Richard Smith, Head of Energy Strategy and Policy, National Grid, offers his perspective on the UK Future Energy Scenarios 2014.
"We’ve also listened to the feedback from last year, when stakeholders told us they wanted to see a broader range of scenarios and a stronger narrative underpinning FES 2014..."
Richard Smith, Head of Energy Strategy and Policy.
National Grid have consulted more than 180 organisations over the past year, including bilateral meetings, workshops and presentations in order to increase stakeholder engagement.
Source: National Grid.
The announcement of National Grid’s UK Future Energy Scenarios (FES) 2014 comes at a time when the energy debate remains high on the political and news agenda. Hardly a day seems to go by without energy issues making the headlines.
So, what are the scenarios all about and why do we publish them?
Each year, we provide detailed analysis of a range of credible and plausible energy scenarios out to 2035 and 2050 that cover a range of issues, including where our energy will come from in future, projected changes in demand and whether the UK will meet its stated environmental emissions targets.
The scenarios are based on information and insight from right across the industry, rather than simply the voice of National Grid, because they are developed using a rigorous and robust process that encompasses an enormous amount of stakeholder engagement throughout the year.
In fact, the past 12 months have been a record year for this engagement, one in which we have consulted more than 180 organisations, holding bilateral meetings, workshops and presentations so we could have extensive dialogue and really explore some of the energy pathways and tough decisions that the UK faces.
We’ve also listened to the feedback from last year, when stakeholders told us they wanted to see a broader range of scenarios and a stronger narrative underpinning FES 2014, in particular relating to the energy ‘trilemma’ of affordability, sustainability and security of supply.
With that in mind we have doubled the number of scenarios we produce to four: Gone Green, Slow Progression, No Progression and Low Carbon Life. In each of these scenarios, we explore the dynamics of affordability and sustainability and use these to inform our picture of what our future energy landscape might look like.
Throughout our analysis, the views of stakeholders play a critical role in shaping our thinking. Our aim is to continue to strengthen this engagement with stakeholders and incorporate their voice in our work. The journey towards our 2015 FES starts now and there are lots of ways to get involved.
A common thread
There is a common thread played through our scenarios. We continue to live in uncertain times and this uncertainty has a tangible effect across our industry in terms of investment decisions, how we develop our network and the operating environment for many companies.
Yet, the past 12 months have also seen the Energy Bill pass through Parliament with one of the largest majorities ever – so there is clear political will behind the goal of decarbonisation.
One thing is certain, whatever scenario plays out over the coming decades, the UK will still need reliable sources of energy and a robust network to deliver them, which goes to the heart of National Grid’s mission.
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The four scenarios at a glance
Low Carbon Life is a world of high affordability and low sustainability. More money is available due to higher economic growth and society has more disposable income. There is short term volatility regarding energy policy and no additional targets are introduced. Government policy is focused on the long term, with consensus around decarbonisation, which is delivered through purchasing-power and macro policy.
Gone Green is characterised by high affordability and high sustainability. The economy is growing, with strong policy and regulation and new environmental targets, all of which are met on time. Sustainability is not restrained by financial limitations as more money is available at both an investment level for energy infrastructure and at a domestic level via disposable income.
No Progression is a world of low affordability and low sustainability. There is slow economic recovery in this scenario, meaning less money is available at both a government and consumer level. There is less emphasis on policy and regulation, which remain the same as today, and no new targets are introduced. Financial pressures result in political volatility and government policy that is focused on short-term affordability measures.
Slow Progression is a world of low affordability and high sustainability. Less money is available compared to Gone Green, but with similar strong focus on policy and regulation and new targets. Economic recovery is slower, resulting in some uncertainty, and financial constraints lead to difficult political decisions. Although there is political will and market intervention, slower economic recovery delays delivery against environmental targets.