Post: National Grid ESO maps the future of flexibility

National Grid ESO maps the future of flexibility

National Grid Electricity System Operator (ESO) has outlined four potential scenarios for decarbonisation in Britain. But it warned that changes to consumer behaviour and policy clarity will be pivotal, especially around flexibility.

The latest Future Energy Scenarios (FES) report, published on 12 July, models different credible pathways for energy transition in Britain over the coming decades. In three out of four scenarios in the analysis, the country reaches net zero carbon emissions by 2050 or earlier, with two scenarios seeing Britain reduce its emissions by 2035 by the 78% from 1990 levels committed to in the recent sixth Carbon Budget. However, the report makes it clear that the changes are required, in particular around incentives for flexibility, if those modelling scenarios are to become reality.

“Holistic energy market reform” is needed to drive the investment and behaviour changes that would deliver net zero and ensure security of supply at a fair and reasonable cost for all consumers. National Grid ESO highlighted the need for changes to industry codes to ensure increased flexibility can be harnessed to balance supply and demand across different locations and time periods. To attract new market participants, especially from the demand side, and to drive investment, the market must prioritise accessibility and competition.

A sustainable route to market is required to ensure financing of renewables capacity when most of the generation operates at zero marginal cost. Market rules, processes and data must be transparent to build trust from participants and investors. But initiatives to encourage new renewable or flexible capacity must consider the impact on system operability and markets must be designed coherently to deliver investment signals across the whole energy system.

In the 2021 modelling document, National Grid ESO included a specific chapter around the future of flexibility. It noted that as electrification of the economy increases across all scenarios, flexibility becomes increasingly important to help manage peak electricity demands and reduce the need for additional generation capacity. It noted that system flexibility today is predominantly delivered on the supply side, with demand side flexibility making up a small proportion.

By 2050, National Grid expects that demand side flexibility will grow significantly and, in some scenarios, provide the largest source of flexibility on the system. Across all scenarios, flexibility is expected to be provided by a combination of new and existing generation technologies, energy storage and action from the demand side. Solutions will include electrolysis, interconnection, demand side response and storage, particularly in the 2-4 hour range.

Supply and demand flexibility in 2050

Source: National Grid ESO

(CT – Customer Transformation, ST – System Transformation, LW – Leading the Way, SP – Steady Progression)

Load shifting of demand for industrial processes is expected to increase across all scenarios, with greater acceleration from the mid-2020s. The rise of smart technology solutions in the net zero scenarios see the rewards for participating in the energy markets increase while the barriers to entry are eased. Increased electrification of heat also leads to opportunities for thermal load shifting, reaching up to 6GW by 2050.

However, the report highlights that appropriate price signals and incentives will be needed from policy-makers and the energy market to encourage the types of flexible demand-side response behaviour that a net zero world requires. Currently, investment signals for flexibility are driven by revenues for ancillary services but, in future, signals should come from the wholesale market to support balancing of energy flows.

Across all scenarios, the transport sector is increasingly electrified and up to 37.4M EVs are expected to be on Britain’s roads by 2050. Although National Grid ESO noted concerns over the impact of EV charging. it said smart charging would keep additional peak electricity demand to between 7GW and 16GW, lower in the scenarios with high levels of consumer engagement. On vehicle-to-grid (V2G) technology, the report noted that the scenarios with high levels of consumer engagement see net EV demands at peak times become negative from the mid-2030s, with more power being fed back to the grid from EVs than is used to charge them.

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