Utility Week

UTILITY WEEK | JUNE 2021 | 21 Policy & Regulation In its sixth carbon budget published last December, the CCC recommended that all unabated gas generation should be o the grid by 2035, although the government stopped short of taking up this recommenda- tion when the Energy White Paper appeared the following week. The CCC said this would still leave the carbon intensity of gas at 10g of CO2 per kilo- watt-hour due to the residual emissions from gas plants with CCS. While fossil fuel generation should be "squeezed down as much as possible" over the next 15 years, Jo e says this drive to decarbonise the grid should not be pursued at the expense of all other considerations, most notably security of supply. If 2035 turned out to be really cold and there were some unabated gas capacity remaining on the system, it could make sense to use it, he says: "It's better to run that than for the lights to go out." Another factor is highlighted by mod- elling carried out by the government to inform the impact assessment of its Energy White Paper. This shows that the optimum system costs can be delivered when the carbon intensity of the grid is at 5 to 25g of CO2/kWh. Marshall agrees that in this scenario it may be better to focus resources on decar- bonising areas like heating and transport rather than squeezing the last few molecules of gas o the grid. Future-proo ng networks The bigger picture is that mass electri' ca- tion of sectors such as transport, heating and industry is likely to mean a 50 per cent increase in demand from 300TWh today to 460TWh from this source of power by 2035, the CCC envisages. This will in turn mean greater reinforce- ment of the electricity network, particularly at the distribution level, says Jo e, who adds that it will be especially important to ensure that lack of grid capacity doesn't hold up the rollout of electric vehicles, given the increas- ingly important role they will play in balanc- ing power demand. But this will require a greater openness within Ofgem to anticipatory investment than is o• en still the case. He says: "If you are going to do it, future proof it by doing it once because the cost is the civil engineering not the wires." If the choice is between a 25 per cent increase in capacity or having to double it, the balance between risks and returns should point to the bigger upgrade, even if it is impossible to be "absolutely sure" that the additional capacity will be used, Jo e says. Ensuring security of supply will become even more important if and when house- holds become solely reliant on electricity for heating, he says: "If you don't have another vector, it makes it all the more important that it's really reliable." And challenges for the transmission net- work could come to some areas faster than others if households shi• en-masse to elec- tri' ed heating and transport, Jo e says. Tackling heat But the biggest issue, which can no longer be le• in the pending tray if the UK is to have any hope of meeting its 78 per cent carbon reduction targets, is domestic heating. The government's impact assessment of its 78 per cent target suggests that 40 per cent of homes must have decarbonised heat- ing by 2035. Jo e says the new target leading towards net zero means there is no scope for duck- ing the need to decarbonise home heating because there's nowhere else to achieve these carbon savings. "With net zero, we have to bite the bullet. There's not enough of anything else to compensate," he says. The new target means that fossil fuel heat- ing will have to be phased out more rapidly than would otherwise have been the case. The 15-year replacement life cycle for typical gas-' red boilers means they must be phased out by 2033 and all heating must be net zero compatible by the early 2030s, the CCC has stated. The CCC's own modelling suggests heat pumps will be the dominant low-carbon heating solution and that, while hydrogen will have a role, it will not be "huge". Wide scale hydrogen heating is "unlikely to be available" by the mid-2030s, accord- ing to the government's impact assessment of the 78 per cent target. This does not mean that no new gas boilers can be installed by this point, but they will have to be either hydrogen-ready or hybrid solutions that also involve heat pumps, says Jo e. And meeting net zero will mean 1.5 million new low-car- bon heating systems will need to be installed each year by 2035, he›adds. Given the size of this mountain, even though the CCC has pushed for more ambi- tious heat pump installation targets than the government has set, it is important not to argue too much about long-term goals, given that installations are today running at around 30,000 per annum, Jo e says: "Getting to 1.5 million by mid- 2030s is a 50-fold ramp-up. The Department for Business, Energy and Industrial Strategy [BEIS] has talked about 600,000 heat pumps by 2028 and we are talking about 900,000. If they manage 600,000 by 2028, that's a mas- sive increase: the most important thing is to deliver on that as a minimum and build up scale gradually over time." The key factor is turning the heat pump sector into a mass manufacturing industry, says Beanland: "Getting to 600,000 is a huge ask but getting from 600,000 to 1 million, once you have scale in place becomes that much easier." However, delays like that surrounding the publication of the government's heat and buildings strategy will make it "much more di¢ cult" for a still £ edgling industry to scale up production and the rate of installations. He says: "If we are having the same conver- sations in six months, it will be that much more di¢ cult; 600,000 is achievable but we have to start getting on with it." David Blackman, policy correspondent • See overleaf for a deeper dive into the di erent paths for decarbonising heat "Fundamentally something needs to happen. It's getting to the situation where I don't mind what it is as long as something happens." Bean Beanland, president of the Ground Source Heat Pump Association. "Everything has to go faster. We don't have the time and we need to move forward as quickly as possible with all solutions." Clare Jackson, co-lead of the Hydrogen Taskforce Secretariat possible with all solutions." "Fundamentally something needs to happen. It's

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