Posted: 3 August 2017
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FES 2017: The scenarios in depth

Each of National Grid’s 2017 Future Energy Scenarios describes a different energy future for Great Britain. So, what might these contrasting pathways mean for the way we produce and use energy in the coming decades? Energy Supply and Demand Manager Jan Mather crunches the numbers.

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FES 2017: The scenarios in depth

FES 2017: The scenarios in depth

Our scenarios show that consumer behaviour will have a significant impact on power demand in the future.

"In 2016, 55% of our gas was imported and by 2050 we see very different patterns emerging, depending on the scenario."

Jan Mather, Energy Supply and Demand Manager.

Insight:

Our greenest scenario, Two Degrees, has EV electric vehicles numbers rising to over 9 million by 2030.

Source: National Grid 2017 Future Energy Scenarios.

Where will any of us be in 2030 or even 2050? It’s impossible to know. Nor we can we predict the future when it comes to energy. However, we can explore credible ways in which the energy sector might evolve and this is exactly what we do every year with the Future Energy Scenarios.

The 2017 scenarios

Jan Mather, Energy Supply and Demand Manager.

Consumer Power is a world with high economic prosperity and consumers have more money in their pocket to spend. The desire for the latest gadgets drives innovation and investment is focused on sources of smaller generation.

In this scenario, consumers and businesses benefit from low gas prices and householders are not concerned about the cost or environmental impact of keeping their thermostat turned up high.

There is little support in place for renewable generation, while high consumer demand for appliances cancels out the energy savings from new smart and energy efficient technologies. Sales of electric and hybrid vehicles grow strongly.

Two Degrees has the highest prosperity levels. Consumers, alongside Government incentives, make the choice to be greener and can afford to make the switch to new technologies. This is the only scenario where all UK carbon reduction targets are achieved.

Incentives are in place to reduce demand and increase renewable generation. Society is very aware of its carbon footprint and consumers are happy to spend on home energy management systems, low carbon heating and insulation.

Technology and investment focus on low carbon generation, with high levels of solar, wind and nuclear generation. There’s also investment in biomethane and other green gases.

Slow Progression is a scenario of low economic growth and affordability. The focus is on cost efficient, longer-term environmental policies.

Gas prices rise significantly due to additional taxes, while government support drives some progress to grow renewable and low carbon technologies. Lack of money reduces the pace of change.

Businesses are prepared to spend more on low carbon investments and consumers are thinking green but have less disposable income to make lifestyle changes. They would like to replace their ageing boiler but also need to keep costs down.

Steady State is a world of ‘business as usual’. The focus is on security of supply and low costs for consumers. This is also the least affluent scenario and the least green.

There is little encouragement for consumers to move to greener sources of energy. No taxes are levied on the use of gas and electricity prices are relatively low, with limited subsidies for low carbon sources.

Consumers try to limit their spending and reduce their bills. They also have little desire to invest in expensive new heating systems or to have the latest gadget.

What the future holds for demand

So, let’s have a look at the numbers behind the scenarios. In terms of energy demand, the three main areas are heat, transport and power.

Dealing with heat first, about 80% of our homes currently have a gas-fired boiler, 13% burn oil or wood and the remaining 7% have an electric heater. In the industrial and commercial (I&C) sector, the split is more even – 55% gas and 45% electricity.

So, where might we be by 2030? For residential demand, gas remains the dominant fuel. Our Steady State scenario sees only a 1% move away from gas in the next 13 years, while Two Degrees shows more of a transformation, with 20% of heating coming from heat pumps.

In the I&C sector, although the scenarios suggest varying balances between gas and electricity, gas is still needed for high grade industrial heating, so we’ll still be relying on gas in 2030.

In the transport arena, all four scenarios see sales of electric vehicles (EVs) increase. Even Steady State, where there is little green ambition, envisages numbers doubling by 2030 to 1.9 million. Our greenest scenario, Two Degrees, has EV numbers rising to over 9 million by 2030.

What about the concept of shared autonomous vehicles – where people have access to a ‘driverless’ car when they need it, rather than owning outright? This might seem a long way off, but our Two Degrees scenario suggests take-up of almost 17% by 2030. Slow Progression (1%) and Steady State (0.5%) are somewhat more cautious!

Moving our analysis into HGVs and buses, we believe the push towards improving air quality will increase the growth of gas-powered vehicles. Both Consumer Power and Two Degrees show almost a quarter of the fleet being converted from diesel by 2030.

Finally, looking at power demand, this is an area where consumer engagement is key. Consumers are becoming more engaged – whether to keep control of their energy bills, to be greener or a bit of both. Our scenarios show that consumer behaviour will have a significant impact on power demand in the future.

To put this into context, peak residential demand in 2017 is about 24GW. Our analysis suggests that by 2050 this peak could rise to 63GW if unconstrained – in other words with no consumer engagement and no smart appliances. With strong engagement, we see the peak at 29GW, so people’s behavior can make a big difference.

The picture for supply

Looking at the story for supply, in recent years we have seen a large shift towards renewable electricity. For example, on 26 May 2017, GB solar production was 8.9GW, or almost a quarter of electricity supplied at that moment on a bright sunny day – the highest on record.

We’ve also witnessed a big swing in generators connecting to the local distribution networks. That figure stands at about 27% today. All our scenarios see this trend continuing, with Consumer Power showing the highest levels (46%) of distribution-connected generation by 2030.

In terms of installed capacities, by 2030 Steady State is still reliant on thermal power, but the other three scenarios have more than half their capacity from renewable sources.

Turning to gas supply, the National Transmission System (NTS) and its 8,000km of pipeline in use today is a far cry from 1965 when the first section of the NTS was built between Leeds and Canvey Island.

For gas, there isn’t the same split as electricity between transmission and distribution as gas nearly always comes through the NTS. There are currently just over 80 biomethane connections at distribution level, but they only provide about 0.2% of gas. By 2030, our Consumer Power scenario shows the highest potential for distributed gas (maximum of 44%). This reflects the potential if all the shale gas was connected at the distribution level, but would still need the NTS to transport from the production area to the customers.

What about where our supplies of gas will come from in future? In 2016, 55% of our gas was imported and by 2050 we see very different patterns emerging, depending on the scenario. In Slow Progression, we estimate that 93% of our gas supply will be imported by that date. Only the Consumer Power scenario shows an almost equal balance between imports (51%) and indigenous supply (49%).

Closing thoughts

So, where does this leave us? We can sum up the picture in one word – change. Our sources of energy are changing. So too, where they connect to the system. Policy intervention will be needed to reach the 2050 decarbonisation target and consumers will have a big role to play in terms of shifts in energy demand.

Through it all, we will still depend on gas as the transition to a low carbon future continues. Whatever the future holds, we can be certain that the pace of change will continue.

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