The National Grid have just published their analysis of Future Energy Scenarios (FES) Four scenarios based on different policy and economic conditions are modelled to understand the potential impact for supply and demand.
A matrix with two axes – prosperity and the nation’s green ambition is used.
Heat & transport dominate the energy dilemma in all four scenarios.
Hamish Wilson, CEO of Minus7 comments on the implications of the FES for heating:
New opportunities for innovation
The key themes from the FES analysis are that we are in an increasingly complex energy environment in which the components of the energy world are increasingly interlinked. The use of gas and electricity alongside renewable energy require new and flexible ways of thinking. This evolving energy landscape creates new opportunities for innovation
The report looks at all the components of demand and relates these to supply. Of particular relevance to heat, the report addresses residential energy demand. Heating accounts for 40% of gas use and 8% electricity use. They state that new low carbon heating technologies will change the balance between gas and electricity demand. All four scenarios show an increase in electricity demand and decrease in gas.
The Gone Green scenario has electricity demand increasing from the current 110 TWh/year to in excess of 150 TWh/year by 2040, with a consequent reduction in gas from 310TWh/year to 150TWh/year.
Note the 40TWh increase in electricity demand being equivalent to 160TWh reduction in gas demand, pointing at a substantial take up of very efficient heat pump type technologies along side a big contribution from home insulation. The analysis shows a substantial increase in heat pump numbers in the market, ranging from 3 million, under the ‘Slow Progression’ scenario, to over 10 million under ‘Going Green’.
The FES notes the recent slow take up of heat pump based technologies is mainly driven by consumer risk aversion and lack of knowledge. Government support is required to drive these technologies into the market.
This support creates the market for the technology and allows the manufacturing costs to come down. They also note the development of new business models to sell heat services further accelerating market take up.
They note the following:
“Altering the public perception and engagement with low carbon technologies could be a large task. There is currently little consumer knowledge of alternatives, with technologies such as ASHPs and district heating widely unknown. Because of this, it may be difficult to encourage people to commit to a long- term domestic heating appliance without prior knowledge. This is compounded by new technologies having relatively high upfront costs compared to established technologies”
The FES report concludes with an assessment of the Environmental targets and the challenge to produce 15% of our energy from renewable sources by 2020. While progress has been made the report states that the biggest challenge to achieving these targets is decarbonizing the heating sector:
For renewable heat to achieve its contribution to the target, it needs to increase by 60 TWh from today’s level of 35 TWh. The technologies are available to reach this level, but to achieve the target within four years the pace of change would need to increase significantly. Over the past four years there was an increase equivalent to 2.5 TWh per year. To reach the target this needs to increase to an average of 12.5 TWh per year.
In a somewhat depressing conclusion the FES says
We believe the progress required in the heat and transport sector is beyond what can be achieved on time. As a result, none of our scenarios achieve the 15 per cent level by the 2020 date. By implication,
It was pleasing to note the ‘outgoing’ DECC ministers reaffirm the commitment these climate change targets with explicit comment on heat post Brexit, and we hope the theme is continued under the new administration.
In particular, commitment to RHI support over the coming years is essential to build investor confidence in the sector to attract the requisite investment in manufacturing to bring costs down.
From a Minus7 perspective, we provide a heat pump based heating system that has a major part to play in the energy transition from gas to electricity.
We are planning for RHI support over the next four years i.e. up to 2020.
Beyond 2020 the value proposition of being able to provide heat at less than the cost of gas will be compelling enough to drive the company growth through to 2040.
Hamish Wilson, CEO of Minus7
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