UK’s net-zero bill could be £16.7bn lower with flexible energy, according to new report

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Investing in flexibility could bring the annual cost of UK net zero down by billions of pounds, new report reveals.

Flexibility is defined by Ofgem as ’modifying generation and/or consumption patterns in reaction to an external signal (such as a change in price) to provide a service within the energy system’. To date, the energy industry has typically provided flexibility on the ‘supply-side’.

According to new analysis led by Carbon Trust, the net zero challenge will require a much larger electricity sector, given the increasing electrification of transport demand and heating.

The gas network will also undergo fundamental changes, potentially transitioning large portions to hydrogen, and/or acting as a back-up source of energy during extreme weather events.

The operation of both networks will become increasingly interlinked to deliver a secure energy system and meet carbon targets.

According to the analysis, understanding the role and value of flexibility in meeting demand cost-effectively is therefore vital.

Tom Delay, Chief Executive, the Carbon Trust, commented on the findings: “Flexibility is vital to unlock value and it is the most important ‘no regrets’ action that can be taken as the UK moves to decarbonise heat, transport and industry, saving billions in investment and operating costs.

“It’s critically important that industry, business, consumers and the public sector understand the value of flexibility and the benefits that flexibility brings to the British economy. Flexibility always delivers – we should invest in it now.”

Key findings of the report included:

  • There is a need to embed flexibility across power, heat and transport to cut the cost of decarbonisation. Embedding flexibility in low carbon heat and transport solutions now will help to reduce their system impact and costs, making the decarbonisation of these sectors more economically feasible.
  • Investing in flexibility has the potential to deliver material net savings of up to £16.7bn per annum across all scenarios analysed in 2050.
  • Flexibility will also enable the development of a safe and secure net zero energy system that can operate cost-effectively in diverse situations such as, cold, still winter periods (when variable wind and solar generation can’t run) and summer solar excesses, while reducing Great Britain’s reliance on back-up gas-fired generation.
  • The importance of local action was reinforced by the analysis, which found that distributed flexibility assets deliver significant value locally.

The analysis was led by the Carbon Trust and Professor Goran Strbac from Imperial College London, supported by a cross-sector group of Bryt Energy, EDF, Greater London Authority, IGEM, Kiwi Power, Low Carbon Contracts Company, SBM Offshore, SP Energy Networks, Statera Energy, Scottish and Southern Electricity Networks (SSEN), UK Power Networks and Western Power Distribution.

BEIS, Ofgem, the Climate Change Committee, Innovate UK, National Infrastructure Commission (NIC) and National Grid ESO were also consulted.

The ‘Flexibility in Great Britain’-report is available on the Carbon Trust website.