SSE Eyes Potential of Hydrogen to Save U.K. Gas Storage Business
(Bloomberg) -- SSE Plc’s “troubled” natural gas storage facilities could be used to store hydrogen as it becomes unprofitable to operate reserves of the fossil fuel.
The assets could be re-purposed for other lower carbon gases in future, including hydrogen, the U.K. utility said in an earnings statement that showed the storage business swung to a loss in the year to April. SSE’s gas storage sites account for about 40% of the U.K.’s reserve capacity.
“That business is quite troubled in terms of making money,” Chief Executive Officer Alistair Phillips-Davies said on a call with journalists.
Storage has traditionally been filled with gas in the summer for use in winter when it’s most needed. Britain now relies on pipelined supplies from Europe and liquefied natural gas imports from further afield to balance its gas network. The government is looking at how hydrogen can replace gas in some sectors to help meet net-zero targets.
SSE isn’t the first utility to struggle to make money from gas storage. Centrica Plc closed the U.K.’s largest site, Rough, in 2017 after operating for more than three decades. It had been plagued by technical problems and became too expensive to repair without government funding. The company is exploring converting the site to store hydrogen.
SSE is working with the energy regulator and the government “to ensure that the critical role of U.K. storage in relation to security of supply and stability of gas price is properly rewarded,” it said.
The storage unit’s adjusted operating loss was 5.7 million pounds ($8.1 million) in the year to April compared with a profit of 3.7 million pounds the year before.
Despite a cold snap in January which sent prices to record levels, higher levels of gas were retained in storage during the year, SSE said.
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