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Centrica denied subsidy – a small victory
No doubt Mr Drew will update this later, but initial reaction this morning to the news that Centrica won’t be building offshore or onshore gas storage is that I am surprised and pleased.
Clearly, without subsidy this project could not go ahead and so Centrica have shelved it. Also, given market dynamics there was no demand for this project without a huge government subsidy. This is as it should be, no market need, no pay taxpayers moollah.
Moreover, only in April Centrica announced a deal with Cheniere energy to supply shale gas to the UK. So we have a nice diversified supply set, Norway, North Sea, Qatar and the US, with the interconnector as a last resort for Russian gas. This is why the UK does not need 3 months storage like say Germany, which is hugely dependent on the whim of Moscow for its gas supplies.
The only slightly worrying part of this story is that the Lib Dems are in charge of DECC, this means that this subsidy was more likely denied because the Lib Dems hate the idea of a dash-for-gas which puts such a commonsense and commercial hole in their preferred dash-for insanity (otherwise known as windfarms) policy. Sadly the windfarm subsidies far, far outweigh anything Centrica is asking for gas.
So its a small victory for the market and Government policy today, but a small victory in a losing war for taxpayers.
Source: http://www.cityunslicker.co.uk/2013/09/centrica-denied-subsidy-small-victory.html
