Powering the UK 2013

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Powering the UK

"Today, the industry is urgently seeking an honest and open debate on energy. The debate will improve decision making, establish the long-term certainty needed by investors and help public understanding of this complex and complicated issue. Powering the UK is a contribution to that debate."

Angela Knight CBE, Chief Executive, Energy UK

Empowering UK growth, jobs and energy users through continued investment

The energy sector continues to play a vital role in the UK economy.

In 2012, it directly contributed £24bn to the economy, a £3bn increase over 2011. It also contributed £78bn indirectly through supply chain activities, providing total gross value added of £102bn.

Energy continues to be a large and consistent employer, employing 125,000 people in 2012 compared to 90,000 in 2008, boosting employment during an extended recession. It also supported an estimated 539,000 jobs through supply chain activities for a total of 664,000, or 1 in 45 UK jobs in 2012, highlighting its critical role in the UK’s economic recovery.

It also continues to create new jobs, covering a wide range of engineering and technical skills. In addition, 86% of energy sector job growth between 2008 and 2013 has been outside London, Southern, and Eastern England, compared with 53% for other sectors.

The sector has also maintained high investment levels.

Momentum from previous years has carried the industry forward, delivering new assets at a scale unseen for decades. In 2012 the private sector invested £11.6bn – higher than private sector investment in transport, or public investment in health or education. Renewable energy accounted for 31% of the total.

There is also a pipeline of projects ready to build enough conventional power stations to replace ageing stations and power 25–30m homes (27 GW1) over the next decade. Many of these projects are awaiting Government policy decisions, such as the Electricity Market Reform packages, before construction.

Despite these uncertainties, the sector is delivering a quiet energy revolution through increased lower carbon generation and efficiency and technology at consumer level. As a result its skills and workforce requirement is also changing. The sector is investing in a future generation of engineers and operators, providing exciting and rewarding graduate trainee and apprentice opportunities. Between 2010 and 2011 annual apprentice enrolment increased from 970 to 1,430.2

2012 was potentially an inflexion year for energy. Growing awareness of, and public debate around, major issues such as taxes, prices, and renewables, has intensified. Coupled with new issues such as shale gas and novel technologies, this suggests that investment certainties that have underpinned the market are changing, and although the government’s policy objectives are clear, the level and timing of future investments are not.

Households and businesses are beginning to change consumption patterns, saving increasing amounts of energy.

Domestic energy use fell by 12% between 2007 and 2012 (after accounting for temperature differences). This was partly due to energy efficiency investments and consumers taking greater control over usage. In addition, over 250,0003 households and businesses have cut energy bills by installing solar panels or wind turbines and producing their own electricity.

Today’s energy system is the result of many bold decisions. Capitally-intensive aspects cannot be re-shaped as quickly as the priorities of the markets or energy users, but that is no reason for inaction or short term, expedient decision making.

The sector and government must stay focussed on 2020 and beyond, and continue to make bold, wise investment and policy choices on behalf of future generations of energy users, and those delivering that energy.

1 Platts UK Power Tracker 2013: Data comprises 22GW CCGT and 5 GW Nuclear classified as proposed, approved, under construction or suspended.

2 Apprenticeship starts for power, gas and water industries. UK Commission for Employment and Skills, Sector Skills Insights: Energy, Evidence Report 51, July 2012, http://www.ukces.org.uk/assets/ukces/docs/publications/evidence-report-51-energy.pdf

3 Ofgem, Feed-in Tariff (FIT): Annual Report 2011-12, Annual Report to the Secretary of State for Energy and Climate Change, 19 December 2012, https://www.ofgem.gov.uk/ofgem-publications/58860/fits-annual-report-2011-2012.pdf