To Net Zero and Beyond: A view on National Grid’s new Future Energy Scenarios
Yesterday, National Grid ESO (NGESO) published its Future Energy Scenarios 2021. A report that the NGESO publishes annually which outlines its views on how the energy system may develop. This year it presented four different pathways for the decarbonisation of the UK electricity system to reach net zero by 2050 (Fig. 1).
Three of these scenarios reach net zero by 2050, System Transformation, Consumer Transformation and Leading the Way.
Whereas, decarbonisation is slowest in Steady Progression, where 2050 emissions are reduced by 73% of 1990 levels, nevertheless, leaving us significantly behind net zero, emitting 243 MtCO2e annually in 2050.
Figure 1. Future Energy Scenarios illustrating the level societal change and speed of decarbonisation.
Heat & Transport need to decarbonise
Currently, the road transport sector accounts for 23% of the UK’s greenhouse gas emissions. Electrification is key to decarbonising transport, with at least 60% of all road transport electrified in the net-zero scenarios. Recent government policy has brought forward the ban on petrol and diesel car and van sales to 2030, with a 2035 ban of plug-in hybrid cars and vans.
Other forms of transport, including rail, aviation and shipping also need to embrace decarbonisation. Currently, 40% of the UK’s rail network is electrified, with the rest reliant on diesel trains. Aviation and shipping rely solely on fossil fuels and last year their combined emissions accounted for 5% of the total carbon emissions.
Even in System Transformation, electrification is often more cost-effective than hydrogen for decarbonising heating in the commercial sector (according to FES stakeholder feedback). For this reason, hydrogen production has been revised down to just over 500 TWh in the System Transformation scenario (from 600 TWh in FES 2020). Furthermore, a large proportion of emissions in the commercial sector come from heating and lighting, which can be reduced by efficiency measures and low carbon heating.
In contrast, small amounts of natural gas may be needed to some extent in all net zero scenarios for industrial sub-sectors that are particularly difficult or costly to decarbonise due to their reliance on high grade heat. Emissions from this will need to be abated or offset via negative emissions. BECCS is the largest provider of negative emissions in all scenarios that reach net zero, but nature-based solutions like afforestation, reforestation and peak restoration all feature heavily too.
In all four pathways, hydrogen (Fig. 2) plays a role in residential energy demand to varying extents. In Consumer Transformation and Leading the Way over 20 million households could have heat pumps (double the amount in System Transformation and Steady Progress). This highlights the importance of the Government’s pledge to install 600,000 heat pumps per year by 2028 in homes across England – especially when compared to the approximately 30,000 heat pumps currently installed. In scenarios where residential heat pump uptake is greatest, electricity demand does not increase significantly (Fig. 2). This is owing to the assumption that thermal storage would be installed alongside heat pumps to release energy at peak times reducing peak demand from heating by up 35% in Leading the Way. Additionally, home appliances could become highly efficient in all net zero scenarios, reducing demand (compared to today’s levels) by up to 39% by 2050 in Leading the Way.
Figure 2. Residential Energy demand for heat and appliances 2020-2050 (excluding electric vehicle charging).
Despite increasing efficiencies in appliances and the use of thermal storage, electricity demand is projected to be higher in 2050 than today (Fig. 3). This is due to increasing use of heat pumps in commercial sectors and reductions in battery electrical vehicles (BEV) efficiency assumptions. Increased electricity demand requires more generation capacity, as well as flexible technologies such as storage and demand side response.
Figure 3. Annual electricity demand by 2050 between FES 2020 and FES 20201.
So, what does this mean?
The UK generation mix is changing. Currently, the largest proportion of installed capacity is from fossil fuels, but by 2050 offshore wind and solar should have the greatest share (Fig. 4)
Figure 4. Installed capacity (GW) in 2020, 2030 and 2050 for each of the four scenarios. The average cold spell (a particular combination of weather elements that gives rise to a winter peak demand, which has a 50 per cent chance of being exceeded as a result of weather variation alone) is marked on the chart to illustrate the difference between winter peak demand and installed capacity.
The rise in renewable generation and electricity demand has meant that flexibility is more important now than ever. Flexibility provided today by the gas transmission system will significantly reduce in Leading the Way and Consumer Transformation (Fig. 5). These scenarios will need significantly more flexibility from consumers.
Figure 5. Flexibility (GW) capacity on the system from interconnectors, dispatchable thermal generation, electricity storage, DSR, V2G and electrolysis in 2050 across each of the four scenarios.
Whilst current levels of residential flexibility are low due to limited uptake and price signal incentives, as more consumers start to own BEVs, the importance of smart charging and V2G becomes paramount as this will help manage higher levels of renewable generation on the electricity system. Both Consumer Transformation and Leading the Way illustrate a significant shift in consumer behaviour comprising high levels of DSR and V2G. The V2G functionality, as well as, unidirectional smart charging capability, will need to be facilitated by large scale availability of tariffs structured to reflect the benefit of intelligent charging. In Leading the Way over 80% of consumers engage in smart charging, and 45% in V2G services (Fig. 6) providing almost 40 GW of flexible capacity by 2050.
Figure 6. Percentage of EV owners engaging in V2G and smart charging in the FES 2021.
Demand Side Response (DSR) plays a huge role in the future, particularly in Consumer Transformation which has the highest levels of electrification therefore electricity demand. In this scenario, DSR could provide up to 16 GW of flexibility by 2050 (Fig. 7). Energy storage also plays a significant part in the FES 2021 with up to 40 GW (Fig. 7) of storage by 2050 compared to just over 1 GW today.
Figure 7. Capacity of DSR and electricity storage projects from 2020-2050 in each of the four FES 2021.
Once again, the FES have demonstrated the need for significant change to our energy system in the coming years. It is abundantly clear that all sectors have a role to play, consumer perception and engagement alongside government policy will be vital to ensure low carbon technologies are adopted.