Flexibility Solutions for High-Renewable Energy Systems
United Kingdom
Executive summary
New forms of flexibility are key to an affordable, renewables-led power system. Without energy storage, smart-charging electric vehicles, demand response and interconnectors, the U.K. energy transition risks proceeding on a suboptimal path, with a power system reliant on fossil backup and oversized renewables capacity. This will come at a higher cost, and with higher emissions. This report, authored by BloombergNEF in partnership with Statkraft and Eaton, explores the newer possibilities for solving the power system flexibility challenge in the U.K.: energy storage, demand response, flexible electric vehicle charging and interconnections to Nordic hydro. (We are simultaneously publishing a similar report for Germany. Although both countries are on a path to higher renewable penetration, our analysis has led to different conclusions about the role of flexibility in each nation’s transition.) Building on BloombergNEF’s flagship forecast for the global electricity system, the New Energy Outlook (NEO), this report develops scenarios to explore alternative futures for the power system, depending on how each flexibility technology might develop in the coming years. It uses BNEF’s proprietary New Energy Outlook modelling tools, meaning that every scenario is, for the given assumptions, a least-cost optimal solution. Each scenario starts with different underlying assumptions about what each technology can provide, and/or at what cost. The report analyses seven scenarios (Figure 1). They are all variants of the NEO base case, which was published in June 2018 and contains some degree of demand response, flexible EV charging and a relatively large volume of batteries. The low-flex scenario considers the consequences if these technologies are substantially held back, whereas each of the other scenarios introduces or accelerates a single ‘new’ source of flexibility. The accelerating factors that we consider include a 2040 internal combustion engine ban, the increased popularity of flexible EV charging, faster battery cost declines, increased demand response uptake and the introduction of several interconnection lines to the Nordics and their substantial hydro resources.