‘Everything has to go faster’: The route to 2035

The government’s ambitious target to cut emissions by 78 per cent by 2035 will inevitably lead to more pressure on the utilities sector to deliver on its own decarbonisation plans. As part of Utility Week's Countdown to COP campaign, David Blackman looks at where that pressure is likely to be applied.

The UK can legitimately give itself a collective pat on the back for its efforts cutting greenhouse gas emission since 1990. Over the last three decades, emissions have plunged by 41 per cent.

However, following last month’s commitment by the government to a new emissions reduction target, which is designed to set the UK on course for net zero emissions by 2050, that trick will have to be repeated all over again and in half the time.

This stipulates that UK emissions must fall by 78 per cent compared to 1990 levels, which is nearly as great as the reductions achieved during the past 30 years, by 2035.

But many commentators have pointed out, following last month’s announcement, that the time for setting targets is over: now the focus must shift to delivery. So what will the new targets mean for utilities?

‘Something needs to happen soon’

The new target certainly injects greater urgency into the task of cutting emissions.

“Fundamentally something needs to happen. It’s getting to the situation where I don’t mind what it is as long as something happens,” says Bean Beanland, president of the Ground Source Heat Pump Association.

Clare Jackson, co-lead of the Hydrogen Taskforce Secretariat, agrees. “Everything has to go faster. We don’t have the time and need to move forward as quickly as possible with all solutions.”

For the power sector, the new target doesn’t mean a “huge change” but offers less wiggle room, says Marlon Dey, GB head of research for consultancy Aurora Energy Research.

Existing pressure to entirely decarbonise the power sector by 2035 will intensify, he says: “The electrification of the wider economy with heating and transport all has to happen anyway, just a lot quicker.”

The Climate Change Committee (CCC) has projected that renewables will need to meet 70 per cent of electricity demand by 2035 with wind, particularly offshore, becoming the backbone of the system, providing 265 TWh of generation.

It means, for example, that the government’s target of 40GW of offshore wind by 2030 is “absolutely needed”, says Dey.

The 3 GW per annum of new wind capacity, which the CCC, says will be required, will mean more frequent Contracts for Difference auctions, says Dr Jonathan Marshall, head of analysis at the Energy and Climate Intelligence Unit.

In a new report, published this week, RenewableUK has proposed the introduction of a set of new targets for the rollout of different renewables technologies by 2030. These are 30GW of onshore wind power, a minimum 5GW of green hydrogen, a doubling of government ambitions for offshore wind deployment to 2GW and a new goal of 1GW of marine energy.

Phasing out gas

The key difference for the power sector though following last month’s announcement, says Dr David Joffe, head of carbon budgets at the CCC, is that there will have to be alternatives to the gas-fired power stations that provide back-up power to cope with peaks in demand.

This will mean a combination of gas power stations fitted with carbon capture and storage (CCS), hydrogen-fired plants and greater storage to help balance demand, he explains.

In its sixth carbon budget published last December, the CCC recommended that all unabated gas generation should be off the grid by 2035, although the government stopped short of taking up this recommendation when the Energy White Paper appeared the following week.

The CCC said this would still leave the carbon intensity of the gas at 10g of CO2 per kWh due to the residual emissions from gas plants with CCS.

While fossil fuel generation should be “squeezed down as much as possible” over the next 15 years, Joffe says this drive to decarbonise the grid should not be pursued at the expense of all other considerations, most notably security of supply.

If 2035 turned out to be really cold and there were some unabated gas capacity remaining on the system, it could make sense to use it, he says: “It’s better to run that than for the lights to go out.”

Another factor is highlighted by modelling carried out by the government to inform the impact assessment of its Energy White Paper.

This shows that the optimum system costs can be delivered when the carbon intensity of the grid is at 5 to 25g of CO2 per kWh

Marshall agrees that in this scenario it may be better to focus resources on decarbonising areas like heating and transport rather than squeezing the last few molecules of gas off the grid.

Future proofing networks

The bigger picture though is that mass electrification of sectors such as transport, heating and industry is likely to mean a 50 per cent increase in demand from 300 TW hours today to 460 TW hours from this source of power by 2035, the CCC envisages.

This will in turn mean greater reinforcement of the electricity network, particularly at the distribution level, says Joffe, who adds that it will be especially important to ensure that lack of grid capacity doesn’t hold up the rollout of electric vehicles, given the increasingly important role they will play in balancing power demand.

But this will require a greater openness within Ofgem to anticipatory investment than is often still the case, he says: “If you are going to do it, future proof it by doing it once because the cost is the civil engineering not the wires.”

If the choice is between a doubling and a 25 per cent increase in capacity, the balance between risks and returns should point to the bigger upgrade, even if it is impossible to be “absolutely sure” that the additional capacity will be used, Joffe says.

Ensuring security of supply will become even more important, if and when a households become purely reliant on electricity for heating, he says: “If you don’t have another vector, it makes it all the more important that it’s really reliable.”

And challenges for the transmission network could come to some areas faster than others if households shift en-masse to electrified heating and transport, Joffe says.

Tackling heat

But the biggest issue, which can no longer be left in the pending tray if the UK is to have any hope of meeting its 78 per cent carbon reduction targets, is domestic heating.

The government’s impact assessment of its 78 per cent target suggests that 40 per cent of homes must have decarbonised heating by 2035.

Joffe says the new target leading towards net zero means there is no scope for ducking the need to decarbonise home heating because there’s nowhere else to achieve these carbon savings: “With net zero, we have to bite the bullet. There’s not enough of anything else to compensate.”

The new target means that fossil fuel heating will have to be phased out more rapidly than would overwise have been the case.

The 15-year replacement lifecycle for typical gas-fired boilers means they must be phased out by 2033 and all heating must be net zero compatible by the early 2030s, the CCC has stated.

The CCC’s own modelling suggests that heat pumps will be the dominant low-carbon heating solution and that, while hydrogen will have a role, it will not be “huge”. Widescale hydrogen heating is “unlikely to be available” by the mid-2030s, according to the government’s impact assessment of the 78 per cent target.

This doesn’t mean that no new gas boilers can be installed by this point, but they will have to be either hydrogen-ready or hybrid solutions that also involve heat pumps, says Joffe.

And meeting net zero will mean 1.5 million new low-carbon heating systems will need to be installed each year by 2035, he adds.

Given the scale of this mountain, even though the CCC has pushed for more ambitious heat pump installation targets than the government has set, it is important not to argue too much about long-term goals, given that installations are today running at around 30,000 per annum,

Joffe says: “Getting to 1.5 million by mid 2030s is a 50-fold ramp up. The Department for Business, Energy & Industrial Strategy (BEIS) has talked about 600,000 heat pumps by 2028 and we are talking about 900,000. If they manage 600,000 by 2028, that’s a massive increase: the most important thing is to deliver on that as a minimum and build up scale gradually over time.”

The key factor is turning the heat pump sector into a mass manufacturing industry, says Beanland: “Getting to 600,000 is a huge ask but getting from 600,000 to 1 million, once you have scale in place, becomes that much easier.”

However, delays like that surrounding the publication of the government’s heat and buildings strategy, will make it “much more difficult” for a still fledgling industry to scale up production and the rate of installations, he says: “If we are having the same conversations in six months, it will be that much more difficult. 600,000 is achievable but we have to start getting on with it.”