31 Jul What is the future for the rapidly changing energy system?
It is no secret that the transformation of the energy sector is already underway. And National Grid’s latest Future Energy Scenarios (FES) report predicts continuing rapid change across almost all aspects of our energy system. Based on the energy trilemma – security of supply, sustainability and affordability – the report provides four credible scenarios for the future of energy out to 2050. We take a look at some of the key findings and the implications for the industry.
Electric cars fueling demand
In three out of four scenarios, the FES team expects peak electricity demand and annual consumption to start rising from 2025 – peak demand could reach 85GW by 2050, compared to 60GW today. The shape of demand will also change. With much of the significant increase in demand likely to come from the expected growth in electric vehicles – rising from 90,000 today to 9 million by 2030. Looking further ahead, the switch from gas to electric heating is likely to be another key driver, particularly in industry.
Rise and Rise of Renewables
An energy system with high levels of renewable generation is already a reality – renewables made up 34% of total installed capacity in 2016. And this growth is likely to continue apace – by 2050 this could increase to as much as 60%.
Three of the report’s four scenarios predict that solar power will have the largest share of generation capacity by 2050 – solar PV is set to grow from today’s 12GW to at least 33GW by 2030. And prospects for wind powered generation are similar – all scenarios anticipate a growth in wind capacity, from approximately 15GW in 2016 to nearly 50GW by 2040 in the best case scenario.
Operability challenges for National Grid
All great news for decarbonisation. But with this significant growth in renewable generation, come some important implications for how National Grid balances the electrical system. Firstly, renewables run a very low marginal cost – so sunny and windy periods see less and less conventional generation being used. This means that instead of using coal or gas generators to balance demand with supply, National Grid will need to contract with industrial and commercial users for demand-side response services. Secondly, as renewable generation output can swing rapidly (and unpredictably), the value of fast-acting balancing loads – refrigeration for example – is likely to increase over time. The overall effect will be to make the services bought by National Grid more valuable.
Making the complex simple
National Grid’s recent consultation on System Needs and Product Strategy highlighted their commitment to simplifying the often complex services they buy. A key driver of this change is the recognition that to increase engagement with industry they need to improve transparency and simplify their market.
We support our customers on their journey to better understanding the nature of their energy consumption – to control costs, increase efficiency and reduce emissions. Given the changes forecast by National Grid, these journeys look set to continue and become an increasingly important part of the business agenda.
We are helping our customers prepare for the challenges and opportunities ahead – to find out more please get in touch with Richard Lewin, Richard.email@example.com