Electricity

Maintaining a balanced portfolio is important to ensure that we have access to a wide range of cost-effective and secure energy sources. In 2006, around 56% of our electricity generation was fuelled by coal, 40% by gas, 2% by oil and 2% by renewables. We can flex this balance as necessary to respond to market conditions.

Electricity Production by Type, %

	2006
Coal	56%
Gas	40%
Renewables	2%
Oil	2%

Includes data from all wholly and partially owned assets including combined heat and power

Gas includes 6.2% from combined heat and power.

The future of electricity generation

Looking ahead, there are a number of lower carbon investment options. We need combined cycle gas turbines (CCGTs) to maintain security of supply through to the end of this decade and into the early part of the next. We are a major investor in renewable sources of energy and are exploring technologies such as cleaner coal and carbon capture and storage, which have the potential to make coal a viable long-term option.

Small-scale combined heat and power generation (micro-CHP) could also provide a significant proportion of the UK's electricity needs.

Gas

Given the UK's increasing reliance on gas, we are investing significantly to make our supply more secure, including a £200 million underground gas storage facility in Cheshire.

Our parent company, E.ON AG, is involved in the upgrading of the existing gas interconnector between continental Europe and the UK, and in building the new Balgzand-Bacton pipeline that will bring gas to the UK from Zeebrugge in Belgium. E.ON AG is also part of a consortium, with Gazprom and BASF, continuing to build a new gas pipeline through the Baltic Sea, which will open up an alternative supply route for Russian gas to Europe. Our sister company, E.ON Ruhrgas, has also diversified its own sources of gas by purchasing Caledonia Oil and Gas, which has about 14 billion m³ of gas reserves in 15 different North Sea fields.

Nuclear

We do not operate any nuclear power stations in the UK, although like most of our competitors, a proportion of the electricity we supply to our customers is bought from nuclear sources. The E.ON Group has 23 gigawatts (GW) of nuclear capacity in Germany and Sweden.

We're well aware that there is new interest in nuclear generation in this country, largely because it emits much lower levels of CO₂ than fossil fuel power stations and can help reduce our reliance on gas for generating electricity. We believe nuclear power can help address both climate change and energy security issues in a cost effective way. However, it's up to Government to decide whether new nuclear power stations can be built in the UK, and if so, to create a planning and licensing framework that can make it happen. We're actively involved in this debate, and will be developing investment options of our own if the Government comes down in favour of nuclear power. Key factors would be a sustainable and realistic price for carbon and a long-term solution for the disposal of radioactive waste.