Centrica has been granted a licence to revive Britain’s biggest gas storage facility as ministers scramble to bolster energy security.
The British Gas owner is now in talks with ministers over a consumer-funded subsidy mechanism for the Rough site, which could cost as much as £500 million.
Centrica has been approved by the North Sea Transition Authority to store gas at the Rough storage site off the coast of Yorkshire, five years after closing it down because it was uneconomic.
There are hopes the facility could be reopened as soon as this autumn, but ministers are still in talks with Centrica about possible financial support to help it reopen. That could see a levy added to consumer bills, deepening the cost of living crisis, according to The Telegraph.
A Whitehall source told The Times that discussions were continuing over “an appropriate support mechanism” and ministers were “open to public support” for the project through some form of regulated return.
Rough had capacity to store gas equivalent to about ten days of UK demand but it’s not clear how much of this can be refilled in time for this winter, given that much of the cushion gas has been produced and the gas injection equipment had been decommissioned.
Centrica indicated last year that it could cost £500 million and take many months to revive the storage site in full. The company, which reports half-year results next week, has declined to provide any further details of its plans since applying to revive the site.
On Wednesday the EU told member states to cut gas use by 15% until March. The proposal could be made mandatory if the European Commission wins the backing of members.
FTSE 100
The UK's top share index, the FTSE 100, was xxxxxxxxxxxx shortly after opening this morning, following yesterday's small six-point rise.
Companies reporting today
- Beazley - Half Year Results
- JTC - Trading Statement
- Verizon - Q2 Results