Natural gas and wind to meet majority of UK's energy needs

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27 August 2014, Gas, Electricity, Nuclear, Solar, Wind

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In the past the UK was heavily dependent on coal-fired plants for energy generation, providing nearly 64% in 1991. In 2012, 128TWh of electricity was generated by coal plants in the UK, accounting for 38% of total energy production. By 2030, Datamonitor Energy projects only 55.4TWh of electricity will be generated by coal, 13.5% of total energy production. Between January 2013 and December 2015, eight coal-fired plants will have been mothballed or decommissioned after reaching their maximum 20,000 hour lifespan, according to the EU's Large Combustion Plant Directive Opt Out regulation.

Renewable energy is projected to be the fastest-growing sector in the UK, and 54.6TWh of electricity is anticipated to be supplied in 2014, 16% of the UK's total. Datamonitor Energy forecasts that more than 151TWh of electricity will be produced from renewable sources by 2030, over 37% of the UK's total energy production. Wind power will account for the largest portion of renewables' contribution. A plethora of new wind farm projects have come online or are under construction, such as the London Array (630MW), which came online last month, and Humber Gateway (219MW), which will come online in 2015. There are already eight wind farms in excess of 200MW across the UK.

Nevertheless with all this focus on growing renewable power and refocusing on gas-fired power generation, the UK will remain in power deficit for the foreseeable future. Energy imports will rise from 2.5TWh in 2014 to 13.2TWh in 2030, fluctuating on a yearly basis depending upon energy demand. Total energy demand in the UK is projected to increase steadily over the next 16 years, rising from 326.7TWh in 2014 to 386.5TWh by 2030.

The residential sector accounts for the largest proportion, and demand is projected to rise over the forecast period as both population and the number of households increase. Surging power demand from the residential sector could lead to potential challenges for energy providers, perhaps as early as 2016. This is due to the glacial pace of energy decision-making in the UK, with the best example being the tortuous process that resulted in the decision to subsidize EDF's capacity expansion at the Hinkley Point nuclear facility. Ofgem and others have warned repeatedly that the lack of early investment and the enforced closure of coal-fired capacity make the UK vulnerable to a capacity crunch in the event of unplanned capacity outages and/or demand surges. / / @DatamonitorEN

Source: MarketLine

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