Catherine Gras reflects on 10 Years of Storengy UK's Stublach site

A decade later: reflecting on Storengy UK's Stublach site

Ten years ago, in 2014, Storengy UK’s Stublach site commenced operations. The journey, however, began well before that, in the pre-2008 financial crisis era.

At that time, the UK's increasing reliance on gas for heat, industry and power generation, coupled with declining domestic production, led to a growing dependency on LNG imports. This dynamic created a greater need for flexibility in the gas supply chain, prompting the development of new storage facilities like Stublach.

Constructing a site of such scale and complexity required significant expertise, a strength that Storengy, with its extensive experience in France and Germany, could readily provide. The teams involved in the Stublach project deserve immense credit for their achievements.

However, the challenge of valuing storage products on the market has proven far more complex. 

When I joined as UK Managing Director in 2016, the gas market had yet to fully recover from the 2008-2009 crisis. Storage products were undervalued, barely covering operating costs, and the industry faced the constant threat of mothballing. The paradox is that the UK had a very limited storage capacity, particularly in relation to its gas consumption and peak demand. The real value of storage was poorly reflected in the gas market prices.

The severe cold snap of February/March 2018, the infamous "Beast from the East," served as a stark reminder of the UK's vulnerability. The event exposed the tight supply-demand balance, resulting in soaring gas prices, and heightened price volatility compared to continental Europe.

In the aftermath, energy intensive industries, utility companies, storage operators ... urged the UK government to reassess its assumptions about the UK's gas market resilience and consider appropriate financial measures to safeguard storage capacity. This did not result in any additional support to increase storage capacity and  the UK continues to operate with one of the lowest storage capacity ratios in Northwest Europe, leading to persistent higher level of gas price volatility.

As the energy landscape evolves towards a higher proportion of renewable energy sources, the need for flexibility becomes even more paramount. The challenge for governments and regulators is to ensure that there will be enough flexibility to manage energy supply and demand in the future.

Storengy UK's Stublach site plays a crucial role in providing this much-needed flexibility to the gas and electricity markets. 

There seems to be a growing recognition that financial incentives are essential for the development of future energy storage infrastructure. After years of relying on market forces, it's encouraging to see the UK government acknowledge the importance of supporting this critical technology.

The next decade promises to be as exciting as the last. I look forward to contributing to Storengy UK's continued success as a non-executive director.