What will our generation mix look like in 2020 and beyond? Understanding where our energy will come from in the future is fundamental to maintaining security of supply for the UK. National Grid’s Energy Supply Manager Marcus Stewart unravels some of the complexities.
It’s been hard to ignore the issue of energy over the past 12 months. Emotive newspaper headlines about possible power blackouts, high-profile protests against fracking and continued discussion over how to deal with escalating household fuel bills mean that the energy debate is front and centre as we move towards a General Election in 2015. The common thread in all these topics is, of course, energy supply.
Understanding what our energy supply landscape will look like in 2020, 2035 or 2050 is an enormous challenge because there are so many variables. However our UK Future Energy Scenarios do present some credible pathways for what this future might look like from an energy supply perspective.
The current generation position
So, what has happened over the past 12 months? Comparing the UK’s generation position in 2014 to 2013 we see that around 1.1GW of wind power has been connected to the network and a further 2GW of gas generation has been returned to service.
However, we’ve also lost about 3.7GW of generation through the closure of coal and oil plants, so overall we’re about 0.9GW behind where we were at the same point last year. In addition some 3GW of new wind projects have been cancelled so it’s clear that there remain many challenges ahead.
The way ahead for coal
Across all four of our Future Energy Scenarios we project an aggressive rate of closure for coal-fired plant. In each scenario, opt-out plant under the terms of the Industrial Emissions Directive (IED) is run down by the early 2020s due to limited running hours. In other words we think coal will burn fast and hard in the near term, which is in keeping with the past two years when we have seen high load factors driven in part by a low coal price.
The next logical question then is ‘what will fill the gap?’ We project an increase in gas-fired plant through to 2025 in order to compensate for the coal closure profile, but with only one new power station due to deliver before 2018, some market intervention is clearly needed to maintain security of supply.
Security of supply outlook
One of the main proposals for Electricity Market Reform (EMR) is the creation of a standard for security of supply. This reliability standard has been set at three hours per year based on what’s called Loss of Load Expectation or LOLE and it broadly follows similar standards in other European countries.
LOLE represents the number of hours per year during which supply is expected to be lower than demand and to be clear it does not mean that the lights will go out for this period of time; rather that as system operator National Grid might need to take some mitigating action. Specifically, this involves two balancing services – Demand Side Balancing Reserve (DSBR) and Supplemental Balancing Reserve (SBR) both of will help to maintain security of supply. Further ahead the implementation of the Capacity Market in 2018/19 is designed to ensure that the three-hour reliability standard is met.
The generation mix
There is a small amount of variation between our scenarios out to 2020, and beyond that date the technology range broadens across the scenarios. The 2020 picture shows nuclear power at around 20% across all four scenarios while gas has the biggest role to play, accounting for 30% of supply in our Gone Green world and up to 40% in the Slow Progression and No Progression scenarios.
Wind power is at its highest under Gone Green at about 20% and at its lowest under No Progression at 12% of energy supply, while imports account for about 10% of supply across all scenarios. The remainder is made up of solar, biomass and hydro supplies.
Looking ahead to 2035 there is greater divergence: in our Gone Green scenario for example, we project 40% of generation coming from wind, while under No Progression, which is the least ambitious outlook in terms of progress on renewables, nearly 50% of our energy supply will come from gas.
Shale – hero or zero?
Which bring us to the issue of shale. There is a huge amount of uncertainty about the impact shale might have on our future energy supplies. Technological issues and social resistance to fracking are both major hurdles to be overcome if shale gas is to become an important part of the energy landscape. This uncertainty is played out in our scenarios, which show a broad range of potential outcomes. In a Low Carbon Life world we project shale production could reach more than 30 billion cubic metres of gas by 2035, Gone Green is about half that figure, while No Progression suggests that the barriers prove simply too high and the technology does not move forward at all.
Our reliance on imports
Turning to the question of how reliant we will be on imported gas by 2035, again there are some large variations between our scenarios largely because of the uncertainties that exist around shale. Today, the UK imports about 56% of its gas and our four scenarios paint very different pictures of how that import percentage might change by 2035: Low Carbon Life (40%), Gone Green (50%), Slow Progression (70%) and No Progression (90%).
Even with the least optimistic of these outcomes, it’s important to say that there is still sufficient importation capacity to bring gas supplies in to the country, so we are not talking about the need for major strategic investment.
So, that’s what the overall supply picture looks like. In summary, plenty of uncertainty, particularly in relation to shale, large variations between our scenarios beyond 2020 and some near-term intervention required to ensure security of supply.
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