National Grid has published its Future Energy Scenarios (FES 2017) projections today, with the System Operator forecasting a sharp increase in peak power demand linked to an expected growth in electric vehicle usage.
However, electric vehicles could create as much as 18GW of additional demand by 2050 under the National Grid forecasts. The slowest forecast growth in EVs still sees the technology make up 30% of sales by 2050. If this transition is not managed correctly, peak time electricity demand in a prosperous economy could grow by almost 1GW per year post 2030. An additional demand pressure, according to the System Operator, could come from air conditioning use on very warm days, with the potential to add 17GW to peak consumption by 2050.
However, electricity demand from industry is expected to decline in all but one scenario. In the ‘Two Degrees’ scenario – which maximises carbon reduction efforts – the decarbonisation of heat in the UK will lead to a further increase in power demand, as electric heating becomes more prevalent.
National Grid says it sees smaller businesses, with the aid of aggregators with suitable information communication technologies (ICT), taking advantage of demand response schemes. Furthermore, use of smart appliances could decrease residential peak demand as much as 18% from 2030 onwards in the ‘Two degrees’ scenario and about 2% in National Grid’s ‘Steady State’ scenario.
Meeting Electricity Demand
From an electricity supply angle, the Future Energy Scenarios report expects continued growth in renewable generation. The most positive scenario forecasts a 60% increase in renewable capacity to as much as 110GW by 2050. Electricity storage could grow from 4GW in 2016 to 6GW by 2020. Furthermore, the ‘Consumer Power’ scenario sees an increase of 50% (reaching 93GW) in distributed generation by 2050.
The growth in Interconnector projects varies between 5 and 13 projects depending on the extent of investment and policy support. This would increase Interconnector capacity by 10 to 20GW from 2025.
How do you solve a problem like Brexit?
To model Brexit risks, National Grid has used four different growth rates for GDP, with 2.1% for Two Degrees, 1.3% for Slow Progression, 1% for Steady State and 1.8% for Consumer Power.
In the first few years, National Grid see effects of uncertainty in all scenarios for both gas and power:
“This is a result of some postponement of investment in the industrial sector as businesses await clarity on the consequences of the UK leaving the EU,” the report states. Short term uncertainties are expected to smooth out during mid to long term.
Fall in transmission gas capacity
In terms of the gas industry, National Grid has forecast a decline in transmission connected gas capacity in all scenarios, even with 3GW of new CCGT coming online in 2025. This could increase to 5GW by 2030 in the Two Degrees scenario.
Ageing gas infrastructure will need to be maintained or adapted, and it is likely that some upstream entry and further storage facilities will close over the scenario period.
National Grid believes new nuclear plant is required in all future scenarios, with additional nuclear capacity ranging from 3.3GW in ‘Steady State’ to 14.5GW in ‘Two Degrees’ by 2035. The most ambitious green scenario forecasts “considerable offshore wind build without subsidies,” with offshore wind capacity rising to 50GW by 2040.
On gas storage, National Grid says it will rely on flexible supplies, including medium range storage, with new sites unlikely. “The economics, and particularly the winter to summer price spread, are very challenging for the development of new gas storage sites,” the report stated.
Shale gas is developed in two scenarios (Consumer Power and Steady State) which focus on a lower green ambition. National Grid has emphasised the need for decarbonisation of heat in order for the UK to meet its 2050 carbon reduction target. While this would result in a reduction in gas demand for heat, the move would lead to further gains in electricity demand, as mentioned earlier. Under the most ambitious green scenario, National Grid expects a fall in the use of domestic gas boilers from 22 million units today to 7 million by 2050. Heat pumps will be dominant, while in less green scenarios the number of gas boilers are maintained around 20 million.
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