Energy Outlook in two major European economies- Denmark and UK
Introduction
Energy plays a key focus in our everyday lives. It encompasses almost every industry and has a profound influence on economic and business decisions.
The aim of this article is to highlight the major differences of two developed countries in North Western Europe, and shed some insight into their energy consumption, sustainability and future focus.
One of the major challenges is how to optimize our energy consumption given that still the majority of our usage is concentrated in sources, which are finite such as oil, natural gas and coal.
Denmark’s energy usage and strategy for the future
On the one spectrum there is Denmark. A leading developed country that has become one of Europe’s leaders in utilizing wind power and has considerably diversified its’ infrastructure with the aim of optimizing energy usage.
However, that wasn’t the case in 1973 when the oil embargo came. Till then Denmark had relied heavily on oil for close to 80% of its energy consumption. The embargo had a crippling effect on the vibrant economy and caused great hardship for both business and the local population.
The crisis had a profound effect on the Danish government’s energy policy and it was decided to create a specific and self-reliant strategy. The main focus was on energy independence and self-reliance. This meant that the government set as an agenda to diversify away from oil and at the same time discover new ways to optimize energy consumption and reduce the need for energy itself.
These goals were achieved via a combination of tax policies and mandates over several decades. It required a great deal of innovation and in that sense Denmark has been at the forefront of renewable energy sources.
Denmark was the first country in Europe to start using wind farms to generate electricity as well as using natural gas as a cleaner alternative to coal and oil. Thanks to the new policies implemented after the oil embargo wood pellets, solar power and wind power are now the prime sources of power and energy. Denmark is constantly trying to increase the usage of these sources as well as reducing the CO2 emissions that are being generated. New projects are also on focus and one of the most important ones in recent years is going to be completed in 2022. That is the giant offshore wind farm off the island of MØN in the Baltic Sea, which will be able to provide electricity for 600,000 households.
Energy efficiency also plays a key role in the energy policy. That was achieved by using more efficient plants called combined heat and power plants.
What are Combined Heat and Power(CHP) plants?
In conventional power plants oil, coal or gas are used to generate electricity by being burnt and creating steam, which then is used to turn a turbine. The turbine then turns a generator and from that electricity is generated.
However, in this conventional way of creating electricity a lot of heat is simply wasted- the average efficiency of such plants is 30-40%.
This is where Combined Heat and Power plants come in.
CHP plants create both electricity and heating that can be use by households. The thermal energy is used for heating or domestic hot water, thereby utilizing the resources used to its’ fullest thereby creating an overall efficiency of up to 80%.
They are not perfect but offer an alternative and a straightforward process of optimizing resources for medium to large cities.
https://www.epa.gov/chp/what-chp
https://www.epa.gov/chp/what-chp
Thanks to their high efficiency they have become extremely popular in Denmark and now close to 60% of all Danish households get their heat in this way, which helps optimize energy consumption and reduce waste.
On the other spectrum we have the UK.
The UK’s energy usage and strategy
The UK on the other hand initially had a slow start in adopting renewable sources and the oil embargo overlapped with the discovery of oil in the North Sea, so there was less of a focus on having diversified energy sources. To this day the 50% of the UK’s energy usage comes from oil, natural gas and coal.
Natural gas has been on focus in recent years due to the fact that close to 80% of UK homes are being heated using gas powered stations. Unfortunately, North Sea reserves for the UK segment have been falling steadily and a big part comes from imports in particular from Norway.
Also due to huge interconnectors electricity is imported during peak demand from Continental Europe. Imports have increased up to 7% and are projected to account for 20% by 2025, which shows the rising challenges with ever increasing populations.
In spite of these setbacks, the UK has still managed to diversify its’ energy sources and in 2019 it was the first time when the energy generated from renewables surpassed natural gas. Also still a large proportion of energy-close to 18%- still comes from nuclear power plants.
Unfortunately, the UK still lags behind other leading economies when it comes to optimizing consumption of energy.
Estimates suggest that close to 54% of the generated energy, the equivalent of 9.5 billion pounds is wasted. There are several causes for this but one of the most notorious ones is the limited usage of Combined Heat and Power plants, which have become the standard in Denmark. It is estimated that close to 2 billion pounds per year could be saved if such plants were adopted and implemented.
The process to bring this type of technology to the public is in its’ infancy in the case of the UK, where only 500,000 households (around 2%) are currently supplied using CHP but there is a significant scope for improvement given the right conditions and tax considerations.
A prime example is the Sheffield Energy from Waste Plant. It generates 21MW of electricity to the National Grid and 45 MW of heat is supplied to 140 buildings. This plant is a very good example as to what could happen if the right conditions were put in place to reduce waste, create efficiency and create a more sustainable energy framework. In general, about 35 % of electricity and 20% of heat is generated using CHP within the UK but that figure is far below the 70% achieved in Denmark.
There are signs of progress as the UK government has created a number of initiatives with the aim to promoting such plants as they offer a viable model for reducing VAT and other taxes to very competitive levels(for more details see here https://www.gov.uk/guidance/combined-heat-and-power-incentives) . Still challenges remain and more investments is needed if the UK is to tackle these issues in today’s rapidly moving future.
Conclusion
Energy consumption and optimizing that consumption have become key topics in recent years and with increasing global population they are only going to increase in importance.
Government strategy and incentives are vital, when it comes to creating viable, long-term plans not just from an energy generation perspective. Optimizing consumption and generating efficiency require the creation of long-term investment opportunities.
Denmark and the UK have had different approaches in dealing with these challenges. Still more needs to be done to meet the ever increasing demands of rising populations and their thrust for energy. And yet both countries are still trying to find new and innovative ways of creating energy, which could serve as a template for other countries in Europe and the world.
Sources used(not an exhaustive list):
https://ens.dk/sites/ens.dk/files/Analyser/deco19.pdf
https://www.iea.org/countries/united-kingdom
https://www.iea.org/countries/denmark
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/820843/Energy_Consumption_in_the_UK__ECUK__MASTER_COPY.pdf
https://www.gov.uk/government/statistics/energy-consumption-in-the-uk
https://denmark.dk/innovation-and-design/clean-energy
https://ec.europa.eu/eurostat/statistics-explained/index.php/Renewable_energy_statistics
https://www.cnbc.com/2017/04/19/10-european-countries-that-are-going-big-on-renewable-energy.html
https://www.euronews.com/living/2019/06/21/which-countries-are-doing-best-on-renewable-energy
https://www.texastribune.org/2016/11/21/denmark-texas-climate/
https://www.theade.co.uk/resources/what-is-combined-heat-and-power
https://www.gov.uk/guidance/combined-heat-and-power
https://www.epa.gov/chp/what-chp
https://stateofgreen.com/en/sectors/district-energy/district-heating/combined-heat-power-production/
https://ens.dk/sites/ens.dk/files/Globalcooperation/chp.pdf
https://www.bbc.co.uk/news/science-environment-48711649
https://www.britishgas.co.uk/the-source/our-world-of-energy/energys-grand-journey/where-does-uk-gas-come-from
https://www.energylivenews.com/2015/10/01/uk-losing-9-5bn-a-year-on-wasted-energy/
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