Companies are tackling the urgent need for new methods of storing and producing energy by developing underground salt caves and novel hybrids.

The energy sector has always depended on factors it cannot control, particularly finite resources such as fossil fuels, whose location is determined by quirks of geography and geology.

The UK was blessed with an abundance of these: huge coal fields, and vast reserves of oil and gas in the North Sea. The supply for power stations to burn and convert into electricity seemed secure for decades.

But that time is coming to an end. The coal remaining underground is too expensive to dig out and difficult to burn without causing disproportionate pollution. And natural gas, the fuel mainstay of the UK's power stations since the 1980s, is also in decline.

Now three ambitious projects are looking at new methods of handling energy resources, both in terms of fuel storage and in seeking news ways to generate power.

The problem with the UK's infrastructure, said Andrew Stacey, director of fuel storage specialist Stag Energy, is related to the climate. Because of the need for winter heating, a lot more gas is needed in the winter months than in the summer. This was not a problem when the UK was self-sufficient in gas but that is no longer the case.

'By 2015, 80 per cent of our gas will come from elsewhere, via long-distance pipelines from Norway, Russia and Algeria and via tanker, as liquefied natural gas, from the Middle East, Angola and West Africa,' he said. The political situation in many of these countries represent uncertainties over security of supply, he added.

One solution, which has been adopted by countries without large gas reserves such as Germany and Poland, is to have large amounts of gas that can be stored in the summer and run down during the cold winter months. Germany can store 20 per cent of its annual gas demand; the UK, at the moment, can store only 4 per cent.

The key to storage lies underneath the UK, onshore and below the seabed, and is due to another quirk of geography. Two hundred million years ago all the Earth's landmasses were joined in a supercontinent called Pangaea, with a large inland sea at its centre. Over time this evaporated, leaving a thick layer of solidified salt, impermeable to gas, which now lies below the bedrocks of large areas of the UK.

Stag Energy specialises in creating caverns within this salt, whose properties are perfect for storing natural gas under pressure, and is about to embark on a five-year project to create a network of salt caverns below the East Irish Sea. Called Gateway, it will be able to store up to 1,200 million m3 of gas.

Choosing the right site for caverns depends on several factors, including proximity to shipping routes, but the most important is geology. 'You need very uniform salt, in terms of its chemistry,' Stacey said. Salt that is not homogeneous can allow the gas to leak into surrounding bedrocks.

The process for making these caverns was perfected about 60 years ago in Canada. A hole is drilled through the bedrock into the salt, then water —seawater, in the case of offshore caverns — is pumped in under pressure to dissolve it, creating a void. 'We use a blanket of nitrogen between the seawater and the salt, to control the shape of the cavern', Stacey said. The gas is then pumped in under pressure and can be withdrawn on demand.

But gas storage is only one way of providing energy security; other generating technologies must also play a part and attention is turning to renewables, in particular, wind energy.

Wind might seem an unlikely candidate for improving security, as one of its drawbacks is its lack of reliability — the wind does not blow all the time and the times it does blow are not necessarily the times you need electricity. Intermittency has been used as an argument against building wind farms and given electricity distributors an excuse to demand a discount for buying wind power.

Grantham's Eclipse Energy is one company looking for new ways of establishing offshore wind-energy farms to overcome the intermittency problem. The company, formed in 1999, plans a wind farm in the East Irish Sea near to Stag's Gateway facility, to the northwest of Morecambe Bay, off Barrow-in-Furness.

Like most of the British and Irish coasts the site, called Ormonde, presents a good wind source. But what is special about this site is the two small gas fields in the sea below. Alongside the 30 wind-turbine towers will be a small platform housing three Rolls-Royce gas turbines, taking the gas from the fields and burning it to create extra electricity when the turbines are not running. Costing about £280m and producing about 200MW of power, Ormonde is the first wind-gas hybrid. It is scheduled to begin operations in 2009.

Ian Hatton, Eclipse managing director, said the firm is unusual as its founders all come from the oil and gas sector. 'All our concepts, business models and ways of operating are a direct lift from there,' he said.

This gives the company an advantage over competitors, he added. 'If you look at some of the other projects in this sector, that's an experience which has been missing. There have been a couple of projects where shallow water was perceived to be a good place to develop, but the water was too shallow for the construction barges to get in. Or the sites were selected on mobile sandbanks, and were fine when they were consented, but the sandbanks moved and are again now too shallow to get the barges in.' Eclipse's understanding of the marine environment gives it a better chance of avoiding such errors, Hatton claimed.

The Ormonde project is Eclipse's first, and the idea came from the board's experience offshore. 'If you establish a piece of energy production infrastructure, it then provides opportunity for additional energy resources to be produced and exported via that infrastructure,' Hatton said. 'So, for example, if somebody builds an oilfield development and installs a pipeline, the next best thing you can have is a small field of oil or gas resources adjacent to that development, because the marginal cost to develop those additional resources is relatively small, and therefore the value is quite high.'

At Ormonde, the infrastructure is the cable taking the power from the wind turbines onshore to the National Grid. 'Because of the nature of wind generation and the load factors on wind turbines, there's an awful lot of spare capacity on that system. That means the voidage on the cable can then take the power from the gas generation.' And that comes at no extra cost.

Because of this Ormonde should be a self-balancing renewable system, producing the same amount of electricity regardless of the weather conditions. Hatton hopes this will have a considerable effect on the economics of the project. Power companies always negotiate a discount when buying electricity from windfarms because they have to find balancing power from other sources to make up the shortfall when the turbines are not running. 'We are able to provide that balancing mechanism,' Hatton said, 'and therefore we can remove that discount and add value to the windfarm.'

In practice it is not that easy. 'It's quite hard to get offtakers to see it from that perspective,' Hatton admitted. 'So we have to work on the two elements of the project as almost stand-alones and ultimately, when we come to fix the power offtake, it'll become something where the self-balancing can be considered. Certainly, we have spoken to some offtakers who are aware of that potential.'

The Brae oilfield uses Rolls-Royce RB211 gas turbines. Ormonde will use the same turbine type

The inspiration for running an offshore gas turbine also came from the oil industry, where they are often used on large rigs to generate the electricity needed for the installation.

At Ormonde, Eclipse plans to use the Rolls-Royce RB211, a jet engine-type machine designed for this purpose. 'One of our inspirations was the Brae platforms in the North Sea — one of them produces electricity with a gas turbine, then trunks the power to the other platforms,' Hatton said. 'We took the view that technically it can be done, but instead of trunking to other platforms, we're trunking the power into the deregulated electricity network.'

Grid connection is one of the deciding factors in locating such a project. 'The UK didn't really plan for the vast growth in renewables in areas which are distributed around the country,' Hatton said. 'The whole grid network was focused on distributing outwards from large, centralised thermal generating plants, rather than from projects that are on the periphery and feeding inwards. Essentially, the grid has to be re-engineered to accommodate that, and that leads to time delays on projects being capable of being connected.'

Ormonde does have an onshore grid connection available but its capacity is limited; a major upgrade for the area will allow new offshore projects to feed into the grid, but it will not be ready until 2010. 'Our whole schedule is geared towards that,' Hatton said.

The gas field at Ormonde is small, holding only enough to operate the turbine installation for about six years, but the marginal nature of the resource is what makes it suitable for the project. 'If you have a gas reserve that has the potential for 20 to 30 years production, then it's quite likely that it would be produceable under a conventional type of gas development,' Hatton said. He said there are many similar sites around the UK, where gas reserves are uneconomic to develop conventionally, but are near good areas for wind farms.

So, what happens to Ormonde when the gas runs out? There are several options. The gas turbine platform sits on legs that can be raised or lowered, and attach to the seabed by suction piles, so it is a relatively simple job to detach it and tow it elsewhere. 'We could theoretically identify another wind farm with an adjacent gas field, go to the transmission generator for the offshore electricity distribution grid and seek to connect to that windfarm's connection; we'd pay a fee, which of course we won't at Ormonde, but we'll still be able to use the spare capacity on that line.'

Alternatively, the turbines could be removed from the platform, overhauled and sold, and the platform used to house an electrical substation for the windfarm.

Meanwhile, the depleted gas field at Ormonde could also have a new lease of life, as a gas storage facility, and Eclipse has talked to Stag Energy to see whether this could happen.

Another intriguing option is to convert the facility into another type of hybrid: wind-hydrogen. The gas turbines would be replaced by electrolyser units which, when the wind is blowing fast enough and the price of electricity is low, would split seawater into hydrogen and oxygen. The hydrogen would then be pressurised and pumped into the sub-surface reservoir. When electricity demand and price is high, and the wind drops, the stored hydrogen can then be burned to generate electricity. This, Hatton said, would keep the project's characteristics as a self-balancing wind farm. It might also have another advantage. 'You could also argue that it would make the whole project eligible for renewable power obligation certificates, because you're not emitting CO2 at all.'

There are, however, technical drawbacks. Even when all the useful gas to run the turbines is extracted, there will still be gas in the reservoir. 'The hydrocarbon reservoir will take an awfully long time before it becomes pure hydrogen, so you're burning a mixture of fuel,' Hatton said. This would require some R&D activity that Eclipse, as a small company, is not well placed to undertake, he added.

However, the possibilities of a self-balancing wind-hydrogen hybrid are beginning to attract more attention, with research projects under way around the world. Australian-based company Wind Hydrogen (WHL) is leading the field and hopes to establish the first grid-connected wind-hydrogen park in Scotland, at Ladymoor in Ayrshire.

The company is seeking approval for a 24-turbine onshore wind farm, with a generation capacity of 48MW, linked to an electrolysis facility on a former steelworks site nearby at Glengarnoch. Classified as a research, development and demonstration facility, this would house internal combustion engines optimised to burn hydrogen, linked to generators. The hydrogen would be produced when electricity prices are low, stored under pressure in steel tanks, and burned to produce balancing power when the wind is low and electricity prices are high.

WHL holds US and UK patents on the process, said Peter McLellan, senior consultant to WHL in the UK and project director for Ladymoor. 'None of the building blocks are new,' he admitted, 'but this is a system patent, looking at how these building blocks can be connected in situ and in series, and whether there's any benefit to this system in dealing with the intermittency of wind generation.'

Unlike Eclipse, WHL is in a position to carry out R&D. 'We want to see whether the system can be made more efficient than it is,' McLellan said. 'Whenever you convert energy from one form to another, you lose some of the energy; as waste heat, for example.' An overall system efficiency of 26 per cent is likely, he said. 'Ladymoor is a proof-of-concept facility but WHL also wants to invest in R&D to make the system more efficient, and therefore more attractive and viable to customers.'

A public consultation for the project found one common objection: a perception that, as hydrogen is flammable and explosive, there would be health and safety concerns.

'We've offered to have a public meeting to solely address those issues, relating to the construction and operation of the plant,' McLellan said. However, it is possible that linking wind and hydrogen could ease some of the objections against wind power. 'Some people said it was a fantastic concept, because of the need to look at energy storage, but whether that makes wind farms more attractive in terms of public perception remains to be seen.'

WHL is not considering offshore projects, as McLellan points out that the wind conditions offshore are much more reliable than those onshore, so the problem of intermittency is not so pressing.

However, he does think wind-hydrogen might be an attractive proposition for island communities to ease concerns over security of supply.

'Some communities, such as Malta and Cyprus, are reliant on diesel generation for their electricity,' he said. 'Having the hydrogen as an energy carrier can help with dealing with blackouts, black starts and so on.'