Seven unexpected graphs about the UK’s energy sector
Sometimes our understanding of what’s going on in the world is at odds with the facts – on issues ranging from teen pregnancies and immigration to levels of voter turnout and the ethnic makeup of the UK.
The energy sector is no different, it seems.
The Department of Energy and Climate Change (DECC) delivered one of its increasingly common data dumps this morning.
We’ve delved through the pile of stats to bring you seven graphs about energy in the UK that raise some questions about received wisdom in the area.
Energy costs aren’t high, historically speaking
The media is fond of pointing out that households are paying more for energy than they used to. This is true – but the data shows the cost of energy is a long way from being at historic highs.
The cost of electricity, gas and other fuels has been rising since it bottomed-out in 2004. Between 2002 and 2012 energy bills increased by 55 per cent, after accounting for inflation. But the amount households spend on energy compared to other things is still relatively low.
In the 1980s, energy bills represented over five per cent of a household’s costs. In 2012, it was a little under 4 per cent:
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Source: DECC energy sector indicators 2013
That’s partly because homes have become more energy efficient in the last 30 years, reducing demand. It’s also because households are generally richer so spend more of their incomes on other things.
The picture’s not so rosy for the UK’s poorest homes. The bottom fifth are now spending 11 per cent of their disposable income on energy, driving an increase in fuel poverty among low income households.
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Source: DECC energy sector indicators 2013
Domestic gas is pretty cheap
Rising bills set the scene for the past year’s front-page debate over the cost of energy in the UK. We are warned that when it comes to energy we’re living in ‘ rip-off Britain‘: Just like everything else, us long-suffering shivering Brits are getting a bad deal.
Except UK domestic gas prices in 2012 (the yellow bar on the graph below) were the second lowest in the EU, including taxes. Only Luxembourgers paid less for each unit of domestic gas.
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Source: DECC energy sector indicators 2013
Even though supplies from the North sea are starting to slow the UK still benefits from having a sizeable domestic production capacity. As North sea production declines, the need for more expensive imports is likely to continue putting upwards pressure on prices.
UK homes use more gas than their continental cousins, so the UK is only eighth cheapest on overall gas bills. UK domestic electricity is the seventh cheapest per unit in the EU once the purchasing power of a pound versus other currencies is taken into account, as the chart below shows.
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Source: DECC energy sector indicators 2013
We looked in more detail at UK energy bills compared to other countries back in January.
The UK’s homes aren’t as cold and draughty as they were
Another oft-repeated idea is that UK’s homes are the ” coldest and draughtiest in Europe“. Our collective love-affair with poorly-built, sash-windowed Victorian terraces and a raft of data seems to bear this out.
But while we’re some way off catching up with those cunning Scandinavians with their triple-glazed windows or those passive-housed Germans, things aren’t all bad. In a single generation the UK’s home insulation levels have been transformed.
Loft insulation levels have more than doubled (the purple line in the graph below) and cavity wall insulation rates have soared more than six-fold (blue line), with both reaching around 70 per cent. Image (note)
Source: DECC energy sector indicators 2013
Better insulation is one of the big reasons why UK homes are using less energy than they used to. There’s still plenty to be done, however. Solid-walled homes make up around a third of the UK housing stock and only a few per cent have solid wall insulation, the DECC figures show.
Another problem is that almost all of the easily accessible loft and cavity wall installations have now been completed after many years of free offers to homeowners. Recent changes to energy efficiency policy have seen progress stall.
A new report from campaign group Energy Bill Revolution says a massive programme of energy efficiency retrofits covering six million UK homes by 2025 would pay for itself through new jobs and lower bills. It says its plan would be adding nearly £14 billion to the economy each year and saving average households nearly £400 each by 2030.
The Labour Party says it plans an overhaul of energy efficiency policy reflecting many of the Energy Bill Revolution’s ideas, though it’s ambition is much lower.
Investment in the energy sector rose under the last government
The industry often blames decades of under-investment for many of the energy sector’s current woes. But this graph shows investment has risen significantly over the past ten years.
Between 2006 and 2010, investment in the UK’s electricity and gas sector under the Labour government almost doubled. In the coalition government’s first year, it stayed at a similar level.
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Source: DECC energy sector indicators 2013
Investment has since reached new highs, topping £11.5 billion in 2012. That’s almost double the amount invested in 2006. In particular, investment in oil and gas extraction has rocketed.
The prime minister has pledged to implement a suite of tax and policy changes making it easier to squeeze every last drop from the North Sea’s reserves. The government estimates that £110 billion of investment is needed between 2013 and 2020 to help modernise and decarbonise the UK’s energy infrastructure.
The UK has been building combined heat and power plants for decades
An oft-overlooked energy source had its day in the sun a couple of weeks ago. Former environment secretary Owen Paterson called on the governmentto invest much more in combined heat and power (CHP) plants.
Paterson has put CHP at the heart of his alternative vision for the UK’s energy policy. CHP is “treated as the Cinderella to the European Commission’s favoured high renewable energy strategy”, he declared.
Many would agree with Paterson that CHP needs more attention. But nonetheless, this graph shows CHP has been growing steadily since the 1990s:
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Source: DECC energy sector indicators 2013
CHP plants generated around 6.4 per cent of the total electricity generated in the UK in 2012. To put that in perspective, windfarms generated 5.5 per cent that year. So CHP may not be the minnow Paterson suggests.
There’s little doubt the UK could do more to make heating more efficient. It would be cost-effective to triple CHP capacity according to a DECC study, though not everyone is convinced it’s the right option. It’s also worth noting that many other EU countries generate much higher shares of their electricity from CHP, for instance over 40 per cent in Denmark.
Public information
There are going to be significant changes to the energy landscape over the coming decades as countries seek to cut emissions, demand, and their dependence on fossil fuels from volatile parts of the world.
Given the huge challenge that represents, we’d all do well to keep an eye on the data to see whether received wisdom matches reality.
Update 14.00 – we added a line on CHP use in other EU countries.