UK energy trend data for Q1 2017 has been published by the government this month. The statistics show a continued trend away from coal-fired generation, with gas and renewables accounting for an increased share of the energy mix. Coal accounted for just 11% of generation in Q1 of 2017, compared to 2014 when power output from coal stood at 30%. Coal-fired plants in the UK have been closing or converting to biomass in recent years as carbon taxes and emission restrictions continue to make coal uneconomic.
Support mechanisms for renewables and an increase in gas supply have also contributed to coal becoming less competitive. Emissions from coal are higher than from gas and, therefore, generators must pay a greater carbon price per GWh produced. The ongoing reduction in coal capacity meant that the gas share of the generation mix continued to grow in Q1, although at a slower pace than in 2016 when the gas share grew by 40%. Growth in gas stood at 10% in Q1 2017 and gas made up 40% of the mix. The share of electricity from low-carbon generation (renewables plus nuclear) increased from 44% in the first quarter of 2016 to 46% in the first quarter of 2017, with renewables alone at 27%.
The shift in the generation mix clearly has a beneficial effect on the UK’s emissions, but comes with an increase in policy costs, which feed through to consumers’ energy bills. Another cost effect can come from higher electricity prices in European countries that are dependent on coal-fired plants. This can have an upward effect on UK prices, which are interrelated with Europe to a certain extent because of our use of electricity imports to meet our total electricity demand. Imports stood at 3% in Q1 2017, although net imports were down 52% from the first quarter of 2016 due to damage to the France-UK interconnector.
Overall however, the move away from coal is being mirrored on a global scale, as can be seen in the recent IEA report on the World Energy Balance. This reported that demand for coal has fallen in China and across the 35 member countries of the OECD, which means that despite an increase in demand for coal in India, global consumption of coal fell by 2% in 2016.
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