Demand for storage of natural gas in northwestern Europe: Trends 2005–30

We provide an estimation of the additional need for underground storage facilities in northwestern Europe until 2030. Storage is one important source to provide supply flexibility in order to match the seasonal demand for natural gas. However, this supply flexibility is now largely provided in northwestern Europe by indigenous production. Declining reserves will increase the dependency on imports from far-off sources, which are less flexible. Hence, flexibility must be provided by additional storage. Our estimation is based on production and consumption forecasts for natural gas and observations of the relationship between the supply and demand of gas and the supply and demand of flexibility in the period 1995–2005. We provide different scenarios to check for the robustness of our results. We estimate that by 2030, between 10.2 (with no strategic storage) and 29.0 billion cubic meters (BCM) of working gas volume (with 10 percent strategic storage for imports from non-EU countries) will be required, in addition to the existing 40 BCM. We conclude that, with well-functioning markets for flexibility, market forces could close a storage gap of 10.2 BCM in time. Strategic storage obligations would require state intervention and a well-balanced relation between a regulated part of the storage market for strategic reserves and the market for the operational use of storage.