Posted: 4 August 2016
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FES: Our energy future

Understanding how Great Britain’s energy landscape will look by 2040 represents a huge challenge. Alice Etheridge, National Grid Insights Manager, explains how the Future Energy Scenarios (FES) are used and examines what each scenario might mean for how we live our lives in 2040.

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FES: Our energy future

FES: Our energy future

“The scenarios are the starting point for a number of significant investment decisions and signals.”

Alice Etheridge, National Grid Insights Manager.

Insight:

In the Consumer Power scenario 49% of electricity generation is from small-scale generation in 2040.

Source: 2016 Future Energy Scenarios

With the winds of political change sweeping across the UK in recent weeks, it is clear that we’re living in uncertain times. Uncertainty is an enduring theme in the energy sector and it goes some way to explaining why we need to explore a wide range of plausible outcomes when trying to gauge Britain’s energy future.

So, why is a robust view of the future important in the first place? The scenarios are the starting point for a number of significant investment decisions and signals. Within National Grid we use the insights to inform planning for the network and future operability requirements. For example, our Electricity and Gas Ten Year Statements set out the likely future electricity transmission requirements and how we will plan and operate the gas system.

We also use them in our Capacity Market analysis for the Department of Energy and Climate Change, on the back of which around £1 billion a year is committed at the moment. Externally, we know that the FES are used for everything from benchmarking other organisations’ scenarios through to being a reference document for students.

The importance of stakeholder input

As System Operator we are in a great position to have an overview of the gas and electricity sectors, but we are not experts in every aspect of the industry that feeds into the FES. That’s why stakeholders have a crucial role to play by providing insights that help to shape the scenarios each year. For 2016, our engagement programme has been more extensive than ever, incorporating webinars for the first time and consulting with a total of 362 organisations.

What the scenarios tell us: Life in 2040

In 2016, our four scenarios retain the same names: Gone Green, Slow Progression, No Progression and Consumer Power. Each of them paints a unique picture of how we will produce and consume energy by 2040. They also see the UK at different points in its journey towards two key environmental targets: to achieve 15% of energy consumption from renewable sources by 2020 and reducing carbon emissions by at least 80% of 1990 levels by 2050.

Gone Green
This is our high prosperity, high green ambition scenario. There is strong government policy driving decarbonisation and money available for innovation and implementation. Society is supportive, which results in the renewable energy target being met in 2022 and the 2050 carbon reduction target being met on time.

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Under Gone Green, solar panels will play a part in automated home management systems.

In this Gone Green world I have lots of disposable income, which is useful because energy prices are high. I’m also keen to invest in products and solutions that will help me lower my carbon footprint. I have insulated my home as far as I can and have a fully integrated and automated home management system. It controls when my appliances are operated and uses the output from my solar panels, storing electricity I don’t need immediately in a battery so that I can use it later.

The electricity I use has a very low-carbon intensity because renewable and low-carbon technologies dominate power supply. Gas is becoming lower carbon too as production of biomethane and substitute natural gas from household waste increases.

There has been a real focus on decarbonising heat and transport and along with many of my neighbours I heat my home with air source heat pumps.

Slow Progression
The Slow Progression scenario is still ambitious, but with a less prosperous economy. There is a tricky balance between strong political will to decarbonise and money available. Money for investment in electricity generation and gas production is limited, while the renewable target is met in 2024 and the 2050 carbon reduction target is beyond the scenario period.

Personally and within businesses, we are on top of how we can use energy more efficiently or differently. We’re doing what we can with the money we have, with the aim of having an impact in the longer term.

I have insulated my home well and was lucky that I was in the right location to take advantage of a new district heating scheme. This time I’ve gone for a plug in hybrid car as it’s cheaper to buy than an electric car and cheaper to run than a petrol one.

It’s interesting how attitudes to energy have changed over time. Lots of people were uncomfortable initially with how much of our gas was imported as there has been little investment in our own production, but being heavily reliant on imports is now accepted as the norm.

No Progression
In No Progression ‘business as usual’ prevails. This is a scenario with limited government intervention, low growth rates and disposable income, and little innovation in energy use. Consumers replace their appliances and gadgets like for like and there are high gas imports despite shale gas development. There is very little progress towards key environmental targets.

NG_ElectricCar_01_RKP_highres300x183

Only a minority of people will start using electric cars in the No Progression scenario.

The government has stopped introducing policies that encourage low-carbon technologies and generation. Economic growth is slow and I don’t have much disposable income, so I’m pleased that energy prices aren’t too high.

I’m limiting my spending and hoping I can keep the gas-fired boiler I installed in 2025 limping along for a few more years. There was talk at one time of new types of heating like heat pumps but they didn’t really take off and I’m pleased as they seemed completely alien to me. A few of my neighbours have tried electric cars, but I’m sticking with my petrol model for now.

Gas remains a core part of our electricity generation mix. There is a reasonable UK shale gas industry, although we import a lot of our gas as demand is so high.

Consumer Power
This is a world where consumers and businesses are in the driving seat. Innovation comes from consumers’ desire to invest in the latest technology and there are high levels of distributed generation and electricity storage. Indigenous gas supplies increase, reducing imports. The renewable target is met in 2026 and it looks like we’ll miss the 2050 target because we’re addicted to gadgets.

I enjoy the amount of disposable income I have and one of my favourite activities is following the latest developments in home and communications gadgets and planning what to buy next. The price of gas is low and electricity costs are reasonable.

It seems crazy that until recently many of us didn’t have air conditioned homes. Technology has come on hugely in recent years – I’m taking advantage of batteries and whole home control systems to save electricity for use in the evenings.

The availability of funding and market changes mean that we are now very well connected to our neighbouring electricity systems. There has been significant investment in gas production, with offshore production being higher than anyone expected and shale gas production now keeping imports low.

The value of scenarios

So, four scenarios and four very different energy futures. Nobody knows for sure what life will be like in 20 or 30 years’ time. However, our Future Energy Scenarios help us to understand how all the variables might pan out so that stakeholders across government and industry can make informed decisions now that will give Great Britain a secure energy future tomorrow.

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