Network JulyAugust 2016

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NETWORK / 37 / JULY/AUGUST 2016 tricity generation mix has con- tinued to grow, reaching 25.1 per cent in 2016 Q1, up 2.3 percent- age points on the share in 2015 Q1, mostly reflecting increased capacity. The decarbonisation agenda is being dragged back by slow progress in the heating and transport sectors. To meet the 2020 target, renewable heat would have to grow from 35TWh to 95TWh – an annual increase of 15TWh. Over the past four years there was an annual increase of just 2.5TWh. From its current level of 14.5TWh, renewable transport would have to rise by 24TWh – an increase of 6TWh a year. There has been an annual increase of just 1TWh over the past four years. As National Grid cautions, "the pace of change would need to increase signifi- cantly". Its findings chime with those of the Committee on Cli- mate Change (CCC) in its recent annual progress report. It said the country had relied heav- ily on the power sector to meet emissions targets – a phenom- enon that can only continue for so long. In the power sector, National Grid says there is a trend in all four scenarios towards more distributed generation: "[The] downward shi• in the size of generation and the tendency to decentralise are important characteristics of all four of our scenarios, albeit to differing timescales and extents." This trend is most pro- nounced in the Consumer Power scenario. It sees 89GW of genera- tion connected at the local level by 2040, "making up 49 per cent of total generation capacity and providing 40 per cent of genera- tion output". Generation is also predicted to diversify across all four sce- narios. Much of this generation will come from renewables, and National Grid says a regional divergence may well emerge, with large amounts of solar gen- eration installed in the south west and more onshore wind and hydro in Scotland. A big question mark remains over what part gas will play in the UK's future energy sys- tem. Although consumption is expected to fall in all four sce- narios, the predictions of quite how much gas will be consumed annually by 2040 are unclear, ranging from 600 to 800TWh. By contrast, predictions for electric- ity demand range from 330TWh to 380TWh. Where Britain will end up depends on a number of fur- ther questions: to what extent will heating be electrified with heat pumps; how much can consumption be reduced with energy-efficiency measures and district heating; and how much gas will be consumed for power generation? Since the government announced plans to replace the Energy Company Obligation (Eco), details of the new scheme have remained sparse. This coincided with a drop in energy- efficiency installations from a high of 97,946 in March 2014 to only 31,748 in September last year. There remain concerns and questions about the replacement scheme's ability to deliver at the same level as Eco. Former shadow energy minister Alan Whitehead says the general target of 200,000 homes treated per year until 2021 "represents roughly a 40% fall on what was Eco expenditure previously". Energy UK chief executive Lawrence Slade echoed these concerns, and Jim Watson of the UK Energy Research Centre criticised the "big gap in energy policy", demanding: "Whoever ends up in charge a•er the cur- rent uncertainty, that should be at the top of their agenda." Under National Grid's Gone Green scenario, 18TWh of energy is saved through energy- efficiency measures between now and 2040. Under No Pro- gression, less than half of that is saved. The answers to other questions are similarly varied. Targets are missed even in the most optimistic of green sce- narios. Something significant, and unforeseen, has to change to get the UK back on track. Tom Grimwood, reporter, Utility Week Recent research has defined the value of flexibility and source of flexibility out to 2030. The UK needs a more flexible power system. This view is fast becoming the prevailing orthodoxy, with the recent National Infrastructure Commission (NIC) report, Smart Power, suggesting that enhanced flexibility could save consumers as much as £8 billion a year by 2030. According to the NIC, the three key means of achieving flexibility in the power system are: u Demand-side flexibility; u Energy storage; u Interconnection. In June, a research report was published by Utility Week in partnership with CGI that canvassed the opinion of energy network leaders – as well as energy suppliers and aggregators – to understand how they perceive the challenge of providing flexibility, and which methods for providing it they consider to be most important. It also asked leaders how close they feel they are to being able to provide flexibility as a matter of course through the means that the NIC identified as being key. The scale of the challenge facing the power industry was laid bare by the responses to the survey. Respondents believed that flexibility in the power system must more than double to an average of 8.4 on a scale of one to ten by 2030. The current level of flexibility is just four, suggesting the industry has a significant mountain to climb in the 14 years ahead. Bridging this gap was seen as a strategic imperative for the future. By 2030, the average rating out of ten for the strategic importance of flexibility was 9.1, compared with just 7 today – interestingly, network respondents rated the current importance of flexibility to their businesses even lower as a group. With regard to the significance of different sources of flexibility, network respondents were the only group that rated interconnection as more important than energy storage – albeit by only a small margin. Overall, demand side response was seen as the most important source of flexibility. All respondents felt, however, that they are some way from being able to exploit these sources effectively in the day-to-day provision of flexibility. The biggest barriers to flexibility in the power system, as perceived by contributors, tended to attach to policy and regulation. The onus is therefore on government and Ofgem to accelerate ongoing discussions about market reforms to support growth in these areas, and ensure words become action in the near future. The full research report can be downloaded at T h e v a l u e o f f l e x i b i l i T y Energy leaders believe that flexibility in the power system needs to double by 2030

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