DCP228 and Business Electricity
What is DCP228? DCP228 is a regulation to be introduced by Ofgem in April 2018 which will change the way busin...Read More
Environmental and sustainability concerns are changing UK electricity generation. We compare business energy suppliers’ fuel mix and renewable energy use.
The fuel mix – how the UK’s business electricity is generated – offers a fascinating insight into our country’s changing priorities. Recent years have seen a surprising return to coal. Some suppliers chose to replace electricity sourced from gas generation with cheaper imported coal generation to keep prices low. E.ON, for example, sourced the majority of its electricity from coal generation in 2012–13, as opposed to 2011–12 when it sourced 49% generated from gas.
But in the last year a number of coal fired power stations have closed, including E.ON’s Kingsnorth power station, which shut down in March 2013. Nationally, the amount of coal used to generate electricity fell, although it still makes up just over a third.
Some electricity suppliers have boosted the share of nuclear power. For example, the share of nuclear energy in E.ON’s fuel mix has doubled – up from 4% to 8% in just a year. The amount of nuclear in the fuel mix has remained fairly stable at 22%, although technical issues and planned shut downs meant less power available from nuclear sources for EDF, the owner of the majority of the UK’s nuclear power stations. Despite plans to build a new nuclear power station in the UK, lingering concerns about nuclear power in the wake of the Fukishima disaster in Japan mean a big increase is unlikely.
Other changes are even more notable.
A glut of gas – due to several warm winters, hydraulic fracturing (‘fracking’) and liquefied natural gas (LNG) technology – has driven down wholesale prices. While not captured by the numbers in this story (due to a time lag in reporting), suppliers such as British Gas and Haven Power have been moving back to gas generation as a cleaner option than coal.
This ‘gas revolution’ is hoped to lower the price of energy for UK businesses. Recently agreed increases in gas imports (much using Floating LNG shipments) will likely encourage suppliers to use more gas in electricity generation in the medium-term. Gas is cleaner than coal and is seen as a low carbon form of energy generation. But gas generation still impacts climate change so in the longer term the UK will increasingly look to renewable energy.
This shift to renewables is already evident. Favourable Government tariffs have encouraged renewable energy developments, with a significant amount coming online.This translates to the biggest change in the mix: the amount of renewable energy has jumped from 11% in 2012–13 to 17% just one year later, a significant increase. Previous years have seen small increases of just 2% each year.
Despite the UK’s seemingly unsuitable climate, solar power has become popular, especially on marginal farmland. On-shore wind power turbines, although controversial, have become an increasingly common sight. Off-shore wind farms are not as visible but have become widespread. Anerobic digestion (AD), which produces flammable gas from waste products, is growing in popularity among farmers and may soon scale up to industrial production. The conversion of coal-fired power stations, such as the massive Drax, to burn biomass such as wood pellets, continues.
Some electricity suppliers have chosen to embrace renewable generation to attract business customers. LoCO2 aims to source 80% of its energy from renewable sources this year and Opus Energy already sources more than 90% of its electricity from renewable sources, for example. Even Gazprom UK has increased its share of renewables from 22% to 58%.
Since 2005 electricity suppliers have had to disclose details of the mix of fuels used to generate the electricity they supply. This enables customers to make an informed decision when choosing their business electricity supplier. But it also offers a fascinating insight into where our power comes from.
Businesses are now in an almost unique situation of being able to clearly compare energy and switch electricity supplier to one that reflects their ethical or economic priorities – or a mixture of both. Whether you want green power from 100% renewable generation, care more about cost than how your power is generated or want a low-carbon compromise, there is a supplier to suit.
The only barrier is time. It can take many hours to trawl through the scores of possible providers, speaking to each in turn. For an immediate solution SwitchMyBusiness.com can help find your perfect power partner. Simply complete the form on the top right of this page or call 0330 0100 251. Our expert team can answer any questions you might have.
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