National Grid’s FES one year on. Where are we now?
Blog
This week saw the annual publication of National Grid’s four Future Energy Scenarios (FES).
The main headlines include:
- Like last year, three scenarios meet net zero by 2050 or earlier (Consumer Transformation, System Transformation and Leading the Way), while Steady Progression only reduces emissions by 73% by 2050.
- National Grid doesn’t expect there to be any lasting impacts from COVID19.
- Consumer behaviour is pivotal to decarbonisation and therefore so are smart technologies, digitalisation, and data.
- The future electricity system will be supply-led, and demand will adjust to use or store energy from renewables.
- Flexibility signals will be driven from the wholesale market rather than Ancillary Services.
- New storage requirements have increased by circa 2GW in all scenarios to 2030 and by 3-5 GW in the net zero scenarios to 2050. The highest estimate from the Leading the Way scenario forecasts 18GW of total storage capacity by 2030 and 63GW by 2050.
Following last year’s publication, we set out our own ‘Five Steps to FES success’ which are ALL still relevant 12 months on!
clear investment signals for flexibility
Need for National Grid to set out detailed requirements and procurement plans across Balancing and Ancillary Services.
The local picture
A clear plan for the integration of DNO-led flexibility with National Grid.
Co-location regulation
Need for regulations to support co-location of generation and storage.
Easy access
Ease of participation for small low carbon assets. Need for interoperability standards to drive participation.
Clear overall regulatory framework
Clarity over network charges, clear renewable subsidies, and the direction of travel for market structure.
Flexibility is key
We are pleased to see an increased focus on Flexibility in this year’s publication. Digitalisation remains at the heart of unlocking flexibility services from low voltage connected generation. This will become even more important as we see the electrification of cars from 2030 and the need for increased Demand Side Response. In May, we saw the launch of the Government’s new Energy Digitalisation Taskforce which has the big task of delivering a digital roadmap to support industry change. This will need to be supported by the prompt removal of regulatory barriers.
Developing the incentives for 12x more batteries
Under the ‘Leading the Way’ scenario, there is a requirement of 12 GW of battery storage by 2030 and 28GW by 2050, while currently there is only 1 GW connected to the grid. This highlights the massive opportunity within the battery market right now. Whilst we are seeing strong returns for batteries in the new frequency product, Dynamic Containment, this has nearly reached its capacity and does not provide the long-term investment signal for batteries. Instead, this will need to come from appropriate wholesale market price signals and the ability to ‘stack’ revenue streams. We have seen some encouraging trials using batteries for services such as Restoration (i.e., after a black out) and to provide Reactive power. We will need these to materialise into real world markets and products.
Transparency and collaboration are pivotal
In April, we saw National Grid publish their Market Roadmap to 2025 which provided insight to their future ambitions. This was helpful but needs to go further to include an estimate of the volume of products required up to 2025 and beyond. National Grid is also running a Net Zero Market Reform programme looking at the challenges in the electricity market and the case for change to meet net zero while OFGEM has its ‘Full Chain Flexibility’ programme. The challenge for the Government and Regulators is bringing all innovative initiatives together to provide clear market signals for owners, optimisers, and users of battery storage and renewable generation. This is no small challenge, and we cannot afford any delay.
The FES is a great focal point to highlight the enormous changes required and challenges to delivering net zero. We now need clarity over the stages for delivery with appropriate milestones and checkpoints to ensure success.