UK gas supply and prices for winter 2013/14

Yeah, yeah, I know summer's not even started yet, but the UK gas markets are already planning ahead to next winter. Time to take a first look at how things are shaping up...

As you will remember, winter dragged on a bit this year in the UK, and it was only seven weeks ago that our gas supplies were running on empty. As I noted at the time, this leaves us with a problem, as there is now not enough time to easily refill the long range gas storage before next winter, as there are technical limits to how fast gas can be injected back into the store at Rough.

To illustrate the problem here's a graph showing long range gas stock levels for the past few years (click for a larger version):

As you can see, we are starting from an all-time low and are several weeks behind the next worst case (which was 2010). Here's another graph showing the rate at which gas has been injected into Rough since the cold weather stopped:

Centrica have actually been making a good effort to get gas in there as fast as possible, actually setting a new record on 1 May, but there have still been some blips due to cold weather or other issues that have slowed things down.

So how has this been affecting price? The exceptionally low storage level following last winter represents itself as extra demand in the gas market between now and next winter, so it's no surprise that average wholesale prices are up 23% for the year to date compared to 2012:

This can only translate into higher bills eventually, although the bumper profits made last winter may result in a short delay before this happens. Boosted gas prices will feed through into electricity prices too.

So what can you do? Well, the message hasn't changed - insulate and draught-proof your house, upgrade your heating controls and thermostats, get a new boiler if you need to. Switching supplier will make little difference, especially in the long run, so the only answer is to use less gas.

I'll post more updates over the summer when I see how things are going in preparation for the coming winter.

Mike

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UK Energy Trends: the decline continues

A couple of days ago the latest UK government Energy Trends publication was released by DECC. As is now normal, it does not make cheery reading...

Production

Here's the headline figures for 2012 UK energy, compared to 2011:

• Total energy production down 10.5%
• Oil production down 14.5%
• Gas production down 14%
• Coal production down 10%
• Hydro, wind and solar generation up 21%

So, bad news on fossil fuel production, but at least renewables are growing. But note that even after this growth, renewables only supplied 11% of electricity in 2012, and a much smaller percentage of total energy, so there's still some work to do there!

There are also figures focused on the fourth quarter of 2012, comparing it to Q4 2011. The results there are even worse than for the year as a whole:

• Total energy production down 14%
• Oil production down 20%
• Gas production down 21%
• Coal production down 10%
• Hydro, wind and solar generation up 7.5%

Gas production was much lower due in part to the leak at the Elgin platform, which is now gradually coming back into production, so hopefully the decline through 2013 won't be quite so severe. However, gas demand will be increasing, due to the closure of coal-fired power stations.

Imports

Here's the figures for how much we were importing, given for 2012 as a whole and then for Q4 2012:

• 43% of all energy was imported through 2012, rising to 48.7% in Q4
• About 39% of oil demand was met by imports, falling to 36% in Q4 as refinery demand reduced after the closure of Coryton refinery
• About 47% of gas demand was met by imports, rising to 55% in Q4
• About 70% of coal demand was met by imports, falling to 64% in Q4

Of course, the declines in oil and gas production are not just down to depletion, there have also been various technical problems and accidents, as well as maintenance. But these events are not one-offs, they happen every year as our energy infrastructure ages...

We're also a net importer of petroleum products, such as petrol, diesel and jet fuel, after the Coryton refinery shut last year - so the reduction in oil import dependency was offset by an increase in dependency on imports of the finished products.

Electricity

Looking at electricity in more detail, a few key points are worth noting:

• Coal's share of electricity generation increased from 29.5% in 2011 to 39.3% in 2012, while gas went in the opposite direction, from 39.9% to 27.5%. This was due to price variations and upcoming carbon taxes for burning coal, combined with the remaining hours left to run on coal plants opting out of compliance with the LCPD. As many of these plants are closing during 2012 (some have already closed), the balance may be expected to swing from coal back to gas again in 2013.
• Net imports of electricity doubled from 2011 to 2012, and represented 3.4% of total supply.
• Installation of renewable energy capacity is still going ahead quickly, and new record generation was recorded, but it is still a relatively small proportion of overall energy.

Summary

Well, what can I say? We're producing less, importing more, but only using a little bit less energy. With the various ongoing gas supply problems I've been reporting on this blog, it is imperative that the whole of the UK takes action to reduce energy use, particularly for heating and electricity, before we get to winter 2013/14. The alternative is that we pay more. A lot more.

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