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UK energy output hits new low as net imports soar

Total energy output fell by 7%, and net energy-import dependency soared to 47%

UK fossil fuel production reached record lows last year, causing energy imports to reach their highest levels in three decades. Total energy output in 2013 was 114 million tonnes of oil equivalent (toe), a fall of 7% on the previous year. A record low in onshore coal production and the long-term decline of oil and gas output from the UK Continental Shelf were behind the drop.

According to figures from the Department of Energy and Climate Change (Decc) the UK’s net energy-import dependency soared to 47% last year, the highest level since 1975. It was the first time since the 1984 that the UK imported more oil products than it exported, Exports of natural gas also plummeted last year, dropping by 24% to 110 terawatt hours (TWh).  

Production

UK coal production fell by a quarter last year to a record low of 12.8 million tonnes, Decc said. Meanwhile coal imports increased by 10%, to 49.4m tonnes. The drop followed the closure of several collieries and deterioration at some of the remaining mines. Deep-mined production was down 34%, to 4.1m tonnes – the lowest level on record, Decc said, because of operational issues at a number of sites. Surface-mine production was also down, by 15%.

Oil production fell by 9% last year, to 40.6m tonnes, reaching its lowest level since reporting began. Oil imports also fell, but not as steeply, dropping by 5% to 25.3m tonnes. 

Decc blamed a 5% drop in oil products production on the 2012 closure of the Coryton refinery, as well as increasing competition from foreign imports. Natural gas production fell 6% to 424 TWh – the lowest level since 1984.

Demand

Demand for fossil fuels was also depressed. Total UK coal consumption was 60.1m tonnes in 2013, almost 7% lower than in 2012. Coal use in electricity generation fell by almost 9% and coal used in blast furnaces was 43% higher in 2013 than 2012. This was because of the re-opening of the Teesside steelworks in April 2012, which has gradually increased operations, and the opening of a new furnace at Port Talbot in February 2013.

UK oil demand was down by over 5%, to 65.1 million tonnes and gas demand fell 1%, year-on-year, to 850 TWh, Decc said.

Electricity

The amount of electricity generated from coal and gas fell last year by 10% and 4%, respectively, while renewable energy generation increased its market share by 28%. Coal accounted for 36% of UK electricity generation (129.4 TWh), while gas’s share fell to 27% (95.7 TWh), its lowest level since 1996. Renewable energy accounted for almost 15% of the total (52.8 TWh), helped by high gas prices and a 46% boost in offshore wind production, Decc said.

Nuclear’s share of total electricity generation increased by a marginal by 0.4%, year-on-year, to comprise almost 20% of the total.

Market investigation

Decc said the average electricity bill for UK households increased by almost 7% last year to £577 ($958). The average household gas bill also increased, by over 6%, to £729.

The UK’s Office of Gas and Electricity Markets (Ofgem), the country's energy regulator, announced on 27 March that it would launch an investigation into energy market competition between the main power providers because of persistent price rises. “Profit increases and recent price rises have intensified public distrust of (energy) suppliers and highlight the need for a market investigation to clear the air,” Ofgem said.

Tim Yeo, chairman of a parliamentary energy committee, said the investigation could help to lower power prices for consumers -- but it may also deter badly needed investment in the UK’s energy sector. “A prolonged period of uncertainty while the investigation is carried out could delay construction of new gas-fired generation capacity which is essential to avert the coming capacity crunch and keep Britain’s lights on,” Yeo said. Ofgem could have avoided the need for an inquiry by earlier implementation of tough measures to increase transparency so consumers knew if energy price rises were justified, or reflected lack of competition in the market, he said.

Decc gave Ofgem extended powers to tackle energy market abuse last year to protect UK consumers from paying artificially inflated prices for energy. This followed allegations of gas market manipulation in 2012, when a reporter at an energy price-reporting agency claimed wholesale gas market prices were regularly being manipulated.

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