UK Government and Centrica Storage Talks Get Rough

The UK government and Centrica, a British energy and services company, have failed to agree on terms to increase the size of the UK’s largest gas storage facility this upcoming winter.

Background: Centrica owns the storage facility Rough, which reopened last year in October to reduce the country’s reliance on Russian gas.

• Rough had been closed since 2017 as it was uneconomic after technical issues and prolonged maintenance.

The ask: Centrica needs to invest £150 million to double the storage and wants subsidies from the UK government to reduce the risk of gas price volatility.

Why it’s important: If the UK doesn’t have enough stored gas, it would have to rely on LNG imports which are notoriously expensive right now.

• The UK only has 1 percent of its annual consumption in storage, which pales in comparison to other EU countries, some of which have as high as 25 percent of their annual consumption in storage.

Centrica has said they still remain open to talks with the UK government, and they are looking to turn the storage facility into one that can hold hydrogen and natural gas. The UK government will need to make firm decisions to ensure energy security while paving the way for energy transition, otherwise, it could be put in a “rough” energy situation again.