Gas storage is responsible for the safe, efficient and reliable operation and maintenance of SSE’s gas storage facilities, and for ensuring they are available for use by its customers.
Both of SSE’s storage sites have continued to operate to meet the needs of their customers through the first half of 2016/17, with the Hornsea (Atwick) site returning to service following its extended outage commenced in 2015/16:
- Hornsea (Atwick) again met 100% of customer nominations with the site 47% available through the period except in instances of planned maintenance. The site was 76% available in the last three months to 30 September 2016, following the return to service of the site earlier in the year, delivering over 90% availability by the end of the period;
- Aldbrough met 100% of customer nominations and was 98% available through the six months to September 2016 except in instances of planned maintenance.
Alongside the requirement to continue to ensure the highest standards of asset management are maintained, SSE continues to respond to the difficult trading conditions with its overall aim to provide valuable flexibility and hedging services to its customers and hence the wider UK gas market, while managing its profitability and being well positioned to take advantage of future market developments.
Responding to market conditions for Gas Storage
The economic environment for gas storage continued to be extremely challenging in the first six months of 2016/17. The value of traditional gas storage services has experienced further decline, although this has been partially off-set by a series of new, innovative services which SSE has introduced during the period.
Given the scale of the economic challenge, a further business review of the Hornsea (Atwick) site has recently been concluded. As a result SSE has decided to mothball two of its nine Atwick caverns (representing c. 20% of storage capacity) through long term suspension, rather than progress the investment required to return these to commercial service. This follows the decision at the end of 2014/15 to mothball the older withdrawal plant at Atwick.
This latest decision reflects the inevitable outcome of the current market conditions which exist in spite of the relatively low levels of gas storage capacity currently available to the UK market.
The economic challenges facing UK onshore gas storage operators have been further exacerbated by the recent announcement of the proposed business rates listing for the period 2017 to 2022 and the consultation process on the associated transitional arrangements. The latter has particularly significant consequences as it all but removes any early relief from the recent doubling of business rates across the industry.
Gas storage priorities in 2015/16 and beyond
Gas storage priorities for the financial year and beyond include:
- ensuring on-going high safety standards for operation of the facilities at Hornsea and Aldbrough and the compliant and effective operation of the Gas Storage business; and
- continuing to listen to existing and potential customers, working with them to shape flexible products which add value to their portfolios.