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Energy in the UK

Energy is a broad term encompassing a range of different fuels and end uses. Electricity, heating and transport fuels are all forms of energy used across the sectors of the UK economy, including the domestic, business, and industrial sectors. Various different fuels and technologies are used to produce the energy consumed in the UK, including both domestic production and imports.

Electricity provides a relatively small proportion of the UK’s energy consumption. However, the evolution of technologies that produce UK electricity, and the importance of electricity for the future of the UK energy sector, has meant that electricity is often the focus of policy. As such the Library’s papers on energy policy, summarised in this paper, often focus on policy related to electricity.

Energy policy basis

Energy policy in the UK is the responsibility of the Department of Business, Energy and Industrial Strategy (BEIS). Although there are numerous regulators for specific parts of the energy sector, much of the energy market is regulated by Ofgem.

Historically, parts of energy generation, transportation, and supply were run by the public sector. All aspects of the market are now privatised; generation and supply are competitive, and transportation through networks is regulated as the operators are monopolies.

The Government and Ofgem continue to regulate the market for customers and deliver policy to meet the Government’s aims on energy.

The energy policy of successive Governments has centred around three objectives of security, affordability, and decarbonisation. This is sometimes referred to as the energy ‘trilemma’.

Timeline of reports

This paper includes a timeline of some of the recent key policy developments in the UK energy industry. Since 2017, energy policy has largely been made in line with the Government’s Clean Growth Strategy. An Energy White Paper was announced in 2018 by the then Secretary of State for BEIS Greg Clark, and is expected to set out future plans for energy policy when published later this year.

Summary of papers

The Library has published various briefing papers, debate packs, and insights covering different aspects of energy policy. These are summarised and linked below. These publications are up to date as per the date indicated.

Consumers bills

  • Energy Bills and Tariff Caps (August 2019): This paper includes information on privatisation and the development of the consumer energy market, the breakdown of an energy bill, reviews and reforms of the market, and details of the price caps.  
  • Energy Smart Meters (October 2019): Smart meters are advanced electricity and gas meters which can offer a range of intelligent functions. This paper covers background information on smart meters and the roll-out, details of consumer issues, and commentary. Further information on this topic is available in the Smart Meters Act 2018 (August 2018) paper, and the insight on The smart meter roll-out: Will the 2020 deadline be met? (August 2018)   
  • Fuel Poverty (November 2019) and Help with Energy Bills (March 2019): These Library briefing papers cover, respectively, how fuel poverty, a devolved policy area, is addressed across the UK, and the support available for consumers who want to reduce their energy bills.
  • Control for low carbon levies (December 2017): Several social and environmental policies are funded through a levy on consumer energy bills. This paper details the policy that aims to control these levies to protect consumers from high costs.

Small scale energy 

  • Support for small scale renewables (January 2020): From 2011 to 2019, a support scheme known as feed-in tariffs (FITs) was available to consumers who installed small scale renewable power generating technologies. FIT closed in March 2019 and a new Smart Export Guarantee began in January 2020. This paper explains the policy change, details of the new scheme, and industry comment. For further information on consumer issues with solar panels, see the Library paper on Q&A Solar panels.  
  • Renewable Heat Incentive (April 2017): Also from 2011, support known as the Renewable Heat Incentive (RHI) has been available to non-domestic customers (and from 2014 domestic customers) to install renewable heat generating technologies.

Large scale energy

  • Support for low carbon power (April 2020): This paper sets out details of the Government’s primary mechanism for supporting new low carbon power infrastructure, known as the contract for difference (CfD) scheme. The Library also has papers on some specific low carbon technologies including, Tidal Lagoons (June 2018), Geothermal in the UK (June 2018), and Planning for onshore wind (July 2016).
  • New Nuclear Power (September 2019): This paper covers the history of policy support for nuclear, existing and planned plants, information on research and development including small modular reactors, and policy on waste disposal. The Library insight on Mind the gap: Challenges for future UK energy policy (January 2019) discusses the issues for energy policy that have been caused by the cancellation of nuclear projects.  
  • Carbon Capture Usage and Storage – CCUS (March 2020): CCUS is a set of processes that capture carbon dioxide and either store it or reuse it in industrial processes. This paper sets out background to the technology, and details how successive Governments have supported CCS.
  • Electricity grids (January 2019): This Library briefing paper covers how the electricity grid is operated, how electricity is traded, how the grid is balanced, and some of the challenges for the grid in future.
  • Shale gas and fracking (March 2020): fracking is an unconventional method of extracting gas and oil from rock. In 2019, the Government announced it would take a presumption against issuing any further consents for fracking. Before this the Government had encouraged the industry, which was at an early exploration phase.
  • UK oil and gas industry debate pack (October 2018): This debate pack covers background information on the UK’s oil and gas industry, including the state of the market, employment, policy, and challenges for the future.

Transport

  • Electric Vehicles and Infrastructure (January 2020): electric vehicles (EVs) are a policy area for both BEIS and the Department for Transport. This paper explains how successive governments have planned for infrastructure and provided vehicle grants and incentives to encourage and accommodate EVs. It also sets out how the electricity grid is preparing to accommodate any increased demand from EV charging and looks at comparative emissions from EVs and conventional vehicles.  
  • Future of the British bioethanol industry (January 2019): bioethanol is a fuel produced from plant sources. It can provide an alternative to fossil fuels, e.g. as a transport fuel.
  • Further publications are available from the Library website section on Transport.

Climate change

  • Climate change: an overview: collects together all relevant Library Briefings and other resources on climate change.  
  • Climate change explainers (June 2020): a series of Insights providing analysis and explanation on a range of topics related to climate change, including the basic science, the role of MPs in driving policy change, UK and global emission trends, the rise of climate activism and possible solutions within nature and technology.

Brexit

  • Brexit: energy and climate change (June 2020): the UK’s departure from the EU has the potential to impact some UK energy and climate change policy. This briefing covers potential impacts on civil nuclear, the EU internal energy market, energy trading on the island of Ireland, and climate change policy.  
  • Nuclear: More information on the impact of leaving the EU on the nuclear industry is available in the Library briefing papers on Euratom (January 2020) and the Nuclear Safeguards Act 2018 (August 2018).  

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