British Ceramic Confederation chief executive Laura Cohen told Utility Week it is “really important” for the government to “continually keep the need for more gas storage under review” and, if necessary, “intervene to ensure that the market on gas storage delivers”.
She pointed out that “more storage is needed relative to total UK demand to take us closer to the level of storage in France or Germany or the Netherlands”, because North Sea gas production is decreasing and making the UK more reliant on imports.
Last month, it was announced that the decision on whether to move ahead with the controversial Preesall gas storage project in Lancashire will now fall to Lord Bourne, following mounting concerns over an assumed conflict of interest involving the Energy Secretary Amber Rudd.
However, there are many gas storage schemes which have been consented, but are still to be financed and built in the UK. The Gateway Gas Storage scheme gained consent from then Energy Secretary Ed Miliband in 2008, but is still unable to get financial backing.
Cohen argued that the gas storage market has not delivered owing to a lack of winter and summer price spread “because there’s less oil indexation”.
“Another reason is increased business rates due to the Valuation Office Agency review,” she continued. “And the third reason is the lack of available and affordable finance, partly because there is no long-term price certainty for the storage.”
This year, the Valuation Office Agency made the decision to effectively double business rates for most gas storage facilities in the UK.
British Ceramic Confederation is a member of the Energy Intensive Users Group, with gas kilns being the most popular type of fuel kiln used today.
“Ceramics manufacturers use much gas and operate continuous high-temperature processes,” Cohen said. “For example, a brick kiln would be operating at above 1000 degrees centigrade and can be over 100 metres long. If that were to lose gas in an unplanned manner, that could cause pretty serious damage to the kiln and cause major safety issues.
“Energy security is a basic in any modern economy. Our members are rightly nervous about UK energy security and this is not doing any favours to encourage investment in manufacturing capacity at a critical time during the recovery.”