Energy Matters

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A discussion about energy in Aberdeen

August 2014

Research by

What is Energy Matters?

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Energy is something that matters to each and every one of us. Yet conversations about

energy are often had between politicians and in the media, and feel far removed from the

people they have the biggest impact on.

So, this year I’ve made it my priority to speak to as many people as I can, direct and in

person, to find out about their concerns. I’m not expecting everyone to agree with everything

I have to say, but I want us all to have an open and honest debate about energy.

We’ve worked with independent research company BritainThinks to find out what people living

in Aberdeen really think about energy. Unsurprisingly, cost was front of mind.

You said that you wanted to understand why your energy bills keep going up, what energy

companies were doing with their profits, and where the UK’s energy will come from in the future.

We’ve produced this report to give a flavour of the research we did and the events we held in

Aberdeen, along with a few facts about the energy we all use every day. We had some really

interesting discussions with local people and community leaders, so thanks to everyone who

came along. If you didn’t, we’re still very keen to hear from you so please do get involved by

visiting www.myenergymatters.com and have your say.

I hope this is just the start of an energy debate which goes beyond politicians and the media

to include everyone.

Mark Hanafin

Managing Director

International Upstream

Centrica Energy

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Trust in energy companies is at an all-time low in Aberdeen

Energy Matters is about having a conversation about energy with the people it matters most to - you. Independent research company BritainThinks carried out

research across the Aberdeen area to get a feel for your questions and concerns. We then held a series of meetings in the local area to discuss these further.

What you told us

• People in Aberdeen described a ‘tale of two cities’: they said that the

energy industry made an important contribution to the city and its

economy, but that local people didn’t always seem to benefit from this.

• We heard that many people in Aberdeen were feeling squeezed by the

cost of living. Against this backdrop, when they thought about energy

specifically, their number one concern was cost.

• Profiteering by energy companies was felt to be one of the key causes

of rising energy bills, though the fact that energy is in such high

demand across the world was also seen as an important factor.

• Although trust in energy companies was very low, most people in

Aberdeen agreed that it was important to talk about energy issues.

More than half of the people we surveyed said they were interested in

hearing what energy companies had to say.

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Trust in energy companies is at an all-time low in Aberdeen

Energy Matters is about having a conversation about energy with the people it matters most to - you. Independent research company BritainThinks carried out

research across the Aberdeen area to get a feel for your questions and concerns. We then held a series of meetings in the local area to discuss these further.

What we discussed

• People in Aberdeen brought a great deal of interest and knowledge to

the events, and asked a wide range of detailed and topical questions.

• They were especially interested in energy efficiency: how people could

be supported to use less energy, primarily to reduce their bills, but also

to take pressure off energy supplies.

• They also had lots of questions about new ways of producing and

storing energy, including carbon capture, generating energy from

waste, and using the UK’s water resources to produce renewable

energy.

• Independence did not form a major part of the discussions, but there

was some interest in the potential impacts of the referendum on

Scotland’s energy sources and future energy plans.

55

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Phone polling

• BritainThinks surveyed 500 adults aged

18+ living within 10km of Centrica

Energy’s Exploration & Production

Headquarters in Aberdeen, and the

Glens of Foudland onshore wind farm in

Aberdeenshire.

• Interviews were conducted by telephone

between 18 December 2013 and

13 January 2014 and each lasted around

15 minutes.

• The data were then weighted to be

demographically representative of the

local population by gender, age and

socioeconomic grade.

Focus groups

• BritainThinks held two focus groups with

people living in Aberdeen with an interest

in their local area and community.

• These focus groups took place on

28 January 2014 at the Copthorne Hotel

in Aberdeen.

• All research was conducted in line with

the Market Research Society’s Code

of Conduct.

How we found out your views

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Public events

• On 27 August 2014, 60 local people

came together in the Aberdeen Maritime

Museum for two ‘town hall’ style meetings

with Mark Hanafi n, the Managing

Director of Centrica Energy’s International

Upstream business.

• Over two hours, the groups discussed

with Mark where our energy comes from,

where it might come from in the future,

and the cost.

Community leaders

• Mark co-hosted a lunch with Colette

Cohen, Senior Vice-President of Centrica

Energy’s Exploration and Production

business in the UK and Netherlands,

to meet local business, political and

community leaders.

• The lunch was attended by senior

representatives from business and the

community including Scottish Enterprise,

Aberdeen City Council, Aberdeen and

Grampian Chamber of Commerce, the

Aberdeen Civic Forum, Aberdeen Citizens

Advice Bureau, SCARF (Save Cash and

Reduce Fuel) and Dame Anne Begg MP.

People in Aberdeen described a ‘tale of two cities’

of Aberdonians surveyed said that they felt optimistic about the local economy

%80

To really understand the wider context of the

energy debate in Aberdeen, we started off

our research by finding out what the top local

issues were.

The vast majority of the people we spoke to

felt that the local economy was booming,

with very high levels of optimism compared

with other parts of the UK.

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Of the different sectors and industries in

Aberdeen, the public sector was felt to make

the biggest contribution to the local economy

(81% said it made either a ‘big contribution’

or ‘some contribution’), followed by the

energy industry at 73%.

People in Aberdeen described a ‘tale of two cities’

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However, we also heard real frustration that

economic prosperity in Aberdeen doesn’t

always seem to benefit the local people,

and that it hadn’t led to enough investment

in the city.

• For many, improving the quality of local

roads and reducing congestion was

felt to be the top priority (at 12%, this

issue was more likely to be mentioned

spontaneously than any other issue).

• People were also concerned about

the rising cost of living in Aberdeen,

especially for families and people trying

to get on to the property ladder (9% of

people surveyed mentioned this issue

spontaneously).

• And for others, the city centre was felt to

be in need of regeneration. Union Street

was often described as ‘run-down’,

especially compared with high streets in

Edinburgh and Glasgow.

“People seem to think we’re rich up here, but the cost

of living is so much higher.”

“For the amount of money that’s in

Aberdeen, it’s a dirty place. Just look down

Union Street.”

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People in Aberdeen are concerned about the rising cost of energy

“To me the biggest issue with energy is the cost and knowing what

I’m actually paying for.”

“Energy supply is running out – there’s more

demand and less supply of it.”

When we asked people in Aberdeen what

they felt were the top two issues relating to

energy, cost was by far the most important.

• Three in 10 Aberdonians surveyed rated

their concern about the cost of their energy

bill as 10 out of 10 (30%).

• And two thirds agreed with the statement

‘I think consumers in the UK pay higher

prices for energy compared with other

European countries’ (66%).

What are the two biggest issues that come to mind when you think about energy?

Each bar shows the % of people in the Aberdeen area mentioning this issue spontaneously as one of their top two issues when they are asked to think about energy.

High / rising cost of energy prices and heating 67%16%

14%7%6%

4%3%3%

1%1%

19%10%

Sustainability of energy supply / future energy

Not enough renewable energy production

Negative impact of wind farms

Concerns about nuclear energy

Too much renewable energy production

Lack of competition in the energy sector

Concerns about fracking

The green debate, pollution and environmental impact

Not enough nuclear energy production

Other

None / don’t know

19%

25%

54%

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People in Aberdeen are concerned about the rising cost of energy

People in Aberdeen were more likely to

blame high and rising energy prices on

profiteering by energy companies than

any other cause (54%). The rising cost of

wholesale prices was also felt to be an

important factor, selected as the single

biggest cause by 25% of Aberdonians

surveyed.

There wasn’t any real sense that the ‘lights will

go out’ soon (64% agreed that this was unlikely

to happen in the near future) but most people

were conscious that some of our current energy

sources were running out.

There was strong interest in where our energy

will come from in the future, and in alternative,

more environmentally friendly sources of energy.

Each segment shows the % of people in the Aberdeen area selecting this option. Respondents were allowed to select one option only.

Which of the following do you think is the main cause of the rising cost of energy bills in the UK?

67% Energy companies trying to get as much profit as they can

The rising cost of oil and gas across the world pushing up wholesale prices

Taxes and green levies from the Government

None of these

Don’t know

1%1%

%

%

6964

of people surveyed in Aberdeen disagreed with the statement ‘I trust the energy companies to make decisions that are in my interests as a consumer.’

of people surveyed in Aberdeen disagreed with the statement ‘I trust the energy companies to make decisions that are in the country’s long-term interests.’

Almost 7 in 10 people surveyed in Aberdeen disagreed that energy

companies can be trusted.

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People are interested in hearing more about energy

We also asked people in Aberdeen what

they thought about energy companies and

the energy industry. They told us that, while

they didn’t really trust energy companies,

they would be interested in hearing more

from them about the top energy issues.

“Energy companies are worrying too much about their profi ts when they should be worrying

about the future.”

13

People are interested in hearing more about energy

of people surveyed in Aberdeen area agreed with the statement ‘I would be interested in listening to the energy companies and hearing their perspective.’

%57Although trust in the energy industry is at an

all-time low, over half of the people we spoke

to in Aberdeen said that they were open to

hearing more from the industry. More than

anything, they wanted to fi nd out the reasons

why prices were rising, where our energy will

come from in the future, and what impact

this would have on Aberdeen.

“I would like to know what energy

companies actually do, who they supply to.”

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Mark Hanafin, Centrica Energy’s Managing Director, hosted two

‘town hall’ style events at the Maritime Museum in Aberdeen. The

events brought together 60 local people to discuss all the big issues

relating to energy, from the factors making up a consumer’s typical

energy bill to where we get our gas from.

After introducing themselves, people were asked what topics they

wanted to discuss during the two-hour events. Mark wrote a list

to capture the issues on people’s minds when they thought about

energy. People had lots to say and raised a diverse set of issues,

from bills and customer service to creative ideas about how energy

might be generated and stored in the future.

“What’s going to change in the future?”

“Is fracking safe?”

“Why are energy bills so confusing?”

“What’s carbon capture and

why aren’t we doing it?”

“How can we be more energy

efficient?”“Are renewables cost-effective?”

People want to know what their money is being spent on

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DID YOU KNOW?

We need to ensure that we

have just the right amount

of energy being produced to

meet the needs of 24 million

homes and businesses every

minute of every day, 365

days a year.

The world hasn’t yet invented

technology to store electricity

in large quantities, so we

need to have exactly the right

number of power stations

running or wind farms

operating at any one time to

make sure each of us has

power at our � ngertips.

To explain what’s driving the cost of energy, Mark

showed how many of the issues that people had

raised could be summarised in three main areas:

costs, keeping the lights on and climate change.

Mark explained how these three things were in

confl ict with one another, creating a ‘trilemma’

of energy challenges.

For example, while we need to reduce our carbon

emissions to limit our impact on the environment,

many of the low carbon technologies - such as

offshore wind - are the most expensive, which

have an impact on prices. The one thing that was

made clear was that we needed to discuss these

challenges, and work together to try to resolve them.

“How can we be more energy

effi cient?”

People want to know what their money is being spent on

Gas

Oil Other C

oal

Renewables Nuclear

36%27%

15%20%

Source: Department of Energy and Climate Change

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People are really interested in hearing more about where our energy comes from

The groups talked about where the UK gets its

energy from at the moment and estimated how

our current energy mix was made up. Even though

people were very knowledgeable about different

types of energy and how our reliance on them has

changed over time, there was a wide range of views.

Coal

Most people in Aberdeen were

aware that we used much less

coal in the UK now than we did

in the past. While the majority

guessed that coal’s contribution

to the energy mix would be

about 35%, some expected the

fi gure to be much lower because

of its environmental impact.

“The amount of coal is surprising given

the damage to the environment.”

“I remember off-peak electricity.

Does that still exist?”

DID YOU KNOW?

Coal

Coal is currently the

cheapest way of generating

electricity but is being

phased out in the UK

because the stations

produce emissions that are

harmful to the environment

and our health.

17

People are really interested in hearing more about where our energy comes from

Nuclear

People were much less certain

about how much nuclear energy

currently contributed to the mix,

with estimates ranging from 10%

to 60%. Several people were

interested to know if there were any

plans for investment in new nuclear

power stations in Scotland in the

future.

Renewables

People were aware that renewable

energy made up a smaller

proportion of our electricity supply

than coal or gas. Attitudes towards

renewable energy were positive,

as people recognised it’s growing

presence in Aberdeen, but some

wanted to know how we could

make sure that it was cost-effective.

“What’s going wrong with nuclear?

Why is it taking so long?”

“I’ve read that wind farms actually

waste us a lot of money.”

DID YOU KNOW? Wind

Renewables provide a

great carbon-free source of

electricity, but wind farms

need wind, and solar farms

need light to work. This means

they need to be backed up

by gas-fi red power stations to

ensure we have power on a

cold, still winter’s night.

DID YOU KNOW?

Nuclear

Nuclear offers steady production

of electricity without generating

any carbon emissions, but the

UK’s current nuclear power

stations are getting old and

signifi cant investment is needed

to build new ones.

Source: National Grid

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People at the events were aware that the UK was

now less self-suffi cient in gas than it used to be,

and some were surprised that we still produced

nearly half of the gas we use ourselves from the

North Sea and East Irish Sea. There was real

interest in understanding what would happen to this

supply if Scotland voted in favour of independence.

There was surprise that we didn’t import any

energy from Russia or the African continent directly

like other European countries, and that as much as

36% of the UK’s gas comes from Norway.

LNG arrivingby ship

Gas piped from theContinent

Gas from Norway

Gas from North Sea and East Irish Sea G

as

Other C

oal

Renew

ables Nuclear

Oil

36%

42%

12%

9%

36%27%

15%20%

“We need to stay friends with Norway

then!”

“I would think that we get most of our gas from Russia.”

DID YOU KNOW?

Gas

Gas is a much lower-carbon fuel than coal –

producing around half of the carbon emissions.

Gas-� red power stations can provide

guaranteed electricity at any time of year.

But, to generate electricity by burning gas,

the UK � rst needs to buy the gas,

which is proving increasingly expensive.

WHERE THE UK’S GAS COMES FROM TODAY

Gas has a big role to play, but where do we get it from?

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While people were familiar with underground

gas pipelines connected to the European

continent as a means of transporting gas,

few had considered how we import gas from

further afi eld. Few had heard about Liquefi ed

Natural Gas (LNG) and were interested to

fi nd out more about how it works and why it

was so important.

LNG arrivingby ship

Gas piped from theContinent

Gas from Norway

Gas from North Sea and East Irish Sea G

as

Other C

oal

Renew

ables Nuclear

Oil

36%

42%

12%

9%

36%27%

15%20%

DID YOU KNOW?

LNG

In order to transport gas from other

countries, we super chill it to -160°C -

the same temperature as you’d � nd on

Saturn, the frozen planet. This creates

Lique� ed Natural Gas (LNG), which

reduces the volume of the gas by 600

times, allowing us to ship it around

the world. However, the UK isn’t the

only country which wants LNG so we

need to compete with other countries,

many of which are willing to pay more

to buy it.

Gas has a big role to play, but where do we get it from?

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Most people in the sessions had heard

or read something in the media about

fracking, but they felt that they were

missing the key facts about how it

actually worked. People had lots of

questions, in particular about safety, but

also about whether fracking could have

any impact on energy bills.

The groups were invited to see for themselves

how shale rock differed from sandstone.

Each participant looked at two pieces of

rock – one sandstone and one shale – and

dropped some water onto each rock. When

participants dropped water onto sandstone, it

was quickly absorbed into the rock, but when

they did so for shale, the water ran off the

surface. Mark explained that this was because,

unlike sandstone, the air pockets in shale

are extremely small, making it much harder

to get the gas out compared with rocks like

sandstone.

“I want the lights to stay on, so I say go for it!”

“You hear horror stories about the environmental

damage it’s causing.”

What about shale gas and ‘fracking’?

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Most people’s concerns about fracking

focused on the potential risks to the

environment and the safety of communities

living nearby. Several people had heard

concerning stories about safety from the US,

so Mark explained that the UK had some of

the strictest regulations in the world when

it came to safety, which would include any

fracking activities.

While some participants remained concerned

about safety, several people were of the

opinion that, if it is regulated in the right way,

fracking was worth exploring.

DID YOU KNOW?

Shale Gas

There is actually no such thing as

‘shale gas’, it’s the same natural gas

we get from beneath the North Sea

but it’s trapped in shale rock so it’s

much harder to produce.

We use a process called hydraulic

fracturing, known as fracking, which

creates small cracks in the shale

rock held open by grains of sand to

allow the gas to � ow out.

“There’s not enough information about it in layman’s

terms.”

What about shale gas and ‘fracking’?

22

“Why is the Government not

investing to teach people to use less

energy?”

“They say you can save money by switching, but

I think it’s just marketing.”

Having set out all the wider issues that had

an impact on the cost of energy, Mark talked

about the makeup of energy bills.

• The largest part of the average energy

bill is the cost of buying the energy

itself. However that only gets the gas or

electricity as far as the UK’s ‘grid’ system

and not to individual homes. After that,

the second largest cost is in getting gas

and electricity to our homes – transporting

it through pipes and pylons.

People were in agreement that the cost of

energy bills was one of the most pressing

issues when they thought about energy, and

were keen to discuss how their bills were

calculated and why prices kept rising.

There was real interest in how people could

be supported to use less energy to reduce

their bills, and a strong belief that there was

more work to be done in improving housing in

Scotland to make it more energy effi cient.

Mark explained how our relationship with

energy was likely to change signifi cantly with

the introduction of Smart Meters, which will

help families work out exactly how much

energy they’re using, and to use electricity at

off-peak times when it’s cheaper.

“I have a smart meter already and it monitors everything

– it’s excellent.”

So what about bills, prices and profi ts?

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• Then there are the costs that the

government requires energy companies

to include: subsidising the cost of

renewable energy, which is important

for the environment but still expensive,

and funding important schemes

to help vulnerable customers.

Energy companies also pay taxes

directly to government.

• The last part of the average bill is made

up of energy companies’ operating costs

– around 9% in the case of British Gas –

and their profi ts – around 4%, or about

£4 per household per month.

Some of these profi ts go back to

shareholders, who invest their own money

to get a return. The rest goes into investing

for the future, helping the UK explore for

gas, build power stations, develop new

technologies and, of course, create jobs.

Base: Breakdown of the average British Gas domestic gas and electricity bill in 2013

So what about bills, prices and profi ts?

24

Mark and Colette Cohen, Senior Vice-President

of Centrica Energy’s Exploration and Production

business in the UK and Netherlands, also met

with a number of Aberdeen’s business, political

and community leaders.

They had a deep understanding of the

complexity of the energy debate, and agreed

that it could be challenging to have an open

and honest discussion about energy when the

media was so dominated by the issues of

prices and profits. The group also felt that

there was a conflict in people’s priorities for

the future: most wanted their bills to go down,

but they also wanted to see more investment

in cost-intensive sources of energy, such as

renewables.

Several community leaders felt that people’s

experiences of energy companies as

consumers were critically important in

building and keeping trust in the industry.

In particular, they felt that examples of poor

customer service had led to people feeling

let down by energy companies, and that the

shift away from meter readers and paper

bills meant that some people didn’t feel that

they had any relationship with their supplier

anymore. There was agreement around

the table that younger people and children

should be the priority in building knowledge

and relationships for the future.

“We want lower bills but we want

the most expensive source of energy.”

“What about the younger generation?”

Local community leaders share people’s concerns about energy

25

The group also discussed the idea that

Aberdeen was often seen as being ‘two

cities’: oil and gas Aberdeen and the ‘real’

Aberdeen. They were concerned about

social inequality and pockets of poverty in

the city, and welcomed schemes such as the

Combined Heat and Power scheme, which

provides energy efficient, low cost heating

to tower block flats. They also felt that

employees in the industry, many of whom

only spent a short time living in the city,

should be encouraged to build stronger local

networks.

There was interest in the next big energy

debate being around security of supply, and

in different forms of energy that might form

an important part of the future energy mix.

Some leaders were keen to know how our

energy policies and prices compared with

other European countries, and whether there

was anything we could learn from their plans

for the future.

“Senior people move on quickly and don’t invest locally. People who could make a difference

aren’t engaging.”“Poverty is relative and inequality

in Aberdeen is massive.”

Local community leaders share people’s concerns about energy

We want to hear from you

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This report has been produced by BritainThinks,

an independent research agency. BritainThinks

carried out all quantitative and qualitative

research, and were independent observers

at the Energy Matters events.

For more information about the research,

contact BritainThinks at www.britainthinks.com

or on 020 7845 5880.

At the end of each event, Mark encouraged

everyone who had given up their time to talk

and find out more about energy to continue

the conversation with family, friends, neighbours

and colleagues.

He concluded by saying that energy was simply

too important not to talk about. Hopefully, by

meeting with people and explaining the issues

that energy companies face on a daily basis,

there will be greater understanding of some of

the challenges and decisions we face in the UK.

We really want to keep the conversation going

so please visit www.myenergymatters.com.

www.myenergymatters.com

/myenergymatters

@energy_matters

There are a number of ways to get

involved and make your voice heard.

Brought to you byResearch by

www.myenergymatters.com /myenergymatters @energy_matters