London’s existing electricity distribution network will require significant investment to be fit for purpose by 2025. The network is intended to become a ‘smart’ grid, making use of decentralised electricity generation at all scales. The network will need to be able to accommodate intermittent wind
generation at the national scale, and manage demand associated with electric vehicles, heating, and energy hungry locations at vulnerable points on the network.
The Mayor supports central government plans to accelerate the development of responsive, robust and accessible electricity grids. The Mayor is working with Ofgem’s Smart Cities programme and in conjunction with London’s electricity distribution network operator (UK Power networks) and a range of commercial and academic partners, on a major project to understand the
demands of a London smart grid. The project will pilot smart grid
technologies that improve access to decentralised generators and accelerate the deployment of smart meters and demand management incentives and
mechanisms.
The Low Carbon London programme (of which the GLA is a steering group member) is trialling demand management on the local distribution network with UK Power networks. It has a target of securing 25 MW of demand response on the London grid (companies that are provided with a financial incentive to reduce their electricity consumption at times of network ‘stress’).
4.2
Infrastructure Plan development scenarios
modelling
In developing scenarios for a 2050 energy infrastructure plan, Arup’s review uses the objectives of the 2011 Mayor’s Strategy for 2025 as its basis for analysis. Wherever possible, it remains consistent with the objectives and measures to achieve the strategy. At the same time, it also aims to be reflective of national energy policy assumptions and objectives.
Heating for buildings (both residential and commercial) gives rise to a significant share of CO2 emissions. Decarbonisation through energy efficiency and supply measures is therefore a priority that will drive a large proportion of new
infrastructure requirements. Changes to the way heat is produced and delivered are included in all the scenarios that we have generated.
In addition to changes to population and industrial and commercial activity, there are three policy factors that are anticipated to drive the shape of future energy demand and supply in London and therefore the requirement for new
infrastructure:
The degree of success of energy efficiency measures to further reduce energy intensity;
The extent to which transport and heat generation become ‘electrified’; and The degree to which energy generation is decentralised;
The scenarios for this study assume national energy policy and the impact it has on London broadly as given. They then reflect flexibility around how the three factors above may influence the final investment decisions. Government has run a number of scenarios with regard to the three policy factors above. It is difficult to provide an accurate estimate of the likelihood that any of these scenarios will materialise. For example we believe that some electrification of heat and transport will occur between now and 2050 although the degree and extent of it remains uncertain. The most relevant issue for London is the degree of additional (or reduced) effort that London will undertake to promote such policy. In the two illustrative scenarios we analyse in this study we make assumptions with regard to this ‘relative London’ effort and the implications that it will have on London’s infrastructure requirement and therefore, for example, on the need for further encouragement or incentives to be provided for certain technologies.
The analysis uses the 2050 Pathways Calculator (originally developed by DECC in 2010 and since then regularly updated) to develop a baseline energy
supply/demand system for the UK to achieve Government 2050 emissions objectives. The Pathways Calculator allows users to develop their own
combination of levels of change to achieve an 80% reduction in greenhouse gas emissions by 2050, whilst ensuring that energy supply meets demand.
The output of the calculator has been modified with London specific ratios and factors to determine the amount and type of energy to be delivered by 2050 (and capacity to be built). The modification allows sensitivities and scenarios to be developed around certain specific objectives, for example to achieve the Mayor’s Strategy Decentralisation targets. A capital infrastructure associated with such energy flows and capacity can then be estimated. We use publicly available sources to estimate total investment expenditure (using costs of existing projects and projected unit costs).
4.2.1
Scenarios
As noted earlier, we have focused on two alternative scenarios: a ‘centralised’ scenario and a ‘hybrid’ scenario. We describe these two scenarios below.
4.2.1.1
Centralised scenario
Centralised electricity production and supply is likely to be based on new nuclear power, wind and gas-fired electricity generation with Carbon Capture and Storage (CCS). A significant level of electrification of heat and transport is also assumed. However, this scenario may entail an amount of fossil fuel (natural gas) in
building heating due to delay in progress on new nuclear and the current interest in developing indigenous unconventional (shale) gas. In general accordance with Government’s 2050 decarbonisation pathway, this model is supported through Electricity Market Reform (EMR) which provides market certainty for new nuclear and wind investment through the introduction of the Contract for Difference Feed-in Tariff (CfD FiT).
The implication for buildings in this scenario would be in the decline in the use of gas for heating and its replacement with electric heat pumps (e.g. air-source in the case of the centralised scenario). The exception would be in areas where heat networks have been developed as a result of the Mayor’s policies and strategies. In these cases industrial heat pumps would replace existing energy production technologies at the appropriate point in the investment cycle using local waste and natural heat sources.
4.2.1.2
Hybrid scenario
In a ‘hybrid’ scenario, cities will become increasingly more efficient and self- sufficient and therefore less reliant on national networks – even though national networks will retain a role in delivering energy supply. , Through a larger role for Smart solutions, such as Smart Grids, and for example Time of Use Tariffs, energy infrastructure and consumers will intelligently adapt to changing demands to deliver environmental benefits and lower energy costs. In this scenario the
Mayor’s target to supply 25% of London’s energy requirements according to a decentralised model by 2025 would be delivered.
Starting with combined heat and power (CHP) with larger schemes incorporating heat networks, such schemes would in time, increase in size and then
interconnect. Later evolutions would deploy ‘smart’ systems, heat storage, and active electricity network control to allow optimum system utilisation and operation. Policy changes would bring about new market structures and new entrants. CHP technology would be replaced with industrial heat pumps operating with the same heat networks as the grid decarbonises.
The evolution of London’s energy infrastructure over the next 36 years is likely to involve a combination of centralised and decentralised models. The hybrid model assumes the decentralised model would achieve a 25% penetration by 2025 and this would increase, where DE is economically competitive, towards 2050 to closer to a 50% penetration. A centralised model would make-up the balance of the energy requirement.
4.2.1.3
Common assumptions in the two scenarios
We expect significant end-user energy efficiency to be achieved over the period with demand for power and heat by 2050 to be not more than 20% higher compared to today’s (2011) levels.113
Following government core scenarios and pathways, we estimated that gas consumption for heating domestic homes by 2050 will be limited and replaced by a combination of new technologies and solutions, for example electric heat pumps, district heating, or solar thermal – although gas supply will continue to play a role as a supply fuel for CHP and industry.114 This assumption is pivotal to the scenarios. A shift in heat supply from gas to either electric heat pumps or district heating networks is the most significant and consequential choice over the period. It will require considerable planning – many years ahead of potential heating supply switchover, particularly in the residential sector and for existing homes. Gas transmission network and gas distribution network operations will be affected. Regulatory decisions at national level will need to be closely coordinated with any London’s policy that aims to drive such a shift.
In line with central government assumptions for the core scenarios in the 2050 Pathways analysis, we estimated a considerable electrification of the transport sector. In particular the passenger vehicle fleet is expected to be two thirds low carbon (hybrid, plug-in hybrid or fully electric) by 2050, with the commercial fleet almost fully low carbon.115
Primary differences between the two scenarios are outlined below.
113
In our analysis we have assumed that energy efficiency targets set by the UK Government and/or the EU Commission area achieved and policies designed by UK Government to deliver such savings are successful – for example with regard to building standards, products standards, the Green Deal etc.
114
This is an assumption based on current government scenarios.
115
In this study, as we have based our assumptions on the DECC 2050 Pathways work, we have focused on electric vehicles technologies, though we recognise that Hydrogen fuel cells may also be a possible alternative means of powering transport in 2050.