The energy system is critical to the UK economy. It supplies electricity and gas to the vast majority of households and commercial premises in the country. British households and businesses spend around £50 billion on energy each year. There are three elements to supplying energy to homes and businesses in GB, generating electricity and producing gas (wholesale markets), transporting them through the 272,000 km of gas pipelines and 1 million km of electricity cabling (networks); and selling them to homes and businesses (retail markets).
Ofgem regulates each of these elements. Energy companies can operate in any of these areas and some have a presence across all three. The six largest firms in the GB energy markets are Centrica, EDF, E.ON, npower, ScottishPower and SSE.
The Energy Industries contribution to the UK Economy in 2017 :
• 2.9% of GDP.
• 9.8% of total investment.
• 33.6% of industrial investment.
• 1.9% of annual business expenditure on research and development in 2016.
• 181,000 people directly employed (6.3% of industrial employment) and more indirectly (e.g. an estimated 142,000 in support of UK Continental Shelf production).
Employment in the energy production and supply industries fell rapidly throughout the 1980s and mid-1990s largely as a result of closures of coal mines. Between 1995 and mid-2000s employment declined more slowly but since 2006 it has increased gradually, driven by growth in the electricity and gas sectors. In 2017 employment in the energy industries rose by 2.8% to 181,000 which was 66% above the 2005 level
Since 2004 there has been increased investment in the energy industries, more specifically in the electricity sector, despite falls in recent years to below the 2014 level. In 2017 at £18.7 billion (at current prices) investment was 0.6% higher on the previous year and of that total 30% was in oil and gas extraction, 60% in electricity, 7.5% in gas, with the remaining in coal extraction, and coke & refined petroleum products industries.