Energy Transition Outlook 2019

TR & NSITION ENERGY

Energy Transition Outlook 2019

The UK Energy System and the Energy Transition

Whilst some of the changes to the way we produce and use energy are underway, significant developments are yet to be made. Some key areas such as electricity generation and use are already transitioning to lower carbon alternatives, but areas such as heat and transport are immature.

Electricity Generation The phasing out of coal in the electricity generation mix is almost complete in the UK. The combined effect of EU ETS and the carbon floor price have already made coal generation less economic. Government has announced plans to complete the phase out of coal-fired generation by 2025. Support for low-carbon alternatives (wind, biomass and solar) being granted large-scale government contracts for difference (CFDs) has also led to significant growth in those energy sources. Renewables now provide around one-third of electricity generation. The cost of offshore wind generation has fallen significantly, with turbines having increased in size from around 2MW to 12–15MW in the latest projects. Overall GHG emissions for power generation are only one-third of 1990 levels. The latest round of offshore wind CFDs will add a further 7GW of capacity, taking the total to 18GW. Meanwhile, the UK aspiration of 75GW by 2050 would mean up to 300TWh of electricity being produced from this renewable resource.

Transport

Residential Heating Generally, a large part of heating of homes and commercial spaces is met in the same manner now as in 1990, through the combustion of natural gas. Energy efficiency measures have reduced demand for gas by around one-fifth since 2000. 4 The main policy instrument has been government requirements in building regulations to install higher efficiency condensing boilers and support for insulation. Meanwhile the share of renewables in the heat sector has remained relatively low at about 8%. Further incremental improvements may result from additional measures of this type. Achieving further reductions require fundamental changes in the way heat is provided. But many consumers will continue to require heating systems based on gaseous fuels. For these users, combustion of hydrogen can be a key enabler of low-carbon energy systems, allowing a roll out to some existing properties at lower cost and footprint than other alternatives and with hydrogen-ready boilers currently under development.

Transport emissions are 3% lower than in 1990. These improvements are largely the result of improvements in combustion engine efficiency with fuel consumption per km having fallen by around one-third in that time. However, motor vehicle traffic reached a new high in 2017 and there has not been a large transition in relation to fuel types or technology. Renewable energy used in transport is only 5%, mainly from biofuels. 3 Achieving a zero-emission sector requires, in particular, expansion in the capacity of power networks and charging infrastructure in anticipation of future demand. If this is possible, reductions in battery storage costs should allow for expansion to many passenger and light commercial vehicles. For heavy duty vehicles and for marine and aviation transport, liquid and gaseous fuels offer an important alternative based on hydrogen fuel cells. As with electric vehicles, government commitment is required to support this, particularly with respect to the development of infrastructure.

3 Transport Statistics Great Britain 2018 (DfT) 4 Digest of UK Energy Statistics (BEIS, 2018)

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