The UK’s electricity grid like many others globally stands at a pivotal crossroads. Facing significant challenges, the National Infrastructure Commission (NIC) and National Grid ESO have recently published comprehensive reports outlining opportunities to enhance the grid’s capacity, reliability, and integration of renewable energy sources. But what do these developments mean for the future of the UK’s energy system?
The UK’s future energy landscape will remain a complex interplay of various energy vectors, including electricity, natural gas, hydrogen, and technologies like Carbon Capture, Utilization, and Storage (CCUS). As the country strives to decarbonize the broader economy, it anticipates a 50% increase in electricity demand by 2035, driven by the electrification of heat and transport. The decarbonization of industry and power will see hydrogen and CCUS playing crucial roles, necessitating substantial infrastructure planning and investment.
In their 2023 Second National Infrastructure Assessment, the NIC laid out several core components essential for this transition. These include facilitating renewable energy deployment, large-scale electricity transmission projects, and ensuring enough flexibility to accommodate the variability of renewable energy sources. By 2035, the UK will need 60GW of short-term flexibility and 30GW of long-term flexibility. This translates to building more wind farms, solar plants, transmission lines, batteries, and maintaining adequate gas or hydrogen-fired power and associated infrastructure.
Image from the NIC 2023.
The NIC also made recommendations on decarbonizing heat and accelerating the rollout of electric vehicles (EVs). Their varied suggestions cover regulatory aspects such as the role of the independent system operator and policies like banning new gas connections and providing strategic energy reserves to enhance resilience against global shocks. A noteworthy element of their recommendations is the proposed buildout of hydrogen and CCUS networks, crucial for heavy industry decarbonization, akin to National Gas’s Project Union.
On the electricity front, the National Grid Electricity System Operator (ESO) released its “Beyond 2030” plan in 2024, proposing a £58 billion investment to meet the growing and decarbonizing electricity demand by 2035. This plan emphasizes investments in offshore wind and creating a north-south supply spine, requiring implementation by Transmission Operators. The NIC underscores the need for more coordinated, cross-vector planning to achieve these goals.
Image from National Grid ESO 2024.
The 2023 Energy Act laid the groundwork for transforming the energy system, introducing the National Energy System Operator (NESO). Set to go live in Q3 2024, NESO aims to be an independent entity overseeing the entire system, ensuring Britain’s energy remains secure, affordable, and sustainable. NESO’s responsibilities include maintaining a reliable electricity supply, promoting innovation, and driving decarbonization. Its whole-systems approach aims to optimize planning, reducing costs and risks in the transition to Net Zero. However, managing relationships with industry stakeholders, regulatory bodies like OFGEM, and the Government will be a challenging task.
Watching NESO’s development over the coming years will be fascinating. Its innovative model could potentially be adopted by other markets globally.
Regardless of the planning bodies and stakeholders, the energy transition will require unprecedented investment, particularly in grid infrastructure. These investments will reshape companies, supply chains, and customer bills for decades, heralding a new era in the UK’s energy landscape.
