Lords: Rule on Centrica’s Rough hydrogen storage plans before its too late

The government has been urged to make a decision on whether it will support Centrica’s plans to repurpose its Rough gas storage facility to store hydrogen.

The House of Lords science and technology committee says a decision on Centrica’s plans for Rough is needed by the end of the year.

It is one a series of recommendations that the committee makes within its report on long-duration energy storage, which labels the government’s lack of a clear plan as “distressing”.

Centrica set out its plans to repurpose its Rough storage facility last year, alongside proposals to develop green hydrogen via offshore wind, in a deal which the company claims to be an industry first.

As well as supporting the exploration of Centrica’s plans, the Lords committee report calls for the government to commit to a strategic reserve which it says “will be vital for energy security”.

It supports the National Infrastructure Commission view that a strategic reserve can generate 25 TWh of electricity a year by 2040 and suggests that hydrogen will have a big part to play.

It continues: “Relying on the market to deliver energy security in a crisis will immediately pass on the costs of future energy shocks to the consumer in an uncontrolled way, as the UK has experienced recently.

“Failure to prepare a strategic reserve would jeopardise energy security and net zero.

“Relying on gas as a strategic reserve would leave us again dependent on expensive, volatile imports.”

Instead, the committee states that “renewable energy, stored in forms such as hydrogen, offers more energy independence and security”.

However, the government’s latest consultation on its review of electricity market arrangements (REMA) – published yesterday (12 March) – rules out the need for a strategic reserve.

It adds: “We have decided to discount a Strategic Reserve (SR) as a supplementary add-on mechanism to the CM [Capacity Market] (having discounted it as an alternative primary mechanism following the first consultation).

“Although we can see potential benefits of a SR in some limited future scenarios, we do not consider that taking capacity out of the wholesale market and paying for it to be operational only at times of system stress is either cost-effective or necessary at this stage.

“Further, we have confidence that our plans for an optimised CM will deliver the capacity we need while also supporting development of low carbon flexible generation. Introducing a SR alongside the CM could also have drawbacks such as added complexity and a reduction in liquidity.”

Other recommendations made within the Lords’ report include:

• Urgently make key decisions and coordinate the delivery of an energy system plan. The commitment to producing a Strategic Spatial Energy Plan is welcome, but there is a risk that it becomes a dead letter if the government cannot coordinate the FSO, Ofgem, Department for Energy Security and Net Zero and public and private investment to deliver a coherent plan. Key decisions about transmission infrastructure for hydrogen and electricity must be made to allow developments to go ahead. The UK cannot wait for decisions in 2025 and 2026 to invest in storage if the commitment to a secure decarbonised electricity system by 2035 is to be realised.
• Set an explicit minimum target for energy storage. The government should assess and acknowledge the likely minimum scale of storage across different durations needed to balance the energy system. This will set the scale of ambition that policies to support storage must meet. It will enable the UK to move forward now with “no-regrets” infrastructure that will be needed by 2035 regardless of how the energy system evolves. The Government cannot allow the perfect to be the enemy of the good. If it waits until it knows precisely how much storage is needed, it will be too late to build it.
• Set out the details of its long-duration storage business model. This should include the scale of funding that will be made available, the amount of storage the scheme will support and clarity on how it interacts with hydrogen support mechanisms. The model should support a range of technologies, not just lithium-ion batteries.
• Support no-regrets investments for hydrogen and clarify its intended role. A large-scale storage project that combines electrolysis, hydrogen storage and electricity generation would provide a model for other projects to follow. Hydrogen is likely to play a crucial role in strategic energy storage, so energy storage and hydrogen policy must be connected. Clarity on which applications the Government expects hydrogen will be used for would increase confidence. The UK must also secure sufficient electrolyser capacity in the face of full order books and global competition for clean technologies.
• Act with urgency and reduce timelines. A lack of green skills, grid connection queues and planning delays for infrastructure jeopardise any energy plan. Working backwards from the Government’s 2035 commitment makes it clear that these areas need action now.
• Engage and communicate. The public must be engaged to ensure support for vital hydrogen and electricity infrastructure. A lack of understanding of the purpose and benefits of new infrastructure and misinformed perceptions about safety will only increase political and planning barriers.

Baroness Brown of Cambridge, chair of the committee said: “Long-duration energy storage technologies are essential to allow the UK to maintain security of supply with a high proportion of renewable generation on the grid.

“The combination of renewables with energy storage will enable the UK to build an economy insulated from dependence on volatile energy markets and imported fossil fuels.”

She added: “In light of the huge economic damage the recent energy crisis has caused, it is distressing to see that the government lacks a clear plan for energy supply risks and indeed is still deliberating over investment in long-duration storage to prevent future crises.

“A strategic reserve of electricity storage is a critical investment to secure the UK’s energy supply against future shocks, but the government is still equivocating over whether it is necessary to invest in one.”

She concluded: “Our report highlights the clear benefits of investing in long-duration storage, including energy and economic security, avoiding waste of renewable electricity, and allowing us to deploy more cheap renewable power, reducing customer bills.

“However, time is running out for the UK to secure that brighter future. The government must take action now.”

In response to the criticism, a Department for Energy Security and Net Zero spokesperson said: “Technologies such as electricity battery storage could save consumers up to £10 billion per year by 2050, reducing the amount of infrastructure needed to decarbonise while supporting up to 24,000 jobs in a smart and flexible electricity system.

“The UK is a world leader in this sector and we are removing regulatory barriers to help storage companies enter the market, as well as consulting on new measures to encourage investment in long duration technology.”