National Grid ESO (ESO) has published its Future Energy Scenarios (FES) 2023 report presenting a number of credible proposals to create a clean energy system dominated by electricity.
The FES outlined four potential pathways to form a picture of how Britain might reach net zero.
One of these pathways is System Transformation. This pathway allows the net zero by 2050 target to be met, with limited consumer experience change due to heavy transformation focussed on the supply side. Consumer changes would include using a hydrogen boiler with a mostly unchanged heating system alongside and electric vehicle (EV) or fuel cell vehicle.
The net zero by 2050 target would be met using this pathway.
The Consumer Transformation requires more involvement from the consumer side. Consumer changes include extensive alterations to improve domestic energy efficiency, and the majority of demand smartly controlled – such as through a Demand Flexibility Service (DFS) – to provide system flexibility.
According to a recent survey by ESO, 83% of DFS participants would been eager to take part in the service again.
Via the Consumer Transformation pathway, the typical homeowner would also require an electric heat pump and an EV. Energy storage, Demand Side Response and smart energy management would also be used to manage higher peak electricity demands.
The net zero by 2050 target would also be met using this pathway.
Leading the Way is the third pathway presented by the ESO, in which Britain decarbonises rapidly thanks to high-level investment in world-leading decarbonisation levels. In this pathway, consumers would be highly engaged in reducing and managing their energy consumption, with significant energy efficiency home improvements and a steep increase in smart energy services.
The most challenging areas to decarbonise would be handled by hydrogen, including industrial processes.
In this pathway, the net zero by 2050 target would be completed four years earlier, in 2046.
The fourth scenario, Falling Short, sees Britain miss it’s target due to a too-slow progression rate.
To meet one of these successful pathways, ESO produced four key messages.
Policy and Delivery
Echoing its Net Zero Market Reform Phase 4 conclusion webinar last week, ESO warned that measures must be introduced to reduce investment uncertainty for net zero technologies.
This is critical to reaching a number of net-zero-essential targets highlighted by the ESO including: residential heat pump installations ranging from 0.3 million to 1.5 million by 2030; and 12-56TWh of inter-seasonal storage in 2050.
The FSE also emphasised the importance of investment for Long Duration Energy Storage (LDES) and a clear funding and development plan for hydrogen and Carbon, Capture, Use and Storage (CCUS) projects beyond the delivery of financial clusters.
Consumer and Digitalisation
Consumer engagement and digitalisation will play a “crucial role” in achieving a net zero energy system however granting easy access to information and providing the ‘right’ incentives are critical, said the FSE.
The ESO cites the need to guide consumers on how best to engage with the energy transition, this includes allowing consumers to see how their energy usage can affect cost. The ESO revealed that the households and businesses participating in the Demand Flexibility Service shifted over 3,300MWh of electricity during peak times.
Market changes that simplify the consumer journey and reward flexible energy use, ESO suggested, could further incentivise consumers to reduce consumption further.
Changes in consumer habits must be adjusted to reach net zero by 2050, for example under the Leading the Way pathway domestic demand for lighting and appliances must be reduced to 47TWH in 2050.
Smart digital solutions will help simplify this consumer-habit change; for example, a market-wide Half Hourly Settlement would allow consumers to participate more readily in demand flexibility.
Markets and Flexibility
The FSE’s third key message was to highlight that Britain will need to improve its market signals and develop new distributed flexibility solutions to deliver a net zero energy system.
Under the Consumer Transformation pathway, 47GW of electricity storage must be operational and 18GW connected at distribution level.
All the pathways suggested by the FSE also require increasing implementation of smart EV charging contributing as much as a 60% reduction in peak demand by 2050.
ESO also highlighted the requirement of market reform to provide locational signals that can optimise decisions on the use of flexible energy sources.
A market structure currently under consideration in the Review of Electricity Market Arrangements (REMA) and often cited by the ESO as an attractive option is Locational Marginal Pricing (LMP).
Infrastructure and whole energy system
Strategic coordination and ‘whole system energy thinking’ is required to accommodate the increasing amount of renewable energy required to power a net zero energy market.
The ESO’s suggestion to accommodate this are: bolster strategic network investment; facilitate a quicker connections reform; and a coherent strategy is developed to ensure large electricity demands are located where they can provide the biggest benefit.
To achieve the best results under the Leading the Way pathway, a minimum of 119GW of wind and solar must be connected in 2030 (89GW under the other scenarios).
“This year’s FFES continues to set out credible ways that the UK can achieve net zero by 2050, as well as the UK Government’s commitment to a decarbonised electricity system by 2035,” wrote an ESO spokesperson during the FSE’s Foreword.
“Based on extensive stakeholder engagement, research and modelling, each scenario considers how much energy we might need, where it could come from and how we continue to maintain outstanding levels of system reliability. Our 2023 FES highlight one key overall theme – we must act now to achieve a clean, secure and fair energy system for all. If we don’t, a once in a lifetime opportunity will pass us by.
James Johnston, co-founder, and CEO of electricity utility company, Piclo, added:
“Two points are clear in all scenarios. Electricity will dominate the future, with demand at least doubling, as the country moves away from gas and petrol. Flexibility will therefore become increasingly important in unlocking the opportunities and keeping costs low, with smart, flexible heat and EV charging systems becoming a vital way to increase overall flexibility on the grid.
“Locational flexibility – and using market signals – also help investors decide where to build new battery parks and large factories. Together with consumers having the ability to flex supply and demand, this will be essential in overcoming grid constraints and reducing the amount of wasted renewables, ultimately accelerating our road to net zero”.
