Posted: 2 October 2013

The future of UK energy demand

Government incentives, consumers, energy demand, smart appliances
The UK has seen a substantial growth of micro-generation in the last three years, largely driven by Government incentives on solar energy.

The UK has seen a substantial growth of micro-generation in the last three years, largely driven by Government incentives on solar energy.

 

How much energy will the UK need in the future to keep our homes warm and our workplaces functioning? Marcus Stewart, National Grid Energy Demand Manager, examines the scenarios and some of the factors influencing the UK’s demand for energy.

With the UK’s economic outlook uncertain and the full impact of a raft of Government-led energy efficiency initiatives still to be realised, there are plenty of reasons for a lack of certainty on future energy demand.

Despite these unknowns, there are two underlying factors identified in National Grid’s 2013 UK Future Energy Scenarios (FES) that will exert the biggest influence on what happens between now and 2035 – and whether the UK meets its stated environmental targets.

Marcus Stewart, National Grid Energy Demand Manager

Marcus Stewart, National Grid Energy Demand Manager

The first is Government policy. If we consider any one from a long list of energy initiatives in recent years, the common denominator is Government intervention, or to be more precise, incentives designed to encourage a change in the way we behave as consumers.

The influence of Government policy

One of the factors influencing a reduction in UK gas demand since 2007 has been the Government initiative to encourage householders to replace their inefficient gas boilers with Grade A condensing boilers.

Although a struggling economy and high fuel prices also contributed to this drop in demand it is clear that, when the incentive is attractive enough and well communicated to the consumer, it can make a real difference.

The story is the same in the field of micro-generation where we have seen substantial growth in the past three years – in the region of 0.5GW per annum over that time, largely driven by Government incentives on solar energy. Approximately 90% of this growth in micro-generation has come from solar photovoltaics (PVs) on the roofs of people’s homes.

Changing consumer behaviour

The second factor that we consider in our Future Energy Scenarios in relation to energy demand is consumer behaviour. The extent to which consumers are convinced to make changes in their daily energy use will have a big part to play in future demand – and it’s here where smart meters could play a valuable role.

In our Gone Green scenario for example, we project that 50% of consumers will interact with new concepts such as ‘time of use’ tariffs and smart meter technology. Under our less optimistic Slow Progression scenario, that figure is 25%.

In a sense, the proof of the pudding will be in the eating – over time we will understand more about whether consumers are motivated enough to save energy in this way. The decisions consumers take are significant in terms of demand. A report from Ofgem states that time of use tariffs and smart appliances could reduce residential demand by 4% and shift peaks by 5%.

The role of heat and transport

Our two scenarios reflect how UK energy demand might change depending on the future uptake of heat pumps as a highly efficient method of helping to heat our homes. There are about 100,000 heat pumps already fitted in the UK at present and around 1.3 million boilers are being replaced every year.

Our Gone Green scenario sees the adoption of heat pumps continue to rise to nine million households by 2035, while our Slow Progression projections envisage a lower take up of the technology at around one million households by the same date. One barrier to progress is the relatively high cost of deployment, which takes us back again to the argument around Government incentives.

Smart appliances and tariffs could reduce residential demand by 4% and shift peaks by 5%.

Smart appliances and tariffs could reduce residential demand by 4% and shift peaks by 5%.

Transport too is an area where incentives have been used to kick-start the adoption of ‘greener’ technologies, in this case electric and plug-in hybrid vehicles. The 5,000 or so vehicles of this type represent a tiny fraction of the total number of vehicles on UK roads at the moment, and future energy policy is likely to shape future expansion.

Where we see demand going

On the power side, we are projecting that demand will remain relatively steady under both our scenarios, with any growth in demand being largely offset by improvements in energy efficiency. Beyond 2020 in our Gone Green scenario we see the impact of heat pumps, electric vehicles and other innovations increasing demand to an extent.

The message on gas is also interesting. We should not forget that gas remains a central part of the UK’s energy mix, currently accounting for about twice the UK’s annual electricity demand. However, under Gone Green we see energy efficiency measures and moderate economic growth reducing demand, continuing the trend of the last few years, while under Slow Progression we see power generation driving gas demand increases in the medium term.

But even with demand being reduced, gas will continue to be a vital energy resource for the UK for many years to come.

Find out more

National Grid’s 2013 UK Future Energy Scenarios (FES) paint a picture of how the UK’s energy landscape might look in 2035 and as far out as 2050. For more on FES, click here.

Richard Smith, National Grid’s Head of Energy Strategy and Policy, explains how these scenarios have been developed.

  • Tom Langdon-Davies

    Whether customers use time of use tariffs in the future will depend on how good a job we make to explain the benefits in both cost and carbon reduction.
    We need to start shifting consumption away from the peak now, not wait for six years until the smart meter rollout is complete.
    Have you fitted time switches to water heating devices such as immersion heaters in your home? I have! See theintelligentplug.com for advice.

  • zain

    How and why does the UK have a higher energy demand?

FES 2017: A day of insights
The decisions consumers take are significant in terms of demand. A report from Ofgem states that time of use tariffs and smart appliances could reduce residential demand by 4% and shift peaks by 5%.

Marcus Stewart, National Grid Energy Demand Manager