The UK energy challenge - Amazon S3 · * 2010 UK consumption divided by 60M Notes: 1. Passenger transport figure excludes international air travel (people in the UK) 2. Data excludes

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Creating an affordable low carbon energy system for the UK

Mike Colechin


The UK energy challenge...

Tensions are increasing...


Where will the UK energy system be in 2050?

Are we on a trajectory to deliver all aspects of UK government energy policy, i.e. an affordable, secure energy system delivering an 80% reduction in GHG emissions?

• Where is the UK getting it right?

• Where is the UK getting it wrong?


The UK energy challenge... Demand is growing, assets are aging, prices are rising... irrespective of a CO2 reduction target

• 62m people ....................................................... growing to 77m by 2050

• 24m cars .......................................................... growing to 40m by 2050

• 24m domestic dwellings .................................... 80% will still be in use in 2050total dwellings 38m by 2050

• Final users spent £124bn on energy in 2010 .... 9% of GDP

• 2.4m English households in fuel poverty .......... average ‘fuel poverty gap’ £438 and increasing

• Over 90GW generation capacity ....................... from 1MW to 3.9GW

• Over 200 ‘significant’ power stations ................. average age >20 years

• 50% of power generation capacity …………….. in 30 power plantsaverage age 30 years


What is the ETI?

The ETI is a public-private partnership between global energy and engineering companies and the UK Government.

Targeted development, demonstration and de-risking of new technologies for affordable and secure energy

Shared risk

ETI programme associate

ETI members


What we do...

System level strategic planning

Technology development & demonstration

Delivering knowledge &

innovation


ESME – ETI’s system design tool...

Example ESME charts


“No emissions targets” and “-80% CO2 in 2050” are very different worlds…

0

20

40

60

80

100

120

140

2010 2020 2030 2040 2050

GW

Gas + CCS

Nuclear

Hydrogen

Renewables

Gas

Coa

l

No targets -80% CO2

UK

ele

ctric

ity g

ener

atio

n ca

paci

ty

Coal + CCS

No targets -80% CO2

Coal

Gas

NuclearRenewables


0

20

40

60

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140

2010 2020 2030 2040 2050

GW

Gas + CCS

Nuclear

Hydrogen

Renewables

Gas

Coa

l

No targets -80% CO2

UK

ele

ctric

ity g

ener

atio

n ca

paci

ty

Coal + CCS

No targets -80% CO2

Coal

Gas

NuclearRenewables

As long as we prepare NOW, decisions on 2050 can wait… but not for long


Prepare over next 10 yearscreating platform for infrastructure roll-out and growth

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10

20

30

2010 2015 2020 2025 2030 2035 2040 2045 2050

Transport

HS2Schools

£bn/year

(NHS >£100bn p.a.)

(MoD >£40bn p.a.)

+£5bn p.a.

+£15bn p.a.

+£35bn p.a.

(Energy >£120bn p.a.)

By 2050 total energy system costs could be as much as £300bn p.a.

Prepare

Build

Maintain ...and plan again

Incremental capital investment in a ‘low-carbon’ energy infrastructure


Some options are more expensive…

0

100

200

300

400

500

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2010 £/Te CO2

UK Energy System CO2 Reduction(including aviation and shipping)

Efficiency improvementsBuildings, heating, vehicles (HDV and cars), industry, appliances,

Energy storage and distributionBiomass to heat

UK 2050 target

>£300/Te Offshore Wind

Light vehicles (fuel cell / electrification)

Nuclear

BioenergyCCS

Marinefirst appearances of major technologies, in order of increasing effective carbon price


Poor system optimisation doubles the cost of a 2050 UK low carbon energy systemAdditional cost of delivering -80% CO2 energy system NPV £ bn 2010-2050

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100

200

300

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No TargetsPerfect lowcost route

Practicallow cost

route

Nobuilding

efficiencypackages

No Nuclear No CCS No Bio NoOffshore

Wind

No CCS No Bio

Nonuclear

No offshore

wind

No building

efficiency1% of 2050 GDP

1% of 2050 GDP

+£30bn pa+£6bn pa +£3bn pa in one year (2030)

To meet carbon reduction targets we need to be prepared to pay at least 1% of GDP and we need to optimise the system or that rises quickly…


Key decisions and cost implications• Direction change between “no

targets” and “-80% CO2” polarises in mid 2020s

Delay in launch of major build programmes beyond mid 2020s leads to cost increases of ~£5bn p.a. as more costly alternatives are built• Key electricity decisions are national

policy led programmes – Nuclear new build– CCS

• plus… local and individual consumer decisions on other critical areas - with major implications for distribution level infrastructure – Heat delivery

(gas, electricity, biomass, district heating)

– Transport(liquid fuels, electricity, hydrogen)

There are logical asset replacements (technically and financially) that ensure security, sustainability and lowest system cost

Nuclear

Gas

Bioenergy feedstock's

(for heat and power)

CCS (fossil and biomass

fuels)

Efficiency improvement

(transport and buildings)

Offshore renewables

all “no regrets” choices for the next 10 years


What we need...

• Understanding of the drivers on future development

– Costs

– Supply capability and capacity (in a global market)

– Infrastructure decisions

– Investor requirements

– Consumer needs/desires

• Clear market and value opportunities for investors and consumers

• Supportive and stable policy

• Consumer support

But... the future remains uncertain and we need an energy system design that allows for this

• Ready to make informed choices• A system that creates and retains

optionality• Prepared for investment in a wide

scale infrastructure roll-out• Innovate to drive down cost

(technology and business models)

• We need innovative incentives for industry to invest in the UK







* 2010 UK consumption divided by 60M Notes: 1. Passenger transport figure excludes international air travel(people in the UK) 2. Data excludes heavy industry

0 1000 2000 3000 4000 5000 6000

Space heating - domestic (Th)Space heating - commercial (Th)

Water heating - domestic (Th) Water heating - commercial (Th)

Process heating (Th)Cooking - domestic (Th)

Cooking - commercial (Th)

14,000 passenger km (Th)4,250 Goods Te km (Th)

LightingAppliances

MotorsCompressed airVentilation / AC

IT, etcRefrigeration

Other

Energy kWh p.a.

Individual energy consumption in the UK*...


Hea

t / E

lect

ricity

(GW

)

0

50

100

150

250

200

Jan 10 Apr 10 July 10 Oct 10

HeatElectricity

GB heat delivery system design point

GB electricity delivery system design point

Source: UKERC (2011)

GB heat and electricity demand variability(commercial & domestic - 2010)


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300

00:0

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Time of Day

Other personal

Entertainment

Holidays/day trips

Shopping

Education

Business

Commuting

Average hour = 100

Data source: Department for Transport (2005-2009 data, weekday journeys only)

Road traffic density peaks at around 8am and 3pm


ETI technology programme areas Addressing UK Energy Development Priorities:

EfficiencySystems and technologies for reducing cost and improving buildings and transportNuclearBuilding supply-chain capacity and financier confidenceGasA critical fuel for power heat, storage and potentially for transportCCSSystem demonstration for capture, transport and storageOffshore renewablesReducing costBioenergyCreating the science, technology and business knowledge base for decisions on how to use bioenergy crops

4.


Delivering innovation from strategic planning to technology demonstration

Knowledge building Developing technology Demonstrating technology and system solutions

BioenergyProject profiling waste arising's in the UK – this is now progressing through a Waste Gassification project



Informing policy to underpin market developments

UK Advisory boards with ETI staff members

Select committee appearances

Responses to Government consultations

Third party policy documents referencing ETI insights


The next five years


The next five years







For more information about the ETI visit www.eti.co.uk

For the latest ETI news and announcements email [email protected]

The ETI can also be followed on Twitter @the_ETI

Registered Office Energy Technologies InstituteHolywell BuildingHolywell ParkLoughboroughLE11 3UZ

For all general enquiries telephone the ETI on 01509 202020.

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The UK energy challenge - Amazon S3 · * 2010 UK consumption divided by 60M Notes: 1. Passenger transport figure excludes international air travel (people in the UK) 2. Data excludes