Centrica, the owner of the UK’s largest gas storage facility, Rough, has warned of its closure unless the government provides financial support for a significant redevelopment. Centrica CEO Chris O’Shea told the BBC that without government assistance addressing energy pricing challenges, the facility will be shut down.
The company projects a £100 million loss this year for Rough and seeks £2 billion in investment to expand its capacity and enable hydrogen storage. While the government stated that Rough’s future is a commercial decision for Centrica, it expressed openness to discussing proposals.
Located off the East Yorkshire coast, Rough holds approximately half of the UK’s gas storage capacity. Closed in 2017, it partially reopened in October 2022 due to the energy crisis following the Ukraine conflict. Centrica recently engaged in discussions with the government for a support mechanism, proposing a “cap and floor” pricing model to mitigate price volatility.
O’Shea emphasized the investment’s potential to create thousands of jobs and safeguard existing ones. He highlighted the critical role of Rough, stating that without it, the UK’s gas storage would drop from 12 days to a concerning 6, while full capacity expansion could increase this to 25-30 days.
The Department for Energy Security and Net Zero responded that while Centrica holds ultimate responsibility, they remain open to proposals that offer value for taxpayers’ money. O’Shea recently stated that the current energy pricing structure means new renewable energy developments won’t significantly lower electricity prices, challenging the government’s 2030 clean energy target while acknowledging its importance.
The Department countered that their clean energy goals are achievable and will bolster energy security, potentially leading to lower costs. This statement follows previous controversies surrounding O’Shea’s substantial compensation and shareholder dissent regarding Centrica’s pay plans.
O’Shea addressed the criticism, stating that his compensation is determined by market rates and that he acknowledges his fortunate position. News reports accompanying this story highlight concerns about low gas storage levels, customer refund disputes, and Centrica’s technological investments.