UK's net-zero bill could be £16.7bn lower with flexible energy, new report reveals
The annual cost of the UK's net-zero transition could be billions of pounds cheaper if policymakers and the public and private sectors collaborate to scale up battery storage, hydrogen and other flexible energy innovations.
That is according to a new in-depth report from the Carbon Trust, out today (18 May). The report outlines how the nation’s electricity demand could treble by 2050, against a 2019 baseline, as sectors including transport and heating become increasingly electrified – and how the costs associated with this shift can be minimised.
According to the report, “embedding” flexibility across power, heat and transport will be necessary to reduce the cost of the low-carbon transition – and will reduce operational costs as well as upfront costs. If properly embedded and scaled, flexible technologies including batteries and low-carbon peaking plants could cut up to £16.7bn off of annual bills by 2050.
The figure is based on the report’s most optimistic scenario. In this case, the report explains, a whole energy system approach is adopted by policymakers and is encouraged across the public and private sectors, overcoming historic challenges with piecemeal approaches and maximising benefits while minimising costs. But, in any scenario, the report concludes, delivering a flexible energy system is a “no-regrets” choice.
Three scenarios are detailed in the report; one in which electric heating covers most of the UK, one in which hydrogen is the primary form of heating and one in which most buildings have a hybrid (electric with a gas back-up) heating system.
Instead of arguing that one scenario is optimal, the report lays out the pros and cons of each. However, in the fully electric heating scenario, flexibility is particularly crucial, as, without, annual costs will rise by £4.5bn.
Whatever route the UK takes, the report argues, flexibility must be embedded across the system and the system must become increasingly digitised – “to allow information sharing, monitoring and coordination between assets and organisations”. The general public must also be more involved in the transition, the Carbon Trust states, to abate fears over the cost and safety of the journey to net-zero. Communications, case studies and targeted incentives will likely need to be developed.
The report comes as the Department for Business, Energy and Industrial Strategy (BEIS) is developing a follow-up to its Smart Systems and Flexibility Plan. BEIS is also expected to publish the much-anticipated Hydrogen Strategy and Heat and Buildings Strategy in the coming weeks. Moreover, Ofgem is currently developing a new post-Covid-19 investment strategy, as its RIIO2 determinations.
BEIS and Ofgem were both consulted during the report development, alongside the Climate Change Committee, Innovate UK, National Infrastructure Commission (NIC) and National Grid ESO.
“It's critically important that industry, business, consumers and the public sector understand the value of flexibility and the benefits that flexibility brings to the British economy,” the Carbon Trust’s chief executive Tom Delay said. “Flexibility always delivers – we should invest in it now.”
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