Engagement with Energy in the Future Russell Fowler – National Grid BESST/metnet/Institute of Directors: Breakfast Meeting 25th February 2015

Overview National Grid’s Future Energy Scenarios Why we do it High level process Background to 2014 scenarios Our 2014 scenarios

Future Energy Scenarios Annual publication of credible future energy scenarios – out to 2015 Driven by an annual consultation process: our stakeholders’ views are key to shaping our scenarios Political & Economic background Government Targets & Policy Heat, consumer, lighting Power demand Power supply Gas demand Gas supply

Why do we do it? Identify potential gas and electricity network investment requirements Other supply and demand analyses Feeds into Electricity Market Reform analysis Informing the future of energy debate

We follow an annual cycle of scenario development Our stakeholder engagement allows us to listen to your views, which are vital to our outputs. They drive our processes and inform both our scenarios and our consultation process. Your Views An axiom is a premise or starting point of reasoning. The axioms that we produce are a reflection pf the stakeholder feedback that we receive through our consultation process. These axioms influence our modelling. Axioms The scenarios are the end result and a vision of the future that stakeholders have informed. The publication of the Future Energy Scenarios document marks the start of our annual process and the continuation of our stakeholder consultation. Future Energy Scenarios Once our axioms have been defined, they underpin our detailed modelling and drive our specific electricity and gas, demand and supply scenarios. Modelling

Our 2014 Future Energy Scenarios Low Carbon Life Affordability Less money More money Gone Green No Progression Slow Progression Sustainability Less emphasis More emphasis

No Progression Economic: Slower economic recovery Political: Inconsistent statements and investor uncertainty Technological: Gas over renewable generation, low innovation Social: Low energy efficiency, low uptake of electric vehicles and heat pumps Environmental: Targets likely to be missed, no new targets introduced

Slow Progression Economic: Slower economic recovery Political: Political will, but financial constraints prevent delivery Technological: Renewables over low carbon generation, low innovation Social: Society engaged, high energy efficiency, low uptake of electric vehicles and heat pumps Environmental: Renewables target missed, new European targets introduced

Low Carbon Life Economic: Growing economy Political: Short term volatility but long term consensus around decarbonisation Technological: Renewable generation at local level, high innovation Social: High uptake of electric vehicles, low energy efficiency, ‘going green’ not a conscious decision Environmental: Carbon target likely to be hit, no new targets introduced

Gone Green Economic: Growing economy Political: European harmonisation, long term certainty Technological: High renewable generation, high innovation Social: Society engaged, high energy efficiency, high uptake of electric vehicles and heat pumps Environmental: All targets hit, including new European targets post 2020

Example findings

Electricity Demand in Lighting Million bulbs 12% of residential demand | much of it peaky | TVs Lighting demand has dropped by ~4GWH since 2007 ; this is ½ the domestic demand reduction since then Legislation was the major driver but consumer preference in the domestic arena is a significant factor Halogen demand increasing from 4TWh to 7TWh between 2009 and 2012 as consumers adopt spot lighting and replace single down-lighters with multiple halogens LEDs could fill this role… EU directive is forcing out thirsty halogens

Peak demand reduction through smart meters “Between 13% and 50% of households reduce their peak electricity demand by 5%”

Residential Energy SP Efficiencies balance growth Uptake of Heat Pumps Gone Green Electrification of transport SP

Coal Power Station capacity The increase in gas fired plant in order to compensate for coal closure profile Aggressive closure profile across all scenarios with GG and SP at lower end Minimal amount of plant remaining is assumed to comply with IED or be converting to CCS Early IED opt out

Security of supply outlook Mid decade products SBR and DSBR to address LOLE EMR Capacity mechanism in place Explain LOLE What other standards are

Gas Supply - No Progression

Any Questions

Contacts Follow the discussion on Twitter #ukenergy Future Energy Scenarios: http://www2.nationalgrid.com/uk/industry-information/future-of-energy/fes/Documents/ General Future Energy Scenarios Contact: Box.Transmission.UKFES@nationalgrid.com My Contact: Russell.fowler@nationalgrid.com