Knowledge Centre
Jersey's energy market
Introduction
The production and use of energy is vitally important in modern economies and has become even more so recently as a result of –
- A general acceptance of the need to reduce global warming which has significant implications for the use of fossil fuels.
- Substantial increases in the cost of energy, partly as a result of the Russian invasion of Ukraine, which has contributed to cost-of-living pressures.
Jersey is a consumer rather than producer of energy. This paper seeks to explain all aspects of energy supply and consumption in the Island.
Summary
There are three main sources of energy - fossil fuels (oil, gas and coal), nuclear power and renewables (hydro, wind and solar). Fossil fuels are used directly and also to produce electricity. Nuclear power and renewables are used almost entirely to produce electricity. Building new energy facilities can be very capital expensive while marginal costs can be low.
Energy consumption in Jersey has fallen by 43% since the mid-1990s and there has been a significant switch away from electricity being generated from oil to electricity being generated by nuclear and hydro power.
Of total energy consumed in Jersey, 58% is provided by oil, 38% by electricity and 3% by gas. Oil is the major fuel for vehicles and heating. Electricity is imported from France through three undersea cables and is either nuclear or hydro in origin. Domestic users account for 38% of energy use, road transport for 26%, industry and government for 27% and air and marine for 9%.
Energy policy has to reconcile three competing objectives – sustainability, security and affordability.
Jersey is committed at a minimum to reduce emissions by 68% compared to the 1990 baseline by 2030; and reduce them to 78% from baseline by 2035 and deliver net-zero emissions by 2050. Increased use of renewables cannot help achieve these objectives given that electricity is already from low carbon sources. The objectives can be achieved only by significant electrification, particularly in transport, and the replacement of some fossil/hydrocarbon fuels with non-fossil hydrocarbons. The targets are that by 2030 no new petrol driven cars and light vans will be registered, 67% of all vehicles will be decarbonised and 75% of domestic and 50% of commercial fossil fuelled boilers will be decarbonised. These are challenging targets and will be costly to meet.
An overview of the supply of and demand for energy
The way that energy has been produced has changed dramatically over the years. Thousands of years ago wood was used to provide heat. Over 1,000 years ago wind and water power were first used to drive mills. With the industrial revolution coal became a major source of energy, used directly by heavy industry and later to produce electricity. In the 20th century oil and gas became more important and later in the second half of the century nuclear power became an energy source. More recently, natural resources – wind, the sun and water - have become more important. There has also been a concentration on energy efficiency, both on cost grounds and also because of the effects of the use of fossil fuels on the climate.
Today, energy sources comprise –
Fossil fuels – coal, gas and oil
Renewables – solar, wind and hydro
Nuclear
Electricity is not an independent source of energy but rather a product of one of the primary sources. Fossil fuels are used directly and to produce electricity, while renewables and nuclear are used almost entirely to provide electricity.
The sources are very different in nature. Coal, gas and oil are physical commodities that need to be extracted from below the surface and then transported to where they are used. They have the advantage of being able to be stored. Renewables, by their very nature, are more erratic and given that electricity cannot be stored to any significant extent this impacts on their effectiveness. Renewables depend on favourable circumstances - the sun, wind and water - and therefore can be located only in appropriate places. Solar and wind power in particular can be very variable, production sometimes falling to zero.
For this reason many countries use a combination of sources of electricity, ideally using renewables and nuclear power but having fossil fuels when there is a drop off in supply from renewables.
Renewables and nuclear power both have relatively low running costs but particularly in the case of nuclear power very high capital costs and a long lead time before new equipment can come onstream. The Hinckley Point C nuclear power station will cost about £33 billion and take over ten years to build. “Small nuclear reactors” have a capital cost of about £1.8 billion.
A House of Commons Research Briefing Introduction to the domestic energy market provides a very good analysis of these points, much of which is relevant to Jersey.
Energy use in Jersey
The authoritative source of information on energy in Jersey is the annual Energy Trends report published by Statistics Jersey. The most recent report is for 2022, published on 9 August 2023.
The key statistic is the TOE, an abbreviation for energy used by burning a tonne of crude oil. The figure peaked at 245,000 TOE in 1996. By 2022 it had fallen by 43% to 139,055 TOE. The 2022 figure was 5% below that for 2021.
The trends are explained in the 2022 report –
- An increase in imported electricity and the complementary decrease in imported petroleum products for on-Island electricity generation.
- A generally downward trend since around 2007 due to a range of factors, including a reduction in the use of kerosene for domestic heating and of motor fuels for transportation.
Total energy consumption in 2022 was 135,976 TOE, made up of
Petroleum 79,487 TOE (58%)
Electricity 52,206 TOE (38%)
Gas 4,283 TOE (3%)
The end users of energy were –
Industry and government 36,588 TOE (27%)
Air and marine 12,568 TOE (9%)
Road 34,802 TOE (26%)
Domestic 52,017 TOE (38%)
In the UK the figures are domestic 32%, transport 34%, industry 18% and services 16%.
Consumption per capital in 2022 was 1.3 TOE, well below the UK figure of 1.9 TOE.
Of energy use in homes in 2022, electricity accounted for 56%, petroleum products for 40% and gas for 3%. For comparison the UK figures were 23% for electricity, 67% for gas, 6% for oil and 3% for renewables.
Energy supply in Jersey
58% of Jersey's energy consumption is of petroleum products. Oil is imported into Jersey by oil tankers to the La Collette Fuel Farm storage facility run by the Fuel Consortium owned by Esso UK and La Collette Terminal Ltd. It is then distributed by fuel tankers to industrial, commercial, agricultural and domestic consumers and retail petrol providers.
Gas accounts for just 3% of energy consumption in Jersey compared with 17% in the UK. Jersey uses Liquid Petroleum Gas (LPG) rather than natural gas. It is shipped to the Island and stored at the gas storage facility at the harbour. Mains gas is manufactured at the gas production plant which creates an LPG air mixture. This is then distributed through an underground distribution network for domestic, industrial and commercial use. Those not connected to the main distribution network are supplied with bottled LPG.
Electricity accounts for 38% of the supply of energy. Responsibility for supplying electricity rests with one company – Jersey Electricity, which is partly owned by the Government of Jersey. It imports electricity from France, distributes electricity throughout the Island, maintains two back-up oil-fired power stations and is involved in initiatives to provide solar and wind power. Jersey Electricity’s Annual Report and Accounts 2022 provides comprehensive information about the company and more generally about the supply of electricity in Jersey and the path to net zero.
Jersey obtains 95% of its electricity from France. Of this 34% is hydro electricity from the Rance Barrage and 66% is nuclear energy from the plant at Flamanville in Normandy. For comparison, the UK figures are 40% from renewables, 15% from nuclear and 43% from fossil fuels. There is a limited amount of locally produced electricity from the Government’s energy from waste plant and some solar power units at the Queen’s Road Car Park, La Collette Power Station, Woodside Farm and Jersey Diary. The power stations at La Collette and Queen’s Road provide backup in the case of power from France being disrupted by damage to the cables.
Three cables supply electricity from France to Jersey –
- Normandie 1 runs for 27km from Surville in Normandy to Archirondel and came onstream in 2017.
- Normandie 2 runs from Saint-Remy des Landes to Archirondel and came onstream in 2000.
- Normandie 3 runs for 19km from Periers to Armanville, then 32km undersea to Grouville and 7km underground to the South Hill switching station and came onstream in 2014.
There is also an interconnector between Jersey and Guernsey. Jersey Electricity and its sister company in Guernsey have a joint venture, the Channel Islands Electricity Grid, which owns and operates the interconnectors with France and Guernsey.
Interconnectors (the technical expression for cables for transmission of large amounts of electricity) are common in many other areas. The UK has seven interconnectors – to France, Ireland, Belgium, Norway and the Netherlands. They are two way – enabling supply and demand to be balanced between countries.
Energy policy generally
Energy policy is the responsibility of the Jersey Government, as it is of all governments. The House of Commons Briefing Paper notes that the energy policy of successive British Governments has used the energy “trilemma” framework with the following three objectives –
- Sustainability: Decarbonise electricity generation.
- Security: Ensure uninterrupted supply.
- Affordability: Minimise the cost of energy to consumers.
These apply in any jurisdiction and are relevant to Jersey. A key point is the trade-off between the three objectives. Actions that improve sustainability or security have cost implications and therefore affect the cost of energy to consumers.
Scope for increased use of renewables in generating electricity
Jersey is an island surrounded by seas with a huge title range. The seas can also be quite windy at times and Jersey claims to be one of the sunniest parts of the British Isles. Therefore it is not surprising that there has been comment to the effect that Jersey should be making much more use of renewables - wind, water and solar power - and also that it should be aim for more energy sovereignty – that is not being reliant on importing electricity from France.
This issue needs to be considered from first principles, that is what would be the purpose of Jersey investing in renewable energy? Would it be to provide cheaper power, more resilience in the supply of electricity or making a contribution on the path to net zero? These issues are considered in turn.
Would renewables produce cheaper power?
Currently, electricity in Jersey is comparatively cheap compared with other jurisdictions. Tariffs in Jersey are 10 to 20% lower than in Guernsey and the Isle of Man and the third below the UK. This reflects a long-term contract that Jersey Electricity has with the French supplier EDF. While Jersey could invest in renewables this would be more expensive at present for the consumer. However, relative costs change over time. The cost of wind power has fallen substantially in recent years which makes it more viable for Jersey. But Jersey is probably too small to invest in its own wind-generated electricity. It does have the ability to co-operate with suppliers in France and a number of wind farms are being built quite close to Jersey. Similar arguments apply to Jersey generating its own hydro power. However, solar power is relatively cheap and Jersey Electricity has commenced a number of small-scale projects, and is seeking to establish six ground-based solar arrays, with an aspiration to provide 5% of Jersey’s electricity supply.
Should Jersey seek to be more self-sufficient in electricity supply?
Over the past year there has been increasing attention on the resilience of fuel supplies largely as a consequence of the Russian invasion of Ukraine which had an immediate and massive impact on energy markets. There were even reports of a threat that France would cut off electricity to Jersey over a dispute on fishing although this was never a realistic prospect. Electricity cables are susceptible to damage and over time eventually wear out so having a reliance on one cable would certainly be risky. Currently there are three undersea cables running between Normandy and Jersey and this gives considerable resilience. Also, in the event of all three cables being damaged or for whatever reason supply from France being cut off then the power stations at La Collette and Queens Road are capable of supplying the Island, albeit at a substantial cost. The Island could build more resilience, for example by storing more oil, but again this comes with a cost.
Would greater use of renewables help achieve net zero?
In respect to Jersey’s commitment to achieve net zero by 2050 there is nothing further that can be done in respect of electricity given that currently almost all of it is generated not from fossil fuels. The Carbon Neutral Road Map commented. –
While access to low-carbon electricity can be maintained, switching to other forms of low-carbon generation at either the utility scale (for example wind or tidal generation) or more local sustainable generation (for example PV panels on roofs) will not provide further carbon reductions, although it could bring other benefits for energy security and (in some use cases, in particular for those generating energy) affordability.
Implications of Jersey’s commitment to reduce emissions
Jersey has voluntarily adhered to the Paris Agreement and therefore to “as a minimum, reduce emissions by 68% compared to our 1990 baseline by 2030; and reduce them to 78% from baseline by 2035 and deliver net-zero emissions by 2050”.
Jersey’s path to meeting these commitments is set out in the Carbon Neutral Roadmap , which was approved by the States Assembly on 29 April 2022. This states that –
The future of Jersey requires significant electrification, particularly in transport; the replacement of some fossil/hydrocarbon fuels with non-fossil hydrocarbons, and potentially hydrogen, will also be required. with non-fossil hydrocarbons, and potentially
The Roadmap sets out what will need to be done in various time periods. By 2030 the targets are that -
- No new petrol driven cars and light vans will be registered.
- 67% of all vehicles will be decarbonised.
- 75% of domestic and 50% of commercial fossil-fuelled boilers will be decarbonised.
By 2050 99% of all vehicles will be decarbonised and there will be 100% zero carbon heating.
In respect of road traffic the Roadmap says this will require a combination of –
- A reduced need to travel – for example by people living closer to their work.
- A shift to active travel and public transport and away from private cars.
- Car travel to be made by low emission vehicles.
For heating, it is envisaged that both buildings and appliances will be more energy efficient, that the installation of new fossil fuel boilers will stop after 2030 and existing boilers will be converted, particularly through replacement by heat pumps. The Roadmap states that in respect of domestic heating –
With an estimated 21,559 fossil fuel boilers currently in the Island, the target is c16,000 boilers to be switched by 2030.
Similarly, there is a target of switching 1,700 of 3,415 fossil fuel boilers in commercial buildings by 2030.
These are challenging targets. They are also costly. The Roadmap states that the minimum direct cost for the Government for fully implementing the identified policies is £215 million. There is no indication of the costs that will be met by consumers or businesses nor is there any analysis of what will be required to achieve the targets.
This can be illustrated by considering the cost of heat pumps. These cost around £10,000 to install. Assuming 10,000 boilers are replaced by heat pumps by 2030 the total cost would be £100 million. A subsidy is envisaged but of course the cost of the subsidy would be met by the Jersey public through taxation.
Proposal for a wind farm
On 17 October 2023 the Council of Ministers announced that “an offshore wind farm, with the potential to provide significant environmental and economic benefits for Jersey will be built in the southwest of the Island’s territorial waters…..the plans for a facility of up to around 1,000MW would comfortably produce enough electricity to meet the Island’s own needs, with the remainder to be exported”.
On 20 November 2023 the Government announced a consultation on the proposal. Key points from the proposal are reproduced below –
The proposed windfarm would generate up to around 1,000MW of low carbon electricity.
Taking into account times when it does not produce electricity (for example, when there is little or no wind), a 1,000MW wind farm would generate around 3,800MWh of renewable energy each year.
Because wind power isn’t constant, we would still need to import some electricity to make sure that we have a consistent and stable service at all times.
The windfarm would be built in in the south-west of Jersey’s waters, next to the existing St Brieuc windfarm. Initial investigations have identified this area as benefitting from relatively shallow sites and energetic wind conditions.
A wind farm such as this will cost several billion pounds to design and build. Because of the very significant level of investment needed, and the significant risks associated with that investment, it is proposed that the wind farm should be privately funded and built by companies that have substantial experience of similar development elsewhere.
Many of these costs need to be estimated in advance but can go up or down over time. The future price of energy also has to be assessed in order to establish how profitable a scheme may be. With this approach the benefits of an offshore wind farm for Jersey come in different forms, and should be substantial.
The way that Jersey benefits from a wind farm will depend on choices taken in the coming years, but should include the following benefits -
- Energy security benefits. Jersey could enter a long-term contract to guarantee energy to the Island at certain prices. This could make local energy costs more stable in the future than they otherwise would be. In future, if access to energy becomes more contested, Jersey would benefit from knowing that it has secure access to its own energy.
- Economic benefits. A windfarm at this size would create energy that, at today’s prices, would be worth around £300m a year. Much of this energy could be exported, adding a new sector to Jersey’s economy. The wind farm should also create sustainable and high value jobs in the Island, such as in supporting its operations and maintenance.
- Income benefits. Developing a wind farm creates opportunities to raise income for the public purse. For example, profit made from the sale of energy would currently be taxed at 20%, and fees can be charged for access to the seabed.
- Environmental benefits. Jersey would secure guaranteed access to low carbon energy that our net zero transition requires. Exporting energy will also help other countries to decarbonise too.
The wind farm issue is discussed in detail in a Policy Centre Policy Brief.
Following the consultation the States Assembly decided in April 2024 that -
- Jersey should pursue the opportunities arising from the development of offshore wind in the south-west of its territorial waters.
- Development of up to 1000MW should be encouraged in order to meet the needs of islanders, power our future economy and create energy for export.
- The government should bring forward appropriate policy and legislation, in 2024, to set in place a process to lease, consent, regulate and decommission a wind farm.