FES 2017: What’s changing?
The launch of the 2017 Future Energy Scenarios in July comes at a time of unprecedented change in the energy market and uncertainty linked to Brexit. Marcus Stewart, National Grid’s Head of Energy Insights, discusses the importance of stakeholder engagement and how this year’s scenarios are evolving.
FES 2017: What’s changing?
“Nobody knows yet what the impact of Brexit will be, so we are using a wider range of economic growth forecasts for FES 2017”
Marcus Stewart, Head of Energy Insights, National Grid.
391 organisations have been consulted during the development of the 2017 Future Energy Scenarios.
Source: National Grid.
Uncertainty is a word that is used more and more when speaking about the energy landscape in Great Britain. It is precisely because of this uncertain outlook that it is valuable to explore a wide range of plausible energy futures, which we do each year through our Future Energy Scenarios (FES).
We could not create these scenarios without the insights and views from stakeholders across the energy industry and beyond. These insights, together with National Grid expertise, form the backbone of our analysis. They also underline that no single organisation has all the answers about what the future might hold for energy.
In January, we submitted to Ofgem our FES Stakeholder Feedback Document, setting out this year’s proposed scenarios and the feedback that has shaped them. Ofgem is happy with the engagement we have carried out and our proposals for this year’s scenarios. We now move into the detailed scenario development work ahead of 13 July when we will publish this year’s scenarios at a formal launch in London.
How we engage with stakeholders
Stakeholders tell us that they use the scenarios in many ways. For example, 78% said that they wanted to hear National Grid’s view on the future of energy. Others use FES to inform business decisions, as an important source of data, or for benchmarking. Understanding what matters to stakeholders helps us to shape our scenarios.
This year we have consulted 391 organisations, up from 362 in 2016. These organisations range from energy industry businesses through to customers, manufacturers, innovators, consumer groups and regulators. Compared with previous years we have seen increased participation from innovation/manufacturing, political bodies, the supply chain and small businesses/individuals.
Listening to feedback
Stakeholders asked us to consider the locations for our engagement workshops. We’ve reviewed our workshop locations and added Cardiff as a new venue, alongside Edinburgh, Warwick and London. This has been well received and we plan to use the same locations again in October for the FES 2017 workshops.
We also held a workshop looking specifically at how we might meet the 2050 Climate Change targets. The insights from attendees will feed into our environment targets analysis and modelling for this year’s scenarios.
Other improvements have included extra webinars to reach those unable to attend the launch event and an enhanced ‘FES in 5’ document that summarises the key messages and insight from our analysis. This is also something we’ll publish again in 2017.
Evolving the scenarios
We continually review our scenarios to make sure they are credible and fit for purpose. So, what’s changing in 2017?
- Reflecting trends in distributed generation: All our scenarios consider energy demand and supply with a whole system view. To reflect trends in the electricity market, two of our four core scenarios will include high levels of distributed generation growth (compared with one last year). The other two scenarios will feature more modest growth rates. This reflects the uncertainty over the revenue embedded generators receive.
- The impact of Brexit: Nobody knows yet what the impact of Brexit will be, so we are using a wider range of economic growth forecasts for FES 2017. We will also include a section in the publication on how we’ve considered Brexit as we’ve developed the scenarios.
- New names for two scenarios: We will continue with four core scenarios this year. The names Gone Green and No Progression are being retired to more accurately reflect the scenarios. Since Gone Green was established in 2011, we have seen a shift in focus from purely renewable technologies towards an emphasis on low carbon. This year Gone Green is replaced by Two Degrees, which will continue to be our core scenario that meets the 2050 carbon reduction target. The name Two Degrees signifies that the scenario is consistent with the UK carbon budgets and the 2050 target which is the UK’s contribution to the Paris Agreement of seeking to hold the increase in the global average temperature to well below 2 °C above pre-industrial levels. Stakeholders have also told us they don’t think the name No Progression accurately describes this scenario. We have chosen Steady State as an identity that most closely represents a world where current levels of progress and innovation remain broadly consistent through to 2050.
- Developing wider sensitivities: We propose to develop a wider range of sensitivities that will be used to flex the scenario range. For example, the introduction of potentially ground-breaking technological developments or major changes in UK or international energy policy. We are considering which sensitivities to include and will share these with stakeholders in due course.
What’s still to come
We are constantly looking for ways to improve our engagement, modelling and analysis. In the coming months, we’ll be publishing a series of thought pieces linked to FES, trialling our modelling and analysis with stakeholders through our regular communications, and making our work more visible via a stronger online presence and email communication to name just a few.
We have also launched our Future of Energy newsletter, which provides updates on our events and key areas of work along with sharing our modelling, analysis and thought pieces work. We’ll be providing more updates in the run-up to the FES launch in July.
In the meantime, I would invite all stakeholders with an interest in the future of energy to take a look at our dedicated FES website where you can find all the previous publications, data and stakeholder feedback. If you would like to receive regular updates from us please contact the team who will add you to our distribution list.
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 each of the scenarios from 2016.