With the Middle East conflict squeezing global gas supplies and the UK running dangerously low on reserves, the case for a homegrown storage solution has never been stronger
The timing could not be more uncomfortable. As the crisis in the Middle East tightens its grip on global energy markets, Britain finds itself in a position that would have seemed unthinkable two decades ago: a net energy importer, heavily reliant on liquefied natural gas from global markets, with storage reserves that had run perilously thin before the disruption even began.
That vulnerability is the backdrop against which EnergyPathways PLC (AIM:EPP) sits. And it may have a solution that helps fix this pressing problem. The company is developing MESH, a large-scale energy storage hub in the East Irish Sea that combines conventional gas storage in depleted offshore fields with long-duration energy storage using compressed air in salt caverns. It is, in essence, a buffer that Britain does not currently have.
The problem is real and immediate
Gas still supplies around 40% of Britain's energy needs. Roughly half of that is now imported from global markets, and by 2030 the UK could be importing as much as 90% of its gas during peak demand periods. That creeping dependence was always a risk. The closure of the Strait of Hormuz has turned that risk into a live crisis, removing around 20% of global LNG supply at a stroke.
Unlike oil, there is no International Energy Agency framework obligating nations to hold strategic gas reserves. Countries are simply competing for whatever they can get, and cargoes are going to the highest bidder. At the start of the current disruption, the EU and China each had roughly 25 days of gas in storage. Britain, which runs a just-in-time supply model, had largely depleted what little storage capacity it has.
The economic consequences feed through fast. Because of how Britain's electricity market is structured, power prices track the global gas price. A geopolitical shock anywhere in the world becomes a household energy bill problem here within weeks.
Where MESH comes in
EnergyPathways is targeting exactly this gap. The MESH hub, located in the East Irish Sea, would use depleted gas fields for large-scale gas storage and offshore salt caverns for compressed air energy storage, delivering multi-day supply back to the grid when demand surges.
The compressed air component is particularly timely. Britain is already wasting vast amounts of wind power because supply regularly outstrips what the grid can absorb. Curtailment costs around £1.5 billion a year, and grid balancing costs are forecast to exceed £8 billion annually by 2030. Systems like MESH could store that surplus wind energy and release it later, reducing the need for expensive LNG imports to back up intermittent renewables.
Britain's geology makes this viable. The East Irish Sea sits above some of the best natural storage geology in Europe, with the combination of depleted gas fields and salt cavern formations that can inject and release energy rapidly, storing when prices are low, discharging when demand spikes.
The investment case
The company says private capital is ready to deploy and the project could be operational by the early 2030s. Crucially, EnergyPathways is not asking for a government cheque. The project is designed to be commercially self-funding, cost-effective, and requiring little if any taxpayer subsidy. What it needs is regulatory certainty.
That is where the timing of the current crisis becomes relevant for investors. Energy security has moved from a background policy concern to an acute political priority. The pressure on regulators to green-light projects like MESH has never been greater. A government that was already under scrutiny for the pace of energy transition investment now has a very public reminder of what insufficient infrastructure looks like in practice.
Small-cap energy plays carry their share of risk. Regulatory timelines can slip, capital markets can tighten, and the transition from development asset to operational infrastructure is rarely straightforward. EnergyPathways is still at the project development stage.
But the fundamentals behind the pitch are not in dispute. Britain is underinvested in energy storage, the cost of that underinvestment is rising, and the political environment for approvals has arguably never been more favourable.
Sometimes the best investment ideas are simply the ones that solve an obvious problem at exactly the right moment. This looks like one of those.