Temperature Adjustment of UK Energy Statistics Iain MacLeay

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Between 2009 and 2010 what happened to UK energy consumption ? Did it a.Rise by 3.9% b.Rise by 2.9% c.Remain broadly unchanged d.Fall by 0.6%

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Annual average temperature (degrees Celsius)

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Primary Energy Consumption Million tonnes of oil equivalent Unadjusted Seasonally and temperature adjusted (annual rates) Per cent change

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Statistical Model Y = C * I * S * TD * E * temp Where: Y = observed time series C = trend-cycle I = irregular component S = seasonal factor TD = trading day effect E = Easter effect temp = Temperature coefficient Note: Model can be arithmetic rather than multiplicative Y = C + I + S + TD + E + temp; or a combination of the two.

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Temperature correction Y / temp = C * I *S * TD * E Assume no temperature, Easter or trading day effects then: Y = C * I * S And the seasonally and temperature adjusted series is Y / S = C * I

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Two main statistical techniques used Regression –Easter –Trading days –Temperature effects Moving averages –Trend-cycle –Seasonal component + ARIMA modelling to help improve the calculation of the moving averages (extend time series by forecasting one year of additional data)

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 How do we currently adjust for temperature Gas –National Grid provide temperature adjusted series as well as the raw data for gas –Adjustments are smaller in the summer months of July and August. Largest adjustments in fact appear in Spring and Autumn –Does this seem sensible ? Coal –Adjusted by factor of 2.1. –If temperature is 2 degrees above “normal” then factor = (2 * 2.1) = 4.2. Raw data is divided by resulting in temperature adjustment increasing the series. –Warm weather – use less energy – so temperature adjusted series should be higher –Same adjustment used irrespective of season

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Temperature adjustment Alternative methods 1.Use same factors for each month – or specific factors for each month 2.Use monthly average temperatures (current practice) or degree days (only use heating if daily temperature above/below threshold) 3.Growth in cooling – should this be adjusted for? Data DECC receive data from the Met Office (17 stations reporting daily max and min temperatures)

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Coal data

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Coal data

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Coal data

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Average monthly temperature

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Heating degree days

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Temperature adjustment factors

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 Final factors – using degree day methodology

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011

Temperature adjustment of UK Energy Statistics Iain MacLeay – May 2011 UK energy growth 2009 to 2010 Raw dataTemperature corrected data Primary energy consumption +2.9%-0.6% Final energy consumption +3.9%+0.1% Domestic gas consumption +15.0%-0.4%