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Energy Comparison: UK and US

Although our cultures may be derivative of one another’s, when it comes to energy, there are some major differences. The key aspect to bear in mind from the outset is the sheer difference in size between the two countries. The United States is roughly 40 times larger than the whole of the United Kingdom. As such, the market is much like inspecting the whole of Europe with a little more commonality and solidarity.


Deregulation

Each state in the United States of America has its own local energy company in order to make nationwide energy governance easier to manage. This has its perks and its disadvantages. Much like the UK, your transmission and distribution will be handled by the relevant companies according to your location; however, the difference occurs at the end product. In the US, many states do not have the option to elect a utility of their choice to better fit their financial needs and consumption habits. As such, your state’s energy company will automatically choose their default energy supplier to distribute to your home. This is usually the most expensive in order to maximise profit margins, especially if there is a choice. The UK, however, was fully liberated in 1990 during the Margaret Thatcher government when she privatised the energy markets allowing competition, therefore disbanding all local monopolies. Below is a map illustrating which states have any form of choice when it comes to your energy supplier:



This process in the US is called ‘deregulation’ and is currently in the process of becoming more widespread; however, there is still an extremely large way to go until the whole of the US becomes deregulated. Just like in the UK, many people either have no idea that they have the option to choose their supplier, or simply can’t be bothered. This should not be the attitude if you have any desire to save money: changing your energy suppliers could save you hundreds of pounds or dollars per year.


Electricity Generation

Although both the US and UK, much like the rest of the world, are making a push towards a sustainable future, the US are still using 8% more fossil fuels in their production mix than that of the UK.

The UK appear to be putting a larger focus on wind generation: the UK landscape is laden with wind turbines, especially in the north of England and Scotland. The UK’s 8% is compared to the US’s 1%.

The UK is also making huge effort towards Biomass & Waste Generation, making up 7% of their electricity generation mix, whereas in the US it only represents 1%. However, the US are making putting considerable emphasis on their renewable energy efforts through Hydroelectric, which represents 6% more in the US production mix than in the UK.

United Kingdom
Production Type Percentage of mix
Fossil Fuels 63%
Nuclear 19%
Wind 8%
Biomass & Waste 7%
Hydroelectric 2%
Others 1%
United States of America
Production Type Percentage of mix
Fossil Fuels 71%
Nuclear 19%
Hydroelectric 8%
Wind 1%
Biomass & Waste 1%
Others less than 1%

Energy Price Comparison

We're all paying for the same product, surely there can't be too much of a difference between countries in terms of price? Well, there is. Due to the size of the United States, it is impossible to pinpoint a common price; however, in general, unit rates in the US are considerably cheaper than those of the UK. Some seeing as much as a 50% difference. In addition, due to the UK's government energy regulator 'OFGEM', each energy tariff in the UK has to contain a 'Standing Charge' which represents static costs such as transmission, distribution, meter readings etc, meaning the price doesn't even stop at the unit rate. That said, the difference in average consumption between the US and UK is quite staggering:

Average annual energy usage per household

United States of America
Electricity - 10,812 kWh
Natural Gas - 21,980 kWh (converted from therms)

Source: US Department of Energy

United Kingdom
Electricity - 3,100 kWh
Natural Gas - 12,500 kWh

Source: UK Power

The above information shows that the average US household uses over three times as much electricity than the average UK household and almost twice as much natural gas. This could be due to a number of reasons, such as: habitual discrepancies; eco-friendly househould installations; switch enabled plug sockets; and many more.

Because of the sheer amount of consumption in the US, it is clear to see that the average US household is paying more than the UK; however, there isn't as large of a difference as one might expect. Below we made an example tariff comparison based an average priced tariff and average annual consumption details for each country.

(All units have been converted into kWh to ensure consistency throughout the comparison.)
(All prices are expressed in both US Dollars and GB Pounds.)

UK tariff breakdown

Both electricity and natural gas tariffs are estimated through British Gas's 'HomeEnergy Capped Feb 2018' for the Yorkshire area.

Electricity

Unit rate = 14.92¢ per kWh
                = 12.29p

3,100 kWh x 14.92¢ = 462.82$
                                    = £380.99

Natural Gas

Unit rate = 4.49¢ per kWh
                = 3.7p

12,500 kWh x 4.49¢ = 561.83$
                                    = £462.50

Combined

$: 462.82$ + 561.83$ = 1024.65$ per year
£: £380.99 + £462.50 = £843.49 per year

US tariff breakdown

Both electricity and natural gas tariffs have been made based on the state of New Jersey.

Electricity

Tariff: Spark Energy's 'Spark Advantage Plus 24'

Unit rate = 11.19¢ per kWh
                = 9.21p

10,812 kWh x 11.19¢ = 1,209.86$
                                      = £996.19

Natural Gas

Tariff: North American Power's '12 Month Fixed'

Unit rate = 1.9761¢ per kWh
                = 1.63p

21,980 kWh x 1.9761¢ = 434.35$
                                         = £357.64


Combined

$: 1,209.86$ + 434.25$ = 1644.11$
£: £996.19 + £357.64 = £1353.83

Summary

As we can see from the above tariff breakdowns, the average UK tariff (exc. standing charge) is around 619.46 (£510.34) cheaper than in the US. However, if we do add the standing charge onto the UK bill, which would amount to around 223$ (£185) per year for this tariff, the bill would become 1247.65$ (£1024.65), which means its only 396.46$ (£325.34) cheaper per year, which considering the sheer difference in consumption between the two countries, means that US energy is incredibly cheap in comparison to the UK.


If you are interested in learning more about energy in the UK visit Selectra UK by clicking the image below: