Pathways to Success? Assessing NESO Plans for Clean Power 2030

The National Energy System Operator (NESO) released its report last week on achieving clean power for Great Britain by 2030. David Simmonds looks at whether the plans are viable, will meet our future needs, and ultimately lower costs to the consumer

THE government’s recent commitment, announced at Cop29, to an 81% reduction in emissions by 2035 is brave, but to be recognised, it must be supported by a viable plan. Elimination of the final 19% to achieve net zero will be the hardest and most expensive. In their work reported last year, the Royal Society calculates that the short and long duration storage and back-up supply measures required for renewables to meet 24/7 demand will add approximately 50% to their cost, though they are still cheaper than continued use of fossil fuels. We have yet to see this premium as unabated gas is used to balance today’s renewables, so these costs will be backloaded into the plan. Other countries are starting to recognise the challenge, and we ignore it at our peril. One answer is to go beyond looking at power on its own, but consider energy integration with industry, transport, and heating.

As a stepping stone towards net zero the government requested advice from the newly established National Energy System Operator (NESO) on how the UK can achieve “clean power” by 2030. Earlier this month NESO provided its answer, with CEO Fintan Slye concluding that it is possible with “a once in a generation shift in approach and in the pace of delivery”.

NESO offers two pathways to “Clean Power 2030”, both dependent upon high deployment of renewables and “flexibility measures” requiring societal change to better match demand to supply. The first (High Flex) looks to very high deployment of offshore wind, while the second (High Dispatch) looks to increasing low-carbon dispatchable power. Both pathways recognise the long-standing challenge foreseen for renewables: how to match seasonal demand to intermittent supplies.

What is clean power?

Before we look at the two pathways it would be useful to understand what is meant by “clean power”. Despite setting targets, the government has yet to define it, so NESO has provided its own definition – A clean power system is one where demand is met by clean sources (mainly renewables), with gas-fired generation used only rarely to ensure security of supply, primarily during sustained periods of low wind.

For their report, NESO has assumed today’s unabated gas-powered generation capacity is still available in 2030 to match shortfalls, supplying up to 5% of Great Britain’s power in a typical weather year. In other words, renewables and other green measures will not meet demand on their own. Contrary to the press coverage following the launch of the report, clean power is only 95% clean, and in a cold or less windy year substantially less. As a result, the power sector will continue to rely on the maintenance and effective operation of the national gas grid and current power plants must remain “ready to operate” for years to come. Given the timeframe, I believe this is a pragmatic way forward, and, on paper, it defers those costs needed to make renewables work.

It is enlightening to look at the planned makeup of the installed capacity for the two pathways; Table 2 of the NESO report provides estimates as summarised below.

Annual power demand has dropped over recent years due to efficiency gains and reduced industrial demand. With the accelerating rollout of EVs and heat pumps demand will grow, increasing by about 10% by 2030. However, under both pathways, NESO estimates renewables will triple, and, overall, installed capacity will have to double to cater for seasonality and intermittency of those renewables. As we have read, connecting this additional capacity to the grid requires new pylons, but it will also result in increased operational complexity, and, potentially, lower reliability, something already concerning the US market.

Both pathways require a step change in delivery of solar, onshore and offshore wind developments, and network expansion projects; contracting as much wind energy projects in the next two years as signed in the last six, and building twice as much network over the next five years as completed in the last ten. This step change in pace requires a substantial increase of investment from an average of £11bn (US$14bn) over the last four years to well over £40bn annually from 2025 to 2030. Many question whether our planning systems and construction market can accommodate this.

Scaling

Today’s offshore wind projects have benefited from cherry-picked locations such as the shallow Dogger Bank or Thames Estuary. Future offshore wind farms will be located in deeper water, requiring longer tiebacks and, in some cases, floating turbines. To achieve maximum value from these projects, NESO must ensure it reduces constraint or shut-in costs, incurred when the wind blows and the grid is unable to take the supply. Indeed, even today, during periods of over-supply, Octopus with its Agile tariff offers customers “free” electricity, and NESO forecasts by 2030 constraints of approximately 40 TWh/y with costs anywhere from £1bn to £8bn or more annually by 2030 depending upon the progress of the onshore grid connections. To utilise oversupply, both pathways consider the export of surplus green power to Europe through our interconnectors.

To scale the challenge, the High Flex pathway considers seven more Dogger Bank equivalents, currently the UK’s largest windfarm, and placing these further offshore in deeper waters. It also requires significant deployment of battery storage (competing with the growing demand for the EV market), and grid tiebacks (with associated planning risk). Furthermore, its success depends upon securing consumer flexibility and much of press coverage on the report focused on consumers being asked to switch off appliances at peak times.

The High Dispatch path relies on a little less offshore wind and battery capacity, replacing it with abated gas-powered generation and a life extension to an extant baseload nuclear power plant. It considers the modification of 2.4 GW of current gas-powered generation for carbon capture. Carbon capture and storage (CCS) has yet to be deployed in UK waters, though the government has the technology in its sights through development of its low-carbon industrial clusters, and recently a few overseas projects have been brought online successfully. As NESO points out, this pathway retains a greater dependence on imported gas which may impose higher cost and reduced security. However, with its reduced scope, NESO estimates that High Dispatch requires £25bn (10%) less investment.

Net zero 2050

A wider concern though, is the further transition of the sector towards net zero by 2050. At the very least this has to provide an alternative to the back-up unabated gas-power generation, so it imperative to assess how the two pathways can segue to the longer-term. NESO forecasts power demand to almost double by 2050, close to 500 TWh, and has yet to elaborate on how this will be met, though, alongside renewables, they do foresee both CCS and hydrogen playing a role. NESO’s demand forecast is lower than that from the Royal Society who, in their report last year, project demand to grow to approximately 700 TWh. With increasing seasonality of demand, the Royal Society concluded net zero flexibility and balancing of renewables can be achieved through wider rollout of abated back-up gas generation (with CCS) and hydrogen generation with hydrogen storage – cheaper than other alternatives but invoking that 50% premium.

Given NESO estimate that High Dispatch is a lower cost pathway to 2030, and that the Royal Society look to CCS and hydrogen to achieve the 2050 targets, every effort should be made to seamlessly delivering these technologies here in the UK. They are required for industry, and they provide a robust alternative for the power sector in case of delays to offshore wind projects and/or exposure to higher constraint charges. Indeed, the Royal Society foresee green hydrogen, produced from power which would otherwise be constrained, will be the balancing vector within our future energy system.

As already pointed out, abated gas-powered generation carries the continued exposure to higher international gas prices, especially as it will only be used during periods of peak demand. Further power plant owners are unlikely to bear the cost of CCS when its usage is unknown. Consequently, the systems engineer/development planner in me would propose closer integration of industrial and power demand. “Abated gas to power” should be aligned with “abated gas to industry” as described in the figure below. This will allow continuity of gas usage across the year, eliminating the need for spot purchases of LNG to maintain peak power, and ensure a constant load on CO2 injection and storage facilities, reducing costs to both sectors.

NESO has presented a stark picture. Clean power 2030 (typically 95% clean) can only be achieved through significant investment and commitment. They offer two pathways, but they have yet to extend them to 2050, where they will encounter even greater challenges with wind farm deployment, long duration energy storage and flexibility measures.

Following their commitment at Cop29, the government now needs to assess this advice and urgently finalise their plan for 2030 and beyond. They are relying on the private sector for investment in renewables, so, in my view, the newly formed Great British Energy must concentrate its support on capacity dispatch and long duration energy storage measures needed to deliver a workable supply system for 2030 and beyond. Further, as NESO point out, they also need conduct a major review of the current retail model which is not helping consumers or investors. Indeed, it will be more difficult to attract private investment if investors do not see their commitments being underpinned by a viable plan with a sound commercial structure.

So, to answer those three questions:

• Viability? Both pathways are extremely challenging. With the retention of back-up unabated gas-powered generation, neither eliminates fossil fuel usage so they do not deliver 100% clean power. Timeframes are very short, and the response of consumers is critical, so the High Dispatch pathway, which carries less supply chain and societal change risk, has a greater chance of success. NESO suggests pursuing the pathways in parallel to mitigate these risks and I would support this approach
• Future Needs? Both pathways require investment in energy storage and balancing measures to achieve post 2030 objectives. As indicated, this could be accomplished through integration with the government’s plans for industry. The duality of High Dispatch (offshore wind and abated gas) provides more optionality for achieving net zero
• Cost? This presents a real test, for the counterfactual, continuation of the status quo, is likely to deliver lower bills (confirmed in the NESO report), so without market reform, neither pathway will reduce consumer bills in the short term. As we have seen, High Dispatch is cheaper and so NESO’s modelling should consider the wider deployment of abated gas and retention of more nuclear plants to limit costs

Building on the last point it may seem counterintuitive to spend money on abated gas to defer renewables. Accelerating renewables in advance of long duration storage and back-up capacity measures needed to balance them, will lead to constraint payments and potential blackouts. Furthermore, building renewables at pace carries significant supply chain and construction skill risk and will incur the wrath of consumers and society if they are not planned properly; indeed, we must learn from the cost escalation and delays of HS2. Yes, CCS also carries risk, but a diversified pathway with well-planned deployment of renewables will reduce both risk and cost. A slower deployment rate for renewables may provide a window for more efficient and cost-effective technologies to mature, such as small modular nuclear and fusion reactors which can be built close to demand.   

To conclude, let me offer the following chart providing a summary of technologies needed for the two 2030 pathways to which I have added my thoughts on how these could extend towards two possible 2050 scenarios.

In my series, Engineering Net Zero, I demonstrated how we can manage risk if we pursue the hybrid pathway to net zero. A hybrid ecosystem, on both supply and consumer demand sides for power, industry, transport and heating, can mitigate much of the incremental cost needed to make renewables work. It will ensure that we all benefit from the choices offered by the efficiency of electricity and the flexibility of hydrogen. To realise this future, for the benefit of both industry and consumers, requires the best of academic and engineering input. As can be seen from the wide range of technologies needed, their likely societal impact, and the integration opportunities, chemical engineers must be at the heart of the debate, planning this future. It is good to see that NESO’s remit covers both electricity and gas grids, and so I hope they look beyond power, leading an approach to maximise the value from both across multiple sectors.