UK ministers rule out additional gas storage subsidies

The government has ruled out further subsidies to help with gas storage, saying that it is confident that the current level of supply is sufficient

Ministers insist that the level of supply currently available in the UK is broadly sufficient, adding that the decision not to subsidise the building of more gas storage facilities would save £750 million over the next ten years.

This announcement comes on the back of independent analysis demonstrating that the current level of demand requires no extra storage.

The study, commissioned by ministers, showed that the UK energy market continues to perform well and is attracting sufficient supplies of gas from a range of sources to cope with current and future demand.

Contrasting opinions on storage capacity needs

However, this research flies in the face of recent calls for the UK to keep more gas in reserve.

Rob Hastings, director of energy and infrastructure at the Crown Estate, insisted earlier this year that the UK was hours from running out in March.

The UK stores far less gas than other European countries do at the current time. Only 4-5% of demand is held in reserve in the UK, compared to the 17-18% averaged across the continent.

Government insists subsidies would be counter-productive

The government said that the costs of intervening with the gas market and providing subsidies for storage would far outweigh the £750 million it believes will be saved by not doing so.

Michael Fallon, energy minister, told the Financial Times: “We were right to examine the case for subsidy.

“But we are now moving energy policy back to the market. We have a number of sources of gas, as well as new fast cycle facilities being developed which will increase our gas storage capacity.”

He added the government is currently doing all it can to help those troubled by expensive bills meet their costs and get out of fuel poverty, and insisted there would be no benefit to consumers in providing expensive subsidies when the market “is not working”.

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