Providing for the UK’s Energy Needs

UK Energy Supply & Demand – present and future

In the last 15 years, primary energy demand has grown at an average 0.7% per year. This slow rate of growth is a result of improvements in energy efficiency across all sectors of the economy and the shift from energy-intensive industries towards the service sector.

Environmental commitments and the continued drive towards energy efficiency are expected to reduce further the growth in total energy demand through to 2020. DTI forecasts UK energy demand to be between 220 and 255 Mtoe in 2020, depending on the impact of the Climate Change Programme, compared to current demand of 233 Mtoe. Demand figures quoted exclude non-energy use for chemical feed stock, etc. Total UK primary energy demand was 246 Mtoe in 2004 when non-energy use (12 Mtoe) is included.

After its peak in 1999, indigenous energy production has started to decline, driven by the combined effects of decreasing oil, gas and coal output. Last year, UK energy production was 238 Mtoe, a 9% decrease on the previous year. Even with a downward pressure in energy demand, the fall in the production of fossil fuels will translate into an increasing dependency in energy imports.

Figure 10: UK Primary Energy Demand 1970 – 2020 (*)

In the last 35 years, the UK economy has become less energy intensive. Whilst GDP (in constant prices) rose by 120%, energy demand grew by just 10% with the result that energy intensity – energy required per £ of GDP – fell by 50% between 1970 and 2004. The downward trend in energy intensity is expected to continue and by 2010 is projected to be 15% less than now.

DTI projections show that UK oil and gas demand will rise from the current 74% to 85% in 2020, showing an increasing reliance on oil and gas. Renewables¹ are also expected to grow from the current 2% to provide 5% of total energy by 2020, only partly compensating for the decline in nuclear power as many of the existing plants are decommissioned.

Footnotes
1 Renewables include solar heating and photovoltaic, wind, wave, hydro, biofuels, geothermal and waste.

Figure 11: Change in Primary Energy Demand (2004 and 2020)

Energy consumption is currently split between Transport (33%), Domestic (28%), Industry (20%) and Other Sectors (19%). This breakdown is expected to remain with little change over the next decade.

The power generation sector consumes around 35% of total primary energy in the UK. The most remarkable development in this sector has been the impressive growth in the use of gas for power generation, rising from less than 1% in 1990 to 41% in 2004 and is projected to rise to 66% in 2020. The deregulation of the electricity and gas markets, the introduction of the combined-cycle gas turbine (CCGT) and the reduction in financial support for the coal industry have been the main drivers behind this “dash for gas”. There has been a continued growth in the application of wind power both onshore and offshore over the last 18 months. The use of all forms of renewables for power generation is currently projected to grow from 3% to 12% by 2020, with the majority coming from a rapid growth in wind power generation; even so this will barely match the projected decline in nuclear power: from 19% to 8% over the same period.

Figure 12: Primary Energy Consumption – UK Power Generation Sector (2004 & 2020)