Energy costs concern everybody. Among current price swings and roundabouts, long-term trends seem to be unremittingly upwards. Predicting several decades ahead is often easier than making monthly or annual forecasts. However, newly released energy statistics offer an instructive snapshot of what is actually happening in UK energy. Jon Herbert examines the numbers.

The fortunes of oil, along with scepticism over the competitive pricing policies of major power generators and distributors, have left many business and household energy planners in a confused state. Energy figures over the years show why. Prices rose by 37% between 2010 and 2013. However, in the 24 years leading up to 2040, energy demand is expected to soar by a further 35%.

It is too early to say how the supply side of the equation, which is fundamental to pricing, will be affected by the strategic development of renewables, or the Government’s determination to introduce and expand the onshore fracking industry.

Other factors are also at play. The EU’s Large Combustion Plant Directive has been designed to shut down polluting power stations, those that are coal-fired in particular. In compensation, the world’s largest current offshore wind farm — the Hornsea Project One 75 miles off the Yorkshire coast — will operate 174 turbines that at 623 feet are taller than London’s iconic 591-feet-high “Gherkin”. However, the National Audit Office is critical of how the 1.2GW project was awarded. It is suggested that energy charge-payers will fork out £4.2 billion in subsidies.

Further down the line, planning consent has been given for Dogger Bank Teesside A and B, which is expected to be developed by the UK/Norwegian consortium, Forewind, between 125 and 290km off the northeast coast with two 200 turbine arrays.

Bringing as many factors as possible together, a tranche of energy statistics released recently by the Office for National Statistics offers a snapshot of the individual elements making up today’s evolving UK energy sector.

Power to the people

The headlines were that total UK 2015 energy production rose by 9.5% compared with 2014. This first rise since 1999 saw oil, gas, bioenergy and primary electricity output rises, but a record dip in coal.

Total primary energy consumption rose by 0.5%, but weather differences year-on-year meant an adjusted fall of 0.8%. Final 2015 energy consumption (excluding non-energy use) was 1.9% higher than in 2014. Rises were seen in domestic, transport and services sectors. Industrial use fell. With seasonally and temperature adjustments, final energy consumption was 0.3% higher in 2015, fed by increased transport demand fuelled by lower petroleum prices.

Average annual household energy bills (based on 3800kWh per annum for electricity and 15,000kWh for gas) fell by £46, or 3.5%, to £1298. Average electricity bills were £8 lower, gas £38 lower.

For international comparison, most recent 2014 figures show that average UK domestic electricity prices, including taxes, were the third highest on the International Energy Agency’s (IEA) list and in the G7, at 17% above the IEA median. With taxes excluded, UK prices were the IEA’s eighth highest, the G7’s highest, and 38% above the IEA median.

By power sector

Provisional 2015 figures show that UK electricity generation dropped by 0.4% from 338.9TWh in 2014 to 337.7TWh in 2015. Gas-fired generation decreased marginally from 29.8% to 29.5% of total UK power output. Coal’s contribution fell from 29.7% to 22.6%, and reached a record low of 76.3TWh after Drax in Yorkshire converted to a feedstock of biomass. Market conditions caused the temporary closure of other coal-fired plants.

In the same period, renewables’ share of electricity generation total rose from 19.1% in 2014 to 24.7% in 2015 as a result of increased solar and wind capacity.

Low-carbon’s share of UK electricity generation grew from 37.9% in 2014 to 45.5% in 2015. The dual-reasons were a rise in nuclear power output following outages in 2014’s last quarter, and a growing national renewable energy capacity.

However, Britain imported record amounts of electricity, too. A high of 20.9TWh in 2015 meant that 5.8% of national energy consumption was supplied through sub-sea interconnectors, a figure that was 2.1% higher than 2014’s 20.5TWh total bought from energy neighbours.

Overall, UK 2015 electricity use was 0.2% higher than 2014, even though domestic use was 0.1% lower.

Fourth quarter 2015 figures showed some dramatic variations. Gas use moved up slightly from 29.1% to 29.7%. However, coal use fell from 30.9% to 19.9%. Nuclear output rose from 15.6% to 21.2%. Renewables’ contribution in the same period also rose, from 21.8% to a record 26.9%.

Last December’s wind generation was a record 4.60TWh; offshore wind reached a record high of 2.45TWh due to both increased capacity and average wind speeds 3.0 knots higher than in December 2014. Low-carbon’s contribution to 2015’s fourth quarter rose from 37.5% to 48.1%. Total three-month electricity consumption was 1.3% lower than a year earlier; domestic sales fell by 2.2%.

Stepping on the gas

Natural gas consumption in 2015 rose by 7.8% compared with 2014, the largest rise since peak production in 2000. The reason was both a reduction in platform and plant maintenance and downtime and the opening up of new fields, including Jasmine and Kew.

In addition, 2015 gas exports of 159TWh were 24% higher than in 2014. Imports rose by only 2.6%, with a notable 20% LNG increase. Although gas demand rose by 2.4% throughout the year, it was still low against average levels seen in recent years. While gas demand for power generation fell by 3.5%, final consumption was up by 4.7% driven by domestic use and commercial heating.

Gross UK gas production in 2015’s final quarter was 12.8% higher than a year earlier. While pipeline imports lost out to LNG imports, UK gas exports in 2015’s last three months were up by 70% as a result of strong production performance and muted end-user demand. The overall quarterly picture was that UK gas use fell by 4.6% to around 219TWh. The primary reason was a 10.5% demand drop. October, November and December were also the warmest for more than 40 years even though mild end-of-year weather brought rain and floods.

“Keep calm … and drill”

UK crude and natural gas liquids (NGL) output in 2015 saw a surprising increase of 13.4% over 2014. New fields, such as Goldeneye, boosted growth; imports were 7.6% lower than in 2014 while exports were up 6.6%.

Petroleum product outputs rose by 0.7%, the first annual increase since 2011. Refining products also rose.

Imported primary oils (crude and NGLs) formed 27.6% of the UK’s energy supply in 2015, a drop from 37.7% in 2014. The UK was a net importer by 9.3 million tonnes, the highest annual total since 1984’s coal strikes. Britain is also a net importer of DERV and aviation turbine spirits, but a net exporter of motor spirit.

The final quarter of 2015 saw crude products increase by 16.6% over 2014. NGL output rose by 10.4%. Petroleum product production was up by 7.5%; imports rose by 9.5% while exports increased by 17.2%.

Renewables’ performance

Renewables’ share of national electricity generation was a record 24.7% in 2015, an increase of 5.6% on the 19.1% of 2014. Total renewables generation was 83.3TWh in 2015, a 29% gain on 2014’s 64.7TWh. Bioenergy was up by 28% and wind up by 26%.

UK renewable electrical generating capacity was 30GW at the close of 2015, a 22% increase at 5.4GW on a year earlier. Renewables’ contribution to UK electricity production in autumn/early winter 2015 was a record 26.9% of the national total, up 5% on 2014’s last quarter. Renewable electricity generation in 2015 was a record 23.8TWh, a 21% increase on the 19.7TWh in 2014’s last quarter.

The final snapshot of UK renewable energy capacity in the closing days of 2015 confirmed by the Feed-in Tariffs scheme was an increase of 348MW added to Britain’s total of 4669MW spread across 833,355 installations.

Petrol picture

In 2005, petrol cost 86.75 pence per litre, diesel 90.86 pence. By 2012, petrol and diesel prices both saw an increase of 56%, the former to 135.39 pence and the latter to 141.83 pence.

The ONS calculates that a 151 mile trip from Cardiff to London in 2012 would have cost £18.59 for petrol vehicles and £19.47 for diesel.

Using January to March averages for 2016, the petrol costs for the same journey would have been £13.95 and £14.01 for diesel.

Published by Croner-i on 17 May 2016