ENERGY IN SCOTLAND: A COMPENDIUM OF SCOTTISH ENERGY STATISTICS AND INFORMATION MARCH 2012 This report provides an overview of energy statistics for Scotland. All statistics presented in the report are from published sources, including publications by the UK Department of Energy & Climate Change (DECC) and the Scottish Government. This web only report will be updated periodically, but the statistics contained within the Energy Statistics Database that accompany this report will be continually updated as the underlying data sources are published. The Energy Statistics Database is available at: http://www.scotland.gov.uk/topics/statistics/browse/business/energy
Energy in Scotland Table of Contents 1 Introduction...3 Scotland s energy and climate change targets... 3 2 The Scottish Energy Industry...6 Energy Employment... 6 Oil and Gas employment... 7 Gross Value Added... 8 North sea oil and gas tax revenue... 9 North sea contribution to GDP...11 Energy Sector Enterprises in Scotland...12 3 Fossil Fuel Extraction... 13 Oil and Gas......13 Production 1970 2010...... 13 Remaining oil and gas reserves... 15 Coal...16 4 Electricity Generation and Supply... 17 Electricity Generation by Source...18 Electricity generated, consumed and transferred...21 Renewable Electricity...23 Electricity from Fossil Fuels...30 Nuclear...31 Combined Heat and Power...32 5 Energy Consumption... 33 Final Energy Consumption...33 Electricity Consumption...34 Gas Consumption...35 Renewable Heat...39 Road Transport...41 6 Energy Prices... 44 Oil Prices...44 Forecasts and Projections...45 Carbon Price...47 Domest ic Energy Bills...48 Prices...... 48 Payment method for household energy bills... 53 Energy prices for industrial consumers......54 Fuel Pov erty...55 Charac teristics associated with fuel poverty... 55 Trends... 56 7 Low Carbon Economy... 57 2
1 Introduction This publication provides a statistical overview of current and historic energy production, transformation, and consumption in Scotland. It includes sections on the economic contribution of the energy sector, fossil fuel extraction, electricity, energy consumption, and energy prices. This report supersedes the Energy in Scotland report which was published in December 2010 in what we anticipate will become an Official Statistics Publication in future years. The energy sector continues to play a key role in Scotland s economy. Since the 1970s, the North Sea oil and gas industry has supported thousands of jobs, both directly and in the wider supply chain. At the same time, Scotland has long been a net exporter of electricity and in the past decade, has led the UK in renewable electricity generation through the rapid expansion of wind power, added to existing output from hydroelectric plants. Renewable electricity generation continues to grow, with onshore wind capacity set to expand and enormous offshore wind, wave and tidal resources ready to be harnessed. Scotland s energy and climate change targets The Scottish Government has set emissions reduction targets that are supported by targets for renewable energy. Achieving these outcomes will require ambitious changes in energy generation and use. The Climate Change (Scotland) Act 2009 sets a target of 80% reduction of greenhouse gas emissions on 1990 levels by 2050. The interim target for 2020 is a 42% reduction on 1990 levels. The Scottish Government s Climate Change Delivery Plan (June 2009) identified two transformational outcomes for the energy sector: These outcomes have been reinforced in numerous documents since and will be reemphasised in the forthcoming Electricity Generation Policy Statement. a largely decarbonised electricity generation sector by 2030; and, a largely decarbonised heat sector by 2050 with significant progress by 2030. We published our 2020 Routemap for Renewable Energy in Scotland 1 in June this year. Because the pace of renewables development has been so rapid in Scotland, and because we have a potential resource capable of powering Scotland several times over, the Renewables Routemap commits to new renewable energy and electricity targets of 30% and 100% respectively see Box 1. 1 http://www.scotland.gov.uk/publications/2011/08/04110353/0 3
Our new electricity target is to generate the equivalent of 100% of Scotland's own electricity demand from renewable resources by 2020, a target which will require the market to deliver approximately 15-16 GW of installed capacity. This does not mean that Scotland will be 100% dependent on renewables generation, but rather that renewables will form the key part of a wider, balanced electricity mix (including thermal generation supported by Carbon Capture techniques). The 2020 Routemap also places a high priority on achieving our target of 11% of heat demand to be sourced from renewables by 2020 (the current level of renewable heat is around 2.8%). Estimates suggest that heat accounts for around 50% of the current total energy demand in Scotland. The relevant energy targets are as follows: Electricity annual renewable electricity generation to be the equivalent of 100% of gross annual electricity consumption by 2020, with an interim target of 31% by 2011 2. In 2010, the equivalent of 24.1% of gross electricity consumption was from renewable sources, down on 2009. While 2010 saw a record level of renewable capacity operational, the lowest rainfall since 2003 resulted in a drop in hydro generation. However, newly published quarterly data shows a bounce back in 2011, with output in the first three quarters already 94% of the 2010 figure. This issue will be explored in more detail in Chapter 4. Transport 10% share of biofuels in transport petrol and diesel consumption by 2020. Biofuels had a 3.6% share of road fuels in the UK as a whole in 2010. Heat 11% of heat demand to be met from renewable sources by 2020. In 2010, it was estimated that the equivalent of 2.8% was from renewable sources. Many of the lowest-cost emissions reductions can be achieved by lowering excess demand for energy. Energy efficiency measures, such as cavity wall insulation, have the twin benefits of reduced greenhouse gas emissions and lower energy bills. The Scottish Government published the Conserve and Save: Energy Efficiency Action Plan in October 2010 3. The action plan introduces a headline target to reduce Scottish final energy consumption by 12% by 2020 from a 2005 to 2007 baseline. In 2009, the latest year where figures are available, final energy consumption fell by 9.6% on the baseline year, though it should be noted that the global recession and cyclical slowdown in the Scottish economy is likely to be a key driver of this trend. 2 The Scottish Government raised the 2020 target for renewables production from 40% to 50% in November 2007, and further extended it upwards to 80% in September 2010 due to developments in the sector and changing expectations, particularly for the deployment of offshore wind. The target was then increased further to 100% in May 2011. 3 Conserve and Save: Energy Efficiency Action Plan: http://www.scotland.gov.uk/publications/2010/10/07142301/0 4
Box 1 Targets 30% of total Scottish energy consumption from renewables by 2020 Scotland is committed to achieve a headline target of 30% of total Scottish energy use coming from renewables sources by 2020. To achieve this energy target, individual targets on renewable electricity, heat and transport have been established: Electricity Achieve the equivalent of 100% of gross electricity consumption from renewable sources by 2020, with an interim target of 31% by 2011. This target does NOT mean that Scotland will rely on renewables generation alone; on the contrary, additional output will also be generated from a range of cleaner and efficient thermal sources for example incorporating carbon capture and storage (CCS) technology, thus providing a balanced energy mix. Transport To achieve a 10% target for renewable transport by 2020. (In line with a mandatory 10% EU target set for each member state). Heat Significant role for heat in overall energy targets (heat demand accounts for a large proportion of all energy use); target has been set at 11% of heat energy to be supplied from renewable sources by 2020. 12% reduction in total final energy consumption by 2020 (with annual maximum limits) The Climate Change (Scotland) Act 2009 stipulates that the Energy Efficiency Action Plan should set annual energy efficiency targets. Given the uncertainty around both future economic conditions and the rate of installation and uptake of key energy efficiency measures, the most appropriate approach to set annual energy efficiency targets that achieve a path towards the desired 2020 consumption level is to set annual maximum consumption levels. This statistical compendium presents quantitative and qualitative analysis of energy statistics for Scotland. The boxes throughout this report look to provide clarity and help address some common misunderstandings when interpreting energy statistics, particularly in relation to renewable electricity generation. This report was first published on the 13 th of January 2012 and cross refers to a number of Scottish Government policy publications including the forthcoming Electricity Generation Policy Statement. For more information on Scottish Government policies, readers are invited to refer to the relevant policy documents. Hyperlinks to these documents are provided where appropriate. 5
2 The Scottish Energy Industry This chapter presents statistics on employment, economic output, and the number of registered enterprises in Scotland s energy sector. The Energy Key Sector is defined in terms of Standard Industrial Classification Codes see Box 2. Energy Employment In 2010, the energy sector (including water supply) employed 51,000 people. Twenty seven percent of the 189,000 energy jobs in Great Britain are located in Scotland. This relatively high figure reflects the scale of the oil and gas industry presence in Scotland. Figure 2.1 shows energy-sector employee jobs data, disaggregated by broad Standard Industrial Classification (SIC) codes. Figure 2.1: Energy sector employee jobs in 2010 (includes water supply) Mining of coal and lignite (SIC 5) 1,500 5,900 Extraction of crude petroleum and natural gas (SIC 6) Support activities for petroleum and natural gas extraction (SIC 9) 8,000 11,700 18,800 20,800 Scotland GB Manufacture of coke and refined petroleum products (SIC 19) 100 9,800 Electricity, gas, steam and air conditioning supply (SIC 35) 18,900 112,400 Water collection, treatment and supply (SIC 36) 3,600 28,100 0 20,000 40,000 60,000 80,000 100,000 120,000 Number of workers Source: ONS (Business Register and Employment Survey) http://www.ons.gov.uk/ons/rel/bus-register/business-register-employment-survey/2010/stb-bres- 2010.html 6
Oil and Gas employment The industry body Oil and Gas UK provides additional insight into the contribution of the sector by assessing the employment supported in the industry s supply chain and wider economy. The organisation s 2010 economic report estimates that from a total of 440,000 jobs UK-wide in 2010 being supported by the servicing of activity on the UK Continental Shelf (UKCS) and in the export of oil and gas related goods and services, 196,000 of these jobs were estimated to be based in Scotland. Of the Scottish jobs, 110,000 were employed directly by oil and gas companies or in the wider supply chain, with another 45,000 in the export of goods and services. Additionally, 41,000 jobs were supported by economic activity induced by employees spending throughout Scotland. Box 2 Estimating energy employment and GVA Official statistics on the employment and GVA of the energy sector are based on the Standard Industrial Classification (SIC) system. The SIC system is based on an EU designated system of classifying business and organisations according to their main business activity. This approach allows for cross national consistency of definition, and allows for more robust comparisons across geographies and over time. Using the SIC to assign businesses to industrial sectors is the approach adopted for most official business surveys covering issues such as direct employment and economic impact. The SIC system does not however lend itself to measuring non traditional or new industries or sectors that straddle a number of different industries. This is a particular issue associated with both renewable energy and the low carbon economy. The energy sector as defined in the SIC system accounted for 51,000 in employee jobs in 2010. While this will include some renewable energy and low carbon related employment, it remains likely that the majority of jobs actually associated with renewable employment are more likely to fall under other SIC classifications such as construction or manufacturing. There is not however, sufficient resolution within the SIC to identify renewable or low carbon jobs within these other sectors. It is also particularly difficult to attribute renewable or low carbon employment where organisations cover a wider range of business activities. Obvious examples of this could include major utilities such as Scottish Power and Scottish and Southern Energy who are responsible for significant levels of renewable employment but also cover a wide range of nonrenewable energy interests such as Coal and CCGT gas generation. The SIC approach also only provides an estimate of direct employment and does not take into account indirect jobs including the wider supply chain benefits in construction and manufacturing that can arise from the development of new sectors such as renewable energy. 7
This has meant that historical estimates of renewable and low carbon employment have relied on discrete one off commissioned research projects such as the Innovas Low Carbon Environmental Goods and Services Study. Discrete studies of this type allow an assessment of specific aspects of employment such as technology specific analysis and also have the distinct advantage of providing useful information on indirect job creation and wider economic benefits. However these discrete studies do not necessarily lend themselves to consistent comparisons across technologies. For example, direct jobs in offshore wind may also be classed as indirect jobs of onshore wind or other marine technologies. While discrete studies offer numerous benefits, they can be resource intensive and a move to official statistics sources will provide significant opportunities for comparisons over time, geography and sectors. We are currently working with the Office for National Statistics to establish how we can better measure renewable and low carbon employment on a more systematic annual basis. We will provide an update on this situation in the 2013 Energy in Scotland Statistical Compendium. Gross Value Added Table 2.1 shows the available data for economic output of the energy industry, as measured by the most recent gross value added (GVA) statistics. The decrease in GVA, within the Extraction of crude petroleum and natural gas sector, can be attributed to the jump in oil price in 2008 and the subsequent decrease in oil price in 2009 (see Figure 6.1). Table 2.1: Gross Value Added (GVA) ( millions), Scotland 2008 & 2009 Gross Value Added ( million) 2008 2009 Industry Sector - SIC 2007 Based Scotland Scotland Mining of coal and lignite (SIC 5) 88.8 102.2 Extraction of crude petroleum and natural gas (SIC 6) 18,810.5 11,860.0 Support activities for petroleum and natural gas extraction (SIC 9) 2,990.2 2,507.5 Manufacture of coke and refined petroleum products (SIC 19) 9.6 10.7 Electricity, gas, steam and air conditioning supply (SIC 35) & Water collection, treatment and supply (SIC 36) 4,813.6 5,003.2 Total 26,712.7 19,483.6 Source: Scottish Government, Scottish Annual Business Statistics http://www.scotland.gov.uk/topics/statistics/browse/business/sabs 8
Under National Statistics accounting practices, GVA from the offshore oil and gas sector operating in the UK Continental Shelf (UKCS) is not allocated to specific geographic regions within the UK mainland. Instead, the convention is for the UKCS to be included as a (notional) separate region of the UK (the extra- regio territory) in the Office for National Statistics Regional Accounts. The data presented in table 2.1 above is therefore sourced from the Annual Business Survey (ABS) whereby industrial sectors are allocated to UK regions (including Scotland) according to the address at which the business is registered. However, a number of different approaches can be used to allocate a share of economic output to Scotland under various assumptions about the delineation of the oil and gas industry. The Government Expenditure and Revenue Scotland (GERS) 4 report provides two illustrative alternative approaches for estimating Scotland s share of North Sea revenue and Gross Domestic Product that are explained further in the next section. North sea oil and gas tax revenue Between 1981/82 and 2009/10, the UK Government has raised approximately 244 billion in direct tax revenue from oil and gas production after adjusting for inflation (2009/10 prices). The upper line in figure 2.2 shows North Sea tax revenues since 1981-82. Scotland s geographic share of oil and gas production has been estimated by Professor Alex Kemp and Linda Stephen from the University of Aberdeen using the median line principle. The lower line in the chart provides an indicative estimate of Scotland s geographical share of tax revenue based on this principle. This is one of the demarcation methods used in the Scottish Government publication Government Expenditure and Revenue Scotland; a range of other methods are possible. 4 http://www.scotland.gov.uk/topics/statistics/browse/economy/gers 9
The Office for Budget Responsibility (OBR) forecast (as at November 2011) that the North Sea will generate 46.9 billion in tax revenue for the UK Exchequer between 2011/12 and 2015/16. This is lower than previously forecast and the OBR attribute this to a combination of lower than expected oil and gas production and higher expenditure. Figure 2.2: North Sea tax revenues 1981-82 to 2009-10 (2009-10 prices) 30 Total North Sea Tax Revenue Tax revenue billion (2009/10 Prices) 25 20 15 10 5 0 Scottish Geographical Share of North Sea 1981/82 1983/84 1985/86 1987/88 1989/90 1991/92 1993/94 1995/96 1997/98 1999/00 2001/02 2003/04 2005/06 2007/08 2009/10 Source: Scottish Government, 2011, Government Expenditure & Revenue Scotland 2009-10. http://www.scotland.gov.uk/topics/statistics/browse/economy/gers HM Treasury, GDP Deflators. http://www.hm-treasury.gov.uk/data_gdp_fig.htm 10
North sea contribution to GDP Table 2.2 below shows Scottish GDP for the tax years from 2004-5 to 2010-11. Three versions are presented for these statistics. The first version includes only onshore economic output. The second apportions a share to Scotland of UK offshore economic output based on Scotland s share of UK population. The third apportions a share to Scotland based on the median line principle, as explained in the preceding subsection. Table 2.2: Scottish GDP, billion 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Excluding North Sea GDP 95 100 107 114 115 112 118 Including per Scottish capita share of GDP North Sea GDP Including 97 102 109 117 118 114 121 geographic share of North Sea GDP 112 121 128 140 141 132 144 Source: Scottish Government, 2011, Scottish National Accounts Project. GDP data are seasonally adjusted. http://www.scotland.gov.uk/topics/statistics/browse/economy/snap 11
Energy Sector Enterprises in Scotland The total number of energy enterprises in Scotland increased from 355 in 2008 to 370 in 2011. The number of enterprises in mining of coal and lignite (SIC 5) fell from 10 in 2008 to 5 in 2011. The number of enterprises in support activities related to oil and gas extraction (SIC 9) decreased from 170 in 2008 to 160 in 2011. The number of enterprises categorised as electricity, gas, steam and air conditioning supply (SIC 35) increased from 95 in 2008 to 145 in 2011. Figure 2.3: Number of registered energy enterprises in Scotland, 2008 to 2011 Number of enerprises 180 160 140 120 100 80 60 40 20 0 2008 2009 2010 2011 Mining of coal and lignite (SIC 5) Extraction of crude petroleum and natural gas (SIC 6) Support activities for petroleum and natural gas extraction (SIC 9) Manufacture of coke and refined petroleum products (SIC 19) Electricity, gas, steam and air conditioning supply (SIC 35) Water collection, treatment and supply (SIC 36) Source: Scottish Government, 2011, Scottish Corporate Sector Statistics http://www.scotland.gov.uk/topics/statistics/browse/business/corporate As noted in Box 2, it is not yet possible to routinely and systematically estimate the number of enterprises operating in the renewable energy field. The figure above will capture some of these enterprises but, given the lack of a clearly defined renewables classification, it is likely to underestimate the overall number of enterprises operating in the renewables industry. 12
3 Fossil Fuel Extraction Oil and Gas In 2010, the UK was the 15th largest gas producer in the world (3rd in Europe) and 20th largest oil producer (2nd in Europe) producing 810 million barrels of oil equivalent. UK Continental Shelf (UKCS) oil production peaked in 1999, and gas production peaked in 2000. Although production has since declined steadily for both fuels, large resources remain to be extracted. Production 1970 2010 UK oil production reached its highest point in 1999, as shown in figure 3.1. Oil production in 2010 was 63 million tonnes, or slightly under half a billion barrels. Figure 3.1: UK Crude Oil Production, million tonnes* Crude oil production, million tonnes 160 140 120 100 80 60 40 20 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: DECC (2011), DUKES table 3.1.1 *Includes natural gas liquids and feedstocks http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/source/oil/oil.aspx 13
UK gas production reached its highest point in 2000, as shown in figure 3.2. Gross production in 2010 was 665 TWh, or around 360 million barrels of oil equivalent. Figure 3.2: UK Gas Production, TWh 1400 Gas production, TWh 1200 1000 800 600 400 200 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 Source: DECC (2011), DUKES table 4.1.1 *Includes natural gas liquids and feedstocks http://www.decc.gov.uk/en/content/cms/statistics/source/gas/gas.aspx By the end of 2010, over 40 billion barrels of oil equivalent (billion boe) of oil and gas had been extracted in the UK 5. 5 Oil & Gas UK 2011 Economic Report http://www.oilandgasuk.co.uk/economic_report.cfm 14
Remaining oil and gas reserves Oil and Gas UK, the industry body, estimates that 14 to 24 billion boe of oil and gas remained to be recovered from the UK Continental Shelf at the start of 2011 (see figure 3.3). This range is in agreement with the current best estimate of remaining recoverable hydrocarbon resources from the Department of Energy and Climate Change (DECC): a figure of around 20 billion boe. For comparison, UK production of oil and gas in 2010 was 0.8 billion boe. Figure 3.3: UKCS Projected Reserves/Resources 30 Billion barrels of oil equivalent 25 20 15 10 5 Exploration (yet to find) Undeveloped Discoveries Possible Probable Existing Fields & Sanctioned 0 Low Projection High Projection Source: Oil & Gas UK, 2011 Economic Report, high projection above 24 due to rounding http://www.oilandgasuk.co.uk/economic_report.cfm 15
Coal Six million tonnes of coal - around a third of total UK production - was mined in Scotland in 2010, as shown in Figure 3.4. Scottish coal production has declined by slightly over a quarter in the past decade, from 8.2 million tonnes in the year ending March 2000. The decline in the rest of the UK has been much sharper over the same period. Figure 3.4: UK Coal Production UK coal production (million tonnes) Coal production, million tonnes 30 25 20 15 10 5 8.2 26.3 11.2 11.8 6.0 6.0 Scotland Rest of UK 0 Apr 1999-Mar 2000 Jan 2009-Dec 2009 Jan 2010-Dec 2010 Source: The Coal Authority, Coal Mining Production and Manpower Returns Statistics http://www.coal.gov.uk/publications/miningtechnology/index.cfm 16
4 Electricity Generation and Supply The contribution of renewables to the electricity generation mix in Scotland in the past decade has increased rapidly, and is higher than in the rest of the UK. It is set to continue increasing, with significant potential from onshore and offshore wind and from wave and tidal power. Scotland is a net exporter of electricity, with net exports of between 14% and 24% of total generation in each year from 2000 to 2010. Box 3: Energy Terminology Discussions of electricity output of generating plant focus heavily on 3 key factors; the installed capacity of a generating plant, the capacity factor and the output. This section will explain the differences in these terms, and how they are linked. Generating Output: This is the actual output of electricity delivered by a generating plant. Installed Capacity This is the maximum power output at which an electricity generating plant can operate. Manufacturers generally measure the maximum, or rated, capacity of generating plant to produce electric power in megawatts (MW). Capacity Factor 6 This is the actual output delivered by a generating plant over a period of time, expressed as a proportion of the generating plants maximum installed capacity. How much was produced over a period of time, as a proportion of how much could have been produced. Example Calculations: Output is calculated by taking the installed capacity of the plant, multiplying by the number of hours in a year, and then by the capacity factor. So, for a 5MW wind turbine, with a 40% capacity factor; 5MW x 365 days x 24 hours x 40% = 17,520 MWh Capacity is calculated by taking the output as a proportion of the total potential output. 6 While there are technical differences in reality, for the purposes of this simple article the terms load factor and capacity factor are used synonymously. 17
So, a 5MW rated wind turbine above could theoretically produce 43,800 megawatt hours in a year. If the turbine actually produced, for example, 15,000 megawatt hours (MWh), then the capacity factor would be ~34% in that year. The 100% renewable electricity target is defined in terms of the Scottish electricity consumption and is measured in terms of output (MWh). However, language around the target often refers to the estimated installed capacity required to deliver that level of output. The forthcoming Electricity Generation Policy Statement will provide more information on a possible future generation mix in Scotland. Electricity Generation by Source Overall electricity generated in Scotland fell slightly in 2010 from 2009 levels. While coal generation increased from 23.3% in 2009 to 29.5% in 2010, generation from nuclear fell from 32.5% to 30.6% as a consequence of maintenance outages. Gas generation also fell from 18.7% to 16.8%. Overall renewables accounted for 19.1% of total generation in 2010. This was a fall from 20.8% in 2009. As noted in Box 1 the target for 100% renewables is based on gross consumption not total generation - this is further illustrated in Box 4. Over the same period, UK renewable generation as a proportion of total UK generation increased by 0.1% between 2009 and 2010, to 6.8%. 18
However, 2010 saw a continuation of the increases in the level of renewable deployed capacity seen since 2000 with the decrease in output occurring as a consequence of lower than usual levels of rainfall. Following high rainfall in the winters of 2007, 2008 and 2009, the rainfall levels experienced in 2010 were the lowest since 2003. This resulted in a reduction in natural flow hydro generation. Figure 4.1 and 4.2 show the total electricity generated in Scotland and the proportion generated by fuel type respectively in figures 4.1 and 4.2 renewable generation is defined as Hydro Natural Flow and Other Renewables combined. Figure 4.1: Electricity generated in Scotland, 2000 to 2010 Electricity generated, GWh 60,000 50,000 40,000 30,000 20,000 10,000 0 Electricity generated in Scotland, by fuel (GWh) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Other renewables Hydro natural flow Hydro pumped storage Oil Gas Coal * Nuclear Source: DECC, Energy Trends, December 2011, *Coal includes a small amount of nonrenewable waste. http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx { 19
Figure 4.2: Percentage of electricity generated by fuel, 2010 Percentage of generation in 2010 100% 80% 60% 40% 20% 0% Scotland UK { Other thermal Other renewables Hydro natural flow Hydro pumped storage Oil Gas Coal * Nuclear Source: DECC, Energy Trends, December 2011, *Coal includes a small amount of nonrenewable waste. http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx DECC have now indicated that quarterly regional renewable electricity output figures will be published on a quarterly basis. This will allow a more up to date assessment of output activity than was previously possible. The Scottish Government is considering how best to disseminate these statistics and will advise users in due course. 20
Electricity generated, consumed and transferred Scotland typically generates around 50,000 GWh of electricity, as shown in figure 4.3. As a result, Scotland is a net exporter of electricity and has been for a number of years. In 2010, net exports to England and Northern Ireland accounted for 20.8% of total generation. Figure 4.3 shows two measures of electricity consumption both measures are illustrated in more detail in Box 4: Total electricity consumption is calculated as total generation, minus generators own use, losses, and exports. Total electricity consumption was 33,606 GWh in 2010. Gross electricity consumption measures total generation minus net exports. It is equivalent to total consumption plus generators own use plus losses. Gross consumption was 39,515 GWh in 2010. Scotland s renewables targets use this measure; see Box 4. Figure 4.3: Energy generated, consumed and transferred GWh 60,000 50,000 40,000 30,000 20,000 10,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Electricity generated Total electricity consumption Net electricity exports Source: DECC, Energy Trends, December 2011, http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx Gross electricity consumption 21
Box 4 Deriving the 100% Electricity Target Generation Mix (2010) Source Output (GWh) Proportion Generated (%) Coal 14,715 29.5% Oil 1,212 2.4% Gas 8,381 16.8% Nuclear 15,293 30.6% Renewables 9,515 19.1% Other 792 1.6% Total 49,908 100.0% Generation own use (3,508 GWh) and Scottish Electricity Generation (2010) 49,908 GWh Net Exports To rest of UK (10,393 GWh) 21% of Generation Gross Consumption [Total generation less exports plus imports] (39,515 GWh) Renewables proportion of Generation (9,515 GWh/49,908 GWh) 19.1% Useful measure for comparison to UK average and other DA s Renewables proportion of Gross Consumption (9,515 GWh/39,515 GWh) 24.1% This is measure for the SG National Indicator renewables target Transmission/ Distribution Losses (2,401 GWh) Scottish Consumption (33,606 GWh) Reductions in Scottish consumption through energy efficiency measures will have a positive impact for the Scottish targets. Either reducing gross consumption or increasing electricity exports for any given level of generation. 22
Renewable Electricity Installed renewable capacity has risen year on year since 2000 and as shown in Figure 4.4, there has been an increase from 1,400 MW in 2000 to 4,365 MW in 2010. Despite the global recession, 2010 saw an increase in renewable installed capacity of 545 MW, an annual increase of 14%. Figure 4.4: Installed Capacity of renewable electricity in Scotland Installed capacity, MW of electricity 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Other biofuels Sewage Gas Landfill gas Wind (includes a small amount of wave) Hydro 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DECC, Energy Trends, December 2011, http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx 23
As at December 2011, Scottish Renewables report that Scotland had 4.4 GW of installed renewable energy generation capacity, with additional 3.3 GW of capacity either in construction or already consented, the majority of which is expected from wind generation, particularly offshore. Considering pipeline projects in planning or scoping potentially takes this figure to a total of 28.8 GW (see figure 4.5) a 600% increase from the level deployed in December 2010. Figure 4.5: Renewable Capacity in Scotland at various stages of project planning Installed Capacity Under Construction Resolution to Consent In Planning In Appeal In Scoping 4.4 1.1 2.2 4.0 0.5 16.6 0.0 5.0 10.0 15.0 20.0 25.0 30.0 Capacity (GW) Source: Scottish Renewables (21 December 2011) Generation of renewable electricity from non-hydro sources has grown year on year since the start of the century from a starting point of almost zero as shown in figure 4.6. Building upon a long established base of hydro generation, the growth in deployment thus far has been predominantly through onshore wind. However, as recognised in the Renewables Routemap and forthcoming Electricity Generation Policy Statement, Scotland has significant growth opportunities in offshore wind, wave and tidal technologies. As shown in Box 4, Gross Electricity Consumption is defined as total generation excluding exports. In 2010, electricity generated from renewable resources delivered the equivalent of 24.1% of Scottish gross consumption. This was a decline on the previous year due to lower than usual levels of hydro generation. The Scottish Government has set a target to deliver the equivalent of 100% of gross consumption through renewable sources in 2020 with an interim target of 31% in 2011. 24
Early indications from the published DECC regional quarterly generation statistics suggest that 2011 has not only seen a recovery in hydro generation above historical trends but increased deployment of onshore wind including the opening of Clyde which upon completion will temporarily be Europe s largest onshore wind farm prior to the completion of the ongoing expansion of Whitelee which then return to being Europe s largest. As a result we are likely to see 2011 generation delivering a record volume of renewable electricity. Quarterly data for Q1-Q3 of 2011 suggest that the output for the first three quarters of 2011 was already 94% of the 2010 figure and 83% of the previous record year in 2009. For more detail, please see the Statistical Note published at http://www.scotland.gov.uk/resource/doc/933/0124593.pdf. DECC s recent decision to routinely publish quarterly regional data provide an early indication of progress towards the output levels required to deliver the 31% interim target. However, it will not be possible to officially report against the target until the regional consumption data is published in December 2012. We will consider in due course how best to disseminate the quarterly figures to users and will consider options, including a short quarterly update published on the Scottish Government website. Figure 4.6 below shows renewable generation output by technology on the left axis and the percentage of gross consumption on the right axis. The graph highlights the growth in wind output, particularly since 2004 such that in 2010, wind generated more electricity than hydro for the first time. Figure 4.6: Electricity generated from renewables in Scotland Electricity generated, GWh 12,000 10,000 8,000 6,000 4,000 2,000 Other biofuels Sewage Gas Landfill Gas Wind (includes a small amount of wave) Hydro Renewables as a % of gross consumption (right axis) 30% 25% 20% 15% 10% 5% Percentage of gross consumption 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DECC, Energy Trends, December 2011 http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx 0% 25
Box 5 Renewable Output The reduction in hydro output in 2010 led to a reversal in the growing trend of renewables output witnessed each year since 2003. This is likely to be temporary, with renewable output already expanding through 2011. It is recognised that renewable generation is by its nature variable in the shortrun. It is also important to highlight that the transition to low carbon generation is likely to be characterised by a variability around an upward trend in renewable output as developments are brought on line hence the ongoing requirement for thermal and nuclear generation during the transition. It is important not to attribute this variability to intermittency and it would also wrong to confuse intermittency and variability with unreliability. As noted in Box 3, at its simplest, the relationship between the capacity of generation and the output from that generation is dependent on the load factor or capacity factor while there are technical differences for the purpose of this simple article the two are consider synonymous. For traditional thermal generation, the load factor can be considered to be the intensity of use and is typically a consequence of economic decisions driven primarily by the price of fossil fuels and also the relative price of individual fossil fuels. E.g. the load factor for a gas plant will be higher during periods of low gas prices, particularly when gas is cheaper than coal, because it is more economic to dispatch at this point. Recent load factors for thermal generation are estimated in DUKES to have been in the region of 40 70%. Generally speaking the load factor for a thermal plant is determined by a conscious decision taken on the basis of economic influences and is considered to be endogenous derived internally. The relative role of Gas and Coal in the generation mix is generally influenced by the relative price of the fuel inputs. Due to complications associated with shutting down and restarting nuclear generation, shutdowns are minimised where possible. The safety requirements that have to be met during the shutdown/restart process mean that it is economically inefficient to use nuclear generation in a flexible way. As such, according to DUKES 7, nuclear is generally considered to be a baseload option with load factors of 50 70%. As with thermal generation, nuclear load factors are also typically determined by conscious decisions. In contrast, the long run capacity factors for renewable generation are not generally as a consequence of a conscious decisions, rather they are driven by weather patterns and are considered to be exogenous derived externally. i.e. renewable generation will typically dispatch when the rain falls or the wind blows rather than because of an explicit decision to switch on the plant. This 7 http://www.decc.gov.uk/en/content/cms/statistics/publications/dukes/dukes.aspx 26
reliance on weather patterns provides the cause of the intermittency but is also the primary determinant of the load factor for renewable generation. However, during the transition to a low carbon generation mix, human decisions are also likely to be critical to the determination of renewable output and short run load factors at particular points in time. As set out in the forthcoming Electricity Generation Policy Statement, one of the challenges to increased deployment of renewables will be distribution and transmission grid upgrades. The current grid can lead to constraints to the volume of generation, both traditional and renewable, that can be dispatched to the grid. The issue of constraint payments is explored further in Box 7. The planned grid upgrades such as the bootstraps and Beauly to Denny line will help address these constraints but at particular points in time there may be some variability in the output of renewable generation while these developments are taken forward. Whether due to genuine grid constraints or temporary closure of grid to allow for upgrading, as has been seen at Whitelee 8, the short term impact will be a divergence between actual renewable output and measured load factors as compared with potential renewable output and renewable availability from the same capacity. Such effects will however be temporary. 8 Upon completion, Clyde (456MW) and Whitelee (539MW) will be the two largest onshore wind farms in Europe. 27
Figure 4.7 below shows renewable electricity generation broken down by UK country and by energy source. Scotland is the main location for UK hydro generation accounting for almost 89% of installed capacity and 91% of UK hydro output. Scotland also accounts for 48% of UK wind output (49% of capacity). Overall, Scotland accounts for 37% of total UK renewable electricity output in 2010. Figure 4.7: Generation of electricity from renewables in 2010 Hydro Wind and wave Landfill gas Sewage gas Other biofuels Solar PV England Scotland Wales N Ireland 0 2,000 4,000 6,000 8,000 10,000 12,000 Electricity generated, GWh Source: DECC, Energy Trends, December 2011, 22.8 GWh of Microwind are not allocated regionally. http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx 28
Of the devolved administrations and English regions, Scotland has by far the greatest electricity generation from renewables per unit of economic activity as illustrated in Figure 4.8. GVA is used as a proxy for economic activity. Figure 4.8: Renewable electricity generation per unit of GVA, 2010 Scotland Wales Yorkshire and Humber Northern Ireland East of England North East East Midlands North West South East West Midlands South West London UK Total 0 20,000 40,000 60,000 80,000 100,000 Elec generation (kwh) per m of GVA Source: DECC, Energy Trends, September 2011 http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx GVA is provisional gross value added in 2010 workplace based) from ONS, December 2011, http://www.ons.gov.uk/ons/rel/regional-accounts/regional-gross-value-added--income-approach- /december-2011/index.html 29
Electricity from Fossil Fuels Fossil fuel generation in Scotland tends to vary over time and is influenced by a wide range of factors including fossil fuel prices (absolute and relative) and the prevalence of renewable and nuclear generation. In 2010, Scotland had just over 5GW of installed thermal generating capacity, with the coal fired Longannet and Cockenzie power stations making up the majority of this capacity. The gas fired power station at Peterhead accounts for much of the remaining thermal capacity. In 2011, Cockenzie was granted consent to build a new Combined Cycle Gas Turbine (CCGT) power station. In 2010, fossil fuels accounted for almost 49% of Scotland s electricity generation up from 45% in 2009. Coal and gas provide the main fossil fuels used for electricity generation with oil used to a lesser extent. 2010 saw a greater contribution from coal than any year since 2006. Gas production fell to the lowest level since at least the year 2000 (see figure 4.9). Figure 4.9: Electricity generated from fossil fuels 35,000. Electricity generated, GWh 30,000 25,000 20,000 15,000 10,000 5,000 Oil Gas Coal * 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DECC, Energy Trends, December 2011, *coal includes a small quantity of nonrenewable waste. http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx 30
Nuclear DUKES 9 estimates that in 2010 there was just over 2GW of installed nuclear capacity in Scotland, consisting of Torness (1205MW) and Hunterston B (890 MW) nuclear generating stations. In 2010, 30.6% of electricity generated in Scotland came from the two Nuclear power stations. This represented a fall from 32.6% in 2009, largely due to planned maintenance outages. The two nuclear power stations in Scotland are currently due to be decommissioned in 2023 (Torness) and 2016 (Hunterston B) although both may receive plant extensions if the appropriate health and safety requirements can be evidenced. There are no plans for more nuclear power stations in Scotland. Further detail on this situation can be found in the forthcoming Electricity Generation Policy Statement. Figure 4.10: Nuclear electricity generation (GWh) 20,000 Electricity generated, GWh 16,000 12,000 8,000 4,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DECC, Energy Trends, December 2011 http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx 9 http://www.decc.gov.uk/en/content/cms/statistics/publications/dukes/dukes.aspx 31
Combined Heat and Power Combined heat and power (CHP) schemes capture heat from the electricity generation process that would otherwise have been wasted and uses the heat for productive purposes such as space heating. The policy on Combined Heat and Power is explored in more detail in the Electricity Policy Generation Statement. Table 4.1 sets out the current number of CHP schemes, their capacity and output. Almost all Scottish CHP schemes are powered by fossil fuels. In 2010, Scottish CHP schemes generated 2,779GWh of electricity and 6,700 GWh of Heat. Table 4.1: Combined Heat & Power Schemes, 2010 Number of Schemes Electrical capacity MWe* Heat capacity MWth Fuel used* GWh Electricity generated* GWh Heat generated GWh Scotland 95 529 2,772 13,573 2,779 6,700 UK Total 1,568 5,989 10,524 110,323 26,083 47,815 Source: DECC, Energy Trends, September 2011 http://www.decc.gov.uk/en/content/cms/statistics/publications/trends/trends.aspx 32
5 Energy Consumption Final Energy Consumption Scotland has a target to reduce final energy consumption by 12% by 2020. Figure 5.1 shows a reduction in final energy consumption year-on-year from 2005. The data for 2009 shows a significant reduction in final energy consumption compared to 2008 (a fall of 7.4%) and an even greater reduction relative to the 2005-2007 baseline (a fall of 9.6%) - against which the 12% Energy Efficiency Target is measured. Figure 5.1: Scottish Final Energy Consumption Final Energy Consumption (GWh 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000-2005 2006 2007 2008 2009 Industry & Commercial Domestic Transport Source: DECC, Sub-National Energy Consumption Statistics, http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/total_final/total_final.aspx Traditionally, energy consumption per capita in Scotland has been higher compared to other parts of the UK. This is primarily due to Scotland s relatively high consumption in the industrial and commercial sector and higher domestic energy consumption, due in part to the colder climate. Some caution should be exercised when interpreting the 2009 figures and using them to assess long-term progress toward improving energy efficiency. Firstly, the statistics are subject to revision. Secondly, and more importantly, a large part of the decline in 2009 will undoubtedly reflect the temporary impact of the global recession on energy demand rather than a structural shift in energy efficiency. Indeed, such trends have been observed in other economic/environmental variables - for example, greenhouse gas emissions fell by 7% between 2008 and 2009. 33
Electricity Consumption The Department of Energy and Climate Change (DECC) produce a sub-uk analysis of electricity consumption at Government Office Region and Local Authority level. During the final data analysis stages of this work, DECC identified some data issues which require significant further investigation. As a result, the publication of the usual special feature article in the December edition of Energy Trends and accompanying datasets have been delayed. DECC will publish the data on their website as soon as they are confident that the data are robust. The exact date of release will be shown on the National Statistics Publication Hub 10 two weeks in advance of publication. This section will be updated when the DECC data becomes available. To see previous electricity consumption data, please refer to the previous Energy Statistics Compendium 11 10 www.statistics.gov.uk/hub/release-calendar/index.html and also on the DECC website www.decc.gov.uk/en/content/cms/statistics/regional/electricity/electricity.aspx 11 http://www.scotland.gov.uk/topics/statistics/browse/business/energy/report 34
Gas Consumption In 2010, domestic gas consumption per consumer in Scotland stood at 15.9 MWh, a reduction from 16.3 MWh in 2009. This remains the highest of any GB region. The GB average was 15.2 MWh. The charts that follow compare gas consumption per consumer and household in Scotland, Wales and the English regions. As expected, the northern parts of the UK tend to have higher domestic consumption per customer, due to the impact of weather differences on demand for heating fuel (see Figure 5.2) The islands and parts of remote and rural Scotland are off the gas grid. Therefore the gas consumption statistics tend to be presented per customer rather than per household, the per customer figure gives a better indication of the amount of gas used by a typical gas user. Figure 5.2: Domestic gas consumption per customer and household, 2010 (a) Average domestic gas consumption per consumer (2010, kwh) by region, and GB average Scotland Yorkshire and Humber North East North West South East East Midlands East of England West Midlands Wales Greater London South West Great Britain 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 kwh Source: DECC, Sub-national energy consumption statistics http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/regional.aspx 35
Figure 5.3 shows that domestic gas consumption per consumer has decreased in Scotland by 21% between 2005 and 2010. Rising gas prices and improved energy efficiency in homes and boilers were contributing factors to this trend. Figure 5.3: Domestic gas consumption per consumer in Scotland, 2005 to 2010 20,000 20,042 19,245 18,795 18,043 16,302 15,919 15,000 kwh 10,000 5,000 0 2005 2006 2007 2008 2009 2010 Source: DECC, Sub-national energy consumption statistics http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/regional.aspx 36
Total domestic gas consumption between 2005 and 2010 decreased by 14%, as shown in figure 5.4. Over the same period, non-domestic gas sales reduced by 11%. Figure 5.4: Total gas sales across Great Britain, 2005 to 2010 GWh 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2005 2006 2007 2008 2009 2010 Domestic total sales Commercial and industrial total sales Source: DECC, Sub-national energy consumption statistics http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/regional.aspx 37
Figure 5.5 shows that Scotland had the fifth highest industrial and commercial gas consumption per thousand pounds of gross value added (GVA) in 2010, as it did in 2009. Figure 5.5: Industry and Commercial gas sales in Scotland, 2010, Industrial and commercial gas sales kwh per thousand of GVA, 2010 Yorkshire and Humber North East Wales North West Scotland East Midlands West Midlands East of England South West South East Greater London Great Britain 0 50 100 150 200 250 300 kwh per thousand of GVA Source: DECC, Sub-national energy consumption statistics http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/regional/regional.aspx GVA is provisional gross value added in 2010 (workplace based) from ONS, December 2011, http://www.ons.gov.uk/ons/rel/regional-accounts/regional-gross-value-added--income-approach- /december-2011/index.html Notes on gas data: The gas data are weather corrected; that is, the consumption figure is revised downward in cold years and upwards in hot years, to isolate changes in demand that are not due to year-to-year weather variation. Gas used by power stations and some large industrial users, as well as a relatively small quantity of gas that is not supplied through the National Transmission System, is excluded from these statistics. A major limitation of the gas consumption data is that it is not possible to accurately determine which consumers are domestic. All consumers using less than 73,200 kwh are assumed to be domestic. This method 38
misallocates many small businesses to the domestic sector, and some households to the non-domestic sector. Renewable Heat Heat is estimated to account for approximately half of Scotland s total energy use. Switching from fossil fuel to renewable sources of heat has the potential to reduce greenhouse gas emissions, and make a significant contribution to Scotland s overall renewable energy target. The Renewable Heat Action Plan 12 set a target of delivering 11% of Scotland s projected 2020 heat demand from renewable sources, amounting to some 6.4TWh, is estimated to require an installed capacity of circa 2.1GW. Renewable Heat is simply heat produced from low carbon renewable sources such as biomass, heat pumps (ground source, air source and/or water source), heat from waste biomass and anaerobic digestion, including bio-gas, solar heating, wind to heat and geothermal heat. It can be produced as either heat only or Combined Heat and Power (CHP) but for the purposes of this report, does not include heat produced from renewable electricity. Table 5.1 sets out the most recent estimate of renewable heat capacity and output in Scotland. In 2010, biomass accounted for over 80% of renewable heat capacity and over 90% of renewable heat output. The result of this update to the renewable heat database shows an estimated 1,696 GWh of renewable heat, which equates to approximately 2.8% of Scotland s forecast heat demand in 2020. Table 5.1: Scottish Renewable Heat Capacity and Output, 2010, by technology 2010 total capacity (MW) 2010 total output (GWh) Biomass primary combustion 203 941 Biomass CHP 138 601 Waste treatment (energy from waste, landfill gas & anaerobic digestion) 23 74 Solar Thermal 17 9 GSHP 24 60 ASHP 5 11 WSHP 0.1 0.1 TOTAL 411 1,696 Source: Renewable Heat in Scotland, 2010 A report by the Energy Saving Trust for the Scottish Government, http://www.scotland.gov.uk/topics/business-industry/energy/energy-sources/19185/heat/rhis 12 http://www.scotland.gov.uk/publications/2009/11/04154534/0-2010 and 2011 updates also available 39
Figure 5.6 shows the two most recent estimates of renewable heat output in Scotland 13, demonstrating that renewable heat output has doubled between the measurement in 2008/09 and 2010. Figure 5.6: Scottish Renewable Heat Output, 2008/09, 2010 and 2020 Target 7,000 6,000 5,000 (GWh) 4,000 3,000 2,000 1,000 0 Output in 2008/09 Output in 2010 2020 Target Source: Renewable Heat in Scotland, 2010 A report by the Energy Saving Trust for the Scottish Government, http://www.scotland.gov.uk/topics/business-industry/energy/energy-sources/19185/heat/rhis 13 http://www.scotland.gov.uk/topics/business-industry/energy/energysources/19185/heat/rhis & http://www.sd-commission.org.uk/publications.php?id=1015 40
Road Transport As figure 5.7 shows, road transport fuel consumption per capita in Scotland is similar to the overall UK level. Figure 5.7: Road Transport energy consumption in 2009, tonnes of fuel, per 1000 of population Buses Diesel Cars Petrol Cars Motor-cycles HGV Diesel LGV Petrol LGV Scotland UK 0 100 200 300 400 500 600 700 Tonnes of fuel per 1000 of population Source: DECC, Regional and local authority road transport consumption statistics, http://www.decc.gov.uk/en/content/cms/statistics/regional/road_transport/road_transport.aspx 41
Figure 5.8 shows that from 2005 to 2009 total personal transport fuel consumption fell by 4.9%, while over the same period freight consumption increased by 0.6%. Across the UK total fuel consumption for personal and freight transport reduced by 6.1% and 4.9% respectively over the same period. Figure 5.8: Road transport energy consumption Thousand tonnes of fuel 2,500 2,000 1,500 1,000 500 0 2005 2006 2007 2008 2009 Personal Freight Source: DECC, Regional and local authority road transport consumption statistics, http://www.decc.gov.uk/en/content/cms/statistics/regional/road_transport/road_transport.aspx 42
Figure 5.9 shows that since 2007, total vehicle kilometres on Scotland s roads has reduced year on year. Figure 5.9: Traffic on all roads in Scotland, million vehicle km 50,000 Million vehicle kilometres 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Heavy goods vehicles Light goods vehicles Buses Two-wheeled vehicles Cars 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Scottish Government, Motor traffic on all roads by vehicle type: 1993-2009 http://www.scotland.gov.uk/transtat Scotland has a renewable transport target of 10% for the share of biofuels in transport petrol and diesel consumption by 2020. Biofuels were 3.6% as a percentage of road fuels consumed in the UK in 2010, rising from 2.9% the previous year 14. Regional data are not yet available. 14 http://www.decc.gov.uk/assets/decc/statistics/source/renewables/et6_2.xls 43
6 Energy Prices Oil Prices Wholesale oil prices can be volatile in the short-term. Since 2011, despite this volatility, oil prices have been on a rising trend, with a peak price of approximately $134 in July 2008. The wholesale oil price then fell to approximately $42 at the height of the downturn in December 2008, due to the impact of the recession but has since risen rapidly, as Figure 6.1 demonstrates. Projections of future oil prices have a high degree of uncertainty. Figure 6.1: Crude Oil price, Dated Brent Monthly Price, not adjusted for inflation 160 140 120 Crude Oil (petroleum); Dated Brent - Monthly Price (US Dollars per Barrel) Crude Oil (petroleum); Dated Brent - Monthly Price (Pound Sterling per Barrel) 100 80 60 40 20 0 May-11 Nov-10 May-10 Nov-09 May-09 Nov-08 May-08 Nov-07 May-07 Nov-06 May-06 Nov-05 May-05 Nov-04 May-04 Nov-03 May-03 Nov-02 May-02 Nov-01 Source: Index Mundi, 2011 44
Forecasts and Projections Figure 6.2 shows a range of independent forecasts made between May and November 2011, of the annual average price per barrel of oil in 2011 and 2012, as published by HM treasury. The average of the forecasts shown for 2011 was $108, and $102 for 2012. Figure 6.2: Forecast Oil Price 2011 and 2012 (Brent, $/bbl) Forecast Oil Price in 2012 Forecast Oil Price in 2011 Beacon Economic Forecasting British Chambers of Commerce Capital Economics CBI CEBR Citigroup Commerzbank Daiwa Capital Markets EC Economic Perspectives EIU Experian Business Strategies Goldman Sachs IHS Global Insight ING Financial Markets NIESR Nomura OECD Oxford Economics RBS Global Banking & Markets Societe Generale Standard Chartered Bank 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 Dollars per barrel Source: HM Treasury, Forecast for the UK Economy, November 2011 http://www.hm-treasury.gov.uk/data_forecasts_index.htm 45
Figure 6.3 shows the reference case used by the US Energy Information Administration (EIA) as a basis for long term projections in International Energy Outlook 2011. To reflect the uncertainty in future prices, the report includes low and high price scenarios. By 2020, the oil price in the high scenario is over 3 times higher than the price in the low scenario. Figure 6.3: EIA World Oil Price Projections (2009 to 2035) 250 Constant 2009 USD per Barrel 200 150 100 50 Reference Low Oil Price High Oil Price 0 2035 2030 2025 2020 2015 2009 Source: EIA 2011 International Energy Outlook 2011 46
Carbon Price The European Union ETS, launched in 2005, is a cap and trade scheme, designed to limit the total amount of certain greenhouse gases that participants can emit, with a declining cap to 2020. The emissions cap is divided into allowances (EUA), each of which permit the holder to emit one tonne of CO 2. If a participant has more allowances than is required, it can sell its excess allowances for the market price. This incentivises participants to reduce their emissions if they can do so for less than the market value of the allowances. DECC have updated their carbon valuation to include both the traded (EU ETS) and non-traded sectors, based on the assumption that meeting emissions targets in these sectors are not equal. After 2030, it is assumed a global carbon market exists, applicable to both sectors (see Figure 6.4) Figure 6.4: DECC Traded and Non-traded Carbon Valuation Constant 2011 350 300 Real 2011 250 200 150 100 Traded - Low Traded - Central Traded - High Non traded - Low Non traded - Central Non traded - High 50 0 2050 2045 2040 2035 2030 2025 2020 2015 2010 2008 Source: DECC, Carbon Valuation, October 2011, http://www.decc.gov.uk/en/content/cms/emissions/valuation/valuation.aspx 47
Domestic Energy Bills Prices Domestic energy prices increased significantly from 2004 to 2010 in real terms. The price rises announced by the Big 6 suppliers towards the end of 2011 will have led to further increases, but are not yet reflected in this data. The average direct debit domestic gas bill in Scotland increased in real terms by approximately 77% over this period, as shown in figure 6.5. The average direct debit electricity bill rose by approximately 31% in real terms over the same period, as shown in figure 6.6. Both charts include VAT. See Box 6 for a discussion on the drivers behind recent increases in domestic energy bills. Figure 6.5: Average annual standard domestic gas bill including VAT, assuming 18,000 kwh used, year 2005. Constant year - 2005 800 700 600 500 400 300 200 Prepayment - Scotland Prepayment - England & Wales Standard Credit - Scotland Standard Credit - England & Wales Direct debit - Scotland Direct debit - England & Wales 100 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DECC Energy Statistics: Prices http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx 48
Figure 6.6: Average annual standard domestic electricity bill including VAT, assuming 3,300 kwh used, year 2005. 450 400 350 Constant year - 2005 300 250 200 150 100 50 Prepayment - Scotland Prepayment - England & Wales Standard Credit - Scotland Standard Credit - England & Wales Direct debit - Scotland Direct debit - England & Wales 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: DECC Energy Statistics: Prices http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Average domestic energy bills in 2010 are shown in table 6.1. As noted above, these figures will be higher for 2011. Note that unlike the charts above these prices are not adjusted for inflation. Table 6.1: Average domestic bills including VAT, 2010, cash terms. Gas (assumes consumption of 18,000 kwh) Standard electricity (assumes consumption of 3,300 kwh) Standard Credit Direct Debit Prepayment E & W Scotland E & W Scotland E & W Scotland 682 673 640 628 683 680 431 457 395 414 441 459 Economy 7 electricity (assumes consumption of 6,600 kwh, of which 3,600 674 736 624 670 661 682 kwh off-peak) Source: DECC Energy Statistics: Prices http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx 49
The recent increases in fuel prices from 2004 onwards follow a period of around 20 years of declining prices, as the UK data in figure 6.7 illustrates. It also demonstrates the variability in fuel prices in the domestic sector. Heating oils and Petrol & Oil increased significantly between 2009 and 2010, while all other fuel types experienced a reduction over the same period. Figure 6.7: Fuel Price indices in the domestic sector, real terms (2005 = 100). Vat included where applicable. 200 180 160 140 Coal and smokeless fuel Gas Electricity Heating Oils Fuel and Light Petrol and Oil Index 2005 =100 120 100 80 60 40 20 0 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 Source: DECC Energy Statistics: Prices http://www.decc.gov.uk/en/content/cms/statistics/energy_stats/prices/prices.aspx Box 6 Energy Bills 2011 saw the announcement of substantial increases to the average electricity and gas bill by the Big 6 energy companies. This box adopts evidence from the Committee on Climate Change (CCC), Ofgem and Department for Energy & Climate Change (DECC) to discuss what a dual fuel bill is comprised of, the drivers behind the recent increases, and what this means for the future of energy bills. What makes up a domestic gas and electricity bill? Ofgem 15 have demonstrated that almost two thirds of household electricity and gas bills are comprised of wholesale energy, supply and profit margin 15 http://www.ofgem.gov.uk/media/factsheets/documents1/updatedhouseholdbillsjan11.pdf 50
Distribution charges account for approximately 20% of bills, while environmental charges are 4% of an average gas bill and 10% of an average electricity bill. Why Are Energy Bills Rising? Analyses by the CCC and Ofgem highlight that the major driver behind the increase in dual fuel bills in recent years has been increasing wholesale oil and gas prices. During periods of high demand, in order to attract gas from Europe, the GB gas price has to rise to at least the same point as EU prices. Furthermore, as wholesale electricity costs contain fuel costs, changes in gas prices have a significant impact on the electricity price. Ofgem 16 indicate that the wholesale cost of gas this winter is approximately 40% higher than the cost in the previous winter. The CCC recently published evidence 17 highlighting that bills for gas and electricity rose by 445 between 2004 and 2010. They found that 64% (approx. 285) of this rise was the result of increases in wholesale costs. In contrast, around 75 was due to the policies that support investment in low carbon power generation and funding energy efficiency improvements in homes. 16 http://www.ofgem.gov.uk/media/factsheets/documents1/why%20are%20energy%20price s%20rising_factsheet_108.pdf 17 http://www.theccc.org.uk/reports/household-energy-bills 51
What impact does a transition to a low carbon energy mix mean for future energy bills? There is a great deal of focus on the expected impact on energy bills as a result of Scotland having an increasing amount of renewable generation on the system. DECC have produced estimates 18 of the impact of energy and climate change policies on average household energy bills in 2020. This analysis shows that policies are estimated to add 280 to consumer bills by 2020. However, this is only half the picture. The impact of these policies will lead to an estimated reduction in cost over the same period of 373. As a result, by 2020 an average energy bill would be 7% lower because of the energy and climate change policies established. Ofgem s Project Discovery 19 also highlighted the impact on consumer bills of a changing energy market. They demonstrated that across a range of scenarios that customers bills would rise, but that the smallest increase in bills would be in a scenario with a healthy expansion in the amount of renewables in the generation mix. 18 http://www.decc.gov.uk/en/content/cms/meeting_energy/aes/impacts/impacts.aspx 19 http://www.ofgem.gov.uk/markets/whlmkts/discovery/pages/projectdiscovery.aspx 52