Flexibility

We expect peak demands to increase in all scenarios as electrification of other sectors of the economy continues and expect the nature and timings of peak demand to change as the country decarbonises and the share of renewable electricity supply increases. For example, in Leading the Way a typical daytime demand could be boosted by up to 58 GW of electrolysis and 19 GW of electric vehicle charging. This could be encouraged to happen at times of high renewable output by low market prices or other incentives and would be in addition to ‘ordinary’ demands on the electricity system. Consumer Transformation is the most electrified scenario and sees the peak demands for electricity increase rapidly from the late 2020s, reaching 113 GW in 2050. 

As the heat sector decarbonises in the net zero scenarios, with greater use of heat pumps and hydrogen boilers, the peak demand for natural gas will reduce. In Steady Progression, natural gas peak demands continue at a similar level to today, In Consumer Transformation and Leading the Way, natural gas peak demand declines to nearly zero as unabated gas is phased out completely, with only limited residual uses in the energy system. In System Transformation natural gas is still used to produce hydrogen via methane reformation with CCUS. However, the peak demand is lower than today as methane reformation to produce hydrogen takes place throughout the year. 

Digitalisation is essential to managing an energy system with smart flexible demand. Without careful control of assets, demand-side technologies responding directly to half hourly price signals could cause big fluctuations in frequency. More granular control including randomisation of response times will be needed to avoid causing system operation issues nationally, regionally and right down to street level. For example, a whole street of electric vehicles all drawing power from or feeding power back to the grid at maximum output could cause local network issues. The right incentives need to be in place to manage this, with the ESO working closely with Distribution System Operators to ensure a coordinated response. Our 2020/21 Bridging the Gap programme explored how data and digitalisation, technology and markets can help meet the new challenges of a decarbonised electricity system.

We see up to 43 GW of electricity storage across our scenarios in 2050, compared to 3.5 GW today, 44 GW of demand-side response, compared to 6 GW today and 58 GW of electrolysis from close to zero today. These high levels, and related flexibility, need to be incentivised and supported by appropriate market signals. In future, investment signals should come from the wholesale market to support balancing of energy flows rather than ancillary services as they are today. We must also identify the optimal market signals to unlock flexibility, ensuring they complement other markets such as adequacy (capacity market) and decarbonisation (carbon pricing). Our scenarios support the work we are doing on market change, and feed into our market strategy which looks ahead to develop a clear 10-year vision.

The type of flexibility natural gas provides will continue to be important to the future energy system and as its use diminishes, alternative solutions will be needed in the net zero scenarios. Urgent focus is needed to get the right infrastructure in place to deliver zero-carbon energy. In the net zero scenarios in 2050, whole energy system flexibility is provided primarily by using electricity or gas to produce hydrogen, storing this hydrogen and then using this hydrogen in power stations or to meet end user demand. Producing hydrogen through electrolysis offers demand-side flexibility and burning it in turbines offers supply-side flexibility to the electricity system. Though the overall ‘round cycle’ efficiency of this process is low, it allows energy generated in windy periods to be used in calm periods, or to be stored between summer and winter. It will therefore be important to support security of energy supply and a strategic approach to the development of hydrogen storage is required to kick-start investment given the likely lead times involved. ​

Despite a huge increase in electricity storage capacity in the net zero scenarios, the energy it stores is dwarfed by that of hydrogen storage. In 2050 the capacity of electricity storage (excluding V2G) in each scenario represents 1.1%, 1.3% and 0.2% of the hydrogen storage capacities in Leading the Way, Consumer Transformation and System Transformation respectively (15 TWh, 12 TWh and 51 TWh). In Steady Progression we assume that natural gas will play a similar role to today in terms of whole energy system flexibility.

The Industrial and Commercial sectors are expected to offer increasing opportunity for demand-side response (DSR: the turning up or down, or off or on, of electricity consumption in response to external signals) across all scenarios. Domestic consumers will be able to provide demand-side flexibility through smart appliances, smart storage heaters and EVs charging on smart tariffs and vehicle-to-grid (V2G) technology. Much of this flexibility will be delivered without direct consumer involvement – but could happen in the background once they have opted in. 

Across all scenarios, electrification of transport raises challenges about how electric vehicles will be charged but also creates an opportunity to increase flexibility. Charging at home and increasing daytime or overnight demand through smart charging could be as valuable to the energy system as reducing peak demands – in fact, we expect smart charging to keep additional peak demand from EVs to between 7 and 16 GW. In Consumer Transformation and Leading the Way, 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 electric vehicles than is used to charge them.

Electrolysis plays an important role as a source of flexibility in the net zero scenarios, able to ramp up demand rapidly to match renewable output and producing hydrogen that can be stored until it is needed. In Consumer Transformation and System Transformation some electrolysis capacity developed in the 2030s is connected directly to new nuclear generation, allowing these generators to operate in baseload. At times of low demand, nuclear-connected electrolysis increases to absorb excess power from the reactor. High levels of renewable generation, particularly offshore wind, are needed in this year’s net zero scenarios to meet annual electricity demands. This is a key part of the transformation of our electricity system from being demand-led to being supply-led, with demands shifting to make use of available electricity.

 Interconnector net annual flows 

Today there are net imports over our interconnectors with continental Europe throughout the year - particularly at peak times. We expect these imports to increase in all scenarios through the 2020s as interconnector capacity grows. When there is excess renewable generation in GB, more than 25 GW of interconnection to other electricity markets can be used to import or export excess power in Consumer Transformation and Leading the Way. From the late 2020s Consumer Transformation and System Transformation see an increasing net export of electricity over the year; the high levels of variable renewable generation, particularly offshore wind, in these scenarios often exceed demand and so power is exported to the continent. Higher levels of electrolysis and demand side response in Leading the Way reduce the need to export power, although interconnectors still play an important role trading electricity throughout the year.