Where do we get our energy from? - Maxwell Grant, Reduce Business Costs | Procurement Specialists, Salisbury
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August 27, 2014

Where do we get our energy from?

A Climate Change Survey carried out in early August by ComRes, revealed that more than half of consumers feel they don’t know the factors behind the energy prices charged in UK – this article will hopefully clarify where we get our electricity from and how we are charged.

As electricity rarely occurs naturally, we need to generate it from different sources, mainly coal, gas and nuclear.  In 2012, coal accounted for 36.3% of the electricity produced by UK power plants.  But with EU reduction targets on sulphur dioxide, nitrogen oxide and particulate matter emissions by next year, it is expected that more than 6 gigawatts of coal capacity will be forced to close.

The remaining power stations use gas (26.8%) and nuclear (19.8%) although this could change as if the option of using “shale” gas materialises, more electricity will come from gas.  With regard to nuclear, 15 of the 16 nuclear power stations  are set for retirement over the next ten years – investment in replacing nuclear power stations is very costly and politically controversial.

Renewables such as wind, solar and hydro are at the bottom of the list although this area of the market is growing fast, reaching 14.8% last year from 11.3% in 2012.  This figure will have to jump to 30% by 2020 if the UK is to meet its renewable obligations under EU law.

The majority of our electric power is made in UK with a fraction imported from France and Holland although the story changes when we look at the fuel stocks burned in our power stations.

For example the number of coal mines in UK has decreased by 97% in the last 60 years which means that we now have to import 45m tonnes, the majority of which (89%) is steam coal which is used mainly by electricity generators.

With regard to gas, UK produced just over 32m tonnes of oil (mtoe) last year but with national gas demand running at 67 mtoe, we still need to import 35 mtoe each year.  Also, we must bear in mind that production of gas from North Sea is in general decline.

The UK has been self-sufficient in conversion, enrichment, fuel fabrication, reprocessing and waste treatment of nuclear power.  However with no domestic uranium reserves, UK has been dependent upon oversea suppliers.

However renewables are not reliant on any imports and are therefore unique in being fully sourced and produced locally.

PRICING ENERGY

Over the last ten years, the cost of electricity and gas has gradually risen with UK energy prices rising by 37% between 2010 and 2013.  WHY?  According to a UK parliamentary report and backed by “the big six”, much of the blame lies with an increase in wholesale costs as well as higher operating, network and environmental costs.  At last, Ofgem announced last month that they are going to carry out a review into the UK energy market.

However in the short term, it seems unlikely that prices will fall.  The UK has little influence over wholesale prices and with renewables contributing only 14.8% to UK power generation, it seems unlikely that we will able to reduce imports.

 

Adapted from an article that appeared in The Guardian on 7th April, 2014  by Oliver Balch

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