It’s once again the time of year when National Grid gazes deep into its crystal ball and tries to decipher what the future holds for Britain’s rapidly changing energy system.
The system operator has just published the latest issue of its annual Future Energy Scenarios report, which this year has been reframed around the issue of decentralisation.
In last year’s report the four scenarios it painted were divided between those in which progress on decarbonisation is stronger or weaker, and those in which the country is more prosperous or less prosperous.
This time around the scenarios are still split according to the strength of progress towards decarbonisation. However, the other division is now between an energy system which is more centralised or less centralised.
The four scenarios
Decentralisation
All four envision an explosion in generation capacity over the coming decades, much of it local.
The smallest increase is seen in the consumer evolution scenario, in which decarbonisation is sluggish but the energy system is highly decentralised. Capacity rises from 103GW today to 125GW in 2030 and then 178GW in 2050.
The biggest increase comes in the community renewables scenario. This depicts an energy system that is not only highly decentralised but also compatible with the UK’s commitments under the Paris agreement.
Generation capacity reaches 158GW by 2030, of which 48GW is distributed generation and 23GW is microgeneration. Together they make up 45 per cent of the total.
Capacity continues climbing all the way up to 268GW by 2050, with distributed generation and microgeneration accounting for 65 per cent of the total at 91GW and 82GW respectively.
The scenario with the least local generation is steady progression, one of the two in which the UK fails to fulfil its climate change commitments.
Total capacity grows to 189GW by 2050 but only 38 per cent of this is local, consisting of 44GW of distributed generation and 27GW of microgeneration.
However, even in this scenario the energy system is far more decentralised than is currently the case. At the moment, Great Britain has 23GW of distributed generation and 5GW of microgeneration, representing just 27 per cent of total capacity.
Generation capacity by grid connection
Decarbonisation
More than anything else, the transformation of the energy system is being driven by decarbonisation.
As its name suggests, the two degrees scenario represents the fastest progress on this front. The carbon intensity of the power grid falls from 266gCO2/kWh currently to 48gCO2/kWh in 2030 and 20gCO2/kWh in 2050.
By the middle of the century, low-carbon generation capacity reaches 160GW, of which 130GW is renewable.
There is a massive expansion in solar and offshore wind capacity, which rises from 12GW and 6GW today to 44GW and 43GW in 2050. Onshore wind capacity also increases significantly from 12GW to 22GW.
Nuclear plays the most prominent role in this scenario, more than doubling from 9GW to nearly 19GW. Gas capacity, which currently stands at 35GW, drops to less than 10GW. There is also 12GW of carbon capture and storage (CCS) enabled generation.
Despite a higher carbon intensity of 32gCO2/kWh, low-carbon capacity is greatest in the community renewables scenario, swelling to 178GW in 2050.
Solar and onshore wind capacity in particular is much higher at 66GW and 50GW respectively, although offshore wind capacity is quite a bit lower than in the two degrees scenario at 33GW.
Nuclear generation plays a more limited role, falling to 3GW in 2030 before returning to 9GW in 2050. Gas generation hangs around on the system for much longer, still totalling 23GW as we head into the second half of the century, and there is no CCS-enabled generation at all.
Progress on decarbonisation is most muted in the consumer evolution scenario. By the end of the next decade, the carbon intensity of the power grid is 146gCO2/kWh – around one and half times 2030 target for the sector. In 2050, the figure is still 72gCO2/kWh – more than three times that of the two degrees scenario.
Nevertheless, there is a substantial increase in low-carbon generation, although much less so than in the two degrees and community renewables scenarios. Solar grows to 36GW, onshore wind to 33GW and offshore wind to 22GW. Gas capacity initially rises to 43GW in 2030 before dipping to 40GW in 2050. Nuclear capacity rises only slightly to just under 10GW.
Generation capacity by technology
Transport
Shortly after the launch of last year’s report, the government revealed plans to ban the sale of new diesel and petrol vehicles in 2040. The proposals were recently fleshed out its Road to Zero strategy for decarbonising road transport.
It is therefore unsurprising that this year’s report once again places plenty of focus on the rise of electric vehicles (EVs). In light of the proposed ban, National Grid has massively ramped up its forecasts for the number of EVs coming to Britain’s roads.
The system operator now expects there to be as many as 10.6 million in 2030 and 36 million in 2050. The previous estimates were 9.3 million and 17 million.
National Grid said they could add up to 8.1GW to peak demand by 2030 and 12.7GW by 2050, but could also provide a substantial amount of storage – up to 1.1GW by 2030 and 20.6GW by 2050. For context, total storage capacity is projected to reach up to 10GW by 2030 and 50GW by 2050.
The report again noted the importance of smart charging to reducing the impact of EVs on peak demand. All of the scenarios assume widespread adoption, although at varying speeds and differing levels of engagement.
Peak demand from EVs
Heat
While there is now a relatively clear route forward for the decarbonisation of transport, there is far more uncertainty over the future of heat.
In the two scenarios in which the UK fails to meet its climate change commitments – steady progression and consumer evolution – there is remarkably little change in homes. By a wide margin, conventional gas boilers remain the dominant form of heating all the way out to 2050, with only slight growth in the number of heat pumps and hybrid boilers.
Major changes only take place in the two degrees and community renewables scenarios.
The two degrees scenario portrays a future in which decarbonisation is primarily driven by the by the rollout of hydrogen gas grids. Heat pumps still play a significant part, especially earlier on. But by 2050 hydrogen has taken the lead, providing heat to just under a third of households. There is also substantial growth in district heating, which meets the needs of one in ten.
The community renewables scenario represents an alternate vision of an electrified future. By 2050, heat pumps of various types have been installed in almost 60 per cent of homes. The growth of district heating is much more limited and, as with the steady progression and consumer evolution scenarios, there is no residential role for hydrogen whatsoever.
Household heating by technology
Demand
The electrification of transport means annual and peak electricity demand rise in all four scenarios.
In terms of annual demand, the largest increase is in the community renewables scenario owing to the mass adoption of heat pumps. By 2050, it has reached 441TWh, up from 297TWh today.
The smallest increase is seen in the steady progression scenario, which sees annual demand grow to 386TWh.
The accelerated uptake of EVs means peak demand initially surges fastest in the two degrees and community renewables scenarios. However, smart and vehicle-to-grid charging are also adopted quicker and with more enthusiasm, meaning by 2040 peak demand is greater in the steady progression and consumer evolution scenarios.
In both of these scenarios peak demand exceeds 86.5GW by 2050, compared to 59.4GW today. It is lowest in the two degrees scenario at 78.5GW.
Peak demand
Despite rising demand for electricity, overall demand for energy – both gas and electricity – falls across all scenarios over the long run.
This is most noticeable in the community renewables scenario. Annual energy demand nearly halves from 1,107TWh now to 685TWh in 2050. Annual gas demand plunges almost three quarters from 810TWh to 244TWh as a result of to the electrification of heating.
Annual energy demand is highest in the steady progression scenario. By 2050 it stands at 1,024 TWh, with gas accounting for 638 TWh.
Annual energy demand in two degrees scenario
Reaction
Claire Perry, energy and clean growth minister, Department for Business, Energy and Industrial Strategy
“As we move towards a low carbon economy, we want to position the UK as a leader in clean and efficient power for transport and heating…
“With demand for electricity expected to increase, gas has a key role to play in our energy mix. As part of our modern industrial strategy, we will continue to explore options for safe and secure domestic supplies of gas, such as hydrogen, biogas and natural gas from shale.”
Lawrence Slade, chief executive, Energy UK
“With their ability to store and supply electricity back to the grid it’s striking that, even with potentially 36 million EVs on the road by 2040, National Grid predicts the extra peak demand could be as little as 8GW if managed appropriately.
“A projected doubling of installed capacity by 2050 underlines the case for a stable policy framework that enables the necessary investment to be made at the least cost to customers…
“The transition to low carbon energy could happen without increasing bills if we make the correct decisions now, and mapping out the future, as this report does, will play an important role in getting those decisions right.”
Richard Black, director, Energy and Climate Intelligence Unit
“In several areas, National Grid is suggesting a rationale for going further and faster than either the Road to Zero transport strategy or the National Infrastructure Commission laid out in the last few days.
“According to Grid, 70 per cent of homes ought to be at EPC class C insulation standards by 2030 – currently we’re under 30 per cent. Half of electric vehicle chargers should be smart by 2024. And shale gas development works against, not for, achieving carbon targets.
“And under all scenarios, there’s a significant build-out of small-scale distributed renewable generation – something that currently government policy is working against.
“So, there are some key milestones here that ministers could usefully be internalising as they develop new policies to get back on track for the 2025 and 2030 carbon targets, for which currently, largely through inaction in the transport and housing sectors, government is off track.”
Matt Allen, chief executive, Pivot Power
“National Grid’s forecast shows that consumer demand will rapidly make petrol and diesel emissions obsolete. We are on a road to zero emissions transport.
“We now need local leaders to support public demand and government ambition and create their own regional road to zero plans. Electrifying buses, taxis and light transport fleets are all easy wins.
“We are ready to support them with the infrastructure they need to realise that vision. By making it easy to switch to electric vehicles, we can help them clean up air pollution, promote low-carbon policies and develop a sustainable economy with better services for local people.”