Why The Energy Market in The UK Will Be Challenging in 2018 and beyond

The UK’s total energy consumption remains more than 80% reliant on fossil fuels.

Historically during the winter, when demand for gas is high for heating, coal-fired power generation helped to lessen the demand on gas for power generation. However, over recent years, emission regulations, have resulted in the gradual closure of coal-fired power generation plants not only in the UK but also now impacting on countries like Germany, Spain and Poland, who have traditionally been large users of coal. This means in cold periods and at times when French Nuclear power generation or renewable power is curtailed, gas fired power generation is relied upon; often coinciding with high heating demand, resulting in high price volatility.

Coal generation has dropped by around a quarter year on year to 6.7 per cent of the mix. However, while use of coal-fired power stations declined through most of last year, large stations such as Fiddler’s Ferry and Eggborough fired up again as part of the capacity mechanism, so that the use of coal in the fourth quarter of the year was little different to the previous year.

Following the recent closure of the Rough storage facility (Britain’s biggest gas storage site) and the reduction in production capacity from the large Groningen gas field, the market is now increasingly reliant on non conventional gas supply, i.e. Russian and Norwegian gas flows, and Liquefied Natural Gas deliveries, which are all very price sensitive.

Oil prices have risen recently as the oil market supply/demand balanced and OPEC curtailed production levels, though whether this will be maintained as 2018 progresses is not obvious.

Total UK generation output in 2017 was 335.9 terawatt hours. Of the generation mix gas dipped to 39.7 per cent, nuclear fell slightly to 20.9 per cent while renewable generation increased to 29.4 per cent.

The energy supply sector continues to decarbonise faster than any other, with emissions falling 8 per cent year on year, now 57 per cent down on 1990 levels.

If you would like to reduce your reliance on these price volatile forms of energy, decarbonise and jump on board with the growing number of businesses who are using renewable energy technologies. Call us on 0161 330 7739 or leave your details and we can get in touch with you.

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