Utility 2050: Where will large scale innovation and deployment sources of investment come from in the 2050 UK electricity system?

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Three ERP projects have informed the Utilities 2050 project.

Managing Flexibility Whilst Decarbonising the GB Electricity System strongly suggested that there will still be a need for capital intensive, large scale, firm low carbon generation capacity in order to provide the system services needed to manage the grid in the future.

Economic Resilience of Cities highlighted how the technical characteristics of the UK electricity system are changing as the volume and impact of both distribution connected generation and demand side participation develops.

Horizon Scanning suggested that future drivers of change might reinforce the centralised electricity system or work against the present system resulting in a highly decentralised system to 2050.

All of the above question the large scale, vertically integrated approach to electricity supply and generation which was particularly effective as a means to manage risk under the New Electricity Trading Arrangements (NETA) and British Electricity Trading and Transmission Arrangements (BETTA) market model.

This project will assess the possible UK electricity system in the period 2035 to 2050, the impacts of decarbonisation on incumbents, system challenges, implications for innovation and deployment, and how futures can be used to inform policy design whilst accommodating deep uncertainty.

The project has taken the Challenge Issues produced in the ERP Horizon Scanning exercise and developed potential electricity archetypes with 38 stakeholders from across the UK energy sector.  We will use a number of scenarios to stress test the capacity of the different archetypes to respond to an increasingly turbulent risk profile and ask whether the changing market can still deliver the appropriate innovation and deployment of the requisite mix of low carbon, flexible and resilient generation capacity.  We will be holding a series of decision theatres and holding interviews with experts to consider issues such as societal responses, financial implications, policy responses, and the institutional architecture and corporate strategy needed by different actors to navigate the increasingly complex business environment.

The project is being supported and informed by a number of ERP members: Shell, Atkins, Turquoise, Drax, Hitachi, Welsh Government, UKERC. We have also recruited assistance from University of Leeds, Imperial College London, and Burglass Advisory, amongst others.  David Casale of Turquoise will present the preliminary outputs from the work at the October ERP Plenary and the project intends to launch its first report in Q1, 2017.

Utility 2050 Project Objectives:

  • Assess the operating environment of the UK future electricity system in seeking to achieve multiple societal objectives;
  • Assess the effect of different scenarios on different electricity business models, such as generation only and vertical integration which will emerge and can be sustained.
  • Assess the commercial and policy responses to system wide and corporate risks in the future electricity / energy sector in seeking to achieve multiple societal objectives.
  • Assess the effect on innovation and investment – what will go ahead / fail under different business models?
  • Finally, a suite of responses aimed at corporate, political, and financial audiences will define new roles and value propositions for electricity system participants in seeking to achieve multiple societal objectives.