In praise of DUKES

The 25^th of July saw the annual publication of DUKES – the Digest of UK Energy Statistics – with the release of DUKES 2013.  DUKES is the starter for ten for all UK energy sector analysts and has been published pretty much in its present form for many years, making it a consistent set of government statistics.  Even a quick scan of DUKES can give you a good feel for what is actually happening in UK energy, as opposed to the many opinions on what is happening which are expressed in the media.  It shows short-term changes and long-term trends.

Some notable highlights I picked up from the press release and DUKES itself, along with some “flash” first impressions – some of which merit further analysis – follow.

Primary energy production and import dependency

Primary energy production in the UK fell by 10.7% on a year earlier due to the continued decline of oil and gas production from the UK Continental Shelf.  Production is now less than half of its 1999 levels, an average annual rate of decline of 7.1%.  Gas production has fallen 64% since its peak in 2000 while production of oil has fallen 67% since 1999.

Energy imports were up 6.9% on 2011 levels, reaching record levels.  For oil the major supplier was Norway (46%) with a large growth in imports from African OPEC countries.  For gas Norway accounted for 55% of UK imports.  LNG imports were down from 47% to 28% of total imports with 98% of the imports from Qatar.  The main source of coal imports was Russia (40%) with Columbia supplying 26% and the USA 24%.

Overall the dependency on imports reached 43% – continuing the upward trend from 2004 when the UK became a net importer.

Oil and gas production from the Continental Shelf continues to fall dramatically despite some talk of a resurgence.  Increasing dependency on energy imports increases the vulnerability of the country to supply disruptions, whatever their cause, and exports money and jobs.  Current instability in some energy producing countries and regions is worrying.  Looking forward at the global energy situation over the next ten to twenty years, many of the exporting countries will have rapidly increasing domestic demand, and this plus the increase in the global middle class – particularly in Asia – will put increasing upwards pressure on energy demand and increase competition for available energy exports. 

Final energy consumption

On a temperature adjusted basis final energy consumption was down 0.9%, continuing the downward trend of the last eight years.  Consumption in the domestic sector and services sector increased (due to cold weather) while industry, transport and non-energy use all declined, (2.9%, 1.4% and 10% respectively).

Looking at the longer term energy consumption in 2012 was 4.5% lower than in 1990 – with a 34.9% reduction in industry, a 1% reduction in services, public administration and agriculture, a 9.5% increase in transport and a 5.9% increase in domestic.

Energy consumption per unit of output, i.e. a measure of energy efficiency, fell by 47% in the chemicals sector between 1990 and 2012 – with chemicals accounting for 16% of all industrial energy consumption.  For iron and steel there was a 12% reduction and for all industries a 33% fall.

In the private commercial sector energy consumption fell by 12% between 1990 and 2012 while economic output from the sector increased by 79% in real terms.  In the public sector consumption fell by 13% while output increased by 45%.

Energy demand continues to fall – the 4.5% fall since 1990 is interesting as clearly the economy has grown considerably since then (despite the current poor economic performance resulting from the global financial crisis).  Some of this is clearly due to changes in the structure of the economy and some is due to improved energy efficiency.  The old idea of a fixed relationship between GDP and energy use is breaking down but we can, and need to, accelerate the rate of reduction in energy intensity through improved energy efficiency in all sectors.

Oil consumption

Oil consumption, 75% of which is for transport, fell 2% with transport showing little change since 2011.  Diesel road fuel grew again in relation to petrol due to the continued switch towards diesel in cars.  Petrol (motor spirit in official parlance) consumption has fallen 4.4% per annum in the past 10 years while diesel has grown 2.4% per annum.  Biofuels account for 3.1% of road fuel.

Aviation fuel demand has increased by 20% since 1998 but is down 11% on the 2006 peak, demand since then has been fairly constant at 11 to 11.5 million tonnes.  Growth in passenger demand has been quite strong since the downturn but fuel demand has remained roughly constant due to increased fuel efficiency in the airline industry.

Transport energy remains pretty much unchanged – the shift to diesel in cars continues pushed by fuel efficiency standards making manufacturers introduce more diesel models, even in high-end ranges which previously were nearly exclusively petrol driven.  Overall the UK is a net exporter of petroleum products and the switch to diesel has resulted in a mis-alignment between UK product demand and UK refining capacity – we export petrol and import aviation fuel. 

The aviation fuel story is interesting – passenger demand growing and fuel use constant is a result of the combination of several effects – airlines retiring older fuel inefficient aircraft, buying more efficient aircraft and increasing utilization levels by changing schedules.  Pressure to improve efficiency in aviation continues and the introduction of new aircraft such as the Boeing 787, which has demonstrated a 20% improvement in fuel efficiency in actual operation, (not marketing hype), despite early aircraft being over-weight, will continue this trend.   

The electricity sector

Total electricity supply increased 0.6% to 375.9 TWh and UK production of electricity fell by 1% so net imports almost doubled to 12.0 TWh (3.2% of the total).

High gas prices led to a switch to coal for electricity generation, with coal increasing its share of generation from 30% to 39%. This led to a 6% fall in overall gas demand and an overall increase of 24.5% in coal consumption.  Driven by this coal imports rose 38% to 45 million tonnes (still 11% lower than the record level in 2006).

Nuclear generation remained constant at 19%.

Electricity from renewables increased by 19%, taking the total generated by renewables up to 11.3% from 9.4%.

Installed capacity of renewables rose 27%, mainly due to a 27% increase in onshore wind capacity, a 63% increase in offshore wind capacity and a 71% increase in solar PV capacity.

The growth of coal use sneaked up on nearly everyone but should not have been surprising with the high price of gas.  The generators are clearly maximizing the output of the remaining coal stations which are a mixture of those plants that have been retrofitted to allow operation under the Large Combustion Plant Directive and those that are due for closure and are on their last legs.  Clearly this increase in coal use will have an effect on overall carbon emissions.

We will see nuclear production drop off as older plant shut in the next few years.  Given the time to build new plant (see an earlier post “Six impossible things before breakfast”) it is unlikely to recover from that drop much before 2022/23.

The growth of renewables is impressive although of course all these numbers are from a low base – not surprisingly feed in tariffs work.  Whether the increase will continue at that pace post the Electricity Market Reform (EMR) and the new system of Contracts for Difference (CfDs) we will only see over the next three to five years. 

Energy spend

Although the quantity of energy consumed has gone down, from 160 million tonnes oil equivalent (mtoe) to 140 mtoe since 2000, the expenditure on that energy by final users has gone up from c.£60 billion to c.£137 billion.  56% of this expenditure was on transport, 24% the domestic sector, 10% industry and 10% the services sector.

Oil prices in 2012 averaged $112 per barrel, unchanged since 2011 but up from $80 per barrel in 2010.

As everyone knows energy bills have gone up.