Results:

This workshop was the first in a series of technical workshops under the Energy Systems Modelling Theme (ESMT) of the UKERC. The overall goal of these workshops is to enhance the links between UK energy modelling practitioners, and to learn about different methodologies and analytical techniques. The specific goals of this 1 st ESMT workshop on transport modelling was to bring together energy-economic and transport modellers to learn about each others models, their synergies, and to develop potential collaborations in terms of data, insights and projects. The envisaged workshop outputs were:

• An understanding and typology of various energy/transport models
• Opportunities for sharing data and insights
• Opportunities for collaborative ventures

• High Electricity: a world in which electricity becomes the dominant energy vector requiring upgrading of related electricity infrastructure. This test case assumes a predominantly centralised approach to generation and transmission.
• High Heat: a world in which there is considerable progress in rolling out heat networks in urban centres, with the mix of energy vectors otherwise being similar to today. The test case suggests a more decentralised infrastructure with more localised forms of generation.
• High Hydrogen: a world in which a transmission and distribution network for hydrogen is developed.

• Description of the methodology used to map and classify multi-vector interactions
• An initial assessment of each case, describing the system, the issues addressed, the current situation and the likely ‘materiality’ for the UK energy system
• The process used to filter and prioritise the cases, and the agreed shortlist
• A recap of the subsequent work to be undertaken in Work Packages 2 and 3

• electricity,
• gas,
• hydrogen,
• district heating,
• liquid fuels

• peak avoidance,
• flexibility using multiple vectorsto supply the same load,
• overcoming a generation capacity constraint,
• avoiding curtailment of a generation asset, and
• backing up an energy source

1. Domestic scale heat pumps and peak gas boilers.
2. Gas CHP and Heat Pumps to supply district heating and individual building heating loads
   1. CHP and heat pumps operating to supply heat to district heating
   2. CHP supplying district heating, with co-generated electricity used to power individual dwelling heat pumps
3. PHEV switching fuel demand from electricity to petrol or diesel.
4. RES to H₂/RES to CH₄
5. RES to DH and “virtual” DH networks
6. Anaerobic Digestion/Gasification to CHP or grid injection

This project uses the global TIMES Integrated Assessment Model in UCL (‘TIAM-UCL’) to provide robust quantitative insights into the future of natural gas in the energy system and in particular whether or not gas has the potential to act as a ‘bridge’ to a low-carbon future on both a global and regional basis out to 2050.

We first explore the dynamics of a scenario that disregards any need to cut greenhouse gas (GHG) emissions. Such a scenario results in a large uptake in the production and consumption of all fossil fuels, with coal in particular dominating the electricity system. It is unconventional sources of gas production that account for much of the rise in natural gas production; with shale gas exceeding 1 Tcm after 2040. Gas consumption grows in all sectors apart from the electricity sector, and eventually becomes cost effective both as a marine fuel (as liquefied natural gas) and in mediumgoods vehicles (as compressed natural gas).

We next examine how different gas market structures affect natural gas production, consumption, and trade patterns. For the two different scenarios constructed, one continued current regionalised gas markets, which are characterised by very different prices in different regions with these prices often based on oil indexation, while the other allowed a global gas price to form based on gas supply-demand fundamentals. We find only a small change in overall global gas production levels between these but a major difference in levels of gas trade and so conclude that if gas exporters choose to defend oil indexation in the short-term, they may end up destroying their export markets in longer term. A move towards pricing gas internationally, based on supply-demand dynamics, is thus shown to be crucial if they are to maintain their current levels of exports.

This briefing is based on two propositions.

First, that gas security matters, because today in the UK gas plays a dominant role in the provision of energy services, accounting for almost 40% of total inland primary energy consumption in 2017. Thus, a short run failure of gas security would undoubtedly have significant political and economic consequences.

Second, that the current measure is far too narrow to offer a comprehensive assessment of UK gas security, particularly in a post-Brexit context. Discussions at the Gas Security Forum suggested that: the measure of gas security focuses only on infrastructure capacity and not supply (capacity does not equal flow); it fails to take account of the time-lag for gas delivery; it does not measure diversity or spare capacity; it ignores the impact of multiple asset failures; and, does not consider the costs associated with ensuring greater security.

It is in this context that this paper seeks to address the following questions:

• What are the constituent factors to consider in assessing gas security?
• What alternative measures exist?
• What potentially threatens gas security in the UK?
• What would a better approach to gas security look like?

The thinking behind this paper is that a more extensive approach to measuring UK gas security is needed to address the less dramatic challenges that face UK gas security, as well as the chance of managing a Black Swan event.

This document is a project report for the project 'A new approach to assessing the value of demand side management and storage in reducing costs for electricity system operation and investment.'

The UK is committed to responding to the climate change challenge and the energy sector, and in particular electricity, is expected to make a significant contribution to achieving this goal. Wind power, both on and offshore is presently the principal commercially available and scalable renewable energy technology and it is expected to deliver the majority of the required growth in renewable energy. However, the amount of electricity generated by wind is highly variable and therefore difficult to predict. One of the key challenges of this development is to ensure cost effective integration of these resources in the operation and development of the UK systems without compromising supply security.

The unpredictability of wind power makes it difficult to maintain the equilibrium between demand and generation. This increases the need for the use of technologies which help manage and control the level of demand, known as Demand Side Management. Demand Side Management, or DSM, works by shifting demand from peak to off-peak periods in order to reduce its variability.

This project investigated a new approach to assessing the benefits DSM could have to the UK. In this context, the proposed project will investigate a new approach to valuing DSM for alternative future development scenarios of the UK system. The methodology used was based on a radically new approach mixing modern financial modelling coupled with sophisticated mathematical and computational techniques. This investigation developed a novel mathematical framework aimed at valuing applications of DSM in increasing the utilisation and improving the efficiency of the operation of future UK electricity system. The project showed that it is possible to save around 30% of the generation cost to warm a typical household in winter using DSM.

This working paper considers the risks and opportunities posed to UK heat sector businesses by a potential transformation towards a low-carbon heat system in the UK. It is an output from the Heat, Incumbency and Transformations (HIT) project which is part of the UK Energy Research Centre programme.

The HIT project is investigating the idea of incumbency, considering what the term means, how it is present in the UKs heat sector and what the implications of incumbency are for the UKs potential transformation from a high carbon heat system to a low-carbon heat system.

The previous working paper developed a working definition of incumbency (Loweset al., 2017). This working paper forms the second phase of the project, exploring who the incumbents are in the UK heat system and the implications of the potential transformation for incumbents.

An online m

This report, commissioned by the Aldersgate Group and co-authored with Vivid Economics, identifies out how the government can achieve a net zero target cost-effectively, in a way that enables the UK to capture competitive advantages.

The unique contribution of this report is to identify the lessons from successful and more rapid historical innovations and apply them to the challenge of meeting net zero emissions in the UK.

Achieving net zero emissions is likely to require accelerated innovation across research, demonstration and early deployment of low carbon technologies. Researchers analysed five international case studies of relatively rapid innovations to draw key lessons for government on the conditions needed to move from a typical multi-decadal cycle, to one that will deliver net zero emissions by mid-Century.

The case studies include:

• The deployment of the ATM network and cash cards across the UK;
• Roll out of a gas network and central heating in the UK;
• The development of wind turbines in Denmark and then the UK;
• Moving from late-stage adoption of steel technology in South Korea to being the world leading exporter; and
• The slower than expected development of commercial-scale CCUS to date across the world. 

The report also sets out which low carbon technologies are likely to have wider productivty and growth benefits in other industries for the UK. These include carbon capture, use and storage (CCUS); heating, ventilation and air conditioning (HVAC); wind energy; biofuels and batteries. These areas should be prioritised by the government’s innovation strategy going forwards.

• The UK can implement an affordable (approximately 1% of GDP) 35-year transition to a low carbon energy system by developing, commercialising and integrating known – but currently underdeveloped solutions
• There is enormous potential and value in CCS and bioenergy in delivering alow carbon future
• The ability (or failure) to deploy these two technologies will have a huge impact on the cost of achieving the UK climate change targets and the national architecture of low carbon systems and future infrastructure requirements
• To avoidwasting investment, crucial decisions must be made about the design of the future UK energy system, driven by choices on infrastructure
• The next decade is critical in preparing for transition
• Preparation will require major investments in developing and proving key technology options by the mid 2020s
• Preparation creates options, demonstrates leadershipand provides scope for economic advantage in a global market place
• Planned UK spend is probably sufficient, if it is targeted to develop genuine deployment readiness of the most strategically valuable options on the pathway to 2050
• Significant policy intervention will be required to support key technologies with characteristics that make a pure market approach difficult (e.g. CCS, bioenergy, nuclear, offshore wind, heat networks

• Low cost sensors that enable many things to be measured – for example all the information that cars now have available.
• Communications infrastructure that enables data to be transported almost anywhere on the planet.
• Relatively low cost storage and processing power that is scalable, so you mostly only pay for what you need.
• Software tools that enable data to be transformed to produce information and insight that can be displayed in a way that people can easily grasp.
• Social and business ecosystems that set expectations and enable us to share and transact without relying on a single point of control.
• Rating sites such as TripAdvisor, blogs, PayPal and social media channels all provide social and commercial models that increase individual knowledgeand empowerment.

These elements have only just started to penetrate energy, which has been held back significantly by the current governance structures. Energy presents similar challenges to those of finance where changes which should benefit consumers come with new risks. However, giving people more freedom in how they buy and use energy should carry less risk than giving them freedoms over their pensions and other investments.

• Light Vehicles in the UK
• Plug-in vehicle sales
• Vehicle life
• Vehicle usage
• Consumer attitudes to plug-in vehicles
• Where to support charging
• Meeting vehicle charging requirements
• Network reinforcement costs
• Consumers, Vehicles and Energy Integration (CVEI) project
  • Consumer adoption: understanding the mass-market
  • Outputs –Modelling capability
  • Interim findings
  • Roadmap for efficient ULEV uptake and use
  • Trials will deliver further robust evidence

What policies and other factors have driven change/transformation in heat delivery technologies, fuels and infrastructure? The Technology and Policy Assessment (TPA) Theme of UKERC have published a scoping note outlining their ongoing investigation into this topic.

This paper explores the sensitivity of energy system decarbonisation pathways to the role of afforestation and reduced energy demands as a means to lessen reliance on carbon dioxide removal. 

Large uncertainties surround the viability of carbon dioxide removal

The stringency of climate targets set out in the Paris Agreement has placed strong emphasis on the role of carbon dioxide removal (CDR) over this century. However, there are large uncertainties around the technical and economic viability and the sustainability of large-scale CDR options. These uncertainties have prompted further consideration of the role of bioenergy in decarbonisation pathways and the potential land-use trade-offs between energy crops and afforestation. The interest in afforestation is motivated by its potential as an alternative to large-scale bioenergy with carbon capture and storage (BECCS), with its arguably lower risk supply chains, and multiple co-benefits. Furthermore, doubt over the viability of large-scale CDR has prompted a renewed examination of the extent to which their need can be offset by lowering energy demands.

Testing the impacts of reduced demands and afforestation

A global optimisation model (TIAM-UCL) was used to examine decarbonisation pathways for the global energy system. Based on core assumptions, where energy demands follow business as usual trends and degraded land is used for energy crops, the model was unable to find a solution for a 1.5°C target. Over the period 2020-2100, the carbon budget of GtCO₂ is exceeded by 332 GtCO₂.

Scenarios where also run to examine how the least-cost decarbonisation pathway changes if i) energy demands are significantly reduced, or ii) degraded land is used for large-scale afforestation instead of energy crops. Each option on its own reduced the CO₂ budget exceedance but both were required to allow the model to meet the 1.5°C target.

Impacts on the energy system

Under the 2°C target, afforestation reduced the reliance on BECCS by 60%. Under the 1.5°C target, the system still used all of the biomass available, as the target is so ambitious. When the energy demands were lower, the effect of afforestation on biomass use was dependent on the climate target. Under the 2°C target, less biomass was used across all economic sectors, whereas under the stringent 1.5°C target, all the available wood and crop biomass was exploited, but its use shifted away from the production of liquid fuels towards use in power generation.

Lowering energy service demands had a larger effect on the energy mix than large-scale afforestation. This is because demands are lowered differently across the sectors according to their economic drivers. However, afforestation had a bigger impact on the marginal cost of climate change mitigation, as it substantially decreases the scale and pace of change required by the energy system, especially in the 2°C case.

Given its key role, afforestation should be considered more in deep decarbonisation scenarios, as should lower demand scenarios.

Lowering energy demand and introducing large-scale afforestation both present significant challenges and opportunities. Further work should focus on factors affecting the carbon sequestration potential of afforestation, along with an interdisciplinary research agenda on the scope for large scale energy demand reduction. Research on the social, technical and economic factors that affect the potential for converting abandoned agricultural land to energy crops or new forest would be beneficial. An interdisciplinary research agenda is needed that brings together techno-economic modelling and qualitative scenario development with research on the social change that could lead to large reductions in energy demand

The development of a comprehensive industrial strategy for the UK is long overdue. The strategy is an opportunity to bring much needed coherence to economic and industrial policy, and to ensure that it works in tandem with the governments other policies and plans. It is particularly important that the strategy underpins the UKs transition towards a cleaner, low carbon economy. This will only be achieved if it is fully compatible with the Climate Change Act, and is integrated with the forthcoming Emissions Reduction Plan.

The Green Paper includes a welcome confirmation of the governments commitment to reducing greenhouse emissions to meet statutory targets, and to do so whilst meeting other important energy policy goals. Unlike previous statements of energy policy, we are pleased to see that the Green Paper adds a fourth policy goal alongside the familiar trilemmaof emissions r

The government has five national missions, to:

The Department for Energy Security and Net Zero (DESNZ) leads on the government's mission to Make Britain a Clean Energy Superpower, working in close collaboration with other departments (see Section 1.1.3).

Research, development, and innovation (hereafter 'R&D') are critical enablers for achieving both pillars of the Clean Energy Superpower Mission (CESM): delivering clean power by 2030 and accelerating to net zero by 2050. They provide the robust scientific evidence base for policy decisions and delivery, enable the successful innovation and scaling up of necessary technologies, and enhance productivity and economic growth. As estimated by the International Energy Agency, approximately 35% of the global emission reductions needed in 2050 to reach net zero rely on technologies that are not yet commercially available.

Areas of Research Interest documents (ARIs) set out research questions and evidence needs of government organisations. They are a key tool for shaping the research landscape - helping to align academic, industry, and public sector efforts with government priorities. This ARI document sets out the R&D needed to deliver the CESM, based on cross-government consensus. It captures the breadth of challenges and opportunities across both mission pillars and seeks to encourage more structured dialogue and collaboration with external stakeholders.

This ARI document is intended to support collaboration between government, academia, industry, and other research organisations. It sets out both the full thematic breadth of research areas relevant to the CESM and a focused set of priority R&D challenges where coordinated effort is most urgently required. Together, these provide a strategic framework to guide research investment, shape funding programmes, and inform policy development.

It can be used to:

This ARI has been intentionally developed at a strategic level. While it captures the full breadth of research areas relevant to the mission, it does not aim to provide detailed R&D requirements. Instead, it offers directional guidance on the research considered most valuable at the time of assessment, rather than an exhaustive specification. As part of our future plan, we will define what success looks like and develop approaches to measure progress.

• Stage 1 aims to characterize market and policy frameworks, business propositions, and the integrated vehicle and energy infrastructure system and technologies best suited to enabling a cost-effective UK energy system for low- carbon vehicles, using the amalgamated analytical toolset.
• Stage 2 aims to fill knowledge gaps and validate assumptions from Stage 1 through scientifically robust research, including real world trials with private vehicle consumers and case studies with business fleets. A mainstream consumer uptake trial will be carried out to measure attitudes to PiVs after direct experience of them, and consumer charging trials will measure mainstream consumer PiV charging behaviours and responses to managed charging options.

• Stage 1 aims to characterize market and policy frameworks, business propositions, and the integrated vehicle and energy infrastructure system and technologies best suited to enabling a cost-effective UK energy system for low- carbon vehicles, using the amalgamated analytical toolset.
• Stage 2 aims to fill knowledge gaps and validate assumptions from Stage 1 through scientifically robust research, including real world trials with private vehicle consumers and case studies with business fleets. A mainstream consumer uptake trial will be carried out to measure attitudes to PiVs after direct experience of them, and consumer charging trials will measure mainstream consumer PiV charging behaviours and responses to managed charging options.

We welcome the opportunity to comment on the findings of the Cost of Energy Review, conducted by Professor Dieter Helm. In our response, we address most of the questions set out in the Call for Evidence from BEIS. Before turning to these specific questions, we have three general observations about the Review and the Call for Evidence.

First, whilst the review title focuses on the cost of energy, this is misleading. The terms of reference and the Review report make it clear that the main focus is electricity rather than energy in general.

This distinction is important since the data shows significant differences in the position of UK electricity and gas costs when compared to costs in other countries. There are also differences between relative costs for households and relative costs for business energy consumers. UK electricity prices are higher up the European league table than prices for gas. Electricity prices for energy intensive industries in the UK are particularly high.

Our second comment is that there are important distinctions between prices, costs and bills. Whilst much of the debate focuses on prices, the costs of energy for consumers also depends on their energy consumption. Therefore, it is also important to consider energy efficiency of buildings, appliances and industrial processes since these are a key determinant of costs.

Our third comment is that costs need to be considered for the electricity system as a whole. Whilst the separate questions in the Call for Evidence about generation, networks and retail supply are understandable, costs to consumers partly depend on interactions between these components of the electricity system. This compartmentalised approach to the evidence base could mean that some of these systemic interactions are missed.

Incumbency is frequently considered as a barrier to the transformation of unsustainable socio-technical systems such as energy systems. However, despite wide use of the term, 'incumbency' has never been fully or adequately defined within the sustainable transitions literature. This working paper considers the use and meaning of the term incumbency in relation to sustainable transformations, specifically in relation to the UK's heat system. It takes ideas of incumbency from other disciplines including economics, politics and innovation. Synthesising these literatures, the paper proposes a number of characteristics of incumbency. Finally we propose a definition of incumbency in relation to sustainability transformations, which suggests that incumbents are actors already present in a specific socio-technical system, who are likely to be involved with unsustainable practices, and who possess the capacity to affect system change.

This document is the executive summary for the project titled 'Producing a Time Series of Input-Output Tables and Embedded Carbon Dioxide Emissions for the UK by Using a MRIO Data Optimisation System'.

This report describes work and results from the project 'Development of an Embedded Carbon Emissions Indicator', undertaken by the Stockholm Environment Institute and the University of Sydney on behalf of Defra (Project Ref.: EV02033). The work is a follow-up of a previous project where the most appropriate approach to constructing a robust account of impacts of trade and thus overall consumption in a headline indicator for Sustainable Development was identified. The present work describes the implementation of such a model.

The project aim was to develop and implement an initial data and model framework (called "UK-MRIO 1") for the flexible adaptation of national input-output and environmental databases for use in a multi-region environmental input-output model in the future, thus setting the basis for detailed multi-country analyses of environmental impacts associated with UK trade flows. This aim was not only achieved but actually exceeded in that a fully functional MRIO model with four regions (UK + three world regions) was assembled and a time series of balanced input-output data and embedded CO2 emissions was produced on the full 123 sector level.

The current model is a major step towards a fully fledged multi-region input-output model featuring multidirectional trade of a substantial number of UK trading partners. UK-MRIO 1 is already the most detailed and comprehensive modelling approach for the estimation of CO2 emissions embedded in UK trade with high relevance for national and international environmental policy-making. The model can be used to produce a range of outputs, for example more detailed results for industry sectors, foreign economies, or other pollutants.

This document is the final report for the project titled 'Producing a Time Series of Input-Output Tables and Embedded Carbon Dioxide Emissions for the UK by Using a MRIO Data Optimisation System'.

For this stage of the project (UK-MRIO 1), the aim was to develop and implement an initial, relatively small, data and model framework that is easily expandable without major adaptations. A data optimisation procedure is to allow the flexible adaptation of national input-output and environmental databases for use in a multi-region environmental input-output model in the future. Thus the work was to set the basis for multi-country analyses of environmental impacts associated with UK trade flows, including detailed accounts of embedded in trade flows to and from the UK over a period of time.

In order to achieve this aim, initial data estimates have been made, data constraints have been defined and specific optimisation algorithms have been developed and implemented. As a tangible outcome of the current project we have constructed a time series of annual input-output tables for the UK from 1992 to 2004 by using a modified RAS7 procedure for balancing (referred to as 'Conflicting RAS' or 'CRAS'). These tables are similar to the "Analytical IO Tables 1995" published by ONS, including symmetric input-output tables (SIOT) for domestic transactions and imports for each year from 1992 to 2004 (see Appendix C: Data Sources and Data Preparation on page 41). In addition to the original project aim, we have also calculated a time series of direct and indirect carbon dioxide emissions associated with UK economic activities, in particular emissions that are embedded in imports to and exports from the UK.

1. Project Context
2. Methodological Approach
3. Results
4. Discussion of Assumptions and Limitations of the Current UK-MRIO Model
5. Recommendations for Further Research
6. Conclusions
7. Acknowledgements
8. Appendix A: Research Contacts
9. Appendix B: Review of Literature on EET models
10. Appendix C: Data Sources and Data Preparation
11. Appendix D: Matrix Balancing with CRAS
12. Appendix E: Production of Symmetric Input-Output Tables
13. Appendix F: Detailed Results for CO₂ Emissions Embedded in UK Trade
14. Appendix G: References

The in-depth analysis presented in this report focuses on four key areas of the economy, highlighting how they may need to change to remain competitive and meet future carbon targets.

• Heat: All approaches for heat decarbonisation are potentially disruptive, with policymakers favouring those that are less disruptive to consumers. Since it is unlikely that rapid deployment of low carbon heating will be driven by consumers or the energy industry, significant policy and governance interventions will be needed to drive the sustainable heat transformation.
• Transport: Following the Road to Zero pathway for road transport is unlikely to be disruptive, but it is not enough to meet our climate change targets. The stricter targets for phasing out conventional vehicles that will be required will lead to some disruption. Vehicle manufacturers, the maintenance and repair sector and the Treasury may all feel the strain.
• Electricity: Strategies of the Big 6 energy companies have changed considerably in recent years, with varying degrees of disruption to their traditional business model. It remains to be seen whether they will be able to continue to adapt to rapid change or be overtaken by new entrants.
• Construction: To deliver low-carbon building performance will require disruptive changes to the way the construction sector operates. With new-build accounting for less than 1% of the total stock, major reductions in energy demand will need to come through retrofit of existing buildings.

The report identifies how policy makersplan for disruptions to existing systems. With the right tools and with a flexible and adaptive approach to policy implementation, decision makers can better respondto unexpected consequences and ensure delivery of key policy objectives.

There is an increasing sense of urgency about the global energy system transition. For many observers an urgent energy transition is also a necessarily disruptive one, in that it is only by radically remaking energy systems that an accelerated transition to low carbon and sustainable energy can be achieved.

Closer to home, there has been substantial progress in some parts of the energy system in the decade since the passing of the UK and Scottish Climate Change Acts. Other areas have shown little sign of change, and the transition ahead may well be more disruptive and intrusive than that seen so far. At the same time, there is also an emerging counter-narrative: that repurposing our existing energy assets (physical and social) offers the best and quickest transition path, since there is insufficient time to disrupt and remake.

Attending energy events and keeping up-to-date with emerging evidence can instil a sense of different experts talking past each other. For those involved in whole systems energy research, and working at the research-policy interface, this can be deeply frustrating. To help address this, UKERC - working with ClimateXChange (CXC), Scotland's Centre of Expertise on Climate Change - has spent two years analysing disruption and continuity in the UK energy system.

As part of that work, we surveyed around 130 experts and stakeholders about disruption and continuity-led change in the UK energy transition. The experts were mostly UK based researchers working on 'whole systems' research projects, but also included policymakers, advisory bodies, think tanks, businesses (old and new) and civil society organisations. This report presents the results of this survey work.

• ESME as an economic model
• Sensitivity studies for nuclear – approach
• Data from PPSS and ANT projects
• Updated ESME baseline
• SMR Deployment levels influenced by
  • CAPEX
  • First Operations Date For UK FOAK SMR
  • Configuration for CHP deployment to energise district heating systems
• Requirement for flexible power delivery
• The case for CHP SMRs
• Impact on the cost of energy system transition transition
• SMRs as a hedge technology for energy security

• Successfully deploying CCS would save billions of pounds – capturing industrial emissions at low cost, providing low carbon energy for industry, transport & heat and delivering negative emissions combined with Bioenergy
• To deliver these savings requires around 10GW of capacity by 2030 - needs capital investment around £21-31bn – based on efficient sharing of infrastructure and co-ordinated cluster/hub development
• Early investments in transport and storage infrastructure can unlock future unit cost reductions and strategic build out options. Strike prices below £100 per MWh are achievable in the 2020s
• 10GW scale deployment is achievable and affordable, capturing and storing around 50 million tonnes of CO₂ per annum from power and industry by 2030
• Developing capture technology options and diversifying geographical location can deliver reduced risk
• Success or otherwise in deploying CCS determines key aspects of the UK’s energy infrastructure architecture
• Delay increases reliance on nuclear and offshore wind – increasing system risk and costs before and after 2030

This report is intended to be an update to the first ETI nuclear insight report released in October 2015, entitled Nuclear - the role for nuclear within a low carbon energy system, and for completeness also summarises developments in the UK nuclear context since 2015.

This insight report summarises the learning from the ETI's Nuclear Cost Drivers (NCD) project which was commissioned through open competitive procurement, delivered by the organisation now known as Lucid-Catalyst, and reported in April 2018. It also reports the learning from applying the nuclear cost drivers data and associated learning through sensitivity testing in the ESME whole system modelling tool now operated by the Energy System Catapult.

The NCD project report concluded that there was strong evidence of applicable cost reduction in the UK, but collective action is required against all cost drivers by all project stakeholders, including government, to bring about the integrated programme of activities necessary to realise this potential. The benefits of such collective action are largely realised through productivity improvements in direct labour and indirect services during construction, giving shorter, more predictable schedules and repeatable engineering. This report also proposes that some FOAK (First of a Kind) commercial plants that could be operational from 2035, could offer further transformational reductions in cost and consequential growth in economic opportunity through deployment in the UK and elsewhere.

• Community scale biomass / biogas CHP
• LV Voltage control technologies
• Energy Management Services and advanced network controls systems.

• hybrid ASHP,
• High Density Thermal Storage (HDTS) and
• HEMS / HAN as high priority technologies.

• Hybridised ASHP with gas boilers for individual dwellings, optimised for the British conditions;
• High-density thermal storage for individual dwellings;
• Home Energy Management Systems (HEMS) and sensors for residential applications;
• Building Energy Management Systems (BEMS) and sensorsfor non-domestic applications.

• The current state of development of the technology
• The key areas of technical development required
• Non-technical market constraints for each technology assessed at a high-leve
• The timescales and key milestones in these development pathways
• The level of investment required to achieve the technical developments identified
• The opportunities for the ETI to accelerate technology development and commercialisation
• Impact of technology development on performance and costs
• Role of the technologies under different electrification scenarios

• Energy governance and regulation frameworks – time for a change ? Keith MacLean, February 2016
• Enabling efficient future energy networks – what governance and regulation will be needed in 2030 ?. Robert Hull, February 2016
• Enabling efficient networks for low carbon futures. Jorge Vasconcelos, February 2016
• Markets, Policy and Regulation in a Low Carbon Future. John Rhys, January 2016

Policy goals to transition national energy systems to meet decarbonisation and security goals must contend with multiple overlapping uncertainties. These uncertainties are pervasive through the complex nature of the system, and exist in a strategic policy area where the impact of investment decisions have long term consequences. Uncertainty also lies in the tools and approaches used, increasing the challenges of informing robust decision making. Energy system studies in the UK have tended not to address uncertainty in a systematic manner, relying on simple scenario or sensitivity analysis. This paper utilises an innovative energy system model, ESME, which characterises multiple uncertainties via probability distributions and propagates these uncertainties to explore trade-offs in cost effective energy transition scenarios. A global sensitivity analysis is then undertaken to explore t

This meeting report summarises discussions at a conference UKERC co-hosted in March 2016 to identify future challenges in energy systems research.

• a description of the policy imperative which supports local area energy planning;
• an assessment of how this fits inwith energy planning already being undertaken by various local authorities and energy network operators across the UK;
• an explanation of the steps to be taken in adopting a whole system approach to local area energy planning outlining how local areas can follow an approach which reflects local circumstances to achieve decarbonisation goals, clean growth and other local drivers such as energy security and affordability, reflecting government advice.

This is the UKERC working paper.

This is the final report for the DTI and DEFRA on the development of a new UK MARKAL & MARKAL-Macro (M-M) energy systems model. The focus of this final report is on the extensive range of UK 60% CO2 abatement scenarios and sensitivity analysis run for analytical insights to underpin the 2007 Energy White Paper. This analysis was commissioned by the DTI to underpin the development of the 2007 UK Energy White Paper, and this technical report is a companion publication to the policy focused discussion of the modelling work (DTI, 2007).

This is the final report for the DTI and DEFRA on the development of a new UK MARKAL & MARKAL-Macro (M-M) energy systems model. The focus of this final report is on the extensive range of UK 60% CO2 abatement scenarios and sensitivity analysis run for analytical insights to underpin the 2007 Energy White Paper. This analysis was commissioned by the DTI to underpin the development of the 2007 UK Energy White Paper, and this technical report is a companion publication to the policy focused discussion of the modelling work (DTI, 2007).

This briefing note describes the amount of gas contained within Great Britain’s gas transmission and distribution networks, and how this changes over a day to support variations in demand. The hourly data covers the 63-month period from 2013-01-01 to 2018-03-07.

The amount of gas contained within the higher-pressure tiers of Britain’s gas transmission and distribution network is termed ‘linepack’; literally, it is the amount of gas packed into the pipelines.

Linepack is proportional to the pressure of the gas in the pipelines, increasing the pressure increases the amount of gas, and thus the energy contained therein. The amount of linepack changes throughout the day due to the varying levels of pipeline pressure. This flexing of pressure provides a method to help match the supply and demand for gas within a day.

The scale of energy that can be stored and released by varying linepack highlights its importance as a means of operational flexibility, helping to balance the changes in national primary energy demand.

The scale of the within-day flexibility currently provided by the natural gas transmission and distribution networks points to a formidable energy systems challenge; how to provide low-carbon within-day flexibility to future energy systems at a reasonable cost.

At present, Governments commitment stands in sharp contrast with its inaction on heat decarbonisation to date. Under pressure to progress this agenda, Government has charged the Clean Heat Directorate with the task of outlining the process for determining the UK’s long-term heat policy framework, to be published in the Roadmap for policy on heat decarbonisation in the summer of 2020 (BEIS, 2017). This report, resulting from one of six EPSRC-funded secondments, is designed to support early thinking on the roadmap by answering the research question: How can Transitions research informs the roadmap for governing the UKs heating transition?

Delivered as part of the Energy-PIECES project, this report was developed during a secondment with BEIS.

• Challenge 1 -System Design Architecture
• Challenge 2 -Civil Engineering CAPEX
• Challenge 3 -Pipes and Connections CAPEX
• Challenge 4 -Internal Connections CAPEX
• Challenge 5 -New Network Income

• The approach to solution development
• Solutions identified which address the challenges above
• The evaluation of solutions against the key criterion of DHN cost saving and the supporting qualitative and quantitative criteria
• The interaction of alternative solutions and how they can be applied to maximise the system level CAPEX saving
• The solutions selected for route mapping in Stage 3 and the selection rationale

• What do we use energy for...?
• An emissions reduction plan
• Priorities to 2030
• Heat - now and in the future
• Which system to pick...?
• Requires local area energy planning... Enabled by EnergyPathNetworks toolset
• SSH Programme Structure
• Where next in low carbon heating...

1. Construction of a set of socio-technical scenarios of air conditioning uptake,
2. Dynamic building simulation to estimate half hourly power consumption of air conditioning in archetypal single buildings,
3. Addition of air conditioning demand to existing prediction of 2050 national grid demand (National Grid Two Degrees 2050 scenario).

• Representative electricity transmission network model: Electricity networks modelled for 275kV and 400 kV network capacity
  • The increase in the costs is proportional to the increase in the network length for the same network capacity and installation date.
  • For the same installation date, NPV total per km is higher for the higher capacity network.
• Representative Electricity Distribution Model: Electricity network modelled in rural, semi-urban, urban and London context
  • The share of costs represented by each of the Assemblies changes slightly from 2020 to 2040, following the same trend in all contexts, except for London.
  • Residential connections represent one of the highest costs in all contexts.
  • The LV network makes a high contribution to total cost in the urban context while in London the LV substations make the highest contribution.
  • First costs per capita increase as the context changes from rural through to urban areas.
  • First costs per capita decrease slightly from urban to London contexts.
  • The NPVs per capita increase as the density increases.
  • One additional factor that influences costs in different contexts is their different lifecycle profiles.
• Generic upgrade costs at transmission scale: upgrading existing 275kV and 400kV lines to increase capacity by ~100%
  • For the same installation date, Capex NPV per km is higher for the installation of a higher voltage network.
  • Opex NPV per km is higher for higher voltages
• Rapid car charging: upgrading existing distribution networks to allow for connection of rapid car charging units
  • Costs for the upgrade of the distribution network are dominant in all variations and contexts.
  • For the same number of connection points at the same installation date the installation of rapid charge connections is more costly in the semi-urban context.
  • he first costs and NPV per connection fall as the number of connections increases, which indicates that it is more cost effective to install a group of charging points than isolated single charging points.
• Rapid car charging: impact of network reinforcement that could be required due to significant increase in electric vehicles in a residential context (semi-urban and urban)
• The analysis is based on the assumption that there is a 50% increase in peak load due to a significant increase in the use of EVs.
• The LV network represents the highest share of reinforcement costs in all contexts, with costs per capita being higher in urban areas than semi-urban areas.
• Storage v reinforcement: analysis to explore the costs of storage compared with conventional reinforcement in three different applications –increase in local demand; distributed energy exporting to grid; installation of rapid car charging units
  • The analysis suggests that considering current prices for electricity storage,l reinforcement is cheaper both in terms of Capex and Opex.
  • Car charging: local generation may improve the potential for storage if the existing OHL has limited potential to charge batteries during periods of low demand.
• Fault Current Limiter v Reinforcement
  • Conventional reinforcement is currently more cost effective than refurbishment of the substation with the installation of the FCL
• Power electronics: assessing the costs of using power electronics using STATCOMS for rural windfarms with utility scale battery storage
  • STATCOMs: the costs of the complementary utility scale battery dominate. 
  • The impact of the utility scale battery on the costs of the project increases at the later installation date
• Power electronics: assessing the costs of using power electronics using back-to-back HVDC connection for coupling DNO networks
  • The costs of the back-to-back converter dominate
• Cost comparison of up grading HVAC vs installing new HVDC at transmission level in rural areas–within an existing wayleave and in a new wayleave
  • One of the main differences between HVDC and HVAC is intransmission losses.
  • There is significant uncertainty with the planning consent process for installing new or refurbishing existing HVDC OHLs in the UK

• Firstly, questions around the configuration and cost of representative (or ‘generic’) networks applicable to particular situations.
• Secondly, questions around the potential impact of selected, identified innovations on specific types of network.

• Representative Gas Distribution Model: connecting networks to transport sitesat different capacities for different network lengths, in rural, semi-urban, urban and London contexts
  • Context is a strong influencer of costs, with costs increasing from rural through to urban and London. .
  • Pipe costs dominate the overall network cost, particularly for the longer network lengths.
  • Pipe capacity and hence size has some influence over cost at the longer network lengths where pipe costs are the most significant element.
  • Normalised costs (ie costs per km) fall with increasing network length.
• Generic decommissioning costs (transmission), 100km length at different capacities / pipe sizes, rural context
  • Decommissioning costs are of the order of £90k/km.
  • Decommissioning of the pipework comprises around 80%-85% of cost, with the remaining 15%-20% relating to decommissioning the conversion station.
  • Pipe size has a minimal impact on cost.
• Generic decommissioning costs (distribution)for different contexts and populations
  • Decommissioning costs range from around £250k/km in London down to £60k/km in rural areas.
  • The relative importance of the different Assemblies in terms of share of cost varies with context: decommissioning the LP network represents the largest share of cost in rural areas (60%) and decommissioning domestic connections represents the largest share of cost in London areas (58%)
• Generic operational costs associated withremaining part of apartially decommissioned network (distribution)
  • In each context, reduction in Opex with increasing decommissioning is linear.
  • Direct costs represent approximately 80% of the overall Opex for gas distribution infrastructure
  • Decommissioning (abandonment) costs make up a small share of overall cost
  • After partial decommissioning, NPV of the partially decommissioned network per connection served increases as the percentage of network decommissioned rises.
• Gas transmission network: repurposing to hydrogen for different network lengths in a rural context
  • Overall the innovation of repurposing existing natural gas transmission networks to carry hydrogen is roughly half the cost of abandoning those same networks and building hydrogen pipelines from scratch
• Gas transmission network: repurposing to carbon dioxide for single network length in rural
  • The task compared repurposing existing gas transmission pipelines to carry gas phase CO₂ compared with building new transmission pipelines to carry dense phase CO₂.
  • Although operational conditions of pressure and and semi-urban contexts were different, they maintain the same CO₂ capacity flow
  • Both first costs and NPV are higher for new build than for repurposing.
  • All costs are higher in a semi-urban context than a rural one
• Natural gas conversion: installation of Biomethane to Grid injection points with different network lengths and capacities in rural and urban contexts
  • The cost of installing Biomethane to Grid plant is higher in urban areas than in less dense rural ones
  • Normalised costs per km fall with increasing network length
  • Normalised costs per m³ gas decrease with increasing gas injection capacities

• Representative hydrogen transmission model: transmission pipeline of different lengths required to transport hydrogen from production facilities to power generation sites and vehicle refuelling sites
  • Pipe lengths (NTS 32") modelled for connection to production sites were 5km and 10km without the need for a compression station; pipe lengths (LTS 16") for connection to refuelling sites were modelled at longer distances up to 200km, with a compression station required for anything over 100km
  • NPV/km for connecting to power stations was £5.4m for installation in 2025
  • NPV/km for connections to refuelling sites was in the range £3.0m to £3.5m depending on network length with the higher cost relating to the need to add in a compression station
  • The additional cost of the power station scenario was due to the need to use larger diameter and hence more expensive pipe
• Representative hydrogen distribution model: distribution pipelines (LP/MP) required to connect production facilities to vehicle refuelling stations at different capacities and contexts
  • Context is a strong influencer of costs, with first costs per km increasing from rural through to urban and London. This is due to the higher costs of installing pipework in more congested areas.
  • Pipe costs dominate the overall network cost, particularly for the longer network lengths.
  • There is a small increase in cost per km for the higher capacity scenarios
• Hydrogen transmission and the impact of including storage:
  • Connecting a single large storage site into the network is considerably less expensive than connecting multiple storage sites of the same capacity
  • As the pipe lengths modelled were relatively short (5-10km) the storage costs dominated the overall project cost
  • Costs per mcm are considerably higher for the multi-storage option
  • The main benefit of the storage options is the storage itself and not the first cost savings associated with it.
• Hydrogen transmission network and the impact of pipeline material change: comparison of stainless steel 316L pipe with conventional steel using same pipe diameter (32" NTS)
  • First costs per km are higher for the stainless steel innovation
  • There is a slight reduction in cost/km for the longer stainless steel pipe lengths

Key findings:

• The majority of local authorities have ambitions for action on sustainable energy, and 82% of those researched are active to some degree
• Local authorities were more likely to have an Energy and Carbon Plan than investment in projects
• Local authority investment in energy was focused on infrastructures for combined heat and power alongside the improvement of energy efficiency in buildings
• Across the UK, Scotland had a higher proportion of leaders in providing low carbon systems - the leading local authorities in England were in Yorkshire and Humber, Greater London and the North East
• The scale of local authority energy projects in relation to overall energy systems remains limited
• Local authorities have very limited capacity for strategic energy management

This briefing draws out the key messages from the UKERC report The UK Energy System in 2050: comparing low-carbon resilient scenarios, – which describes and compares a series of model runs, implemented through the UK MARKAL modelling system, which was developed through UKERC with funding from the Research Councils’ Energy Programme. This has revealed some consistent patterns showing how the UK energy system might develop in future, which are discussed in detail in the full report.

1. The registered company information databases used in the tertiary sector demand calculations contain many records that are missing the number of employee data;
2. Conversions between employee numbers and building floor area can only currently be performed at large tertiary sector groupings. The contribution of demand uncertainty from the tertiary component could be projected and tracked in the resulting demand calculations.
3. The temporal resolution of the demand is good and the method, based on energy transporter load prediction techniques, seems able to predict the main trend and features of residential thermal demand

• The process for achieving the project’s key objectives
• Detailed performance criteria for the assessment of DE zone approach and UK benefits, at a minimum CO₂ reduction, security of energy supply and cost of delivery
• Baseline assessment assumptions, including the target end users

This report takes a whole systems approach to the development of the UK energy system over the next 40 years.

Achieving a resilient low-carbon energy system is technically and economically feasible at an affordable cost.

There are multiple potential pathways to a low-carbon economy. A key trade-off across the energy system is the speed of reduction in energy demand versus decarbonisation of energy supply. There is also a number of more specific trade-offs and uncertainties, such as the degree to which biomass, as opposed to electricity and perhaps hydrogen, is used in transport and other sectors.

Deploying new and improved technologies on the supply side will require substantially increased commitment to RD&D, the strengthening of financial incentives and the dismantling of regulatory and market barriers. A major increase in efforts to acceleratethedevelopment of

Mapping energy participation: a systematic review of diverse practices of participation in UK energy transitions 2010-2015. What does public participation in energy transitions look like at a relational 'whole systems' level?

UKERC co-hosted a meeting last month with DECC and ETI to seek input and feedback on plans for the 300 million in heat network capital expenditures announced in the government's Spending Review. Amber Sharick, UKERC Business Engagement Manager, and Jan Webb, UKERC Researcher & Professor of Sociology of Organisations, University of Edinburgh, report on the discussions.

• Energy system balancing is critical and extends beyond the electricity system
• Changes to the energy system are shifting the emphasis on how much and what type of flexibility measures are needed –future changes will only increase these shifts
• There are opportunities to utilise a variety of flexibility measures to deliver system operability, including:
  • Energy storage–Gas and hydrogen fuelling peaking plant to help balance electricity supply
  • Heat storage in homes allowing the load on electricity networks to be reduced at peak times
  • Gas as peak support for heat pumps
  • Managed charging of plug-in vehicles
  • Interconnectors
• The ETI’s Storage and Flexibility Model represents the role of storage and flexibility across multiple vectors, network levels, geographic regions and energy services through to 2050.

The paper investigates the importance of governance for energy system change and specifically investigates some of the areas where the UKs net zero target implies significant infrastructure change or expansion, namely in industry and associated with buildings and transport.

1. The UK can achieve an affordable transition to a low carbon energy system over the next 35 years. Our modelling shows abatement costs ranging from 1-2% of GDP by 2050, with potential to achieve the lower end of this range through effective planning
2. The UK must focus on developing and proving a basket of the most promising supply and demand technology options. Developing a basket of options (rather than a single system blueprint) will help to limit inevitable implementation risks
3. Key technology priorities for the UK energy system include: bioenergy, carbon capture and storage, new nuclear, offshore wind, gaseous systems, efficiency of vehicles and efficiency/heat provision for buildings
4. It is critical to focus resources in the next decade on preparing these options for wide-scale deployment. By the mid-2020s crucial decisions must be made regarding infrastructure design for the long-term
5. CCS and bioenergy are especially valuable. The most cost-effective system designs require zero or even “negative” emissions in sectors where decarbonisation is easiest, alleviating pressure in more difficult sectors
6. High levels of intermittent renewables in the power sector and large swings in energy demand can be accommodated at a cost, but this requires a systems level approach to storage technologies, including heat, hydrogen and natural gas in addition to electricity

This report is the first in the UKERC Energy 2050 project series. It focuses on a range of low carbon scenarios underpinned by energy systems analysis using the newly developed and updated UK MARKAL elastic demand (MED) model. Such modelling is designed to develop insights on a range of scenarios of future energy system evolution and the resultant technology pathways, sectoral trade-offs and economic implications. Long-term energy scenario-modelling analysis is characterised by deep uncertainty over a range of drivers including resources, technology development, behavioural change and policy mechanisms. Therefore, subsequent UKERC Energy 2050 reports focus on a broad scope of sensitivity analysis to investigate alternative scenarios of energy system evolution. In particularly, these alternative scenarios investigate different drivers of the UK’s energy supply and demand, and combine the twin goals of decarbonisation and energy system resilience. Future analysis includes the use of complementary macro-econometric and detailed sectoral energy models.

This report is the first in the UKERC Energy 2050 project series. It focuses on a range of low carbon scenarios underpinned by energy systems analysis using the newly developed and updated UK MARKAL elastic demand (MED) model. Such modelling is designed to develop insights on a range of scenarios of future energy system evolution and the resultant technology pathways, sectoral trade-offs and economic implications. Long-term energy scenario-modelling analysis is characterised by deep uncertainty over a range of drivers including resources, technology development, and behavioural change and policy mechanisms. Therefore, subsequent UKERC Energy 2050 reports focus on a broad scope of sensitivity analysis to investigate alternative scenarios of energy system evolution. In particularly, these alternative scenarios investigate different drivers of the UKs energy supply and demand, and combine the twin goals of decarbonisation and energy system resilience. Future analysis includes the use of complementary macro-econometric and detailed sectoral energy models.

With these challenges in mind this report uses UKERC research findings on local and regional energy system development to make recommendations for effective local planning to accelerate net zero energy systems.

• Introduction to ETI and ESME, ETI's modelling tool
• UK emissions reduction plan
• ETI's Nuclear Insights - Key Messages
• Conclusions

The 2006 Annual Energy Modelling Conference (AEMC) of the UK Energy Research Centre (UKERC) was held in Oxford UK from 5-7 December 2006. The conference theme was Quantifying Scenarios of a Low Carbon Society. The conference structure consisted of an open symposium with UK energy policy stakeholders followed by a technical modelling workshop. A particular emphasis was on developing country participation. A key output of the workshop was to define comparative modelling runs which will be a direct research output to the UK-Japan research project Developing Visions for a LowCarbon Society (LCS) through Sustainable Development.

Open Symposium

• Presentation and discussion of research regarding UK and international scenarios of low carbon societies (LCS) Closed expert workshop
• Technical discussion of state-of-the-art energy modelling
• Introduction to developing country energy modelling teams and capacities
• Definition of collaborative modelling run: to agree a set of scenarios each with common inputs for comparable runs of the various models

• Vehicle electrification
• Users and Vehicles
• Energy supply
• Project aims
• Project structure
• Modelling framework
• Narratives (scenarios)
• Stage 1 initial analysis
• Stage 1 research with consumers
• Stage 1 research with fleets
• Stage 2

• Substantial challenges associated with widespread roll-out of low carbon vehicles; shift from a “problem for the network” to an “opportunity through integration of vehicles as part of a wider system” can yield benefits for all actors in the system, including:
  • increased uptake of low-emission vehicles, managing charging and refuelling, and optimising the system design
• Analysis and solutions must be holistic (considering all parts of the system together, including users)
• Robust trials in Stage 2 will generate data to test solutions and inform analysis, and will add unique value:
• Trial with mass-market users (i.e. people from the majority of the vehicle user and fleet operator markets)
• Addressing widely-applicable plug-in vehicles (BEVsand PHEVs) suitable for wide range of users
• Holistic system design

The aim of this paper is to describe three multi-sectoral modelling techniques, and to show how these modelling approaches have been used to quantify the economic impact of renewable energy and energy efficiency developments.

The three techniques are Input-Output (IO), Computable General Equilibrium (CGE) and Macroeconometric studies. Each is firstly detailed in a separate section. In each section we describe the nature and operation of the technique, and identify different types and sub-types (where appropriate). We then consider the data requirements of these modelling approaches and finally discuss what might be considered the strengths and weaknesses of each approach. For each modelling approach we pay particular attention to the ways in which the employment effects are estimated, as employment is arguably the most tangible economic variable.

After sections on each of the three modelling techniques, we address some general questions about their applicability and validity of each approach for understanding the quantitative impacts of renewable energy and energy efficiency improvements.

The UK Energy Research Centre welcomes this opportunity to provide input to the Ofgem consultation Project Discovery: Options for delivering secure and sustainable energy supplies. The UKERC response addresses a number of the questions posed in the consultation document. The response has been prepared by Catherine Mitchell and Phil Baker from the University of Exeter and Robert Gross from ICEPT at Imperial College. It makes a number of high level and specific points but does not seek to be exhaustive. We refer the reader also to UKERCs submission to Ofgems previous consultation over Project Discovery, in which we make a number of observations about the various scenarios considered by Ofgem. These provide some important context for the comments provided below.

Substantive points are made on a chapter by chapter basis below, with higher level issues pulled out as app

This paper is the second in a series which aims to provide insights into the use of scenarios for informing low carbon energy policy. Building on insights from a historical overview of strategic scenario planning in the first working paper of the series (Hughes, 2009), this paper reviews selected recent UK and international low carbon energy scenarios, analyses their strengths and weaknesses, and offers some suggestions for improving the strategic power of future UK low carbon energy scenarios.

This paper adopts the broad characterisation proposed in Hughes (2009), that scenario thinking is the use of the imagination to consider possible alternative future situations, as they may evolve from the present, with a view to improving immediate and near-term decision making. The three key objectives of scenario thinking identified in Hughes (2009), improving protective decision making, improving proactive decision making, and consensus building, are also highlighted.

The paper notes that from the approaches and methodologies outlined in Hughes (2009), two approaches in particular have been strongly drawn upon in the construction of low carbon energy scenarios. The first is the derivation of broadly consistent future scenarios from 'high level trends', sometimes represented within a '2x2 matrix'. The second is the concept of 'backcasting' from a normatively constructed future end point. This observation informs a three-fold typology for reviewing the low carbon energy scenarios in this paper:

• Trend driven studies: developed around high level trends
• Technical feasibility studies: demonstrate technical feasibility of end points, sometimes 'backcasting' from them
• Modelling studies: complex quantitative models are used to generate results, often operating within exogenous emission constraints

1. The transition to net-zero will affect the whole economy. Investment and policy decisions by all government departmentmes need to be compatible with this transition.
2. Policies to support renewable electricity generation should be more ambitious, building on deployment and cost reduction successes. Action is also needed to ensure electricity market rules are fit for a fully decarbonised power sector.
3. Decisions by the energy regulator, Ofgem, should also be compatible with net-zero. This includes enabling investment in local electricity networks to facilitate heat and transport decarbonisation, and ensuring more active use of existing networks.
4. Local energy systems could play a significant role in achieving net-zero, particularly in the integration of electricity, heat and transport. More resources and greater powers for Local Authorities will help to ensure the potential for local action is realised.
5. A clear plan is required for upgrading the UK housing stock. A heat and energy efficiency White Paper must include policies for widespread deployment of low carbon heat (including demonstrating hydrogen at scale) and for prioritising low income households.
6. Whilst the decarbonisation of industry is receiving more attention, policy initiatives are not joined up. Funding for specific projects and industrial clusters should be complemented by market creation policies, including for carbon capture and storage.
7. Our analysis shows that achieving net-zero requires the phase out of fossil-fuelled vehicles to be brought forward to 2030. Immediate action is also required to counter the rapid increase in sales of larger cars (including SUVs).
8. Plans to meet net-zero should maximise environmental co-benefits. Potential negative impacts on ecosystems should be assessed and mitigated.
9. Continuing uncertainty about the UK’s changing relationship with the European Union has already affected decarbonisation plans. Whatever the outcome, close co-operation with the EU is likely to make it easier to achieve net-zero.
10. The transition to net-zero should not compromise energy security. In light of the events on August 9th, responsibilities for ensuring system resilience need to be clarified and applied in a more rigorous way.

In this issue of UKERCs annual Review of Energy Policy, we discuss some of the effects of COVID-19 on the energy system and how the unprecedented events of 2020 might impact energy use and climate policy in the future.

Focusing on electricity demand, transport, green jobs and skills, Brexit, heat, and societal engagement, the Review reflects on the past year and looks forward, highlighting key priorities for the Government.

Key recommendations

Electricity

The scale of investment in the power system required over the coming decade is huge. A big challenge is market design. We need a market that can incentivise investment in low carbon power and networks at least cost whilst also providing incentives for flexibility. Output from wind and solar farms will sometimes exceed demand and other timesfallto low levels. The right mix of flexible resources must be established to deal with variable output from renewables, with the right market signals and interventions in place to do this at least cost.

Mobility

The end of the sale of fossil fuel cars and vans by 2030 must be greeted with enthusiasm. Yet if this is to play its part in a Paris-compliant pathway to zero emissions, it must be one of many policy changes to decarbonise UK transport. Earlier action is paramount, and we recommend a market transformation approach targeting the highest emitting vehicles now, not just from 2030. Phasing-in of the phase-out will save millions of tons of CO2 thus reducing the need for radical action later on. The forthcoming Transport Decarbonisation Plan has a lot to deliver.

Green jobs and skills

COVID-19 recoverypackages offer the potential to combine job creation with emissions reduction. A national housing retrofit programme would be a triple win, creating jobs, reducing carbon emissions and make our homes more comfortable and affordable to heat. However, UKERC research finds that there are significant skills gaps associated with energy efficient buildings and low carbon heat. UKERC calls for a national programme of retraining and reskilling that takes advantage of the COVID downturn to re-equip building service professions with the skills needed for net zero.

Brexit

As the UK leaves the EU on the 1st January it will lose many of the advantages of integration. With new regimes for carbon pricing, trading, and interconnection yet to be agreed, there will be a high degree of uncertainty in the near to medium term. Given upward pressure on energy costs,delays to policy, and this uncertainty surrounding new rules, the overall effects of Brexit are not positive for UK energy decarbonisation.

Heat

UKERC research calls for action on heat to deliver the net zero technologies that we know work - insulating buildings and rolling out proven options. We need to end delay or speculation about less-proven options. Analysis is consistent with recent advice from the CCC that heat policy should focus on electrification whilst exploring options for hydrogen. We need to break the pattern of ad hoc and disjointed policy measures for heat and buildings, and develop a coherent, long-term strategy. This would be best achieved as an integral part of local and regional energy plans, involving local governments as coordinating agents. The aspirations for heat cant be realised unless we also take actionon the skills gap.

Societal engagement with energy

Achieving net zero in 2050 will entail significant changes to the way we live, what we eat and how we heat our homes. The COVID-19 pandemic has shown that when faced with a threat, society can change rapidly. Engaging society with the net zero transition also needs to change, it needs to be to be more ambitious, diverse, joined-up and system-wide, and recognise the many different ways that citizens engage with these issues on an ongoing basis.

With a focus on gas and the UK continental shelf, industrial decarbonisation, heat, mobility and the environment, we look at developments both at home and internationally and ask whether the UK is a leader in decarbonisation, and if the transition is being managed as well as it could be.

As we reach the end of 2018, the scorecard for UK energy policy is mixed. Optimists can point to rapid emissions reductions, cost falls in renewables and the centrality of clean energy within the Industrial Strategy. Ten years after the Climate Change Act was passed, UK greenhouse gas emissions have fallen by 43% from the level in 1990. The UK is on the way to meeting the first three carbon budgets, and a transformation of the power sector is well underway.

However, if we turn our attention from the rear view mirror, the outlook is more pessimistic. As the Committee on Climate Change pointed out in June, there are an increasing number of policy gaps and uncertainties. If not addressed promptly, meeting future carbon budgets will be much more challenging. For some of these gaps, there is a particularly clear and immediate economic case for action.

Key recommendations:

The government needs to take urgent action to ensure that the UK continues to meet statutory emissions reduction targets, and goes further to achieve net zero emissions. This not only requires new policies to fill looming gaps in the portfolio, it also requires much greater emphasis on sharing the benefits and costs of the low carbon transition more equitably. Our main recommendations are:

1. We repeat our call for a heat and energy efficiency White Paper, and recommend that the Industrial Strategy mission to reduce building energy use is extended to existing buildings.
2. A better, more targeted approach to the energy needs of low-income households is required. Energy efficiency investment for these households should be funded via general taxation.
3. Urgent large-scale trials of heat decarbonisation using hydrogen are required to understand whether it could be technically, economically and socially viable.
4. A dashboard of indicators is needed to monitor gas security during the energy transition. The current one dimensional approach is not sufficient.
5. Future electricity policy should build on the Electricity Market Reform policies that have worked well, and adapt them in the light of changes in technologies and costs.
6. Changes in incentives for ‘black start’ and other ancillary services are necessary to ensure that the electricity system remains resilient as it changes.
7. The target for phasing out conventionally fuelled vehicles is inadequate and does not fit with our emissions targets. The 2040 date should be brought forward and linked to accelerated investment in networks and charging.
8. The Industrial Strategy needs to be strongly linked to market creation policies for low carbon technologies. Carbon capture and storage is in particular need of such policies to progress beyond its current holding pattern.
9. To ensure widespread support for the energy transition, there needs to be more focus on equity and justice. The UK government should consider setting up a process similar to Scotland’s Just Transitions Commission to achieve this.
10. Continued vigilance is required to mitigate any negative impacts of Brexit, particularly those that could affect integration with European energy markets.

This review takes stock of UK energy policy ahead of the Autumn Statement, Industrial Strategy and new Emissions Reduction Plan. Its main recommendations are:

1. An integrated, evidence based approach to the new Industrial Strategy and Emissions Reductions Plan. The Industrial Strategy should set out clear priorities and the mechanisms for realising benefits for the UK
2. A new White Paper on Heat and Energy Efficiency
3. A Gas by Design approach to the future of gas that is compatible with carbon budgets and targets
4. A new approach to CCS commercialisation and deployment, in response to the Oxburgh report
5. An extension of the Levy Control Framework beyond 2020, and plans for auctions that include most large-scale electricity technologies and demand reduction in a single auction
6. Reform of the Capacity Mechanism so it gives equal

This report serves as a technical explanation of the MARKAL and MARKAL-Macro (M-M) model analysis, to be included in the 2007 Energy White Paper, of the long-term impacts and associated uncertainties of a 60% reduction in CO2 emissions by 2050. It is a companion report to the policy focused DTI report The MARKAL energy model in the 2007 Energy White Paper (DTI, 2007). Further policy focused MARKAL-Macro analysis, exploring alternate sensitivities and more stringent emission reduction targets is in Lockwood et al (2007) and DEFRA (2007).

‘Smart grid’ is a catch-all term for the smart options that could transform the ways society produces, delivers and consumes energy, and potentially the way we conceive of these services. Delivering energy more intelligently will be fundamental to decarbonising the UK electricity system at least possible cost, while maintaining security and reliability of supply.

Smarter energy delivery is expected to allow the integration of more low carbon technologies and to be much more cost effective than traditional methods, as well as contributing to economic growth by opening up new business and innovation opportunities. Innovating new options for energy system management could lead to cost savings of up to £10bn, even if low carbon technologies do not emerge1 . This saving will be much higher if UK renewable energy targets are achieved.

Building on extensive expert feedback and input, this report describes four smart grid scenarios which consider how the UK’s electricity system might develop to 2050. The scenarios outline how political decisions, as well as those made in regulation, finance, technology, consumer and social behaviour, market design or response, might affect the decisions of other actors and limit or allow the availability of future options. The project aims to explore the degree of uncertainty around the current direction of the electricity system and the complex interactions of a whole host of factors that may lead to any one of a wide range of outcomes. Our addition to this discussion will help decision makers to understand the implications of possible actions and better plan for the future, whilst recognising that it may take any one of a number of forms.

Smart grids are expected to play a central role in any transition to a low-carbon energy future, and much research is currently underway on practically every area of smart grids. However, it is evident that even basic aspects such as theoretical and operational definitions, are yet to be agreed upon and be clearly defined. Some aspects (efficient management of supply, including intermittent supply, two-way communication between the producer and user of electricity, use of IT technology to respond to and manage demand, and ensuring safe and secure electricity distribution) are more commonly accepted than others (such as smart meters) in defining what comprises a smart grid.

It is clear that smart grid developments enjoy political and financial support both at UK and EU levels, and from the majority of related industries. The reasons for this vary and include the hope that smart grids will facilitate the achievement of carbon reduction targets, create new employment opportunities, and reduce costs relevant to energy generation (fewer power stations) and distribution (fewer losses and better stability). However, smart grid development depends on additional factors, beyond the energy industry. These relate to issues of public acceptability of relevant technologies and associated risks (e.g. data safety, privacy, cyber security), pricing, competition, and regulation; implying the involvement of a wide range of players such as the industry, regulators and consumers.

The above constitute a complex set of variables and actors, and interactions between them. In order to best explore ways of possible deployment of smart grids, the use of scenarios is most adequate, as they can incorporate several parameters and variables into a coherent storyline. Scenarios have been previously used in the context of smart grids, but have traditionally focused on factors such as economic growth or policy evolution. Important additional socio-technical aspects of smart grids emerge from the literature review in this report and therefore need to be incorporated in our scenarios. These can be grouped into four (interlinked) main categories: supply side aspects, demand side aspects, policy and regulation, and technical aspects. A brief overview of each is provided.

UKERC welcomes the Scottish Government's energy and climate policy ambition, and applaud the valuable lead it is taking on energy. This has the potential to bring economic and social advantages - for example, the development of low carbon industrial capability with export potential and jobs, and improved air quality with associated health benefits. However, it is also important to ensure that the scale and pace of the transition minimises the additional costs for consumers. This can be achieved by supporting technological innovaiton that further reduces the costs of low carbon technologies and by maximising investments in energy efficiency.

UKERC have submitted a reponse to the Scottish GovernmentFinance and Constitution Committee's call for evidence on the Financial Memorandum that accompanies the Climate Change Bill.

This bill was introduced in May 2018 andamends the Climate Change (Scotland) Act 2009 to make provision for setting targets for the reduction of greenhouse gases emissions and to make provision about advice, plans and reports in relation to those targets.

• Decarbonising domestic energy is a very complex systems integration challenge
• Consumers have little interest in that complexity... ...they care about the experiences energy affords
• There are few actors today providing the integration to help people achieve the experiences they value
• Without such actors, policy makers are left with little choice to decarbonise but to subsidise components
• The big idea is turning energy retail into an experiential service, not billing for units of commodity consumed
• SSH is creating an ecosystem to help the energy sector make a customer-centric market really work
• We help innovators understand their customers, enabling them to design better products & services
• We help product and service innovators via integrated domestic energy system analysis
• We help product and service innovators develop and test new business models and technologies
• We help local area stakeholders decide on their spatial infrastructure planning to drive change
• We help all stakeholders position for the future ‘smart’ energy system via holistic architecture
• We help industry innovate in business models and processes via whole systems simulation

• Thermoregulation – deals with temperature changes in the environment and how the complex physiological system maintains body temperature
• Defining thermal comfort – review on the thermal environment people find comfortable and how age, gender, race and other factors affect the thermal comfort of the individuals
• Perception of thermal comfort and control – how people perceive thermal comfort and how much control they have to alter their comfort
• Different models of thermal comfort – Fanger’s Model and the Adaptive Model
• Conclusion on the findings

• Introduction to the ETI
• What is a Small Modular Reactor (SMR)?
• Benefits of deploying SMRs in the UK transition to a low carbon economy
• Understanding the steps towards potential deployment
• Update on Phase 1 of the UK SMR competition
• Conclusions

• Energy balancing is critical and extends beyond the electricity system
• Numerous opportunities to achieve balancing include:
  • Energy storage
  • Demand side flexibility
  • Vector integration
• Key decisions that lead to new energy systems will affect how much and what type of flexibility is needed.
• There is a huge amount of potential that we do not currently understand about balancing within a whole energy system.
• It is possible to assess the requirements for future flexibility - tools and evidence are being developed to help with this.

• Scenario analysis using the modelling framework and data developed during the project
• Identification and assessment of 3 case-study examples of private sector storage investment and potential generic policy options
• Wider qualitative assessment of risks/opportunities for storage deployment associated with the analysis undertaken
• The report will also describe how the scenarios have been constructed and describe the underlying model framework insofar as it is necessary to support the interpretation of its outputs.

This regular ETSAP workshop, held at St Annes College, Oxford, was preceded by a focused UKERC sponsored event which examined issues in modelling future energy technology costs and choice.

The ETSAP meeting was structured around the two main themes. The first was applications of the MARKAL / TIMES model variants in specific methodological and policy focused projects. The second was presentations detailing ongoing model development and improvement in this open-source collaboration in energy system analytical tools.

Two underlying developments were discussed throughout the two days. The first was the surge of interest in scenario quantification and modelling of the options for climate change mitigation policies arising from the G8 Gleneagles Summit. ETSAP is likely to be heavily involved in this process which includes the IEA preparing a new flagship publicationon Global Energy Technology Perspectives (GETP). The first annual GETP is to be published in March 2006, will explore the role energy technologies can play in shaping long term markets and will be closely tied to results from the global MARKAL model. The second was an ongoing aim to continue to interact with key developing countries and to enhance and to link with their energy modelling capacities. This has been done through ETSAP as a whole and through bilateral contacts and this process will continue to be strengthened.

In additional to the modelling insights this workshop offered an excellent opportunity for networking and relationship building between international modelling groups. This was facilitated by the conference dinner held at St Anthonys College, Oxford.

This report summarizes the key issues and outcomes from a Research Hotel on Energy Systems Modelling. This event, which included the MARKAL modelling teams of the USEPA and UKERC, together with additional external experts, was held at the Policy Studies Institute in London from February 6th to 10th, 2006.

• Role: If SMRs do what proponents claim, SMRs could play a significant role in the UK’s future energy system
• Requirements: SMRs will need to achieve a number of functional and economic energy systems requirements e.g. costs
• Heat: Heatprovision to District Heating networks could be a major benefit to the UK energy system and SMR plant economics
• Role of Government: Deployinga fleet of UK SMRs is likely to require Government co-ordination and intervention
• Backup slides
  • What energy services could SMRs offer?
  • Target vs estimate: Extra-flex
  • IRRs based on estimated CAPEX
  • Technical development assessment framework
  • Non-kWh services

• Objective, Scope and Team
• Introduction to SMRs
• UK energy system to 2050
• Technical work-stream
• Economic work-stream
• Conclusionsul>
• Opportunities
• Challenges
• Economics
• Next Steps

• SMR heat supply (CHP) is technically feasible and easy to implement
• CHP solutions can provide flexible heat and power independently
• CHP improves SMR economics –costs are modest; revenues large
• Different SMRdesign philosophies (module size & efficiency) make little difference to CHP cost or performance
• Many international examples of heat supply to DH networks from large power plants, including nuclear
• Plant cooling technologies that use very little water are technically feasible and could be retrofitted

One of the objectives of the research under the UKERC’s quantitative modelling effort is the review and development of models of energy use by the domestic sector. The aim of this paper is to describe version 3 of the Domestic Energy Sub-model, which models household energy use in the UK as a sub-model within the UK multisectoral dynamic model of the UK energy-environment-economy (E3) system maintained by Cambridge Econometrics MDM-E3. The paper does so by describing the structure of the model and development of different versions of the sub-model, with an outline of the appliances and thermal characteristics of domestic buildings included.

The paper then goes on to explain how households use thermal energy services and describes the characteristics of the buildings and appliances which are included in the model. Finally the paper describes the data collection methodology used to update the model’s dataset from 1995 to 2004 for version 3. Such a description allows the reader to see how the model is structured and how the results of the model are generated, based on the historical data.

A UKERC policy briefing considers some of the changes that are affecting energy systems and energy policies in the UK and the EU; and what the energy relationship between the UK and the EU might look like in future.

This briefing paper uses the example of a changing UK/Scottish government relationship after Brexit to demonstratehow to analyse the role of politics and policymaking in the transformation of energy systems.

Brexit will create a new division of policymaking responsibilities between EU, UK, and devolved governments.

In this paper we divide energy policy competences according to levels of government. Initially, it suggests that we cangenerate a clear picture of multi-level policymaking. However, the formal allocation of competences only tells a partialstory, because actual powers may operate differently from the strict legal picture. These blurry boundaries betweenresponsibilities may be further complicated by Brexit, even if it looks like the removal of a layer of government willsimplify matters.Instead of imagining clearlines of accountability, think of energy policy as part of a complex policymaking system in which the link between powers, practices, and outcomes is unclear and an energy system, in which government isonly one of many influences on outcomes.

Key findings

• Brexit could have a major impact on UK energy policymaking, but its likely effect remains unclear.
• We can predict major changes to formal policymaking responsibilities. There is less certainty of the policies that may
  arise from EU, UK, and devolved governments.
• The law is only one aspect of policy, and policy is only one influence on energy system outcomes.
• Systems thinking helps inform discussions of, for example, the impact of Brexit on the transition to a low carbon
  energy system.
• However, terms suchas energy systems will only be useful when researchers and practitioners clarify their meaning and identify the role of policy in their transition.

The study examines the macroeconomic rebound effect for the UK economy, arising from UK energy efficiency policies and programmes for 2000-2010. The work explores the relationships between energy efficiency, energy consumption, economic growth and policy interventions using a well-established and highly detailed macroeconomic model of the UK economy. The work has been carried out in response to a call from the UK Department for Environment, Food and Rural Affairs (Defra), with the support of Defra’s energy-efficiency policy team. As the focus of this study is to assess the magnitude of the macroeconomic rebound effect, the projections given in the report should not be taken as forecasts of future UK economic or environmental performance, e.g. the projections given here will differ from those in the 2006 Climate Change Programme.

Phase 1 of the UK Energy Research Centre (UKERC) facilitated the development of a state-of-the-art MARKAL model of the UK energy system. MARKAL is a well established linear optimisation, energy system model, developed by the Energy Technology Systems Analysis Programme (ETSAP) of the International Energy Agency (IEA) in the 1970s, and was until very recently used by it for its annual Energy Technology Perspectives (ETP) reports. It is also used by many other research teams round the world, and has been regularly updated and improved over the years through the ETSAP Implementing Agreement.

Towards the end of UKERCs Phase 1, in 2007-8, UK MARKAL was used for a major modelling exercise of different projections of the UK energy system to 2050, the results of which were published in Skea at al 2011. In the ensuing years, UK MARKAL was again used for major 2050-focused modelling projects: for the Committee on Climate Change (CCC) in 2010 (CCC 2010), for the Department of Energy and Climate Change (DECC) in 2011 (HMG 2011), and again for UKERC to update the Energy 2050 scenarios in 2012. This UKERC Research Report presents the main results of each of these modelling exercises, with a view to drawing out any key messages from the set as a whole.

Comparisons between such model runs, even of the same model, need to be drawn with care. Various assumptions, including cost and other data inputs to the model, were changed between the model runs, to reflect policy and other developments, and to incorporate new information. Some of the technology representations in the model were also improved. These changes have two implications for comparisons between such model runs. The first is that detailed conclusions about the cost-preferability of particular technologies, unless they emerge as clear favourites across the whole set of runs, are unlikely to be robust. This is because the cost uncertainties of possible developments in these technologies and their competitors over four decades are very great. Where, as will be seen in these cases, the costs between the major low-carbon technologies are, or may be, of the same orderof magnitude, then there are no strong grounds on the basis of these runs of preferring one over the others on cost grounds.

The second conclusion is more positive. Where consistent patterns of development of the energy system emerge across the different runs, despite the different inputs and the fact that the runs were carried out by different modellers and modelling teams, then more confidence may be placed in these patterns as likely features of the future UK energy system under the constraints applied, theprincipal constraint being reductions in greenhouse gas (GHG) emissions, or carbon dioxide (CO2) emissions in the case of the UK energy system, according to the provisions of the UK Climate Change Act of 2008. It is these consistent patterns that inform the main conclusions of this report, which are summarised here under a number of headings. The numbers on which these broad conclusions are based appear in the main report.

This study investigates how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy and industrial policy by comparing two types of energy-economy models.

Achieving the targets for reducing greenhouse gas emissions set out in the UK Climate Change Act will require a significant transformation in the UK's energy system.

At the same time, the government is pursuing a new UK Industrial Strategy, which aims to improve labour productivity, create high-quality jobs and boost exports across the UK.

The economic and the energy systems in the UK are tightly linked and so policies adopted in one area will produce spillover effects to the other.

To achieve the objectives set out in the two strategies it is therefore vital to understand how the policies in the energy system will affect economic development and vice versa.

Our study contributes to this by investigating how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy and industrial policy.

We address this question by systematically comparing the results of two types of energy-economy models of the UK, a computable general equilibrium model (CGE) and a macroeconometric (ME) model.

In both models we analyse a stimulus to demand from an increase in exports arising from a successful export strategy as motivated by the UK Industrial Strategy.

Main findings

The qualitative results of the export stimulus are similar across all models in that GDP and employment are always stimulated. In this sense, the results are reassuring for the UK's Industrial Strategy that emphasises export promotion.

However, the models also find that total energy use and CO₂ emissions increase, and so does the energy intensity and emissions intensity of GDP.

The increase in CO₂ emissions occur because the study identifies the energy and CO₂ impacts of an export shock with other things remaining unchanged. Therefore the models do not simultaneously incorporate the UK carbon budgets or policies to support energy efficiency and decarbonisation of energy supplies.

However, our analysis reveals the likely adjustment of energy and climate policies to counteract the increase in CO₂ and energy intensity that may result from export promotion. It therefore emphasises the need to complement UK industrial policies with appropriate action on energy use and carbon emissions to meet statutory carbon targets set by the Climate Change Act (2008).

The results highlight the interdependence of the energy and economic systems. They show that there are benefits to coordinating strategic initiatives aimed at stimulating economic activity with those aimed at tackling carbon emissions, as envisaged in the UK's Clean Growth Strategy.

This UKERC scoping note, written by University of Sussex's Emily Cox, Sarah Royston and Jan Selby, offers a review of existing academic research on the impact of non-energy policies on energy systems; and proposes a future research agenda on this topic.

• Introduction to the ETI
• Developing the role for nuclear in a UK transition
• What could be the role for SMRs in the UK energy system
• A credible plan for deployment of a UK SMR by 2030
• Cost competitiveness of nuclear as a low carbon technology
• Conclusions

• Introduction to the ETI
• A UK emissions reduction plan and the challenge of decarbonising heat
• Recent projects undertaken by the ETI related to UK nuclear deployment
• The role for nuclear including SMRs in the UK transition to a low carbon economy
• Enabling activities to support UK SMR deployment
• Requirements for advanced nuclear technologies
• Conclusions

This working paper is an update to our November 2021 briefing paper: Risk and investment in zero-carbon electricity markets.

This report examines the key uncertainties facing the UK’s planned low carbon transition, and identifies policies and strategies to mitigate or better understand them. It focuses on technical, economic, political and social uncertainties that could affect the achievement of agreed climate change targets between now and 2030.

The report shows that action can be taken to mitigate many of these uncertainties. In cases where it is not possible to significantly reduce them – at least in the short term – complementary strategies can be pursued. These include providing support for a diverse range of potential technologies and measures, and using trials and evaluations to identify those that are most effective. They also include making greater use of analytical tools that improve understanding of uncertainties and their potential impacts.

Bridging the gap between short-term forecasting and long-term scenario models, the UK Transport Carbon Model (UKTCM) is a strategic transport, energy, emissions and environmental impacts model, covering a range of transport-energy-environment issues from socio-economic and policy influences on energy demand reduction through to lifecycle carbon emissions and external costs.

Developed partly under the auspices of the UK Energy Research Centre (UKERC) the UKTCM can be used to develop transport policy scenarios that explore the full range of technological, fiscal, regulatory and behavioural change policy interventions to meet UK climate change and energy security goals.

The UK Energy Research Centre (UKERC) has provided research and analysis across the whole energy system since 2004, with funding provided by the Research Councils through a succession of five year phases. Research related to low carbon heat became a significant focus during Phase 3 (2014 2019) and the current Phase 4 includes a research theme devoted to decarbonisation of heating and cooling, with several of our other themes providing relevant insights. Our whole systems research programme addresses the challenges and opportunities presented by the transition to a net zero energy system and economy.

In this submission we address specific consultation questions where UKERC evidence and analysis provides us with relevant insights. In addition there are a number of high level observations that we provide in these introductory remarks.

Overall, we are concerned that the measures outlined in the consultation need to be set within a coherent and ambitious package of policies that work together to drive the UKs transformation to sustainable heating at a rate commensurate with the goal of net-zero by 2050. While we appreciate there are some uncertainties over the future role of the gas grid and the potential for hydrogen for heating, immediate progress in heat system decarbonisation is clearly required as part of this multi-decadal transformation. As the consultation notes, heat pumps offer a low regrets option in some applications and it is widely acknowledged that the UK has a small supplier base and very low level of heat pump deployment compared to many countries. Increasing consumer and installer familiarity, and growing the skills base and supply chain all feature strongly in the process of learning by doing that reduces heat pump costs. Ifheat pump deployment were to proceed linearly to 2050 in line with some scenarios for deployment, annual installations would need to increase by an order of magnitude. Whilst welcome, the current proposals are not sufficient to deliver a large scale market for heat pumps. Ambition and clarity of purpose are essential if heat system decarbonisation is to succeed. We also stress the importance of providing support to support the development of large low carbon heating systems, including systems attached to heat networks. We appreciate that the provisions laid out in the consultation pertain only to specific schemes and note the observations made in the consultation about support for heat networks.

Alongside the required policy changes necessary to support specific heating technologies, wider governance changes will be needed to drive the UK transformation to low carbon heating.Whilst regulation and other forms of financial support for building efficiency improvement are noted in the consultation, we note that it is likely to be important to use sticks as well as carrots if the highest carbon heating systems are to be removed and building efficiency increased. However, it will also be important to consider ownership and regulation of heat networks, the role of local authorities and opportunities for innovation that may be unlocked through regulatory change such as encouraging electricity suppliers to offer smart heating tariffs or enabling community ownership of heat distribution schemes.

While we appreciate these issues are beyond the scope of the current consultation, it is important that these considerations inform policy choices made now.

This UKERC Research Landscape provides an overview of the competencies and publicly funded activities inEnergy Systems Modelling research, development and demonstration (RD&D) in the UK. It covers the main funding streams, research providers, infrastructure, networks and UK participation in international activities.

UKERC ENERGY RESEARCH LANDSCAPE: ENERGY SYSTEMS MODELLING

• Section 1: An overview which includes a broad characterisation of research activity in the sector and the key research challenges
• Section 2: An assessment of UK capabilities in relation to wider international activities, in the context of market potential
• Section 3: Major funding streams and providers of basic research along with a brief commentary
• Section 4: Major funding streams and providers of applied research along with a brief commentary
• Section 5: Major funding streams for demonstration activity along with major projects and a brief commentary
• Section 6: Research infrastructure and other major research assets (e.g. databases, models)
• Section 7: Research networks, mainly in the UK, but also European networks not covered by the EU Framework Research and Technology Development (RTD) Programmes
• Section 8: UK participation in energy-related EU Framework Research and Technology Development (RTD) Programmes
• Section 9: UK participation in wider international initiatives, including those supported by the International Energy Agency

The UKERC Systems Theme has played an important role in the development of the UK’s capacity to think systematically about the future of the energy system. Key tools in this process have been the development of scenarios, and the development and use of the MARKAL energy system model. This project reflects on scenarios and on the use and communication of MARKAL, with a view to informing future UKERC work. Specifically, the project conducted retrospective analysis of pre-UKERC energy scenarios for the UK (published from 1977-2002), examined the scenarios produced by the UKERC systems theme, and studied the use and communication of the UK MARKAL model.

The diversity of scenario methods and approaches developed within UKERC is valuable, and should be fostered further. Too narrow a range of techniques and teams developing scenarios would risk constraining the ability of UKERC to open up thinking to a wide range of possibilities, perspectives and framings, which history suggests is important. UKERC scenarios have tended to be dominated by futures in which mitigation goals are met, and in which scenario differences are driven by policy or technology, though there are of course exceptions. As UKERC Phase 3 begins, there is a case for reflecting further on the range and type of uncertainties addressed within energy system scenarios, and the diversity of tools and techniques used to generate them.

A core tool of the UKERC systems theme has been the UK MARKAL model. The research undertaken for this project indicates that MARKAL has generally been used and communicated appropriately, in part because of good working relationships between government analysts and UKERC researchers. There are also areas in which there is room for improvement, and UKERC Phase 3 provides an opportunity to learn the lessons from previous experience.

The UK Energy Research Centre (UKERC) is in its fourth five-year phase of research and engagement activities, which will run until April 2024. In addition to the core programme of research, a number of mechanisms have been put in place to ensure that participation in UKERC is broad, flexible and addresses the needs of the wider UK research community.

A Flexible Fund of around £3m (valued at 80% FEC) has been set up in order to commission new research and facilitate the integration of the existing programme. The Fund is overseen by UKERC’s independent Research Committee. The key aims of the Fund are:

• To allow the research programme to develop flexibly in the light of new scientific insights or external developments, e.g. in energy policy;
• To bring a wider range of researchers and disciplines into UKERC’s research programme, including researchers from outside the ‘traditional’ energy community;
• To promote integration in the UKERC research programme, and to fill gaps where needed;
• To build collaborations between the UKERC research community and other research communities – including other energy researchers, groups and centres; and
• To scope and develop new research agendas in partnership with funders, the research community and other stakeholders.

This report presents the outputs of two key consultation activities on potential Flexible Fund topics :

• Section 2 of this report sets out the outcomes of a workshop held on the 12th February with attendees from across the UK research community. This presents the research areas and ideas that were the most popular in the voting exercise, the key issues that were discussed in each of the breakouts and a record of the full list of ideas in each breakout group, as well as the outcomes of the voting exercise.
• Section 3 presents the results of an online survey.

• There are extremely ambitious technology deployment rates (for example for CCGT, heat pumps and electric vehicles) within some scenarios that could be challenging in reality and should therefore be subjected to stress testing.
• In addition to the need for appropriate investment signals, analysis should address the incorporation of a very active demand side and if the current arrangements can handle large amounts of intermittent generation supplying an elastic demand side.
• UKERC recommends that Ofgem consider a stress test that examines the loss of Norwegian gas supplies.

Direct use of fossil fuels is the main source of space heating in the UK and this drives a major part of national greenhouse gas emissions. Climate stabilisation therefore implies a systemic change in approaches to space heating, involving some combination of radical efficiency improvement and low carbon fuels. The challenge in this area for the UK is made particularly difficult because of the combination of the legal commitment to an 80% reduction in emissions by 2050, an old building stock and a very high penetration of natural gas as a heating fuel.

This paper presents new quantified scenarios for residential energy use in the UK to 2050. These address both factors that are exogenous to the energy system, such as population, but also some systemically different approaches to delivering residential heat.

What might community energy in the UK look like in the long term ? What does it need for it to thrive ?

This report provides a summary of practitioner and stakeholder responses to these questions, and many more, that explore the future of community energy in the UK.

Through a series of workshops held across the UK over the winter of 2018-19, invited participants were encouraged to explore and debate the future of community energy.

We found that community energy actors feel they have lots to offer to, and gain from, the transition to a decentralised and flexible energy system. The system appears to be moving towards a future where there is a clear need for organisations that combine technical knowledge with the skills and trust to effectively engage citizens – such as community energy groups.

• Across all model runs, the average total costs were �7.23 billion. However, the Business as Usual scenario costs were �6.59 billion, suggesting that decarbonisation costs �0.66 billion. Business as usualwill see homes remain on gas boilers and continued significant investment in high carbon infrastructure.
• A 95% local carbon reduction target is achievable, providing some form of low carbon energy centres can be deployed, such as large-scale heat pumps.
• Meeting a 95% carbon target will require at least 82% of domestic properties to transition away from their current heating system. Across all model runs, on average, 97% of buildings changed heating systems.
• Building fabric retrofit could be a quick win in areas of Bridgend where fuel poverty is high.
• There is no one solution. Transition will require a mix of different technologies for different types
  of geography, buildings and people.
• Building level changes result in significant network changes, in terms of both electricity network
  upgrade and new build district heat.

• Consider local constraints on the siting of certain technologies and options resulting from EnergyPath Networks view of the least cost decarbonisation scenario.
• Were informed by a practical engineering review of barriers to low carbon technology deployment within specific local areas which examined the outputs of the analysis and project stakeholder group feedback.

• Planning
• Subsidy/Financial Support
• Market Structure, Liquidity and Pricing
• Energy Regulation

This document sets out the evidence base in support of a local energy strategy for Bury.

Key conclusions

• By 2050 Bury can reduce its building emissions by 98% from 1990 levels. A 95% reduction could be achieved by 2040.
• These carbon savings would not come easily.
• There are limited windows of opportunity to replace domestic heating systems.
• If Greater Manchester and Bury aim for a more ambitious carbon target of nearly zero carbon by 2050 then low carbon heating needs to accelerate. Heating systems need to become low carbon at the earliest opportunity
• For some areas and homes in Bury, if lower carbon gas is not available it is clear that electric heating is a cost effective way to decarbonise
• For other areas there is the potential to have a lower cost solution using district heating networks.
• There is significant uncertainty today in the future costs of both electric heating systems including heat pumps and heat networks.
• Decarbonising non-domestic buildings is necessary.
• Some non-domestics are modelled to use heat industrially and so are difficult to switch to a low carbon source.
• Local renewable energygeneration can play an important role.
• Meeting carbon targets will come at a cost.
• Most consumers are not currently familiar with the transitional technologies discussed in this report.
• Many consumers will value the sunk cost of their current heating system that is not at end of life – even if a new system would save them money overall.
• Even familiar technologies cannot be assumed to be easy to implement.
• Transitional technologies could help to tackle some of these consumer issues.
• The relative future costs of fuels, heating systems and fabric retrofit options closely influence which options are likely to be preferable.
• The level and cost of network new build and reinforcement and the opportunities for solar PV and battery storage are projected to be different depending on location, demonstrating why local area energy planning is needed to manage the process.
• Consideration will need to be given to how heat network costs are socialised across the local area.

We welcome the Welsh Government's interest in locally owned renewable energy. Our response draws on a range of research undertaken by the Heat and the City research group at the University of Edinburgh, including a UK-wide study of local authorities and energy; and on the Financing Community Energy research project being led by Tyndall Manchester.

In our response we made the following general comments, before responding to individual points raised in the call:

• We suggest that greater attention should be paid to city/town/settlement scale infrastructure for a low carbon energy system, including area based upgrading of the built environment and low carbon heating infrastructure. Heat and energy efficiency for a low energy building stock are crucial to meeting Welsh and UK Government legally binding targets for carbon abatement.
• At national scale, Wales has opportunities for sharing risk, costs and benefits of energy developments - i.e. the direct benefit to the citizens of Wales through public ownership and the aggregate costs across society of decarbonisation.
• Local Authority planning and ownership could be considered further as key components to securing greater local control and accountability, and achieving Welsh Government objectives. Our research indicates that further developing specific roles, powers, resources and responsibilities of local institutional actors in energy planning and ownership, especially Local Authorities would also add value to Welsh society and economy.

This workshop brought together researchers working within the International Energy Agency’s ETSAP network of MARKAL model users, together with a broad range of practitioners from the UK energy modelling community.

This opportunity for the two modelling communities to learn from each other’s work was enabled by the UK hosting the regular ETSAP semi-annual meeting which discussed modelling issues related to the MARKAL / TIMES family of energy models on subsequent days. One of the purposes of the UKERC Meeting Place is to develop networking and collaboration between UK energy researchers and also with the wider network of international energy practitioners.

The costs and characteristics of future energy technologies and how quickly they penetrate markets is a fundamental driver in the evolution of energy systems. Future technology cost is critical in assessing the costs of energy policies, ranging from economic competitiveness, environmental protection and emission mitigation, security of supply and equitable access to energy services. In response, a major ongoing effort by the energy modelling community has sought to better understand and incorporate this key driver of technological change into their energy models.

The scope of the workshop was to:

• highlight the approaches in a range of energy models to determining the future costs of existing technologies and the introduction of currently pre-commercial energy technologies;
• stimulate discussion on conflicting and complementary approaches to characterizing future energy technologies.

1. Energy is a large component of GDP, and fundamental change in our energy sector is required by the challenge of decarbonisation. This makes energy policy over the next decade vital to long term UK economic performance and productivity.
2. A key challenge for energy policy is to move towards a more coherent framework to incentivise emissions reductions across the economy. A stronger whole systems perspective should inform policy choices and the allocation of policy support or subsidies.
3. More policy attention will be needed in the decade ahead on the challenges of decarbonising energy for heat and transport.
4. Energy policy needs to support UK capability in deploying a portfolio of the key low carbon energy technologies that offer most potential value to UK decarbonisation. This portfolio includes carbon capture and storage (CCS), a range of bioenergy technologies (including advanced gasification), new nuclear (large and small modular reactors), gaseous systems (including hydrogen), low carbon vehicles and supporting infrastructure, energy efficient buildings and low carbon heat options (including heat networks) and offshore wind. Targeted policy interventions may be required to address specific market failures that currently inhibit the development of these technologies.
5. New governance and regulatory arrangements that go beyond current sector-specific frameworks should be considered to enable efficient investment in transforming energy infrastructures.
6. Addressing issues around the burden of high energy bills will depend on delivering improvements in home energy efficiency and control over energy use for consumers, as well as changes in retail energy pricing structures.

This document is the supplementary written evidence from Professor Pam Thomas, CEO at the Faraday Institution, submitted to the House of Lords Select Committee on Science and Technology following an inquiry evidence session on Tuesday 9 March 2021 for the 'Role of Batteries and Fuel Cells in Achieving Net Zero'.

Is the right strategy, funding and support in place to enable the research, innovation and commercialisation of battery technologies in the UK?
• If the UK is to play a significant role in battery manufacture and to decarbonise a range of industrial sectors, a larger and longer-term commitment in R&D of next generation energy storage technologies will be required.
• Funding for the FI's core research portfolio is currently maintained at £30m per annum.
• An additional £20m per annum (bringing the core funding to £50m pa) is deemed necessary to focus on new research problems that look beyond electrochemical aspects of battery research, for example, materials and systems engineering.