Insights
UK Energy
Energy is essential to our everyday lives, and the industry is undergoing an exciting and rapid transformation to meet growing electricity demand, cut carbon emissions and ensure security of supply.
The UK energy industry in numbers
£149bn
in economic activity through the energy sector and supply chain
66%
emission reduction in the power sector since 1990
£13bn
invested in the UK energy sector in 2021
56%
of power generated from low-carbon sources in 2022
£100bn
planned investment in new energy sources in the next decade
743K
jobs supported across the UK (1 in 48)
Report
The Clean Growth Gap:
A series of reports about how low carbon energy investment can transform the UK
The current international gas crisis
Since Autumn 2021, the price of wholesale gas on the international market has been more volatile than ever, driven by post-pandemic recovery demand and compounded by the Russian invasion of Ukraine in February 2022. At times prices have been 20 times higher than the levels seen at the start of 2021. Gas is traded on international markets, so companies that buy and sell gas are subject to global prices.
In the UK, we are very dependent on gas for our heating (used in around 85% of our homes) and gas also contributes around 40% of our electricity generation mix.
This has meant that energy bills in the UK are higher than they have ever been before. If you are struggling to pay your energy bill, contact your supplier and see our information for customers.
Who does what?
A wide range of companies play a role in delivering electricity and gas to homes and businesses across the UK, from the power plants that generate electricity from sources like the wind, sun and nuclear fuel, to the companies that serve customers.
Electricity generation
In the UK, our electricity is generated via a number of different ways. It is vital to have different fuel sources and technologies to ensure that we have a constant electricity supply to meet demand, and do not become overly reliant on just one type of power generation. Industry is working hard to decarbonise the UK’s power system to mitigate climate change, which means the way we generate electricity is necessarily changing. As we increase our electricity demand we will need billions of pounds of investment in grid capacity and new technologies.
Balancing the system
Every second of every day, the power system must be balanced to ensure that supply meets demand. This is done by National Grid ESO.
As we change the way we generate energy, this careful balancing act will continue to be vital, bringing more challenges but also opportunities both in the home and for businesses.
Flexibility is key to this, using innovative and exciting technologies which will bring down costs for all consumers.
Supplying customers
Energy retail suppliers buy electricity and gas in the wholesale market and sell that energy on to homes (domestic customers) and businesses (non-domestic customers). Suppliers work in a competitive market and domestic customers can choose any supplier to provide them with gas and/or electricity.
Energy suppliers can also provide services and products to help people manage their energy use and improve energy efficiency.
Energy regulation
The electricity and gas markets are regulated by the Gas and Electricity Markets Authority, operating through the Office of Gas and Electricity Markets (Ofgem). Ofgem’s role is to protect the interest of consumers by promoting competition where appropriate. Ofgem issues companies with licences to carry out activities in the electricity and gas sectors, sets the levels of return which the monopoly networks companies can make, and decides on changes to market rules.
Decarbonising heat and transport
In order to reach the UK’s Net Zero target we will need to increase our use of electricity, powered by low carbon sources, to heat our homes and power our transport.
Energy UK members are increasingly providing technologies like heat pumps and smart EV charging to customers to enable faster decarbonisation at the demand side of the system.
The future energy industry
Energy companies will continue to diversify their offerings to in related markets and we can expect non-traditional energy companies to enter the energy space. New applications for data, more smart appliances and innovative technologies will offer opportunities for attractive service offerings that will not only enable further decarbonisation but give customers the ability to choose to engage with the energy system as never before.