‘Groundbreaking’ analysis reveals potential net zero cost reductions

18 May 2021

The Carbon Trust says that ‘Flexibility in Great Britain’, is its most in depth analysis to-date on the subject, underlines the vital role of flexibility in delivering an unprecedented expansion of the UK’s energy system aimed at achieving net zero.

Its key findings:

  • Embedding greater flexibility across the entire energy system will reduce the cost of achieving net zero for all consumers while assuring energy security;
  • Investing in flexibility is a no-regrets decision as it has the potential to deliver material net savings of up to £16.7bn per annum across all scenarios analysed in 2050;
  • A more flexible system will accelerate the benefits of decarbonisation supported by decentralisation and digitalisation.
  • To maximise the benefits of flexibility, households and businesses should play an active role in the development and operation of the country’s future energy system as energy use for transport, heat and appliances becomes more integrated.
  • Policymakers should preserve existing flexibility options and act now to maximise future flexibility, such as by building it into ‘smart’ appliances or building standards.

The findings are expected to have profound implications for policymakers, households and the wider energy sector across Great Britain.

For the first time, the system-level value of deploying flexibility across heat, transport, industry and power sectors in Great Britain, and the sensitivity of this value to different scenarios, has been assessed. The analysis is said to deliver a robust and up-to-date evidence-base on the role and value of flexibility in a net zero system, to drive decision making across the energy sector and government to create technology, policies and business models to realise this vision.

Reaching net zero by 2050 will require an unprecedented expansion of the country’s energy system, with electricity demand forecast to treble from 2019 levels.

The conventional approach to energy system development has been to follow trends in demand and have production and network capacity ready to meet demand peaks. The net zero challenge will require a much larger electricity sector, given the increasing electrification of transport demand and heating, and the gas network will also undergo fundamental changes – potentially transitioning large portions to hydrogen, and/or acting as a back-up source of energy during extreme weather events. The operation of both networks will become increasingly interlinked to deliver a secure energy system and meet carbon targets.

Understanding the role and value of flexibility in meeting demand cost-effectively is therefore vital. The analysis comes at a time when the UK government is developing a follow-up to its Smart Systems and Flexibility Plan and the regulator Ofgem is considering future investment for Great Britain’s electricity networks.

The multi-organisational analysis was led by the Carbon Trust and Professor Goran Strbac, Imperial College London. 

The objective of the project was to understand how flexibility can help deliver a net zero transition under three heat decarbonisation scenarios – electric heating, hydrogen heating and hybrid (electric with back-up gas boiler) – rather than recommend an optimal energy system for 2050.

The scenarios were chosen to represent the potential extremes as there is significant uncertainty around how Great Britain decarbonises heating, and these choices will have a significant impact on the size and make-up of the energy system. 

The importance of local action was reinforced by the analysis, which found that distributed flexibility assets deliver significant value locally. Although, even more value is realised when co-ordinated at a national level – a critical finding at a time when there is increased interest in local energy system planning.

The analysis also considered the use of hydrogen across the energy system. It found that the development of hydrogen uses and associated infrastructure (electrolysers, natural gas reformers, biomass gasifiers, CCS infrastructure, hydrogen turbines and storage) for 2050 has significant system benefits if coordinated effectively. 

Driving this value is the ability of the system to optimise production from electrolysers to coincide with high energy supply times, store hydrogen and then use it for heating, power production and other applications across transport and industry. However, there is a need to diversify hydrogen production routes (from electricity and water, gas and biomass) and develop CCS infrastructure at scale to deliver a hydrogen future cost effectively.

The report also identifies the key challenges that could delay, or prevent, the development of a smart flexible net zero system. The report’s authors call for flexibility to be treated as a core infrastructure challenge and to be integrated into low carbon generation, network planning and heat and transport decarbonisation strategies. Policymakers should try to preserve existing flexibility options (eg hot water tanks) and act now to maximise future flexibility, such as by building it into ‘smart’ appliances or building standards.

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