UK energy demand shifts to coal in Q1 2006: DTI

UK energy demand shifts to coal in Q1 2006: DTI

London (Platts)--29Jun2006

UK energy demand shifted from oil and gas to coal in the first quarter of
2006 compared with the first quarter of 2005, electricity generation using
16.4% less gas and 17.3% more coal, according to figures published Thursday by
the Department of Trade and Industry in its quarterly "Energy Trends" report.
The government figures show total gas consumption fell by 10.8% in Q1
2006 compared with Q1 2005, while primary electricity consumption fell 0.9%
and coal and other solid fuel consumption rose by 12.7%.
Demand for coal in the first quarter of 2006, at 21.7 million tons, was
15.8% higher than in the first quarter of 2005 and at the highest quarterly
level since 1996. A large portion of the increase came from electricity
generators, which consumed 19.1 million tons in Q1 2006, 17.3% more than a
year earlier.
By contrast, electricity generation used 16.4% less gas in the first
quarter of 2006 than a year earlier, while overall demand was 1.1% lower.
Domestic production of natural gas fell 4.5%, and the DTI said: "Overall,
natural gas production is now declining as UKCS reserves deplete." Imports of
gas rose by 44.5% from Q1 2005 to Q1 2006.
Overall UK energy production was 4.7% lower in the first quarter of 2006,
at 57.1 million tons of oil equivalent, compared with the same period in 2005.
Despite the overall drop in energy production, total electricity supplied
was 3 per cent higher in the first quarter of the year than a year earlier, at
114.7 TWh. Of this, 48.7 TWh came from coal generators (up 18.5%),
20.5 TWh from nuclear generators (down 0.8%) and 28.9 TWh from gas generators
(down 17.4%).
Demand for electricity increased by 2.5% to 115.2 TWh in the first
quarter of 2006 compared with a year earlier. Imports of power rose 14% to 2.6
TWh while exports fell by 12.8% to 0.8 TWh.
The drop in demand for gas reflects an increase in gas prices. Day-ahead
gas prices averaged 70 pence per therm in the first quarter of 2006, compared
with an average of 37.8 p/th in the first quarter of 2005, Platts data show.
The DTI's figures show that the climate change levy, introduced in April
2001, increased the average prices of fuels to industry by 9.5% for coal, 3.6%
for electricity and 2.6% for gas. According to the DTI, data from
International Energy Agency shows that average UK industrial electricity
prices were above the EU/G7 median, while gas prices were below the EU/G7
median in 2005. By April 2006, UK industrial electricity prices were above the
median, while gas prices were above the EU15 median for medium and large
consumers.
The report also included figures on renewables for 2005. Electricity
generated from all renewables as a percentage of total UK electricity
generation rose to 4.2% in 2005, from 3.6% in 2004, according to the DTI.
Total generation from renewable sources was 16.9 TWh in 2005, up 19% from
2004. Generation from co-firing biomass with fossil fuels grew by 148%, while
offshore wind grew 102%, onshore wind 44% and landfill gas 7%. On December 31
2005, total renewables capacity in the UK was 3.4 GW.

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