| KN40025 |
| KEY NOTE Plus : Energy Industry : March 2005 |
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This report covers: The Energy Industry
| Executive Summary |
| 1. Market Overview |
| REPORT COVERAGE |
| The Oil Industry |
| The Gas Industry |
| The Electricity Industry |
| The Nuclear Industry |
| The Coal Industry |
| Renewable Energy |
| Combined Heat and Power |
| REPORT BACKGROUND |
| Primary and Secondary Fuels |
| Demand for Primary Fuels |
| Table 1.1: UK Demand for Primary Fuels (000 tonnes oil equivalent), 2003 |
| Consumption of Primary and Secondary Fuels |
| Table 1.2: UK Consumption of Primary and Secondary Fuels by Sector (%), 2003 |
| Table 1.3: UK Consumption of Primary and Secondary Fuels Within the Major User Sectors by Type of Fuel (%), 2003 |
| ECONOMIC TRENDS |
| Population |
| Table 1.4: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003 |
| Gross Domestic Product |
| Table 1.5: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 |
| Unemployment |
| Table 1.6: Actual Number of Unemployed Persons in the UK (million), 1999-2003 |
| MARKET SIZE |
| Table 1.7: UK Market Value of Inland Energy Consumption by Sector (£m), 2003 |
| Table 1.8: UK Market Value of Inland Energy Consumption by Fuel Type (£m), 2003 |
| KEY TRENDS |
| Primary Fuel Production |
| Table 1.9: UK Production of Primary Fuels by Volume (million tonnes oil equivalent), 1980, 1990 and 2000-2003 |
| Energy Consumption |
| Table 1.10: UK Inland Energy Consumption by Volume (million tonnes oil equivalent), 1980, 1990 and 2000-2003 |
| Table 1.11: UK Primary Energy Consumption by Volume (million tonnes oil equivalent), 1980 and 2003 |
| Fuel Prices |
| Industrial Sector |
| Table 1.12: UK Fuel Price Indices for the Industrial Sector (1990=100), 1990-2004 |
| Retail Sector |
| Table 1.13: Fuel Components in the UK Retail Prices Index (current fuel price index 1990=100), 1990-2004 |
| Household Expenditure |
| Table 1.14: UK Total Household Expenditure on Energy at Current Prices (£m), 2003 |
| INDUSTRY STRUCTURE |
| Employment |
| Table 1.15: Employment in the UK Energy Industries (000), 2001-2003 |
| KEY TRADE ASSOCIATIONS |
| Energy Industries Council |
| Energy Information Centre |
| Energy Institute |
| MARKETING ACTIVITY |
| Main Media Advertising Expenditure |
| Table 1.16: Main Media Advertising Expenditure by Gas and Electricity Companies (£000), Year Ending September 2004 |
| BUYING BEHAVIOUR |
| GLOBAL PERSPECTIVE |
| Global Perspective |
| FORECASTS |
| Table 1.17: UK Primary Energy Demand Projections (million tonnes oil equivalent) 2005, 2010, 2015 and 2020 |
| 2. PEST Analysis |
| POLITICAL |
| Future Energy Portfolio |
| Security of Gas Supply |
| Sources of Gas |
| The International Energy Market |
| ECONOMIC |
| Investment in the UK Energy Industry |
| Rising Energy Costs |
| Climate Change Levy |
| SOCIAL |
| Fuel Poverty |
| Marketing of Gas and Electricity |
| Rising Energy Prices |
| Dual Fuel Supplies |
| TECHNOLOGICAL |
| Clean-Burn Technology |
| Generating Plants |
| Renewable Energy |
| Remote Metering |
| 3. Competitor Analysis |
| INTRODUCTION |
| MARKET LEADERS |
| BP PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| Centrica PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| EDF Energy PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| E.ON UK PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| RWE npower PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| Scottish Power PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| The Shell Transport and Trading Company PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| UK Coal PLC |
| Company Structure |
| Activities and Strategy |
| Financial Results |
| 4. The Oil Industry |
| INTRODUCTION |
| KEY TRENDS |
| Production and Reserves of Primary Oils |
| Table 4.1: UK Production of Primary Oils by Volume (million tonnes oil equivalent), 1980, 1990 and 2000-2003 |
| Table 4.2: Estimates of Oil Remaining in UKCS Reserves in Present Discoveries (million tonnes oil equivalent), 1980, 1990 and 2000-2003 |
| Supply and Demand in Primary Oils |
| Table 4.3: UK Supply of and Demand for Primary Oils by Volume (000 tonnes), 2001-2003 |
| Crude Oil Production |
| Table 4.4: UK Production of Crude Oil by Volume (000 tonnes and %), 2001-2003 |
| Supply and Demand of Petroleum |
| Table 4.5: UK Supply of and Demand for Petroleum Products by Volume (000 tonnes), 2003 |
| MARKET SIZE |
| By Value |
| Sales |
| Table 4.6: Total UK Sales of Oil and Gas by Type by Value (£m), 1993-2003 |
| Revenue from Taxes and Royalties |
| Table 4.7: Taxes and Royalties Attributable to UK Oil and Gas Production by Value (£m), 1991/1992 to 2004/2005 |
| Inland Consumption of Crude Oil |
| Table 4.8: Basic Value of UK Inland Consumption of Crude Oil (£m), 2001-2003 |
| Table 4.9: Market Value of UK Inland Consumption of Crude Oil (£m), 2001-2003 |
| Inland Consumption of Petroleum Products |
| Table 4.10: Basic Value of UK Inland Consumption of Petroleum Products (£m), 2001-2003 |
| Table 4.11: Market Value of UK Inland Consumption of Petroleum Products (£m), 2001-2003 |
| Overseas Trade |
| Crude Oil |
| Exports |
| Table 4.12: UK Exports of Crude Oil by Volume and Value (000 tonnes and £m), 2001-2003 |
| Imports |
| Table 4.13: UK Imports of Crude Oil by Volume and Value (000 tonnes and £m), 2001-2003 |
| Petroleum Products |
| Exports |
| Table 4.14: UK Exports of Petroleum Products by Volume and Value (000 tonnes and £m), 2001-2003 |
| Imports |
| Table 4.15: UK Imports of Petroleum Products by Volume and Value (000 tonnes and £m), 2001-2003 |
| SUPPLY STRUCTURE |
| Table 4.16: Distillation Capacity of UK Refineries by Volume (million tonnes oil equivalent), 2002 |
| Distribution |
| Table 4.17: Inland Deliveries of Selected Petroleum-Based Products by Volume (000 tonnes and %), 1999-2003 |
| Key Trade Associations |
| Association of British Offshore Industries |
| Energy Institute |
| Offshore Contractors' Association |
| UK Offshore Operators Association |
| MAJOR PLAYERS |
| BP PLC |
| ExxonMobil |
| The Shell Transport and Trading Company PLC |
| Total SA |
| BUYING BEHAVIOUR |
| Table 4.18: Demand for Petroleum Products by Use by Volume (000 tonnes), 2001-2003 |
| FORECASTS 2004 TO 2009 |
| Table 4.19: UK Oil Production Projections (million tonnes), 2004-2009 |
| Table 4.20: UKCS Oil and Gas Capital Expenditure Plans by Category (£bn at 2003 prices), 2004-2008 |
| 5. The Gas Industry |
| INTRODUCTION |
| KEY TRENDS |
| Production and Reserves of Gas |
| Table 5.1: UK Production of Natural Gas by Volume (million tonnes of oil equivalent), 1980, 1990 and 2000-2003 |
| Table 5.2: Estimates of Remaining Gas Reserves in Present Discoveries (billion cubic metres), 1980, 1990 and 2000-2003 |
| Gas Supply and Demand |
| Table 5.3: UK Supply of and Demand for Natural Gas and Colliery Methane (gigawatt hours), 1999-2003 |
| MARKET SIZE |
| By Value |
| Inland Consumption of Natural Gas |
| Table 5.4: Basic Value of UK Inland Consumption of Natural Gas (£m), 2001-2003 |
| Table 5.5: Market Value of UK Inland Consumption of Natural Gas (£m), 2001-2003 |
| Overseas Trade |
| Table 5.6: UK Imports and Exports of Natural Gas by Volume (gigawatt hours), 1999-2003 |
| Table 5.7: UK Imports and Exports of Natural Gas by Value (£m), 2001-2003 |
| supply STRUCTURE |
| Key Trade Associations |
| Gas Forum |
| Society of British Gas Industries |
| MAJOR PLAYERS |
| BG Group PLC |
| Centrica PLC |
| EDF Energy PLC |
| E.ON UK PLC |
| National Grid Transco PLC |
| RWE npower PLC |
| Scottish and Southern Energy PLC |
| Scottish Power PLC |
| BUYING BEHAVIOUR |
| Table 5.8: UK Demand for Natural Gas and Colliery Methane by Sector by Volume (gigawatt hours), 2001-2003 |
| FORECASTS 2004 TO 2009 |
| Table 5.9: Forecast UKCS Gas Production Projections (billion cubic metres), 2004-2009 |
| 6. The Electricity Industry |
| INTRODUCTION |
| KEY TRENDS |
| Fuel Used for Electricity Generation |
| Electricity Generated by Fuel Type |
| Table 6.1: UK Fuel Input for Electricity Generation by Volume (000 tonnes oil equivalent), 1999-2003 |
| Table 6.2: Electricity Generated in the UK by Fuel Type (%), 1990 and 2003 |
| Table 6.3: Electricity Generated in the UK by Fuel Type (terrawatt hours), 1990 and 2000-2003 |
| MARKET SIZE |
| By Value |
| Inland Consumption |
| Table 6.4: Basic Value of UK Inland Consumption of Electricity (£m), 2001-2003 |
| Table 6.5: Market Value of UK Inland Consumption of Electricity (£m), 2001-2003 |
| SUPPLY STRUCTURE |
| Key Trade Associations |
| Association of Electricity Producers |
| Energy Networks Association |
| Energy Retail Association |
| MAJOR PLAYERS |
| Centrica PLC |
| EDF Energy PLC |
| E.ON UK PLC |
| National Grid Transco PLC |
| RWE npower PLC |
| Scottish and Southern Energy PLC |
| Scottish Power PLC |
| United Utilities PLC |
| Viridian Group PLC |
| FORECASTS 2005 TO 2008 |
| Table 6.6: Projected Fuel Use for Electricity Supply (million tonnes oil equivalent), 2005-2008 |
| 7. The Nuclear Industry |
| INTRODUCTION |
| Nuclear-Power Plants |
| Fuel Cycle |
| Nuclear Waste Management |
| Decommissioning |
| KEY TRENDS |
| Nuclear Input for Electricity Generation |
| Table 7.1: Nuclear Fuel and Total Fuel Input for Electricity Generation in the UK by Volume (000 tonnes oil equivalent and %), 1999-2003 |
| Electricity Generated by Nuclear Fuel |
| Table 7.2: Electricity Generated in the UK by Nuclear Fuel and All Fuel (terrawatt hours and %), 1990 and 2000-2003 |
| MARKET SIZE |
| SUPPLY STRUCTURE |
| Key Trade Association |
| Nuclear Industry Association |
| MAJOR PLAYERS |
| British Energy PLC |
| British Nuclear Fuels PLC |
| FUTURE PROSPECTS |
| 8. The Coal Industry |
| INTRODUCTION |
| Types of Coal and Methods of Production |
| KEY TRENDS |
| Coal Production |
| Table 8.1: UK Coal Production and Imports (million tonnes), 1980, 1990 and 2000-2003 |
| Coal Supply and Demand |
| Table 8.2: UK Supply and Consumption of Coal (000 tonnes), 1999-2003 |
| Table 8.3: UK Coal Consumption by Sector (million tonnes), 1980, 1990 and 2000-2003 |
| MARKET SIZE |
| By Value |
| Table 8.4: UK Sales of Coal by Value (£m), 2001-2003 |
| Table 8.5: UK Market Value of Inland Consumption of Coal by Sector (£m), 2001-2003 |
| Overseas Trade |
| Exports |
| Table 8.6: UK Exports of Solid Fuel by Volume and Value (000 tonnes and £m), 2002 and 2003 |
| Imports |
| Table 8.7: UK Imports of Solid Fuel by Volume and Value (000 tonnes and £m), 2002 and 2003 |
| SUPPLY STRUCTURE |
| Key Trade Associations |
| Coal Merchants Federation |
| Solid Fuel Association |
| MAJOR PLAYERS |
| UK Coal PLC |
| Other Companies |
| BUYING BEHAVIOUR |
| Table 8.8: UK Demand for Coal by Sector (000 tonnes), 1999-2003 |
| FUTURE PROSPECTS |
| 9. The Renewable Energy Industry |
| INTRODUCTION |
| KEY TRENDS |
| Electrical Generating Capacity |
| Table 9.1: Electrical Generating Capacity of Renewable Energy Sources by Type (megawatts electrical), 1999-2003 |
| MARKET SIZE |
| Electricity Generated |
| Table 9.2: Electricity Generated from Renewable Energy Sources by Type (gigawatt hours), 1999-2003 |
| Energy Supply |
| Table 9.3: Renewable and Waste Energy Supply by Type by Volume (000 tonnes of oil equivalent), 2001-2003 |
| SUPPLY STRUCTURE |
| Biofuels and Wastes |
| Hydropower |
| Wind Power |
| Solar Energy |
| Wave Power |
| Types of Company |
| Key Trade Associations |
| British BioGen |
| British Hydropower Association |
| British Photovoltaic Association |
| British Wind Energy Association |
| Renewable Power Association |
| Solar Trade Association Ltd |
| MAJOR PLAYERS |
| BP Solar Ltd |
| Renewable Energy Systems Ltd |
| Shell Renewables |
| Vestas-Celtic Wind Technology Ltd |
| FUTURE PROSPECTS |
| 10. Combined Heat and Power |
| INTRODUCTION |
| KEY TRENDS |
| Number of CHP Sites |
| Table 10.1: Number of Combined Heat and Power Schemes in the UK by Electrical Capacity Sizeband, 1999-2003 |
| MARKET SIZE |
| Electrical and Heat Capacity |
| Table 10.2: Total Electrical and Heat Capacity of Combined Heat and Power Schemes in the UK (megawatts electrical and megawatts thermal), 1999-2003 |
| Table 10.3: Total Electrical Capacity of Combined Heat and Power Schemes in the UK by Capacity Sizeband (megawatts electrical), 1999-2003 |
| Output |
| Table 10.4: Electrical and Heat Output of Combined Heat and Power Schemes in the UK (gigawatt hours), 1999-2003 |
| Table 10.5: Fuel used to Generate Electricity and Heat in Combined Heat and Power Installations in the UK by Type (%), 2003 |
| Table 10.6: Fuel used to Generate Electricity and Heat in Combined Heat and Power Installations in the UK by Type (gigawatt hours), 1999-2003 |
| SUPPLY STRUCTURE |
| Key Trade Association |
| Combined Heat and Power Association |
| MAJOR PLAYERS |
| FUTURE PROSPECTS |
| 11. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 12. The Future |
| ENERGY PRICES |
| Declining UK Oil and Gas Production |
| Nuclear Power |
| Renewable Energy |
| Emissions Trading |
| Kyoto Protocol |
| Cost of Emission Reductions |
| Climate Change |
| 13. Further Sources |
| Associations |
| General Sources |
| Government Publications |
| Bonnier Information Sources |
| The UK has a strong energy industry based on a variety of natural reserves. It also has the environmental conditions to develop a major, new renewable-energy sector through wind energy and, in the longer term, other technologies. In addition, the UK has highly developed expertise in the nuclear-power sector. |
| Structurally, the industry is privatised, with opportunities for new entrants and all end users having a choice of supplier. |
| This Key Note Market Review segments the UK energy industry into seven sectors: oil, natural gas, electricity, nuclear energy, coal, renewable energy and combined heat and power (CHP). |
| Oil is a key component of the UK's energy industry. There is a major offshore oil industry based in waters surrounding the UK. As well as providing energy for the UK, it is a source of tax revenue and it also supports an export trade. However, production from the UK offshore industry is now declining and, unless new economically viable discoveries are made, output will continue to decline at the present rate of consumption. In the longer term, the UK will increase its oil imports. |
| Most of the oil processed through UK refineries is used to provide fuel for transport, particularly road vehicles. Oil is also used as a feedstock for the chemical industry. |
| The UK Continental Shelf (UKCS) also contains important reserves of natural gas, which provide gas for the UK mains gas supply and fuel for electricity generation. Natural gas production from the UK's offshore industry is now decreasing and an increasing amount of gas is being imported. Gas is a vital component of the UK's energy resources. Future supplies are to be sourced from a variety of regions, including Russia, Africa and the Middle East. The UK has an interconnector gas pipeline to continental Europe. |
| The onshore gas industry is regulated by Ofgem (the Office for Gas and Electricity Markets). Gas is supplied to customers by energy companies, which also supply electricity. |
| Electricity in the UK is generated by using coal, gas, nuclear power and, to a much smaller extent, renewable sources. For many years, coal was the main fuel used for power generation, but it has lost market share to gas, which can be burnt more efficiently with fewer carbon emissions. Gas will continue to grow as a source of fuel for power generation. The future role for nuclear power is uncertain. Renewable energy will play a greater role in power generation in the UK. Ofgem regulates the electricity market. |
| Nuclear power currently provides around a fifth of the UK's electricity. Changes in the structure of the electricity market have had an adverse effect on the competitive position of nuclear power and the main UK nuclear-power generator has experienced serious financial difficulties, resulting in urgent government support. The whole nuclear-power sector is being reorganised in such a way that the Government will take over liabilities for many of the assets. It is hoped that this will make the nuclear-power sector more competitive. This move deals with environmental aspects of the sector, based on the current nuclear-power stations, which are all due to be decommissioned by around 2020, with no plans to replace them. At present, the Government is keeping its options open regarding the future of nuclear power. |
| The UK's coal industry continues to decline, with less UK-produced coal being used in power generation and much of the coal that is used being imported. Coal produces large amounts of carbon emissions and the installation of clean-up equipment would be very costly. Gas has replaced much of the coal previously used for electricity production. There is now only one major producer of coal in the UK. Deep mines continue to be closed as coal reserves run out or become uneconomic to recover. Opencast coal production is an option, but planning approvals are difficult to obtain. |
| Renewable energy is a growing sector in the UK energy industry. Targets have been set requiring electricity suppliers to source specified amounts of their electricity from renewable sources. The biofuels sector produces most of the UK's renewable power. As far as new renewable energy is concerned, the wind-power sector is now expanding rapidly, as a result of the emerging offshore wind-power sector. |
| In combined heat-and-power (CHP) plants, heat produced by the electricity-generation process is recovered and used locally. It is an efficient process, but increases in the price of gas have made CHP plants unattractive. Some CHP schemes have been mothballed. However, new government initiatives have been drawn up to help support the sector. |
| Statistics, an analysis of industry structure and profiles of major players are included for each sector of the energy industry, in addition to an overview of the industry as a whole. |
Text © 2005Key Note
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Last updated by Amanda Porteous 2005