On 11 July 2019 National Grid published their annual Future Energy Scenarios (known as FES). This article gives a general overview and we will follow it up with more detailed analysis of some of the themes.

Why is FES so important?

FES is the product of in-depth analysis by the National Grid ESO (electricity system operator) team of analysts and collaboration with more than 600 stakeholders and industry specialists. FES presents four indicative scenarios and identifies what the future energy outlook may be based on those scenarios. The different outlooks can help industry better understand the challenges it faces and help customers and stakeholders as they make long-term decisions. The ESO, as system operator of both the electricity and gas networks, is in a privileged position that enables it to draw on insight and data that cut across both fuels in developing FES. It has a whole system view of energy, helping the industry to understand how low-carbon solutions can be delivered reliably and affordably for the consumer of the future.

National Grid ESO's stakeholders use FES in a variety of ways, and for a variety of purposes, such as: for investment and pre-investment decisions; to gain insight into the industry; and to see where potential future opportunities lie. FES is the starting point for planning long-term regulated investment in gas and electricity systems. It defines a path for delivery of low cost energy for the consumer of the future and for meeting the energy industry’s contribution to carbon reduction targets.

FES scenarios

FES contains four scenarios, offering different credible pathways for the future of energy for the next 30 years and beyond. For FES 2019 they are the same as last year and based on the speed of decarbonisation and the level of "decentralisation":

  • Steady Progression (large-scale centralised solutions, but pace continues as today, then slows)
  • Consumer Evolution (decentralised but local, market-driven solutions, lack of strong policy direction)
  • Two Degrees (large-scale centralised solutions, including hydrogen for heat, and CCUS (carbon capture, use and storage))
  • Community Renewables (decentralised pathway, local generation)

There is also a new standalone sensitivity analysis of how 'net zero' could be achieved by 2050, added in to FES to reflect the recent change to the Climate Change Act target from 80% reduction to 100% reduction of carbon emissions compared to 1990 levels by 2050. 

At present, according to FES, only the last two scenarios would meet the original 80% decarbonisation target set out in the Climate Change Act 2008.

Key messages

There are four key messages in this year's FES:

1. Net zero by 2050 is achievable but needs immediate action across all key technologies and policy areas – at a significantly greater scale than assumed in the 4 core scenarios. In particular:

  • electricity will need to operate using ONLY zero carbon generation and the power sector will need to deliver negative emissions (e.g. through BECCS, bioenergy carbon capture and storage, as being trialled by Drax). FES envisages 43TWh of electricity from BECCS being produced, around 10% of total annual electricity demand in 2050.
  • natural gas would no longer be burnt without the use of CCUS and there is an increasing reliance on hydrogen. New gas appliances need to be hydrogen ready.
  • CCUS is essential.

2. We still do not know how best to decarbonise heat. The government is to decide by 2025. There are multiple pathways to heat decarbonisation, including electrification, decarbonised gas, and hybrid systems, and they will vary by region, but there are clear, urgent actions we can take now:

  • improve thermal efficiency of housing so the majority of homes are rated EPC C or higher by 2030.
  • accelerate the rate of heat pump installation so that there are at least 2.5m domestic heat pumps by 2030.

3. Electric vehicles (EVs) can help decarbonise both transport and electricity supply for Great Britain. The market needs to align vehicle charging behaviour to complement renewable generation and meet system needs.

So instead of seeing EVs as a potential threat causing blackouts when everyone plugs them in at 6pm, we need to encourage their use as "batteries on wheels", storing solar energy during the day and releasing it at night. It is fascinating that this year's FES sees EVs as a positive for the system compared to just two years ago where FES predicted an extra 30GW of peak demand from EVs.

4. There needs to be a whole system view across electricity, gas, heat and transport to underpin a sustainable energy transformation, along with widespread digitisation and data sharing to harness the interactions between these changing systems. In other words:

  • There will be more interaction between gas and electricity networks.
  • We need significant digitisation of legacy infrastructure so we can see the whole energy system.
  • Data must be made accessible to decision-makers.
  • Investment decisions must be made around potential new systems, such as hydrogen, on a whole energy system basis.

National Grid's ambition is to operate the GB electricity system at zero carbon by 2025 which is an admirable but ambitious target. The real question is, can the rest of the energy sector decarbonise in a similar timescale?

Further articles

Look out for our series of articles looking in more detail at topics such as: hydrogen; CCUS; and energy efficiency in buildings – key areas which will need rapid investment in order to meet our decarbonisation targets.

Key Contacts

Paul Dight

Paul Dight

Partner, Energy and Utilities
United Kingdom

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Richard Goodfellow

Richard Goodfellow

Head of IPE and Co-head of Energy and Utilities
United Kingdom

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