8. Electricity

Key data

(2017)

Electricity generation: 335.5 TWh (natural gas 40.8%, nuclear 21.0%, wind 14.9%, biofuels and waste 10.7%, coal 6.9%, solar 3.4% hydro 1.8%, oil 0.5%) -14.6% since 2007

Electricity net imports: 14.8 TWh (imports 18.2 TWh, exports 3.4 TWh)

Installed capacity: 103.5 GW Peak demand (2016): 61 GW

Electricity consumption: 307.9 TWh (residential 34.2%, commercial 31.8%, industry 30.1%, energy sector 2.3%, transport 1.6%)

Overview

In 2017, electricity accounted for 20% of the total final consumption (TFC) of energy in the United Kingdom, the third-largest final energy source after oil and natural gas. Electricity demand has declined in the past decade, similar to the overall trend for TFC.

In 2017, natural gas was the first fuel and accounted for 41% of electricity generation (Figure 8.1). Nuclear was the second largest power source. In recent years, electricity from renewable energy sources (RES), mainly wind, biofuels and solar, increased to reach 30% in 2017, above the UK’s 2020 target, whereas the contributions of oil and coal in electricity supply have sharply fallen. In 2018, the installed RES capacity for the first time overtook fossil fuel capacity. By 2030, the United Kingdom expects more than 50% of its electricity generation to come from variable wind and solar, which will require the mobilisation of all flexibility sources, including from demand response, storage, flexible generation capacity, and as interconnectors. Great Britain is interconnected with France, Ireland, and the Netherlands and higher wholesale prices have increased imports from the European continent. Given the planned interconnector investments, the United Kingdom is to import about 20% of today’s generation by 2025.

The Electricity Market Reform of 2012 radically changed the wholesale market design. Based on the lessons learned, the government has refined the design over time. Amid increasing electricity prices, the government is taking action in the retail market and introduced a temporary retail price cap to protect vulnerable customers. Price caps are likely to distort the market. An exit strategy is needed, based on a solid and regular assessment of the retail and wholesale market performance.

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