What will the UK’s energy landscape look like in 2035 or 2050? National Grid’s UK Future Energy Scenarios 2014 provide credible analysis of how this uncertain future could play out, helping Government, customers and other stakeholders to make informed decisions. Alice Etheridge, National Grid’s Strategy Development Manager, explains what each scenario might mean for the UK as a whole and for consumers.
One of the key pieces of feedback that we received during our stakeholder engagement programme over the past 12 months was that our new scenarios should reflect the energy ‘trilemma’ of sustainability, affordability and security of supply. Stakeholders also asked us to increase the number of scenarios to reflect a broader range of uncertainty as we analyse what the future might hold.
Against this backdrop, we have published four scenarios this year (up from two in 2013). They are: No Progression, Slow Progression, Low Carbon Life and Gone Green. Within each of them we explore how greater or lesser emphasis on affordability and sustainability might affect energy demand, supply and the UK’s ability to meet its stated environmental targets. Here’s the story of our four scenarios in a nutshell…
No Progression: low affordability and low sustainability
In essence this is a natural evolution from where we are today and is our first completely new scenario. There is less money available for Government and consumers and lower political will to drive new policies and regulation. There’s lots of gas generation, but the UK misses its main environmental targets.
In a No Progression world financial pressures mean that the Government is focused on the short term and the need for affordable and secure energy sources with little emphasis on carbon reduction. It’s a difficult time for investors without the certainty of a clear funding Control Framework beyond 2020. The new generation being built is mainly gas, there’s some wind and solar but very little new nuclear and no carbon capture and storage (CCS).
For us as consumers… we can’t capture what our scenarios mean for every household but under No Progression this is what my world might look like: “I don’t have lots of disposable income so I’m watching my energy consumption. Being green is not on the agenda, all I want is cheap energy at all times. My gas boiler is still going strong and I’ve never even heard of a heat pump. I don’t see the need for an electric vehicle. I just have the one diesel car, but I am cycling to work to save money.”
Slow Progression: low affordability and high sustainability
Money is still tight in our Slow Progression scenario although the political impetus to bring in new energy policies and regulation is there. The result is that we hit our targets, but late. Demand is at its lowest among all our scenarios.
In a Slow Progression world the economic recovery is fairly slow meaning less certainty for investors although the Government has strong policies and regulation alongside new targets, which make it different to last year’s Slow Progression scenario. There is lots of market intervention but unfortunately it is not as successful as the Government would like because of the sluggish economy. Electricity Market Reform (EMR) remains technology specific and there’s a big push towards energy efficiency. In terms of technologies, renewables feature more heavily but the roll-out is slow, while there is also some new nuclear power and Carbon Capture and Storage (CCS).
For us as consumers… “I still don’t have much disposable income so any energy efficiency changes I make at home have to achieve a quick payback. I’ve heard about heat pumps and can see the benefits but I just can’t afford to buy one. I’m still trying to bring my energy costs down though and I’ve signed up for a time-of-use tariff through my smart meter.”
Low Carbon Life: high affordability and low sustainability
In our second completely new scenario, there is stronger economic growth and we have more money in our pockets to spend but there is less emphasis on sustainability. There is a high level of low carbon generation and distributed generation.
In a Low Carbon Life world short-term political volatility means that there is less drive towards a sustainable future and no new targets are set, although there is long-term agreement around decarbonisation. There is some increase in nuclear power, CCS and renewables and innovation funding is helping to develop new and improved solutions.
For us as consumers… “My wages have finally caught up with living costs and with more disposable income I want to enjoy life. I’ve recently bought an electric car and some new appliances – and put solar panels on my roof because I like the sound of free energy. However, I’m not that bothered about energy efficiency as a way of saving extra money. I’ve recently bought a new gas boiler because it’s what I know and what I like.”
Gone Green: high affordability and high sustainability
Under our Gone Green scenario there is more money available both at investment level and as disposable income, as well as strong policy, regulation and new environmental targets. We see a high proportion of renewables and all targets are met.
In a Gone Green world Government policy is strong and effective. Europe is harmonized, leading to new European environmental targets, which the UK meets in full. Policy is joined-up across sectors such as transport, heat and power. Technology is characterised by lots of innovation and organic improvements to existing technology. Wind and solar photovoltaic make up the highest proportion of renewables, while there is a significant increase in nuclear and CCS.
For us as consumers… “Going green is a conscious decision for me and my neighbours. I’ve made the most of incentives and invested in a heat pump and my roof has solar panels, which were installed just before the subsidy was removed. My electric car is being charged flexibly thanks to time-of-use tariffs and I’m even considering moving home to one of the new super-low-energy Passivhauses in the village to get an even better level of energy efficiency.”
Of course, this is just a snapshot of our four scenarios for 2014. One of the underlying themes of our analysis is the uncertainty that exists in so many aspects of our energy future and how that uncertainty unfolds in the coming years will go a long way towards informing which of our scenarios provides the most accurate reflection of the UK in 2020 and beyond.
Richard Smith, Head of Energy Strategy and Policy, National Grid, offers his perspective on the UK Future Energy Scenarios 2014.
Ten things you need to know about National Grid’s Future Energy Scenarios 2014.