Centrica invests £1.5bn pounds in isle of grain gas terminal amid falling UK demand

Centrica, the owner of British Gas, has made a significant £1.5bn investment in the UK’s energy future by acquiring Europe’s largest liquefied natural gas (LNG) import terminal on the Isle of Grain in Kent. This decision comes at a critical juncture, as UK gas demand fell to its lowest level since the early 1990s last year, despite a notable drop in domestic North Sea production.

The Isle of Grain terminal, with its capacity to hold 15 million tonnes of LNG annually, will now be jointly owned by Centrica and a US private equity partner. The facility is being purchased from National Grid, which has shifted its focus toward electricity infrastructure over recent years. Centrica’s chief executive, Chris O’Shea, described the asset as central to securing the country’s energy needs in the decades ahead, particularly during the transition towards net zero emissions.

This acquisition follows Centrica’s £20bn supply agreement with Norway’s Equinor, ensuring an annual delivery of 5 billion cubic metres of gas—enough to supply up to five million UK homes—until at least 2035. O’Shea reiterated the importance of gas storage and has urged government backing for a £2bn upgrade to the Rough storage facility, Britain’s largest, emphasising its value as a safeguard during periods of low renewable generation.

Despite overall reductions in gas usage, particularly for electricity generation—where wind power now supplies more than gas—British households are expected to remain reliant on gas for heating and cooking for many years. Efforts to replace gas boilers with electric heat pumps have not kept pace with government targets, ensuring a continued role for gas in the energy mix.

With government plans aiming to reduce the share of gas-fired electricity generation to just 5% by the end of this decade, Centrica has also taken a stake in the forthcoming Sizewell C nuclear power project, due to begin operating in the mid to late 2030s. This forms part of a broader strategy to balance supply security, investment in low-carbon infrastructure and the complex transition away from fossil fuels.