Accelerating the energy transition can not only alleviate concerns over security of energy supply, but also deliver cheaper power to consumers, National Grid ESO has said.
In its Future Energy Scenarios (FES) 2022 report, published today, the system operator has highlighted the myriad challenges and changes the world has undergone since last year’s report.
But rather than avert course, National Grid ESO (NGESO) has said that significantly accelerating the energy transition can deliver more secure, more affordable power to British homes and businesses.
The annual report provides a detailed assessment of the energy system’s decarbonisation journey, using four key scenarios to plot that trajectory. This year’s report (found in full here) includes some key changes to last year’s edition (as detailed below) with decarbonisation expected to happen slightly quicker than previously expected throughout the 2030s.
The report also builds on how geopolitical developments – most notably Russia’s invasion of Ukraine – has posed new challenges and raised fresh concerns over the security of energy supply.
But in a foreword for the report, the ESO’s executive director Fintan Slye has said that the net zero timetable is achievable if all stakeholders can work together.
“Delivering [the transition] will require a strong partnership between industry and policymakers, and full engagement across society and consumers. Never before has collaboration been more important,” Slye has said.
FES 2022 in focus
The report is broadly divided into four chapters, each exploring the energy sector’s decarbonisation out to 2050. Those chapters, and key recommendations within them, include;
Policy and delivery
The report focuses on three core areas with regards policy, notably the need for a comprehensive demand side strategy to support the aims of the government’s energy security strategy – which focused entirely on supply-side measures – the need for a more comprehensive rollout of energy efficiency measures, and the need for more regionalised focuses on heat decarbonisation, with national strategies deemed “sub-optimal”.
Consumer and digitalisation
Significant levels of demand side response will be required after 2035 to support the management of the energy system and energy suppliers must be supported in their endeavours to encourage and coordinate this, through the introduction of measures such as time of use tariffs. Smart technology solutions that coordinate this participation automatically, rather than manually, will be required for consumers to ensure a just and fair transition. Meanwhile, information relating to net zero and decarbonisation will need to be disseminated by trusted bodies.
Markets and flexibility
Currently around 43% of UK power demand is met by renewables (wind and solar), however this will rise to at least 66% by 2030. Transmission costs have also soared nearly ten-fold since 2010 to £1.3 billion this year, cost which is expected to continue to rise as more renewables enter the system. As a result, there will be a need for significantly more flexible power capacity than today, with the Consumer Transformation and Leading the Way scenarios both modelling for in excess of 115GWh of electricity storage capacity by 2035.
In addition, market reforms will be necessary to improve locational signals to optimise power dispatch at the local level, delivering cost savings, while participation in energy markets will also need to improve. NGESO has highlighted the need for flexible tariffs, supports for innovation and barriers to entry being removed in this regard.
Infrastructure and the whole energy system
With as much as 15TWh of power curtailed by 2030 in all three net zero-compliant scenarios, the report stresses the need for whole system strategy and coordination to reduce losses as much as possible. Interseasonal energy storage capacity will be crucial to both this and the need to run the energy system on renewables throughout the year, while NGESO has also stated that competition will be vital in the delivery of large projects in order to reduce the cost of the transition.
The net zero trajectory
In FES 2022, three of National Grid ESO’s scenarios – System Transformation, Consumer Transformation and Leading the Way – reach a net zero energy system by 2050, however decarbonisation is now expected to occur slightly quicker over the 2030s compared to modelling in last year’s FES. The one scenario that does not, formerly known as Steady Progression, has been renamed as Falling Short.
As the graph below illustrates, the three net zero-compliant scenarios all reach the target at broadly the same pace.
With the annual average carbon intensity of electricity having last year stood at 156g CO2/kWh, the need for progress is clear. The three net zero-compliant models within this year’s FES have this falling to between 15 – 47g CO2/kWh by 2030 before falling into the negative by 2035 – a necessity for any net zero model.
More renewables, less C&I flexibility
This year’s FES document includes some changes to last year’s forecasting, which highlighted the pivotal role of policy in driving whole energy system change.
Perhaps the most sizeable changes to this year’s FES over the 2021 edition are in electricity demand and supply, with stakeholder feedback and recent policy announcements used to revise peak electricity demands upwards in all four models.
All three net zero-compliant scenarios also see more onshore wind and solar built by 2050 than previously expected, those two generation classes increasing by 4.8GW and 3.2GW respectively.
Offshore wind is expected to come onstream more quickly than previously thought, while in two scenarios – Consumer Transformation and Leading the Way, nuclear power capacity has been revised downward.
With regards C&I, demand side flexibility capacity has been revised downwards by as much as 4.9GW by 2050.
Changes in policy over the past year have altered the way some sectors decarbonise, including transport in the wake of the government’s decision to phase out new carbon-emitting heavy goods vehicles by 2040. Modelling assumptions have also been changed in relation to EVs, resulting in a slight increase in peak transport-related electricity demand in the two most ambitious scenarios.
In heat, NGESO has revised its expectation for hydrogen boilers playing a role in residential heating by 2050 – which would have equated to demand of 15TWh – to reflect that domestic heating will be almost fully electrified by 2050 in its Customer Transformation scenario.