New Report Confirms that Storage is More Important than Ever
WASHINGTON – Surging demand for energy has created an urgent need for more natural gas storage, according to a new report from the American Gas Association. The report, titled Assessing the Value of Natural Gas Storage: A Strategic Asset for Grid Reliability, System Resilience and Operational Flexibility in a Changing Energy Landscape, highlights emerging pressures on natural gas infrastructure because of rapidly increasing demand for energy, including from data centers and a resurgence of American manufacturing. The report recommends policy considerations and strategic actions related to storage to support energy reliability, affordability and security, including more flexible natural gas storage to preserve system reliability.
Rapidly increasing demand pressures necessitate a rapid buildout of natural gas storage at a time when growth in underground storage capacity has slowed to just 0.1% per year. Action by policymakers is essential to avoid potential service interruptions during extreme weather, price shocks for consumers and impacts on grid reliability, particularly in integrating variable renewable energy sources.
“America’s natural gas system requires expanded storage capacity that is flexible and responsive to help enable our system to reliably meet increasing demand from power generation, data centers and a reshoring of American manufacturing,” said AGA President and CEO Karen Harbert. “Over the past few years, natural gas production, pipeline capacity and demand have all grown significantly while underground storage capacity has remained largely flat. Despite the proven value of natural gas storage facilities to the energy system, several structural and regulatory challenges continue to limit the system’s overall effectiveness.”
Natural gas storage faces challenges due to capacity and withdrawal limitations, lengthy project development timelines and market signals that fail to reflect the full value of storage, all of which hinder the ability to meet rising demand and provide flexible, reliable service during peak periods.
“Market fundamentals are signaling the need for proactive storage expansion,” said AGA VP, Energy Markets, Analysis and Standards Richard Meyer. “Domestic natural gas consumption is surging in response to increased industrial activity and power demand – and with the rollout of AI in our daily lives and economy, that demand is only set to grow. Despite this, outside of the South Central, Mountain and East regions, we’re not seeing the new storage projects we need to meet this escalating demand.”
The report presents several recommendations for policymakers looking to address this emerging issue.
- Targeted Expansion: Storage capacity is nearing practical limits in several high-demand regions. Strategic investments in new underground and LNG facilities will be essential, particularly where capacity utilization averages at or above 90 percent. These investments should align with increasing residential loads, heightened industrial consumption and power sector needs.
- Faster, Clearer Project Approvals: Storage projects require years to progress from concept to completion. Regulatory clarity and streamlined permitting can help eliminate bottlenecks and allow projects that provide broad system benefits to move forward more efficiently.
- Improved Integration with Energy Planning: Storage is not always included in broader discussions about reliability, clean energy, or infrastructure planning. Incorporating natural gas storage in state and regional energy plans will help ensure its availability when needed, particularly as grid flexibility becomes increasingly important.
- Recognition of Storage’s Full Value: Storage offers more than economic returns; it contributes to reliability, resilience, emergency preparedness and consumer protection. These broader benefits should be acknowledged in terms of how storage is valued in policy, regulation and energy markets.
- Support for Low-Carbon Pathways: Current and future natural gas storage expansion supports and enables pathways to lower greenhouse gas emissions. By enhancing energy system flexibility, storage facilitates the growth of lower-carbon energy. Underground storage facilities can be utilized for renewable natural gas storage, enabling greater seasonal use. Additionally, natural gas storage could be repurposed for hydrogen-ready capabilities in future scenarios.