RGI meeting, 24th Oct 2018

Future Energy Scenarios 2018

2

Contents

1 What is FES?

2 How we develop our scenarios

3 FES 2018: decentralisation, decarbonisation, demand, electricity supply

4 Stakeholder engagement

3

Future Energy Scenarios (FES)

FES presents the credible pathways

for electricity and gas in Great Britain

between now and

2050. It is used to underpin a number

of System Operator business activities

including how we

develop and operate our networks

The Future Energy

Scenarios (FES) are

produced annually by

National Grid System

Operator.

FES is a dual fuel product

presenting the pathways for

the future of electricity and

gas in Great.

It includes cross-sector

analysis of power, transport

and heat to ensure our

scenarios are self-

consistent.

It is used to underpin a

number of System Operator

activities to help us develop

and operate our networks as

the energy landscape

transforms around us on the

path towards

decarbonisation, while

ensuring security of supply

is maintained.

4

FES is a full suite of outputs

Modelling

assumptions

FAQWebinars

FES

document

including

‘FES in 5’

Conference

Modelling

methods

document

Thought

pieces

Data

workbook

5

FES is just the beginning…

Summer Outlook Report

System Needs and

Product Strategy

Winter Review and Consultation

Electricity Ten

Year Statement

Winter Outlook Report

Gas Ten Year Statement

Network Options Assessment

Gas Future Operability

System Operability

Framework

Security of supply

How we develop our networks

How we operate our networks

6

Meet the team

7

How we produce FES

FES is an annual

process incorporating

stakeholder feedback

(more on this later),

high-level scenario

development followed

by detailed modelling

and analysis

8

Developing the scenario content: scenario framework

How many scenarios do we need?

What are the key areas of uncertainty?

How can we describe our scenarios (can we believe

these worlds could exist)?

How can we present our scenarios?

Which questions do we need to answer?

How many scenarios should meet the

environmental targets?

Defining the scenario framework at the start of the process helps to provide

guidelines and focus for more detailed modelling. It also starts to set out

how we will present our scenarios and helps us test credibility

9

Developing the scenario content: modelling constraints

There are two significant modelling

constraints for our scenarios to ensure

that security of

supply standards are met in all scenarios

and that environmental

targets are met in

decarbonised scenarios

Decarbonisation

Any scenario that meets

the decarbonisation targets must achieve an

80% reduction in carbon

emissions compared to 1990 levels across all

sectors (power, transport, heat, aviation, shipping..)

Uncertainty around Paris

/ IPCC (1.5 degrees) and net zero

Security of supply

All scenarios have to

meet security of supply standards for electricity

and gas in all years

between now and 2050

Electricity: 3 hours loss of

load expectation per year

Gas: N-1 criteria

10

Developing the scenario content: detailed modelling

2050 guidance

UK Times Model

Emissions for power, transport, heat

Electricity demand

Efficiency

Power, transport and heat

Domestic, industrial and commercial

Electricity supply

Installed capacity projections

BID3 dispatch modelling

BID3, Europe

Transmission and distributed

Built up from individual projects

Gas demand

Efficiency

Power (e.g. CCGTs), transport and heat

Domestic, industrial and commercial

Gas supply

Domestic sources such as UKCS, shale, green gas

International markets such as Norway, Europe, LNG

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Future Energy Scenarios 2018

FES 2018 scenario framework features

four scenarios exploring the themes

of decarbonisation

and decentralisation

Two scenarios meet the 2050 targets and

all meet security of

supply standards

12

The energy transformation from now to 2050

Power

Heat

Transport

Now 2030 2040 2050

Markets, Networks, System Operation

13

Decentralisation

In FES 2018 we defined

decentralisation as referring to where

energy technologies

/ solutions are located on the

network. While this is clearer for supply,

the concept of

decentralisation for demand is trickier.

Decentralised

Centralised

Solar Onshore wind Heat pumps Biogas

Offshore wind Nuclear CCUS Hydrogen

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Decarbonisation in Community Renewables

2024: Half of EV owners use smart charging

2030: 33 GW of solar generation installed 2041:12 million

residential heat pumps installed

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Demand: electric vehicles

0

5

10

15

20

25

30

35

40

45

2015 2020 2025 2030 2035 2040 2045 2050

Mill

ion

s o

f V

eh

icle

s

Community Renewables Consumer Evolution

Steady Progression Two Degrees

16

Demand: residential heat TWh in 2050

SP

0 10 20 30 40 50 60 100 200 300

TD SPGas

boiler2017

Electricity

(HP + resistive)TD

Hybrids CRSP2017

Hydrogen

BoilersTD2017

District

Heat2017 SPCR

2017 CR

17

Demand: hydrogen in 2050

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What does this mean for total demand?

0

200

400

600

800

1000

1200

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

TW

h

Community Renewables Two Degrees Steady Progression

Consumer Evolution History

GAS

ELECTRICITY

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What does this mean for electricity peak demand?

55

60

65

70

75

80

85

90

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

To

tal p

ea

k d

em

an

d (

GW

)

Community Renewables Two Degrees Steady Progression Consumer Evolution

Faster take-up of electric

vehicles in 2050-compliant scenarios

Impact of smart

charging reduces

peak demand in the 2050-compliant

scenarios

20

What is the opportunity for future power generation?

0

50

100

150

200

250

300

2017 CR TD SP CE CR TD SP CE

Ins

talled

ca

pa

cit

y (

GW

)

Interconnectors Biomass CCS Waste Gas CoalHydro Marine Nuclear Offshore wind Onshore wind SolarOther thermal Other renewables Storage Vehicle to Grid

2017 2030 2050

27%

45% 31%28% 40%

65%44%

37% 56%

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Generation output: Community Renewables

0

60

120

180

240

300

0

100

200

300

400

500

2015 2020 2025 2030 2035 2040 2045 2050

Ca

rbo

n in

ten

sity (

gC

O2

/ k

Wh

)

An

nu

al o

utp

ut

(TW

h)

Interconnectors Biomass CCS Waste GasCoal Hydro Marine Nuclear Offshore WindOnshore Wind Solar Other Thermal Other Renewables

Renewable generation

accounts for more than 75% of total output by 2030

22

The role of flexibility by 2030

0 GW 5 GW 10 GW 15 GW 20 GW 25 GW

SPBattery storage

2017CR

TD

Large-scale

storage2017

CRTD

CESP

Interconnectors TDCE2017

2017Vehicle to

gridCR

TD

CE

SP

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The role of flexibility by 2050

SP

Interconnectors

Battery storage

Large-scale

storage

Vehicle to

grid

TD

0 GW 5 GW 10 GW 15 GW 20 GW

CE2017

2017 SP CR

2017

2017 CR

25 GW

TDCE

SP

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What does this mean for networks?

Winter 2030 in Community Renewables Summer 2030 in Community Renewables

Net supply Net demand

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Some key insights from our electricity supply analysis

Low carbon technologies

will grow at paceMarkets will need to adapt New business models

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1 Electric vehicle growth2

Action on heat3 A role for gas4

A new energy world

Key messages from FES 2018

Stakeholder engagement

Future Energy Scenarios

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Why do we engage?

Even though we have a licence condition, it is

the feedback, input and challenge that we get

on our scenarios from

our stakeholders that ensures they remain

credible and deliver value – we would seek

to do this even without

a licence obligation

There is a licence condition

that means we have to

submit our Stakeholder

Feedback Document to

Ofgem by the end of

January each year. This

provides a preview of the

new scenarios and details

our engagement activities.

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Our engagement cycle

While we engage

throughout the year,

autumn is usually our

busiest period for

stakeholder

engagement – this is a

critical time for

developing the next

FES and so it’s

important that we

engage at the input of

the process

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Our engagement activities

What are we doing differently for FES 2019?

Increased

capacity at our events

‘Themed’

workshops

Call for

Evidence

Launch conference

Workshops Webinars

Existing engagement:

Bilateral meetings

Newsletters, Thought

Pieces etc.

Enhancements:

Pre-read

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What do we engage on?

We engage on all matters relating to FES

including the framework, detailed

modelling

assumptions, project-specific market

intelligence and how we present our

scenarios

Our engagement activities

cover a broad range of

topics

Scenario framework: this

helps ensure our scenarios

cover the key areas of

uncertainty and address the

big questions (e.g. how

many scenarios meet 2050

targets)

Detailed modelling

assumptions and project-

specific intelligence: many

of the assumptions in FES

are ‘bottom-up’ – developers

are usually willing to share

these details on a

confidential basis to improve

our work

Presenting our work: data

sets, format of the document

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We engage with a broad range of stakeholders

CustomersEnergy industry

Media

Educational interestSupply chain

Non-governmental organisations

InnovatorsSmall businesses

Consumer groups

PoliticalInvestors

Communities and their representatives

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How our engagement has evolved

22%

21%

24%

7%

8%

7%

6%5%

44%

15%

8%

6%

5%

5%

4%

4% 4%

2% 1% 1% 1%

233 organisations 362 organisations

38%

16%9%

7%

6%

5%

5%

5%

5%

2%1% 1%

391 organisations

44%

18%3%

10%

3%

5%

4%

4%5%

2%1% 1% 0%

430 organisations

FES 2015 FES 2016 FES 2017 FES 2018

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FES 2018 engagement statistics

6700

subscribers to

our

newsletter

390

attendees at

the FES

launch

conference

Bilateral

meetings with

60

organisations

Over 650

stakeholders

4 workshops

attended by

over 200

people

430

organisations

Responded to

over 500

queries via

FES email

account

Over 80

conferences,

workshops

and industry

events

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Continuing the conversation

Read our Future Energy Scenarios and take

part in our FES 2019 Call for Evidence

fes.nationalgrid.com

Contact us about our Future Energy Scenarios

fes@nationalgrid.com

Keep up to date on key issues relating to National

Grid via our Connecting website:

www.nationalgridconnecting.com