Net zero starts at home

For a cost-effective energy transition it is crucial to understand where demand could be reduced and potential pathways to managing the system in a smarter way. This is why Scottish and Southern Electricity Networks started capturing energy efficiency measures in its regional forecasts. The company’s DSO transition manager, Steve Atkins, discusses what conclusions can be drawn.

In a two-year period, the UK government has effectively brought forward its decarbonisation ambitions by fifteen years, from an 80 per cent carbon reduction by 2050 to 78 per cent by 2035. Realising this target requires immediate action, including rapidly increasing the deployment of a range of low-carbon technologies (LCTs) including electric vehicles and heat pumps.

At Scottish and Southern Electricity Networks (SSEN), we undertake annual forecasts to help us understand network requirements and prepare for the extensive electrification that meeting net zero necessitates. These are based upon National Grid’s Future Energy Scenarios which set out four pathways to 2050: leading the way; consumer transformation; system transformation; and steady progression.

Working with Regen we apply these forecasts at a local network level to produce Distribution Future Energy Scenarios (DFES). These are informed through stakeholder engagement, local evidence and intelligence gathering, recognise national and devolved targets, and are developed for our distribution regions in the north of Scotland and central southern England.

Until recently our DFES have focused on the impact of LCT uptake. However, this is only one part of the net-zero challenge. For a cost-effective transition it is crucial to understand where demand could be reduced and potential pathways to managing the energy system in a smarter way.

That’s why we took an industry-first step in capturing energy efficiency measures in our regional forecasts, which highlight the scale of the challenge and opportunities the transition to net zero will create.

Energy efficiency measures have huge potential

Our new forecasts study the impact and potential for demand reduction in five major demand sources: domestic heat; domestic lighting and appliances; non-domestic heat; non-domestic lighting and appliances; and industrial processes.

Depending on the region and scenario, the impact of energy efficiency measures in reducing current baseload electricity demand by 2035 ranges from 7 per cent to 29 per cent.  This upper target will only be realised through clear policy signals that support the acceleration of energy efficiency uptake. The reports forecast initial progress to be made in the non-domestic sector before a significant accelerating of domestic energy efficiency measures between 2025-2035.

The 19 million home challenge

The UK and Scottish governments are targeting as many homes as possible to secure an Energy Performance Certificate rating of ‘C’ by 2035. This will require upgrading 19 million homes which the UK government estimates could cost as much as £65 billion.

As a distribution network operator, we will play a key role in neutrally facilitating the uptake of low-carbon technologies and supporting a cost-effective transition. Understanding the impact of energy efficiency performance on network demand, and where this will most likely be felt, is a key component in preparing our critical infrastructure for the net zero transition.

Our reports reveal that over 60 per cent of homes in Portsmouth, Southampton, Bournemouth, Oxford and the Highlands and Islands, as well as over 50 per cent of homes in Aberdeen and Dundee will need to be upgraded to secure EPC C by 2035.

Securing a fair transition to net zero

Improving the energy efficiency of the UK’s homes and businesses will be one of the most difficult challenges on the path to net zero, however it is fundamental to achieving a cost-effective and fair transition. The UK government has calculated that achieving its EPC C target could provide annual bill savings of £7.5 billion and will be critical in bringing households out of fuel poverty.

This highlights the importance of taking a ‘fabric first’ approach to the net zero transition. This means prioritising the energy efficiency of the UK’s housing stock to deliver cost and carbon savings. The accumulation of these measures, as highlighted in our forecasts, also deliver significant system benefits that will be secured if the UK and Scottish governments meet their energy efficiency targets.

A fair transition to net zero mitigates risks for households and creates opportunities for customers to enjoy the benefits of greater participation in the energy system. Energy efficiency measures can unlock the ability of households to play an active role in flexibility markets which can lead to more efficient consumption and lower bills. For example, we have undertaken innovation projects which demonstrate that electricity network peak demand could be reduced by 7 per cent through households shifting to LED lighting. This creates exciting opportunities for aggregators, households and businesses to pool demand side response (DSR) measures to create new revenue streams in the future.

Turning ambition into action

Our forecasts have already proved to be an invaluable tool in translating the impact of national targets at a local level. By including energy efficiency measures we now have a clearer understanding of its potential in the net zero transition and how these interact with a concurrent increase in demand from technologies such as electric vehicles and heat pumps.

The UK and Scottish governments are expected to publish updated approaches to heat decarbonisation imminently. These will be instrumental in providing direction on how ambition will be turned into action  and in securing the benefits that rolling out energy efficiency measures provides for the UK’s energy system and the households, businesses, and communities it serves.

The reports for both SSEN distribution areas are available online for the north of Scotland and central and southern England.