The Energy Challenge
Energy for a Changing World
Secure future energy supplies are essential for any country, and as the UK's North Sea (UKCS) gas reserves run out this means we have to import increasing amounts of gas from overseas.
Around 80% of British homes use gas for heat - a higher percentage than most other European countries – so securing long-term affordable energy supplies is vital.
The UK is currently importing around 50% of its energy needs and that proportion could rise to around 70% by 2035.
Under National Grid's Future Energy Scenarios import dependency in 2035 ranges from 40% in 'Low Carbon Life' to 91% in 'No Progression'. We believe the 'Slow Progression' scenario relates more closely to present reality.
What is Centrica doing?
To ensure energy security for the future, the UK must pursue a diverse energy portfolio to reduce reliance on one type of energy:
Long-term supply agreements
Centrica is one of the largest investors in energy supplies for the UK, signing long-term contracts and forging partnerships to compete in the global energy market for the resources the country needs.
A strong balance sheet is essential when entering into long-term agreements to ensure the UK is well supplied. Centrica's commitments to supply gas and power to customers over the next ten to fifteen years now total around £60bn. Read more.
Working to maximise recovery of the UK’s existing resources
Centrica is the leading gas producer in the UK*, and the company would have brought over £1bn of major projects on stream in the period 2013 to 2015. When production began at Centrica's Rhyl gas field in April 2013, it was the first new field to be brought on stream in Morecambe Bay for ten years.
With its partners, Centrica gave the go-ahead to invest around £1.5bn to develop the Cygnus project. Currently under construction, the project will eventually provide enough gas for 1.5m homes at peak and represents the largest discovery in the Southern gas basin for 25 years.
Centrica is working hard to maintain a competitive cost base, and is working more closely with suppliers than ever to find new ways of working and new technologies that will make potential new fields and projects a reality and continue to maximise the potential of the North Sea.
* Source: Wood Mackenzie (2013)
Investing in low carbon sources of energy
Together with partners, Centrica owns the 270MW Lincs offshore wind farm, located off the North East Lincolnshire coast. Commissioned in September 2013, Lincs is operated and maintained out of a dedicated renewables base in Grimsby.
We also operate the Glens of Foudland, Lynn and Inner Dowsing wind farms from the base, providing support to the wind farms 24/7, 365 days a year. Combined, the wind farms are capable of producing enough electricity to meet the needs of nearly 350,000 homes.
Centrica’s 20% stake in EDF Energy Nuclear Generation, the UK's largest electricity generator with eight nuclear power stations in the UK, provides it with access to 20% of the uncontracted power from the existing nuclear fleet, and an additional 18 terawatt hours (TWh) of power from EDF over five years from 2011, providing a stable source of low carbon baseload power.
Read more about Centrica's research on alternative routes to meeting the UK’s climate change targets whilst securing affordable energy supplies in the ‘Energy Choices for the UK’ report.
Centrica's gas storage facility at Rough in the North Sea is the largest in the UK. The facility is capable of meeting approximately 10% of the UK’s current peak day demand and represents over 70% of UK storage capacity.
Market participants use gas storage facilities to buy gas purchased in the summer, when it is cheaper, for use in winter when it is more expensive to buy in the market.
Exploring the potential of natural gas from shale in the UK
With 8 in 10 UK homes still reliant upon gas for heating, the development of natural gas from shale could have an important role to play in terms of helping to secure future gas supplies.
Experts at Pöyry* have estimated that the production of natural gas from shale in the Bowland licence alone could reduce the amount of gas the UK has to import from 89% to 78% in 2035. This could reduce the nation's exposure to the volatile wholesale market, helping us to mitigate against rising energy prices and keep the UK economy as competitive as possible.
In 2013, Centrica acquired a 25% stake in the Bowland shale exploration licence, and has been working with Cuadrilla to understand the potential of natural gas from shale in the UK, using its expertise as a responsible operator and developer of gas resources.
* Source: Pöyry (2014) 'UK Shale Gas - where are we now?'
The Energy Challenge: how do you reduce carbon from energy whilst keeping it affordable and secure?
Centrica has been working to explore pathways for future UK energy policy to 2030 and beyond that are both sustainable and affordable, outlined in the ‘Energy Choices for the UK’ report.
Find out more about Climate Change: The Challenge.