National Grid ESO has published its 2020 Future Energy Scenarios (FES), marking a significant shift as it replaces three of these scenarios with net zero compliant ones.
Of these three new scenarios, two – Consumer Transformation and System Transformation – hit net zero by 2050 and the other – Leading the Way – achieves it in 2048. The only remaining scenario from 2019 – Steady Progression – still emits 258 MtCO2e in 2050, equivalent to a 68% reduction compared to 1990 levels.
A new scenario framework – the level of societal change - was also included, but the impact of COVID-19 has not been factored into this year’s FES due to the full extent not becoming apparent until too late. It will be examined fully in 2021, the ESO confirmed.
Four key messages were identified, one of which being that open data and digitalisation “underpin the whole system thinking required to achieve net zero”. This is “critical”, the ESO said, to navigating the increasing complexity at the lowest cost for consumers.
As the number of energy market participants rapidly expands, open data access is “fundamental to ensuring efficiency”. Whole system interaction will also increase, with consumer technology choices made today influencing decarbonisation pathways and options for efficient whole system operation in the future.
“Visibility and interoperability standards must be embedded to maintain options for smart management and market participation,” the ESO said.
Another key message is that while net zero by 2050 is achievable, it will require “immediate action across all key technology and policy areas”. As part of this, cross-sector regulations and services will be needed to simplify changes consumers need to make and “significant” investment will need to be made in low carbon electricity generation.
Commenting on the FES, RenewableUK’s director of future electricity systems Barnaby Wharton said the report "shows just how radically our energy system is set to change in the decades ahead".
"Renewable energy is taking us further and faster towards net zero emissions than anyone expected. But as this report notes, significant investment in low carbon electricity generation will be needed to make sure we get there."
Across all the net zero scenarios, the carbon intensity of GB electricity will have become negative by the mid-2030s. The scenario with the most renewables is Consumer Transformation, which has 2.8 times more capacity than today and over 480TWh of wind and solar.
Other features of Consumer Transformation include electrified heating, high energy efficiency and demand side flexibility. System Transformation conversely has hydrogen heating, lower energy efficiency and supply side flexibility.
Leading the way takes the best of both, with a mix of hydrogen and electrification for heating as well as significant lifestyle changes for consumers.
In all three of these scenarios, four technologies produce over 90% of electricity generation: wind, solar, nuclear and bioenergy with carbon capture and storage (BECCS).
Decentralisation increasingly plays a role in the three scenarios, however, with up to 42% of GB capacity decentralised generation connection to the distribution network by 2050.
In fact, the level of decentralisation in all scenarios suggests the role of the transmission system may often by to transport electricity between the distribution networks as opposed to delivering transmission connection generation to the distribution networks.
However, at least 3GW of wind and 1.4GW of solar will need to be built every year from now until 2050, the ESO said. This forms part of another of its key messages, that the economics of energy supply and demand fundamentally shift in a net zero world. Markets therefore must evolve to provide incentives for flexibility and zero carbon generation.
Demand side flexibility, V2G and electricity storage
Both Leading the Way and Consumer Transformation have the highest levels of consumer engagement in flexibility, with high levels of demand side response, domestic storage and vehicle-to-grid (V2G) technologies.
Demand side flexibility will becoming increasingly important, the ESO said, particularly in scenarios with higher electrification and societal change.
Smart appliances could shift up to 11.4% - or 1.5GW – of peak appliances and lighting electricity demand by 2050 in the Leading the Way scenario.
However, electricity storage was also highlighted as a useful technology for providing flexibility due to its ability to respond to market signals quickly as well as being able to be utilised in different locations, sizes and use cases.
Electricity storage increases in all scenarios as costs fall and renewable generation increases. Larger, longer duration storage will be needed to support decarbonisation in the net zero scenarios, the ESO said, however System Transformation sees less electricity storage than the other net zero scenarios, particularly for long durations, due to high use of hydrogen as a flexible energy source.
Flexibility could also be provided by transport, with high levels of smart charging uptake leading to a big impact on residential peak demand from electric vehicles (EVs), with additional demand after smart charging limited to under 6GW in all scenarios.
The potential of V2G was a key focus in the 2019 FES, and was also explored in this year’s FES, with the ESO stating that there is a wide range of outcomes for V2G across the scenarios due to the “high level of uncertainty” of the technology.
In the high societal change scenarios, over a quarter of households make their vehicles available for V2G, although only 50% of those are assumed to be available at peak times.
In all net zero scenarios the levels of V2G export in 2050 offset the peak demands after smart charging, which leads to a net negative effect on EV demand at peak times.
The challenge of decarbonising transport
Transport decarbonisation forms a key part of reaching net zero 2050 regardless of its potential for flexibility through V2G.
The ESO has assumed that plug-in hybrids will form part of the government’s proposed ban on the sale of new internal combustion engine cars and that this ban will be implemented in 2032 in Leading the Way, 2035 in Consumer Transformation and System Transformation and 2040 in Steady Progression.
Electrification is “key” to decarbonising transport, with at least 60% of all road transport electrified in the net zero scenarios.
In Leading the Way, the fastest to decarbonisation, there is a 75% reduction in total energy demand for road transport due to a combination of electrification, automation and changing consumer behaviour.
Heating: Hydrogen vs Electrification
The technologies used for decarbonising heating vary between the scenarios, with 65% of homes using hydrogen for heating in System Transformation.
The energy required for residential heating for net zero could be over 50% lower by using high levels of insulation and electric heat pumps, such as in the Consumer Transformation scenario, rather than hydrogen boilers. Better insulation contributes one-third of this reduction, with the other two-thirds due to heat pumps.
2050 could see 20 million heat pumps installed, with as many as 8 million homes actively managing their heating demands by storing heat and shifting their use outside of peak periods. In fact, in the Consumer Transformation and Leading the Way scenarios, 40% of homes with heat pumps will have thermal storage.
However, heat decarbonisation requires “urgent policy decisions”, the ESO said, in order to drive change across the whole energy system.
Mark Herring, head of strategy at National Grid ESO, said: "While COVID-19 came too late to be factored into this year’s analysis many of the areas highlighted will be crucial in a green recovery from the pandemic, particularly improving energy efficiency across all sectors and significant investment in low carbon electricity generation.
"There is already significant progress being made towards net zero, including ESO planning to operate a zero-carbon electricity system by 2025, but the fundamental changes outlined make it more important than ever to have a coordinated approach to decarbonising the whole energy sector."