Coalition hopes to fill UK energy gap with gas

Marion Dakers
THE DASH for gas came a step closer yesterday as the chancellor talked up the importance of the fuel for Britain’s energy security.

But there were fears that the incentives offered to gas producers would not be enough to tempt firms to generate enough power to bridge the UK’s looming capacity gap.

In the Department for Energy and Climate Change’s (DECC) gas strategy, produced yesterday, it admitted that not a single firm has applied to build a new gas-fired station since the rules were changed in 2011. This is partly due to falling wholesale prices.

Stakeholders told DECC that “from an economic perspective, the current profitability of gas plants is low and that there is uncertainty on their future profitability”, yet the government expects 26 gigawatts of new capacity to come from gas-fired stations by 2030, a rise of 30 per cent.

“Natural gas, whether on or offshore, is struggling to attract investment… so we keenly await details of the scope of the consultation on the fiscal regime in that area,” said Mike Tholen of Oil & Gas UK.

The chancellor used his Autumn Statement to confirm tax incentives for shale gas explorers next year, in an attempt to kick start the potentially lucrative but fledgling industry.

A new Office for Unconventional Gas and Oil will be set up to oversee the sector.