Renewables generation hits record high but low oil production fuels reliance on imports

The government has published the Q2 Energy Trends data which shows a reduction in energy use with a fall of 0.9% in demand between April-July 2024. 

Energy production also fell by 7% with natural gas and petroleum production falling by 18% and 9% respectively, and renewable output increasing by 19% to reach a record high at 51.6% of total generation. The amount of imports continues to rise, with a 12.7% increase in net imports of oil and oil products as compared to this time last year, and overall demand for energy is continuing on its upward trajectory.

Sheena McGuinness, head of renewables and cleantech at RSM UK: “Although we see an uptick in contribution from renewables, low oil production is fuelling the UK’s reliance on importing energy to meet growing domestic demand – exposing consumers to fluctuations in pricing, and availability of supply.

“Plans to extend and increase the energy profit levy, or windfall tax, may deliver a short-term boost to revenues, but in the longer term we could see less private sector investment in the UK oil and gas sector. This would further increase our reliance on imported energy, erode the UK tax base and, in turn, much-needed revenues to support the UK’s net zero transition. 

“If the UK wants to ensure energy independence, we need a concrete plan to transition away from fossil fuels to a more sustainable renewables future. Essentially, we need to get more renewable schemes approved, developed and crucially connected to the grid which currently can take years and is a real blocker to producing low carbon energy in this country.”

David Hough, co-head of energy and natural resources at RSM UK added: “The transition away from fossil fuels requires huge investment which the government is hoping will be supercharged by the private sector, supplemented by a suggested uplift in windfall tax revenues which will fund GB Energy. 

“What is required from the imminent industrial strategy is a comprehensive roadmap that drives policy decisions, shapes behaviour and encourages business and infrastructure investment.

“Turning the tap off too soon domestically will increase the UK’s vulnerability and reliance on imported energy and potentially reduce the tax base – restricting the UK’s ability to achieve net zero commitments and energy independence.”