4. Electricity demand must grow to stop climate change

4.1. Whole-system energy transformation

  1. The annual demand for energy from all sources in the UK in 2021 was 1,355TWh, with 20% (272TWh) in the form of electricity [107]. While current projections are that total energy demand must reduce significantly by 2050 in order to meet climate change targets, electricity demand is expected to grow as carbon-intensive sources of energy are displaced by electrification of other industry sectors, and electricity is used to produce other energy vectors (e.g. hydrogen) which will enable the deep decarbonisation of hard to reach sectors. The scale of energy transformation required to deliver Net Zero in the UK is illustrated in Figure 4‑1.

 

Figure 4-1:
Annual UK end consumer energy demand in 2020 and 2050

Chart, bar chart Description automatically generated
Figure 4‑1: Annual UK end consumer energy demand in 2020 and 2050

Adapted from [107]

 

  1. The future characteristics of the UK’s energy and electricity demands are described through a set of possible scenarios developed (through industry consultation) on an annual basis by Great Britain’s Electricity System Operator and statutory undertaker, National Grid ESO (NGESO). This annual publication is called Future Energy Scenarios (FES), see [13] for the most recent publication. In completing their work NGESO look at a number of inputs including legislation, policy, technology and commercial drivers and consumer behaviour. NGESO state that “All our scenarios consider energy demand and supply on a whole system basis, incorporating gas and electricity across the transmission and distribution networks. We continually develop all aspects of our Future Energy Scenarios process ensuring that the outputs are as rich and robust as possible to provide a sound reference point for a range of modelling activities. This includes extensive stakeholder consultation and detailed network analysis, which enables NGESO to identify strategic gas and electricity network investment requirements for the future”.
  2. Of the four scenarios shown in Figure 4‑1, three are compatible with the UK's Net Zero commitments. The fourth, called Steady Progression, does not meet those commitments. FES have been published annually since 2012. Since the 2018 publications, the speed of decarbonisation has been a key feature in each FES. The three scenarios which meet Net Zero follow distinct pathways but each requires significant investment in energy efficiency, electricity decarbonation, and/or new or enhanced energy vectors (e.g. hydrogen). In reality, these pathways are not mutually exclusive, and government and industry are currently pursuing initiatives which cover all possible stepping-stones to Net Zero.
  3. Figure 4‑2 shows how sectoral carbon emissions will evolve in NGESO's System Transformation scenario (which meets UK Net Zero 2050) and in Steady Progression (which does not).

Figure 4-2:
NGESO scenarios, showing the importance of a whole-society approach to decarbonisation and low carbon electricity generation

Figure 4‑2: NGESO scenarios, showing the importance of a whole-society approach to decarbonisation and low carbon electricity generation

Adapted from [107]

 

  1. An important development in FES since 2020, and a direct result of the increasing urgency of the requirement to meet Net Zero, is the growing prominence of a hydrogen economy in those scenarios which achieve the 2050 requirement. Hydrogen has time been acknowledged as having the potential to facilitate deep and broad decarbonisation by providing “difficult to reach” sectors with access to zero-carbon fuels, and it therefore has been attributed a significant role in achieving Net Zero in the UK and elsewhere. The relevance to the Project of the hydrogen economy, and the potential for hydrogen to play an increasingly important role in the energy ecosystem of the future, is that the increased use of hydrogen as a low carbon energy vector will increase the demand for electricity. For more information see Section 4.7.
  2. The 2021 FES brings together future operation of existing generators, and future trends in the demand for energy, to conclude that:
  • Net emissions from the power sector likely must be net negative from the early 2030s to achieve Net Zero (see Figure 3‑4);
  • Hydrogen and carbon capture and storage are likely to be required to achieve Net Zero, with in excess of 29TWh of electricity demand required by 2040, and in excess of 95TWh by 2050, for hydrogen production (including electrolysis connected to non-networked offshore wind). This is likely to increase the need for low carbon electricity generation over and above that needed to meet other growth in electrification; and
  • Offshore wind is, based on current economics, likely to be the most significant (and one of the cheapest) source(s) of electricity in the 2050 energy mix. A diverse mix of low carbon generation is required to meet national decarbonisation targets.
  1. In March 2020 the Energy System Catapult (ESC) published a report, “Innovating to Net Zero” which summarised the results of an update to their national Energy System Modelling Environment [37]. The report considered and evaluated potential pathways to 2050 in order to support the identification of technologies, products and services which will be most important to achieving the Net Zero target. The ESC’s analysis provides a useful independent analysis of the trends described in the FES and therefore provides useful confirmation of some points, while drawing different conclusions on others. The ESC’s analysis adds breadth and depth to the consensus of how best to achieve the Net Zero target. Other professional organisations also share their views of future demand and these are discussed in Section 4.3.

4.2. Trends in Scottish and UK electricity demand

  1. Scotland has its own legal commitments to decarbonise and has developed an overarching national strategy to deliver those commitments. There are similarities however between UK-wide and Scottish progress to date in decarbonisation; and many principles for delivering further decarbonisation are also consistent between the two nations. Figure 3‑2 and Figure 3‑3 show that electricity supply in Scotland and the UK have evolved in similar ways since 2015, and Figure 4‑3 shows that the demand for electricity in Scotland and the UK have also followed similar trends at the sectoral level although the average annual decline in consumption in Scotland has been at a marginally higher rate than in the UK as a whole. In the domestic sector, Scottish electricity consumption has declined over the period 2005 - 2019 by 1.6% per annum, while the decline in the UK has averaged 1.0%. In the non-domestic (industrial and commercial) sector, Scottish consumption has declined by 1.3% annually while in the UK decline has been 1.1% per year.
  2. National strategies for decarbonisation influence future demand. Figure 4‑4 shows that the Scottish strategy for delivering Net Zero is through the displacement of carbon intensive fuels by electricity or by hydrogen. In the first case, the demand for electricity will grow 62% (20TWh) above the 2015 baseline demand, and in the second, assuming that hydrogen production is half green and half blue (see Section 4.7) demand for electricity will be 117% (37TWh) above 2015. Applying the same assumptions to data from Figure 4‑3 and Section 4.2, implies that UK electricity demand will grow between 50% and 113% above 2015 UK demand.
  3. The strategic drivers for future electricity demand evolution in Scotland and the UK, and the high-level strategies which affect demand in both nations are similar. Scottish and UK future energy scenarios anticipate similar levels of electricity demand growth in aggregate over the 2050 timeframe. Through the remainder of this Statement, as is required and for simplicity, only UK-level future demand forecasts are included but it is concluded that any high-level implications of decarbonisation-through-substitution which apply to the UK's decarbonisation challenge, will be equally relevant for Scotland.

Figure 4-3:
Consumer demand for electricity in Scotland and the UK, 2005 - 2020

Figure 4‑3: Consumer demand for electricity in Scotland and the UK, 2005 - 2020

Diagram Description automatically generated with low confidence
Adapted from [38]

Figure 4-4:
Scottish energy flows, 2015 and 2050

Figure 4‑4: Scottish energy flows, 2015 and 2050

[23]

4.3. Net Zero societies will use more electricity

  1. In the 1990s and early 2000s, electricity demand in the UK grew only slowly. Since 2005, demand has fallen. The trend in reducing underlying demand has been influenced by three factors:
  • A decline in economic growth rate (particularly with the recession of 2009);
  • A reduction in the level of electricity intensity as the UK economy has shifted to less energy-intensive activities; and
  • The introduction of energy efficiency measures, especially more efficient lighting within the last seven years.
  1. Today’s view of future demand remains uncertain, but is growing:
  • The switching of sources of final use power for heating and transport from carbon-intensive sources to electricity, the generation of which can be decarbonised using technologies already available today, will put upward pressure on demand;
  • The least-cost energy efficiency measures, such as introduction of low-voltage LEDs for lighting, have now been implemented across business and domestic sectors; and
  • Economic restructuring in the UK away from manufacturing to a service-based economy has largely occurred, however the growth of new high-technology and highly skilled manufacturing, both contributing to national economic growth and prosperity, is likely to place additional pressures on the electricity sector.
  1. These observations are consistent with those made by NGESO in FES 2020 [39], FES 2021 [13] and FES 2022 [107]. Each FES analyses four scenarios. Following the UK’s adoption of Net Zero as a legal target, NGESO have described in each annual FES, three scenarios which meet Net Zero and one (called Falling Short – previously Steady Progression) does not.
  2. There are many expert projections of electricity demand in 2050, and the majority of forecasts are for UK electricity demand to increase (from today’s level of circa 300TWh). The amount by which demand is forecast to increase varies according to the level of decarbonisation of non-energy sector demand, and the source for that decarbonisation. For example hydrogen is an important energy vector which is primed to deliver the decarbonisation of hard to reach sectors of transport, space heating and heavy industry. Off-grid production of green or blue hydrogen would require the generation of low carbon power but this may be counted in addition to the electricity transmission system demand projections for 2050 presented below:
  • The UK National Policy Statements foresaw a doubling of current demand [40], i.e. to circa 600TWh;
  • NGESO present a range from 565 – 716TWh, excluding electricity demand for the purposes of producing hydrogen [107];
  • The National Infrastructure Commission forecasts 465 – 595TWh [41];
  • The Energy Systems Catapult forecasts 525 – 700TWh [37];
  • The CCC’s sixth carbon budget presents a range from 550 – 680TWh [3];
  • The BEIS impact assessment for CB6 presents a range from 610 – 800TWh [42]; and
  • The 2020 Energy White Paper presents a range from 575 – 665TWh [29].
  1. The ESC underpin their scenarios with the premise that "Net Zero requires switching to low carbon technologies wherever we can” including hard-to-treat activities as well as carbon sequestration. Critically the ESC conclude that Net Zero requires society-wide adoption of low carbon heating and transport technologies as well as continuing to drive "upstream” changes in the electricity mix and reduced energy use in industry [37].
  2. In the ESC scenarios, population growth and societal habits drive underlying demand growth, with either centralised or society-led decarbonisation supporting their demand forecasts. Industrial demand for energy is forecast to decrease by between 20% and 30% due to a move away from energy-intensive industry and an adoption of energy efficiency measures wherever possible.
  3. Further similarities between the ESC report and the FES are that a hydrogen economy must be created to decarbonise hitherto "hard to reach” end uses; the production of hydrogen through electrolysis may act to increase further electricity demand; and the transport sector, which also requires fundamental transformation, will need to be a strong adopter of hydrogen (for heavier freight) if emissions are to fall. Other predictions, including those which inform the Scottish Energy Strategy [23], are also closely aligned with these macro trends.
  4. On the basis that electricity demand in the UK is predicted to increase, it remains prudent to plan on a conservative basis to ensure that there is sufficient supply of electricity to meet demand across a wide range of future scenarios, including where the use of hydrogen is limited.

4.4. Decarbonising transport will increase electricity demand

  1. The emissions from passenger cars and light goods vehicles make up over two thirds of all transport emissions, so decarbonising those forms of transport is a priority [29].
  2. In Scotland, surface transport accounted for approximately 30% of emissions in 2019 [113] and surface transport has been Scotland's highest emitting sector since 2015. Surface transport was the largest source of UK greenhouse gas emissions in 2021 (accounting for 22.6% of emissions [112]). At the time of writing, the CCC have not yet published an assessment of 2020 or 2021 sectoral emissions in Scotland.
  3. A rapid shift to low emission vehicles will give a significant boost to the enduring decarbonisation of our economy. Growth in the use of Electric Vehicles (EVs) is expected to create significant new demands on our supply of electricity.
  4. The decarbonisation of transport is prominent in Scottish climate change plans. Scotland's Inward Investment Plan identified the decarbonisation of transport as an area of competitive strength for Scotland [21]. The Scottish government has committed to phasing out the need for new petrol and diesel cars and vans by 2030, and will work with public bodies to phase out the need for new petrol and diesel light commercial vehicles by 2025.
  5. The market for electric vehicles in Scotland is growing rapidly, and sales of ultra-low emission vehicles in Scotland more than doubled in 2020. Scotland now has over 2,500 public charging devices, of which over 650 are rapid chargers. To support the shift away from petrol and diesel cars and vans, Scotland is investing £30 million in an electric vehicle charging network (the fourth largest in the UK), in line with recommendations tabled by the Just Transition Commission. Further work with the Scottish Futures Trust is considering and developing new financing and delivery models for electric vehicle charging infrastructure in Scotland. Infrastructure deployment to date has already been supported by the Scottish government’s investment in the ChargePlace Scotland network, and on a per-capita basis Scotland is ahead of England, Wales and Northern Ireland in both total public charge points and rapid devices.
  6. Buses which run on hydrogen are already serving the streets of Aberdeen, and Scotland's rail services will be decarbonised by 2035: a joint government, enterprise and academia study has been funded to understand the application of hydrogen fuel cell technology to rail traction.
  7. The UK government has proposed a ban on the sale of all new petrol and diesel vehicles to be effective from 2030 [45], bringing further forwards a prior indication of 2035. The Prime Minister’s November 2020 announcement, confirmed alongside a ban on sales of new hybrid vehicles by 2035 within the Energy White Paper [29], brought emerging UK government policy more into line with the CCC’s recommendation that the date for phasing out petrol and diesel cars and vans (including hybrids) should be brought forwards to no later than 2032, with EVs supported by detailed policy arrangements to be able to fill the light transport gap this would create [44]. Innovation is bringing affordable and highly desirable low emission private road vehicles to market, with almost every major brand now sporting a fully electric model and EV costs reducing. In September 2020, market frontrunners TESLA unveiled a new EV battery design which “will enable the company to produce a $25,000 electric car in the next three years” [46] and generally the price of EVs is reducing and their range is increasing.
  8. The UK has placed leadership of transport revolution at the heart of its Industrial and Clean Growth strategies, with investment being directed into both electric vehicle manufacturing, battery manufacturing and grid recharging points. In late June 2020, the Prime Minister committed to backing the vision of the UK becoming a global leader in developing batteries for electric vehicles [47]. Specifically, commitments were made to:
  • Make funding available to attract investment in “gigafactories”, which mass produce batteries and other electric vehicle components, enabling the UK to lead on the next generation of automotive technologies;
  • Make £10m of funding immediately available for the first wave of innovative R&D projects to scale up manufacturing of the latest technology in batteries, motors, electronics and fuel cells, and nearly £500m for battery manufacture in the UK; and
  • Provide additional funding to allow the progression of initial site planning and preparation for manufacturing plants and industry clusters, with sites under consideration across the UK – forming part of the government commitment to spend up to £1 Bn to attract investment in electric vehicle supply chains and R&D to the UK [48, 49].
  1. These commitments came on top of the over £1 Bn provided at the Spring Budget 2020 to support the rollout of ultra-low emission vehicles in the UK via support for a super-fast charging network for electric vehicles, and extension of the Plug-In Grant schemes. EVs are already a critical new technology and are vital in the fight against climate change. The commitments described above from both the Scottish and UK governments are evidence that there is strong political support for the rapid development and rollout of EVs. Work to upgrade utility supply networks and boost EV charging infrastructure is already being planned and undertaken in cities across Scotland and the wider UK, e.g. ChargePlace Scotland and [50]. Such works are examples of the tangible actions already on track for delivery which will reduce transport carbon emissions, increase Scottish and UK demand for electricity and therefore underpin the urgent requirement for the development and delivery of new electricity generation at scale.
  2. EVs are predicted to play a major part in the future GB electricity mix as a result of their energy demand requirements and potentially also their electricity storage capabilities. Ofgem, the independent energy regulator for Great Britain, have announced a plan to “Enable drivers to go electric by supporting an energy network that can power 10 million electric vehicles by 2030” [51] and anticipate that the number of electric vehicles on UK roads may grow from 320,000 at June 2020 [29], to 46 million by 2050 [51]. Other forecasts range between 20 – 33 million cars on UK roads in 2050, adding approximately 100TWh to electricity demand annually [107].
  3. Hydrogen (see Section 4.7 for more information) is well placed to help decarbonise hard to reach sub-sectors of transport (particularly larger, long-haul, road freight vehicles) and is making tangible steps towards mainstream use in this and other transport sub-sectors, e.g. in Aberdeen. In September 2020, the first UK train journey was powered by hydrogen. In the same month, the maiden flight by a hydrogen-powered commercial aeroplane was made [52, 53]. Annual electricity demand from road transport as a whole (i.e. incorporating both EVs and vehicles powered by hydrogen) could be 126 – 240TWh by 2050 in scenarios which meet Net Zero [107]. This projection shows greater upside potential than previous projections from 2019, 2020 and 2021 [39], [54], [55] and [13]. Decarbonisation of road transport has gained significant momentum over a number of years and has growing credibility to succeed.
  4. To support efforts in the decarbonisation of heavy-duty transport, government pledged to invest £20 million in freight trials to pioneer hydrogen and other zero emission truck technologies; and £120 million to start the delivery of the 4,000 zero emission buses [29].
  5. Electricity demand will significantly increase as a result of measures already delivered and many others already in flight. The use of hydrogen in rail and air travel will increase the demand for electricity (for hydrogen production) even further.
  6. Similarly, the ESC scenarios also foresee the decarbonisation of transport as a major influence to future electricity needs, anticipating approximately 35 – 40 million battery EVs on the roads by 2050 and only small numbers of Plug-in Hybrid Electric Vehicles or other hybrid vehicles remaining operational. Hydrogen is anticipated by the ESC to be the major fuel for heavy transport [37].

4.5. Heating homes and spaces with lower carbon emissions

  1. Reducing dependency on natural gas and thereby reducing carbon footprint further, requires gas to be substituted from home and industrial / commercial heating, cooking and water heating.
  2. The Scottish 2021/22 Programme for Government (PfG) was published in September 2021 and shows a move to integrate Net Zero in all areas of policy across the economy. The PfG announced £1.8 billion of funding towards decarbonising buildings, which was later reiterated in the Scottish Heat in Buildings strategy. The Scottish government has made other commitments to further the decarbonisation of homes and spaces through a number of targets for 2030. These are:
  • To develop around 5TWh of low carbon heat networks;
  • To install 80,000 - 100,000 heat pumps over the period 2021 - 2026;
  • To achieve 170,000 heat pump installations in 2030. [15]
  1. However CCC analysis concludes that the Scottish legislated carbon reduction targets require more rapid emissions reductions in the 2020s than are achieved in the current policy pathways and more rapid emissions reductions must be enabled by more rapid low carbon electricity capacity development.
  2. The UK's strategy to displace gas demand for heating homes and spaces is through electrification, either indirectly using electricity to produce hydrogen or through other renewable technologies, for example electrification of the home or installation of heat pumps. Coupled with governmental plans for new homes in Scotland, Wales and England, electrification of home and space heating will increase GB's demand for electricity. For every household that is supplied with electricity, an average additional burden of approximately 3.8MWh per year could be placed on the grid [38] and more as gas use in homes is substituted for electricity as suggested. In 2019, research by Homes for Scotland revealed that a further 25,000 homes are needed each year to keep up with housing demand and recognised a backlog of 80,000 homes created by a shortfall in the supply of housing since 2008 [56]. The need for new homes in Wales has been estimated at 7,300 new homes per year to 2024, reducing to 4,500 per year to 2039 [57]. Estimates have put the number of new homes needed in England at up to 345,000 per year, accounting for new household formation and a backlog of existing need for suitable housing. Projections therefore imply a potential additional increase in electricity demand in Great Britain of at least 41TWh per year by 2050.
  3. The ESC anticipates a hybrid approach to home and space heating, with electric heat pumps being installed in thermally efficient homes, and hydrogen or electricity providing heating for peak periods and/or cold spells. These measures are also included in the Energy White Paper: the UK government aims to grow the installation of electric heat pumps from 30,000 per year to 600,000 per year by 2028; and will consult on whether it is appropriate to end gas grid connections to new homes by 2025, in order to open the market of homes not on the gas grid to heat pumps or other clean energy alternatives, representing some 50,000 to 70,000 installations a year [29]. Homes currently consume, on average, three times as much energy from gas as they do from electricity, increasing the potential incremental electricity demand in 2050 versus 2020 from new homes from 41TWh by over 100TWh per annum if all gas demand is successfully substituted for electricity.
  4. District heat systems present an alternative opportunity to decarbonise home heating. District heat captures process heat from thermal power plants or industrial applications, thereby increasing the efficiency of the application and presenting an overall reduction in carbon emissions associated with the combined need to carry out the source application and heat nearby buildings. District heat without carbon removal therefore presents opportunities to reduce carbon emissions, but such emissions cannot be removed entirely unless the source of the heat is itself low carbon. Industrial-scale low carbon heat sources could either use hydrogen as a low carbon fuel, or apply technology to capture and store carbon emissions associated with burning gas to generate heat or power. [37].
  5. Even if Scotland and the UK are currently able to meet current electricity needs and share of renewable generation targets now, it will be very difficult – if not impossible – to do so into the medium and long term, without the significant growth in new low- or zero-carbon generation capacity.


4.6. Peak electricity demand will grow

  1. The future daily profile of electricity demand is less easy to forecast, but anticipated peak demand remains a key determinant for future installed generation capacity requirements.
  2. Figure 4‑5 illustrates the potential peak demand for GB power (using NGESO’s Average Cold Spell methodology) to 2050. In the four scenarios, peak demand is anticipated to be 62.7 – 68.4GW by 2030 (for comparison, 2020: 58.8GW), and 97.5 – 114.3GW in 2050 [107]. Despite NGESO anticipating flat growth or a decline in peak demand until 2025 in all Net Zero compliant scenarios, all scenarios show an increase in peak demand thereafter, driven by underlying industrial and commercial demand growth as well as the electrification of heating and transport.


Figure 4-5:
Future net peak electricity demand

Figure 4‑5: Future net peak electricity demand

[107]

 

  1. EVs and hydrogen vehicles require the deployment of significant additional electricity generation capacity, and may also act as integration measures for all renewable and baseload generation technologies, capable of shifting load from when demand is high, to periods where supply is high. Until recently, system peak demand has been expected to reduce in the future, with Vehicle-to-Grid technologies working alongside enormous national-level batteries, helping keep peak electricity demand down as well as providing income for vehicle owners. More recently, NGESO have updated their analyses to incorporate consumer behaviour, noting that many cars will be on the road returning children from school and workers to their homes, during peak periods. They conclude that V2G is less likely to be a significant contributor to peak demand shaving than previously thought. Vehicle-to-grid may have a lower utility than previously thought because although vehicle-to-grid has significant capabilities, cars will not be constantly plugged in.
  2. Ofgem announced a new Strategic Innovation Fund in August 2021. The £450M fund is being deployed over five years as part of the regulated price controls for the electricity system operator, and for the network companies which operate GB’s energy networks. The fund, and its source, further signals the significant and imminent changes required to continue the journey to Net Zero. Ofgem stated that the fund would help GB “find greener ways to travel, and to heat and power Britain at low cost. Britain’s energy infrastructure will play a pivotal role in cutting net zero greenhouse gas emissions”. Growth in electricity demand through the electrification of heat and transport, and the introduction of versatile energy vectors, such as hydrogen, which will be produced with the help of low carbon electricity generation capacity, to decarbonise industry and hard-to-reach sectors, is certain. An increase in the complexity of operating the electricity system and in the future an integrated whole-energy system is likely, but must be overcome in order to meet Net Zero. The Strategic Innovation Fund, and others like it, will work to ready our energy networks for the growth in low carbon generation required to meet future estimates of electricity demand.

4.7. The role of hydrogen in a low carbon world

  1. The prominence of a hydrogen economy has increased in subsequent FES since the 2019 edition. This is a direct result of the requirement to meet Net Zero, and hydrogen is an important constituent of those scenarios which meet the 2050 carbon emissions reduction target. Although the public prominence of hydrogen has recently grown, it has been forerun by a longer acknowledgement of its potential to enable deep and broad decarbonisation. As described by the Union of Concerned Scientists: “Hydrogen is an important energy vector which may be able to help decarbonise homes and buildings, and power road transport, however hydrogen needs to be made through large-scale industrial processes, which require significant amounts of energy. Thus, in order for hydrogen to contribute to decarbonisation, the energy source for hydrogen production must itself be low carbon” [58].
  2. The major potential uses of hydrogen are:
  • A further development of existing technologies such as liquefied petroleum gas and compressed natural gas will enable hydrogen’s use in road transport, reducing the carbon intensity of freight haulage and public road transport, enabled by a national supply infrastructure;
  • Hydrogen, when blended with mains gas into the GB National Transmission System (NTS), will reduce the carbon intensity of current gas use (industrial use, power generation, home and commercial heating and home cooking);
  • A greater share of hydrogen in a blended natural gas mix will provide greater decarbonisation, leading effectively to a substitution of natural gas by hydrogen in industrial, service, commercial and domestic applications, as well as heavy transport, wherever opportunities exist. An upgrade to the NTS would be required but would be cheaper than building a new network;
  • This also opens up the use of hydrogen as a power generation vector: substituting the current Combined Cycle Gas Turbine fleet (c. 394gCO2/kWh) and Open Cycle Gas Turbine fleet (c. 651gCO2/kWh) for a zero-carbon dispatchable generation technology, covering both baseload and peaking (flexibility) needs [114]. For example, the Intermountain Power Project (Utah, USA), which is replacing 1.8GW of coal generation with 0.8GW of CCGT plant, capable of burning up to 30% hydrogen, 70% natural gas before 2025, and 100% hydrogen by 2045;
  • Potentially only minor changes would be required to enable existing home appliances (boilers, cookers) to run on a blended fuel, especially one with only low (c. 10%) amounts of hydrogen in the blend however detailed studies are yet to confirm this fact;
  • Hydrogen is a highly suitable energy vector for inter-seasonal energy storage. By using excess low carbon electricity generation to produce hydrogen to send to storage, that hydrogen can later be released for other application when needed. Because of the low unit costs of keeping hydrogen in storage, this technology is particularly well suited to long-term use.
  1. Methane cracking is the predominant hydrogen production technology in use today, however carbon is emitted as a by-product of the process. Hydrogen produced by methane cracking requires CCUS facilities to achieve Net Zero carbon, hence the close links in government strategy and industrial plans between hydrogen production and CCUS development. Electrolysis currently accounts for only approximately 1% of global hydrogen production, however a growth in electrolysis capability and capacity opens out the prospect of using RES to produce hydrogen, in potentially significant quantities. Electrolytic hydrogen has the lowest carbon emissions over the full life cycle if supplied with low carbon power [59].
  2. Hydrogen produced by electrolysis, powered by low carbon (renewable) electricity, therefore has exciting prospects for decarbonising industry; displacing petroleum products from heavy transport; replacing natural gas for heating and home use; and providing an energy vector suitable for long-term zero-carbon energy storage.
  3. Actual examples of hydrogen produced by electrolysis from low carbon generation (predominantly in the US) include solar-to-hydrogen at California’s Stone Edge Farm Estate (where excess solar generation is used to produce green hydrogen for own-use), and California’s SunLine Transit Agency, who have been operating a fleet of 16 hydrogen buses since early 2021 using green hydrogen generated from a 4MW solar array.
  4. Scotland's Hydrogen Policy Statement [26] describes Scotland’s unique selling points as its natural resources, infrastructure and skilled energy workforce, all of which have the potential to enable Scotland to become the producer of lowest cost hydrogen in Europe by 2045.
  5. “Scotland has an abundance of the ingredients in green hydrogen production: water and wind” [26]
  6. Scotland's Draft Hydrogen Action Plan [60] establishes the decarbonisation of heat, industry and transport as current priorities which will require a broader range of technologies, strategies and energy systems to deliver on. There is consensus that hydrogen will play a critical role in decarbonisation of the energy system, especially where electrification of parts of that system will be challenging.
  7. The Scottish Offshore Wind to Green Hydrogen Opportunity Assessment [61] develops scenarios to ascertain the feasibility of coupling Scotland's extensive offshore wind resource with green hydrogen production, to contribute towards national and international net zero targets by providing green hydrogen for the decarbonisation of hard to reach sectors in Scotland, the UK and continental Europe. The most ambitious ‘export’ scenario in this assessment assumes that Scotland could credibly reach an installed capacity of 5GW of renewable hydrogen by 2032, and over 25GW by 2045. The analysis was based on a realisation of the current Scottish offshore wind assets pipeline plus a 10GW outcome of the ScotWind seabed leasing round for offshore wind projects but it is noted that the capacity associated with ScotWind leases is currently significantly higher. However, the scale of the hydrogen market depends on its cost. Driving down the cost of offshore and onshore wind electricity generation will be key to cost-effective green hydrogen production. Asset scale and location, including local geological characteristics and cost-effective transmission connections are important aspects of driving down cost. Section 3.7 lists the competitive strengths of the Project in relation to those projects which together have been granted seabed rights for offshore wind generation capacity through ScotWind.
  8. UK government’s 2021 Hydrogen Strategy [62] explains that hydrogen has “the potential to overcome some of the trickiest decarbonisation challenges facing our economy” especially in enabling the decarbonisation of industry and land transport, and as a potential substitute for current carbon-intensive marine and aviation fuels.
  9. The Industrial Decarbonisation Strategy [19] and Transport Decarbonisation Plan [63] set out the actions government is taking to bring forward hydrogen demand across industry, power, transport and heat to enable decarbonisation.
  10. As a result of its geography, geology, infrastructure and capabilities, the UK has an important opportunity to demonstrate global leadership in low carbon hydrogen and to secure competitive advantage. The proposed “twin track” approach to hydrogen production in the UK capitalises on the UK’s potential to produce large quantities of both electrolytic ‘green’ and CCUS enabled ‘blue’ hydrogen [62].
  11. Hydrogen is making tangible steps towards mainstream use in the decarbonisation of hard-to-reach sub-sectors of transport. In September 2020, the first hydrogen-powered UK train journey was made. In the same month, a hydrogen-powered commercial aeroplane made its maiden flight [52, 53].
  12. NGESO estimate that annual electricity demand from road transport as a whole (incorporating both EVs and vehicles powered by hydrogen) could be 120 – 150TWh [107], this is consistent with independent analysis carried out by SNC Lavalin (Atkins) which estimated 150TWh [55]. Both estimates are approximately 50% of current national electricity demand. The potential for use in rail, marine and air travel increase estimates of hydrogen use even further.
  13. NGESO estimate that at between 126 and 240TWh of electrical energy will be required annually by 2050 to produce hydrogen to meet its many potential end-uses [107], the wide range is due to different Net Zero compatible scenarios producing hydrogen in different ways. The Energy System Catapult foresee the need for “a new low carbon hydrogen economy ... delivering up to 300TWh per annum, roughly equivalent to electricity generation today” and concluding that “Electricity generation itself may have to double, or even treble if most hydrogen is to be produced by electrolysis.” ESC also models over 600TWh of hydrogen storage covering strategic and operational reserves to an acceptable level of security [37, 18]
  14. The National Infrastructure Commission have also considered the benefits hydrogen could bring in terms of lowering the overall cost of a highly renewable electricity system: “Highly renewable systems are still a low cost option in a net zero world. The analysis once again finds that electricity system costs are broadly flat across a range of different levels of renewable penetrations. If hydrogen is deployed, providing low carbon and flexible generation, it could further reduce the costs of highly renewable systems ... The conclusions also hold in a lower demand scenario where heating has been decarbonised using hydrogen.” [41]
  15. The hydrogen economy is set to grow in the UK with recent UK government announcements targeting 5GW of "low carbon" hydrogen production capacity by 2030 and development of the first town heated by the gas by the end of the decade [45, 62]. To support this ambition, UK government is providing £240M for the Net Zero Hydrogen Fund out to 2024/25 for co-investment in early hydrogen production projects, and up to £60M under the Low Carbon Hydrogen Supply 2 competition. A UK standard for low carbon hydrogen has been developed, allowing a UK hydrogen business model to be finalised before enabling first contracts to be allocated from 2023. The UK’s “twin track” approach to hydrogen production foresees a significant opportunity for the role of offshore wind in the production of green hydrogen.
  16. Further, large scale renewable hydrogen production may provide an essential energy balancing and flexibility function to integrate the expected large increases in offshore wind into the UK energy system.
  17. The hydrogen economy, and the potential for hydrogen to play an increasingly important role in the energy ecosystem of the future, is relevant to the case in support of the Project, because the increased use of hydrogen as a low carbon energy vector will increase the demand for electricity. The Project is capable of supplying large quantities of low carbon power required to feed Scotland's hydrogen ambitions.

 

4.8. Conclusions on the future of electricity demand

  1. The main conclusions from this section are as follows:
  • Although energy demand in 2050 will be required to be much lower than it is today in order to meet Net Zero, the electrification of other sectors will mean that electricity demand will grow;
  • The decarbonisation of transport, homes and space heating and industry will be a major driver in the growth of electricity demand;
  • Scottish demand is anticipated to grow broadly in parallel with UK national demand because the Scottish decarbonisation strategy is broadly consistent with the UK strategy of electrification and substitution of carbon-intensive fuels from other sectors;
  • Demand is expected to double, and peak demand is expected nearly to double, in the 2050 timeframe compared to current levels; and
  • Hydrogen is an energy vector with application to the decarbonisation of hard to reach sectors. It is anticipated that in the future, a significant proportion of hydrogen will be produced via electrolysis of water, using low carbon electricity as a power source. The growth of a hydrogen economy therefore necessitates growth in electricity demand.