Gas Storage Levels

Commons Urgent Question

The following Answer to an Urgent Question was given in the House of Commons on Monday 13 January.

“Energy security is a key priority for this Government, and at no time was there any concern about Britain’s energy system being able to meet demand. Our systems worked entirely as intended. We had capacity to deal with market constraints, and that has been backed up by the two authoritative voices on this issue in the country—National Gas, which runs the gas network, and the National Energy System Operator.

We have sufficient gas supply and electricity capacity to meet demand this winter, due to our diverse and resilient system. While storage is an important flexibility tool in the gas system, our varied sources of gas supply mean that the UK is less reliant on storage than some other European countries that have more limited supply options. Our diverse options include the UK continental shelf, our long-term energy partner Norway, international markets via the second largest liquefied natural gas onshoring capacity in Europe, and two interconnectors.

Gas storage is used throughout the year, but typically operates in winter to help meet peaks in demand. Through colder spells, storage levels are expected to fluctuate across the winter period. That is what happened last week following the severe cold weather, and it is a sign that the gas and storage markets are working exactly as they should. That is precisely why we have those systems in place. In their winter outlooks, National Gas and the National Energy System Operator assessed that there is sufficient supply to meet winter demand, including the role of storage. On Friday, National Gas, the owner and operator of Britain’s gas networks, confirmed that

‘the overall picture across Great Britain’s eight gas storage sites remains healthy’.

We will continue to work closely with National Gas, NESO and storage operators to maintain continued security of supply. I reiterate: Britain’s energy system is working to continue to meet the demand of consumers across the country”.

15:31:00

My Lords, last week, Centrica commented on Britain’s storage levels as being “concerningly low”. We know that the UK’s gas supply is pretty tiny in comparison to the rest of Europe, but the Government’s position seems to be that there is no problem and no threat to our gas supply because we can simply import LNG to bridge the gap. The industry is saying that, looking forward to 2030, up to 80% of our gas will come from costly imports. Surely we should be supporting our own oil and gas industry in Britain, rather than shutting it down in favour of imports from abroad.

My Lords, I am grateful to the noble Lord for his question. First, I must remind the House that, on Friday, National Gas confirmed that: “The overall picture across Great Britain’s eight main gas storage sites remains healthy”. The diversity of Great Britain’s sources of gas supply means that we are less reliant on natural gas storage than our European counterparts. This includes, as the noble Lord suggests, supplies from the UK continental shelf; our long-term energy partner, Norway; international markets via liquefied natural gas; and interconnectors to the European continent. I understand and fully accept what the noble Lord says about the North Sea and the contribution of the oil and gas sector, which we have debated, but it is essential that we move as quickly as possible to clean power. Clearly, by 2030, that will give us a great advantage in energy security. We will look for low-carbon, flexible technologies to ensure that we have the proper balance when we get to clean power. We want to see a successful transition in the North Sea, recognising the contribution that it makes and will continue to make.

My Lords, does the Minister agree, first, that this is a fabricated scare story? There are no issues with our gas. It is not running out and it can be quickly resupplied via pipelines and LNG. Secondly, does he agree that the best resolution is the rapid end to the Conservative’s legacy of overdependence on very expensive imported foreign energy? To that end, the Conservatives would be well advised to stop filibustering on the Great British Energy Bill, which will greatly improve our energy security, decrease our overdependence on expensive imported foreign gas from tyrants such as Putin, bring down energy bills and costs for bill payers, and help us to meet our energy and climate targets.

My Lords, I am glad that I was not alone in thinking that we enjoyed a filibuster last night. What is tragic is that the Conservative Party is clearly retreating from net zero and clean power and has become obsessed with gas. This is not the way that we need to go. The noble Earl is quite right. Centrica chose to put out what I can only describe as an alarmist statement. NESO and National Gas are quite clear that we did not face a crisis and that we have adequate supplies. I hope that those who were involved in making those claims last week will reflect on the concern that they caused.

My Lords, I welcome the Minister’s Statement. For the clarity of the house, can he confirm that the statement put out last week by NESO was a completely normal, conventional, operational statement which is made regularly to ensure that we have one of the safest and most reliable systems in the world?

That is right. NESO manages this with an operating margin, made up of the operating reserve—1,400 megawatts, which it always keeps in reserve. There is a contingency reserve of an additional 800 megawatts on top of that operating reserve. That contingency reserve was tight last week and so an electricity margin notice was issued, as my noble friend suggested. This is a perfectly normal market response to a tightening of the situation, which was resolved immediately.

My Lords, I declare my interest as chair of Peers for the Planet. The Minister’s Statement and his reply to the noble Lord just now are reassuring, as was all the independent analysis of what happened last week. We were not in a crisis. Nevertheless, it is important that, as we move towards more dependence on renewables, we look at the issues of long-duration energy storage and energy efficiency. We do not have a long time until 2030. Can the Minister tell us when we will be able to put some real targets on the amount of long-duration energy storage, which the Science and Technology Committee of this House says that we need urgently?

My Lords, I was present during the debate on Thursday on the Select Committee’s excellent report on this very subject. I refer my friend the noble Baroness to the action plan that my department issued only a few weeks ago, estimating that between 40 gigawatts and 50 gigawatts of dispatchable and long-duration flexible capacity could be needed by 2030. We are going to take a number of interventions to ensure that this happens. We have already announced a ground-breaking deal with Net Zero Teesside, our first power CCUS project. We are developing a hydrogen-to-power business model to derisk investment in that area. Ofgem will be introducing the cap and floor scheme to support investment in long-term duration electricity storage. We aim to open the scheme to applications in quarter 2 of 2025. We fully take on board the point that the noble Baroness makes and the Select Committee report.

My Lords, what was the level of storage at the Rough facility when Labour last left office in 2010 and what happened to that storage facility after the Tories took power?

My Lords, Rough was closed in 2017. At that time, when the party opposite was in government, I do not think that it raised any concerns at all. Indeed, the then Energy Minister, the noble Lord, Lord Harrington, said that the closure of Rough would not cause a problem with security. In 2022, Centrica decided to re-open the site. This was a commercial decision by the company. It now seeks government support. One needs to draw a line between the announcement that it made last week and its request for government support.

My Lords, many people in the public will still not understand the logic of why we spend some £14 billion buying gas from Norway from the same North Sea that we ourselves could be taking it from. Does the noble Lord think that Norway cares any less about the environment and net zero than we do?

For a very long time, we have taken supplies from Norway. It is surely a great advantage of our system that we can look to a diversity of supply. The North Sea supply has been declining over many years now; if it were not in that situation we could, where we needed gas in the future, just look there, but that is not the position. That is why we are trying to manage a transition which recognises that the North Sea still has a contribution to make. The essential point here is that we move as quickly as possible to clean power. That is the best way to get to homegrown energy, which I think the noble Baroness is really pointing to.

I wonder if I can move on to the need for warm homes. Heat pumps are very efficient in heating homes—every kilowatt of electricity generates three to four kilowatts of heat—yet cheaper electricity from renewables ends up being a more expensive option to heat homes than gas because the price of electricity is tied to the high price of gas. Does the Minister agree that this situation is nonsensical and that electricity prices must be decoupled from the price of gas?

That is a very wide question, and it is of course a matter that we should always keep under review. It is a situation that has existed for some time and which we inherited from the previous Government. On the substantive point, the noble Baroness is right about heat pumps and home insulation. We clearly need to make great progress on that.