Energy minister plays down need for strategic gas reserve

The energy security minister has pooh-poohed suggestions that the UK requires a strategic gas reserve, arguing that supplies of other vital staples are maintained without similar backstop arrangements.

As gas prices spiked two years ago following Russia’s invasion of Ukraine, the Labour opposition was deeply critical of the government’s 2018 decision to allow the closure of Centrica’s Rough storage facility.

The supplier re-opened Rough, which is located off the east Yorkshire coast, in October 2022. It wants to quadruple the facility’s size to create Europe’s largest gas and hydrogen long duration energy store but this would cost around £2 billion of investment.

Energy minister Graham Stuart told the House of Lords science and technology committee that the government is due to consult on creating long-term energy storage as part of the REMA (review of electricity market arrangements) but expressed scepticism about whether such a facility is necessary.

He said: “There are lots of areas in which people think there has to be that sort of thing, and there does not. We have not created a strategic reserve for gas, even though we are terribly dependent on it, because of the circumstances. We are looking at it under REMA, and we will do the analysis and consult. Clearly, if we need one, we would look to bring one forward.

“We do not provide reserves on most of the things in the British economy. We have traders who trade and anticipate, and we look at whether there is a strategic risk that needs government intervention. Nearly always, the answer is no. Those committed to central planning cannot imagine how a market-based system of short-term people looking for profit could possibly provide a more sustainable system than the alternative, but all the facts in multiple markets suggest that they do.”

Pressed on how the UK would cope without a strategic reserve during prolonged cold snaps or when wind speeds are low and existing facilities become rapidly depleted, Stuart said “equally catastrophic circumstances” could be envisaged for water or food or “any other staple”.

But the minister added that he is “absolutely not” ruling out a strategic reserve.

Stuart also rubbished the suggestion that government sign off will not be required for the Strategic Spatial Energy Plan (SSEP) which is due to be drawn up by the soon to be established Future System Operator (FSO).

He said: “The idea that a strategic spatial energy plan covering a multi-vector plan for land and sea across the whole of Great Britain can be visited upon us by a non-elected body without our ok seems to me to be for the birds. The democratically elected government will need to approve this. It must be the case that we will approve it.”

Emily Bourne, director of energy systems and networks at the Department for Energy Security and Net Zero, told the committee that the Electricity System Operator is due to be commissioned this spring to carry out the SSEP ahead of its transformation into the FSO.