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News Extra: UK 2014 energy data reveals significant increase in renewables, decline in coal in 2014

28 August 2015

The latest annual Digest of UK Energy Statistics from the Department of Energy & Climate Change (DECC) shows that in 2014, UK energy production was down 1.7% on a year earlier, the smallest decline since 2002. Preliminary government figures for electricity production in 2014 are 30% gas (27% in 2013), 30% coal (36%), 18.7% nuclear (19.7%) and 19.1% renewables (14.8%). Much of the remainder was imported from France and the Netherlands.

Coal’s share declined due to the closure of several power stations and the conversion of another to biomass. Generation from gas increased as prices declined, down 18% on 2013 levels, and nuclear output declined by 9.7% due to planned and unplanned outages affecting a number of plants.

Generation from renewable sources grew by 21% to reach just under 65 TWh in total, with increases from all major sources. Generation from bioenergy contributed 40% of the increase, wind 32%, solar 18% and hydro the remaining 10%.

The annual growth rates from renewables sectors varied: with bioenergy up 25%, wind 13% on increased capacity, solar output doubled and hydro up 25% on increased rainfall. Generation from nuclear and renewables both accounted for around 19% of generation.

However, the last budget’s Climate Change Levy exemption removal and changes to wind and solar subsidies could impact on future renewables expansion.

UK Continental Shelf output declined at a much slower rate than recently with gas output up for the first time since 2000.

Imports in 2014 were down from the record high levels of 2013, though exports were at their lowest level since 1980. Net imports decreased marginally and accounted for 46% of energy used in the UK.

Primary energy consumption was down 6.6%; and on a temperature adjusted basis primary energy consumption was down 2.6% continuing the downward trend of the last nine years. The UK experienced record warm weather in 2014 with temperatures on average 1.2 degrees Celsius warmer than 2013.

Total final consumption, which includes non-energy use of fuels, was 142.8 million tonnes of oil equivalent in 2014; this is an 8.2 million tonnes of oil equivalent decrease, 5.4% down on  consumption in 2013. The majority of this decrease was from the domestic sector, where consumption fell by 14.4%.

Adjusted final energy consumption fell by 5.6% with less energy used for heating, and temperature adjusted final energy consumption was down 1.0%.

Fossil fuels remain the dominant source of energy supply, accounting for 84.5%, though this is a record low level. Supply from renewables increased, with its contribution accounting for 7.0% of final consumption.

Provisional DECC estimates suggest that overall emissions fell by 45 million tonnes of carbon dioxide (MtCO2) (9.7%) to 422.0 MtCO2 between 2013 and 2014.

Production of crude oil and Natural Gas Liquids (NGLs) from the UK’s North Sea fields decreased by 1.8% between 2013 and 2014, a far smaller drop than that seen in recent years. Indigenous production has been falling by nearly 8% per annum over the last 10 years but the rate of decline slowed in 2014. Total production is now less than 30% of the UK’s peak production of 1999.

Despite the decrease in oil production, net imports of primary oils decreased in 2014 due to a fall in refinery demand. Exports were more than 2 million tonnes lower in 2014 but imports were down by over 5 million tonnes. Exports of crude oil are now at their lowest level since 1978.

UK refinery production fell to 60.3 million tonnes of product in 2014, down 7.8% from 65.4 million tonnes in 2013. Production loss from the closure of Milford Haven refinery in 2014 and Coryton in 2012 has not been made up by other refineries, many of which have reduced their distillation capacity in recent years. Overall, UK production is around 30% lower than in 2000.

The fall in production meant that the UK was a net importer of petroleum products in 2014 by more than 6 million tonnes, the highest such figure since 1984, the year of the miner’s strike. Prior to 2013 the UK was consistently a net exporter but whilst product imports were only up marginally on 2013 exports decreased by 16%.

Upstream production of crude oil and liquefied natural gas (LNG) on the UK Continental Shelf also fell by nearly 2% between 2013 and 2014, though DECC’s figures could yet be buoyed by industry body Oil & Gas UK’s latest provisional figures  in its Economic Report 2015 that suggest production in the North Sea could increase by 2.5% in 2015 – the first rise of its kind in 15 years.

Oil & Gas UK chief executive Deirdre Michie said: “It’s still early days, but initial indications suggest that production could increase this year for the first time in fifteen years.”
“Provisional data for the first six months of 2015 show liquids production to be up around 3% and net gas production to be up around 2.5% this year, compared to the first six months of last year,” Michie said.

According to Michie, production in the second quarter of the year looks particularly encouraging and early figures suggest that May saw the most oil and gas produced on the UKCS since March 2012.

“We will be able to discuss annual estimates with more certainty by the end of the summer maintenance season, as figures for July and August are historically the most uncertain,” she said.

The UK energy industries’ contribution to the economy in 2014, based on the latest available data from the Office for National Statistics (ONS), is as follows: 2.8% of GDP; 13% of total investment; 37% of industrial investment in 2013; 162,000 people directly employed – some 5.9% of industrial employment.

Many others are indirectly employed, for example an estimated 207,000 in support of UK Continental Shelf activities.

The share of GDP at 2.8% compares to a peak level of 10.4% in 1982. The share fell to below 4% in most years since 2000, with the latest fall largely due to the decline in the value of oil and gas production - wholesale gas prices fell by around 25% in 2014.

In the last 10 years investment has grown sharply, though levels in 2014 were broadly the same as those in 2012 and 2013. Employment has remained broadly unchanged in the last five years, but up from 10 years ago.

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