Stakeholder Feedback Document. Future Energy Scenarios January 2018

Transcription

1 Stakeholder Feedback Document Future Energy Scenarios January 2018

2 Executive Summary Executive Summary Progressing our scenarios for 2018 Our stakeholders tell us that the Future Energy Scenarios (FES) are a leading contribution to the debate around the future of energy. The pace of economic, social, political and technological change is relentless. Each year we therefore review our scenarios to ensure they remain credible and fit for the various purposes of ourselves and our stakeholders. We have engaged widely with our stakeholders and, drawing also on our own experience and insight, have further enhanced our scenarios for There is broad support for progressive rather than radical change which allows some consistency with previous year s analysis: In FES 2018 we will have four scenarios, structured in a 2x2 matrix against the axes of speed of decarbonisation and level of decentralisation; Speed of decarbonisation combines policy, economics and consumer attitudes. All scenarios will show progress towards decarbonisation from today; Level of decentralisation indicates where on the energy system solutions are physically located, recognising this as an important variable in determining future energy pathways. All scenarios will show an increase in decentralised energy compared with today; Two of the scenarios will meet the 2050 carbon reduction target (instead of one in FES 2017), but via different routes, addressing one of the key challenges we had encountered when using the previous matrix and reflecting stakeholder feedback; As in previous years, security of supply for both gas and electricity is achieved across all four scenarios. Continuously enhancing our stakeholder engagement As the energy sector evolves at a rapid pace, so does our stakeholder base. We continually review our stakeholder groups and how we engage to ensure we capture the breadth and needs of our stakeholders. During 2017 we engaged with over 650 stakeholders from the UK and abroad, representing 430 organisations, which is an increase from 391 organisations in We improved our engagement in several ways. We introduced our Future of Energy newsletter to provide regular updates outside of the main FES engagement points. We also shared our emerging analysis and sought early feedback, including through online surveys. Our conference was live-streamed for the first time and we made material from our events available online and sought views from those unable to attend, to broaden the opportunities to be involved. Providing well-informed analysis and insights Through the FES process we gather a wide range of information, including stakeholder feedback, industry data, research and insights from subject matter experts. Stakeholders wanted to hear more of our thoughts and opinion on hot topics, which we have shared throughout the year and will continue to do so. In doing this, we draw on the wealth of information we gather as well as our own expertise, and inform our stakeholders and the energy market by providing wellinformed analysis and foresight. In 2017 the FES team attended or presented at over 80 industry events where we shared our work and actively contributed to the debate around the future of energy. We also enhanced the main FES document and FES in 5 summary to bring out more clearly the key insights and conclusions. Our Licence requirement National Grid s Electricity Transmission Licence Standard Condition (C11) requires the submission of our proposed Future Energy Scenarios and associated stakeholder 2 engagement to Ofgem by the end of January each year. This document is our submission.

3 Contents Contents Executive summary... 2 Foreword... 4 Chapter 1: Our Scenario Framework and scenarios for How we create the Scenario Framework... 5 Key themes from the Framework review... 6 New scenarios for The scenarios in detail... 7 Topic specific feedback... 9 Chapter 2: How we and our stakeholders use the scenarios Chapter 3: Our stakeholder engagement for FES How we engage with stakeholders to develop FES Our engagement and improvement activities during International engagement Chapter 4: Next steps & future improvements Chapter 5: Continuing the conversation Appendices Disclaimer

4 Foreword Foreword 2017 has been a busy year where we have seen the energy industry continue to change rapidly. It s been an exciting time with many network firsts from a day where we operated the system with zero coal power, to one where over half of Great Britain s energy demand was met by renewable generation. On the 11 th June we had a generation mix that briefly delivered a carbon dioxide level below 100g/kWh the UK s 2030 target was the greenest year so far and between June and September over 50% percent of our electricity generation was met by low carbon sources, compared to around 35% four years ago. Conversely, on a cold day in December we had 9GW of coal on the system and over half of the country s electricity supply coming from gas fired plant. On the gas side, 2017 was the first full year without Rough, the long range gas storage facility. We also saw the highest gas flows for four years through the BBL and IUK interconnectors at Bacton, reaching nearly 100 mcm/day on 12 th December. And the combined UK and Norwegian gas flow through St Fergus in the first two months of the year showed an increase of around 50% on Our engagement on FES continues to provide us with a broad range of views and feedback that we will take forward into our work for the 2018 scenarios. During 2017 we had a fantastic level of engagement and gathered very valuable feedback. We even found our material being used by a physics Nobel laureate in the US. I would like to thank all our stakeholders for their enthusiasm, time and input during our engagement throughout Your feedback has been a vital input into the creation of a new Scenario Framework and scenarios for This will be structured around the speed of decarbonisation and the level of decentralisation in the energy system, with two of our four scenarios meeting the 2050 carbon reduction target. We trust that this new Framework will ensure that our scenarios continue to provide credible and informative pathways for the energy industry and beyond. My team and I look forward to sharing the final FES 2018 with you in July. If you want to find out more about our ongoing FES work and have early sight of some of our results, please sign up to our newsletter, visit the FES website or contact the team by on: FES@Nationalgrid.com Marcus Stewart Head of Energy Insights I am once again proud to share the Stakeholder Feedback Document with you. This document is an integral part of our annual review and development process for FES. The document signals the approach we take to develop the 2018 scenarios and how we will integrate your feedback. It also provides a summary of our engagement with stakeholders over the past year, notes the key themes gathered from stakeholders feedback and puts forward our scenarios for

5 Chapter 1 Our Scenario Framework and scenarios for 2018 We use our Future Energy Scenarios to help us plan for an uncertain future. The political, economic, technological and consumer landscapes which drive our energy systems are changing at an unprecedented rate. Against this backdrop it would be unhelpful to forecast a single pathway for our energy future over the long term. Instead, we develop scenarios to help us explore a range of credible futures and to better understand the uncertainties facing the energy industry. It is important that we regularly check that our scenarios properly reflect our views of the future, and we strive to improve our process continually. As a result, this year we have changed the Scenario Framework to take into account recent developments in the energy world. How we create the Scenario Framework When we develop our scenarios we use a structured approach that we call the Scenario Framework, shown in Figure 1. This shows the stages in creating scenarios, starting with the Scenario Matrix, where we decide how many scenarios there will be, and how they will be differentiated at the highest level. There are then stages with increasing levels of detail, culminating in the Levers, which describe how we choose the inputs into our detailed models. Figure 1: Scenario Framework 5

6 Chapter 1 Key themes from the Framework review To test our thinking and gather views on the Scenario Framework review, we have engaged with a wide range of internal and external stakeholders at our stakeholder workshops, through an online survey and bilateral discussions. Their feedback has been very useful and wide ranging, reflecting our broad stakeholder mix, and some common key themes emerged, including: Continuing support for a structured approach which uses a framework approach and 2x2 matrix with four scenarios; Broad support for progressive rather than radical change which allows some consistency with previous year s analysis; The relationship between Green Ambition and Prosperity has changed; for example, the cost of some renewable technologies is reducing significantly; Agreement that an important variable in determining future energy pathways is the degree of decentralisation. With our stakeholders, we have defined this as meaning where on the energy system solutions are physically located, for example on the transmission network, or on the distribution network; Varied views as to how many scenarios should achieve the target of 80% reduction in carbon emissions from the 1990 level by The majority view was that there should be more than one pathway to 2050, but also that not all of the scenarios should meet the target. New scenarios for 2018 Taking account of the engagement feedback and our own analysis, we will have four scenarios structured in a 2x2 matrix against axes of speed of decarbonisation and level of decentralisation (see Figure 2 below). The speed of decarbonisation axis combines policy, economics and consumer attitudes. All scenarios will show progress towards decarbonisation from today, with the scenarios on the right of the matrix meeting the 2050 target. The level of decentralisation axis indicates whereabouts on the energy system solutions are physically located, moving up the axis from large scale central, to smaller scale local solutions. All scenarios will show an increase in decentralised energy compared with today. This approach allows two of the scenarios to meet the 2050 target, but via different routes, addressing one of the key challenges we had encountered when using the previous matrix and reflecting stakeholder feedback. Retaining four core scenarios and the 2x2 matrix retains some elements of the previous structure to aid comparison. As in previous years, security of supply for both gas and electricity will be achieved across all the scenarios. 6

7 Chapter 1 Figure 2: Our scenarios for FES 2018 The scenarios in detail We can give a general overview of our intent for the scenarios by considering the broad themes of power demand, transport, heat and energy supply. Community Renewables For this scenario we will explore how the 2050 decarbonisation target can be achieved through a more decentralised energy landscape. Power demand: With the drive towards decarbonisation, together with the high use of electric vehicles (EVs) and deployment of heat pumps, smart technology will be extensively used to manage peak electricity demand. Appliance efficiency will improve and we expect to see greater use of demand side response. Transport: EVs will be the most popular personal vehicle and we will explore home and destination charging for this scenario. For commercial vehicles, hydrogen is expected to become more prevalent as the fuel of choice to aid the decarbonisation target. Sharing of vehicles will also feature in this scenario. Heat: Homes will become more thermally efficient as we drive towards decarbonisation, and the landscape for heat in this scenario will be predominantly heat pumps supplemented by green gas with increased use of district heating. Power supply: In this decentralised and decarbonised landscape, there is a reliance on green generation. Onshore wind and solar, co-located with storage, will dominate and we will explore whether this pathway can achieve the 2050 target without Carbon Capture and Storage (CCS). Flexibility is provided by small scale storage, small gas fired plant and hydrogen production. Gas supply: Gas from the UK Continental Shelf (UKCS), Norway and Liquefied Natural Gas (LNG) remains important in the short and medium term. However, in this scenario where we explore achieving the 2050 target without CCS, green gas, predominantly located at the distribution network level will be most prevalent. Hydrogen in this scenario will be produced via electrolysis. Community Renewables is based on the Consumer Renewables sensitivity from FES

8 Chapter 1 Two Degrees This scenario explores how the decarbonisation target can be achieved in a less decentralised way. Power demand: We expect that this scenario will be similar to Community Renewables with the drive towards decarbonisation, together with the push towards electrification of heat and transport. Smart technology will be extensively utilised alongside greater demand side response to manage peak electricity demand. Appliance efficiency will improve significantly. Transport: EVs will be the personal vehicle of choice and we will consider the development of autonomous vehicles. We will explore the rollout potential of rapid charging networks. For commercial vehicles, hydrogen is expected to become more prevalent as the fuel of choice to achieve the decarbonisation target. Sharing of vehicles and increased use of public transport will also feature in this scenario. Heat: As with Community Renewables, homes will become more thermally efficient as we drive towards decarbonisation. However, the landscape for heat in this scenario will explore a mixture of gas boilers, hydrogen and heat pumps. Power supply: In this more centralised and decarbonised landscape, there is also a reliance on green generation. Generation based more on the transmission network will dominate such as offshore wind and nuclear together with CCS to allow flexibility to be provided by large scale gas plants, large scale storage and interconnectors. Gas supply: Gas from UKCS, Norway and LNG remains important in this scenario and we will explore the use of steam methane reforming to produce hydrogen. Some green gas will be available. This scenario builds on Two Degrees from FES Steady Progression This scenario will show a centralised pathway that makes progress towards, but does not meet the 2050 decarbonisation target. Power demand: With a slower drive to decarbonisation there are limited improvements in efficiency, and little electrification of heat. However, there will be significant adoption of EVs so smart technology will be important for managing peak demand. Transport: EVs and hydrogen fuel cell vehicles will dominate in this scenario. There will also be a role for natural gas powered vehicles, particularly in the commercial sector. EVs will be supported by a rapid charging network. Heat: Gas boilers will still be the heat source of choice for most residential properties. We will see limited use of heat pumps and decarbonisation of the heating sector will be slow. Power supply: In keeping with the centralised theme of this scenario there is greater emphasis on large scale generating technology rather than local generation. We will expect to see development of nuclear power as well as offshore wind. Gas will play an important role in providing flexibility. Gas supply: Gas will be provided from the UKCS, Norway and LNG, with additional supplies from shale gas. This scenario combines elements from Steady State and Slow Progression from FES

9 Chapter 1 Consumer Evolution This is a more decentralised scenario which makes progress towards the decarbonisation target but fails to achieve the 80% reduction by Power demand: We expect that in this scenario there will be a moderate rollout of smart charging to accommodate the achievement of the 2040 transport target for no further petrol or diesel cars. There are some improvements in energy efficiency with homes, business and communities focused and incentivised towards local generation, notably roof top solar, and local energy management. Appliances will have some efficiency improvements to assist with peak electricity management. Transport: Private ownership of personal vehicles remains popular with home and destination charging preferred in this scenario to support the uptake of EVs. The commercial vehicle sector makes some progress towards natural gas vehicles, but the internal combustion engine still dominates this sector. Heat: It is expected that there will be limited progress made towards the difficult area of decarbonising heat within this scenario. There will be some progress in the roll out of heat pumps and district heating, but the current heating technologies will still remain dominant. Power supply: In this decentralised world, generation is focused on smaller scale renewable solutions, with small scale gas and batteries providing the majority of the system flexibility. No new nuclear power stations are built after the delayed construction of the contracted plant. More local markets lead to lower levels of electricity interconnection. Gas supply: Gas from UKCS, Norway and LNG remains important in this scenario. However, we will explore the potential for shale gas within this scenario. This scenario will build on a blend of Consumer Power and Slow Progression from FES Topic specific feedback In our 2018 scenarios we will also take account of the topic specific feedback we have received from our stakeholders. A more detailed summary of this feedback, and our response to it, can be found in Appendix 1. At a high level, the following themes have emerged which will be considered in our analysis for FES 2018: Power demand & flexibility: Stakeholders commented that co-location of storage with renewable generation is going to carry on and we will continue to reflect this in our modelling. We will examine the potential for inter-seasonal storage, taking account of cost differentials between winter and summer. We will also review our modelling assumptions in respect of consumer engagement, reflecting on feedback that high consumer engagement levels are realistic only under certain circumstances (e.g. support through policy, infrastructure and financial incentives). Demand range: Stakeholders previously expressed a view that the range of electricity demand in our scenarios was not wide enough. We addressed this last year by developing sensitivities to extend the range of demand. The sensitivities from FES 2017, which encompassed a wide range of electricity demands, have been considered in developing our scenarios for 2018 which should ensure that the demand range in FES 2018 is broadened, where evidenced. Transport: We will model the uptake of automated vehicles in all sectors of road transport (not, just in the private car market as in FES 2017). We will also include a 9

10 Chapter 1 level of smart charging in all scenarios and review the roll out of natural gas vehicles in the various transport sectors to take account of recent developments in this area. Heat: Stakeholders generally agreed that decarbonisation of heat represents a major challenge and that there are different routes to pursuing this. We will develop our modelling for home energy efficiency and align it with heat pump deployment. We will also include hydrogen for heating in our modelling for the first time this year. Electricity supply: Responding to feedback regarding the impact of environmental regulation on small diesel generators, we will review the fuel split between gas and diesel when modelling the future growth of small scale peaking plant. Our electricity interconnectors modelling will, for the first time, incorporate different views of developments in Europe, based on scenarios already published for those individual countries. We will also review how we can continue to develop our modelling of electricity flows across interconnectors. Gas supply: Stakeholders expressed the view that we should look at the potential split of transmission and distribution connected shale gas. For FES 2018 we will review the split based on current available information. The detailed assumptions, driver levels and levers for FES 2018 will be developed further as this year s analysis proceeds and, as in previous years, will be published on our FES website alongside FES 2018 in July. 10

11 Chapter 2 How we and our stakeholders use the scenarios We use our scenarios as a foundation for a range of modelling activities. FES is the starting point for our regulated long-term investment and operability planning as well as a reference point for further analysis projects. As each subsequent process has its own specific requirements, further analysis is undertaken, building on the detail in the scenarios. In Figure 3 we summarise where FES was used within our business in Figure 3: How we use the FES Our stakeholders have told us how much they value FES, with more than one describing it as the industry bible, and others noting our scenarios as well thought out, invaluable and the work that everyone uses. Stakeholders have told us they use FES as a foundation for their own analysis, helping with their own forecasting and scenarios. It is also used by them for giving a market view to support investment decisions, as a benchmark to compare with other work, and as academic source material. 11

12 Chapter 3 Our stakeholder engagement for FES 2018 How we engage with stakeholders to develop FES The creation of our scenarios is an annual process that starts and ends with the publication of FES, usually in July. The process includes several stages, including stakeholder engagement, data and intelligence gathering, followed by high level scenario creation and detailed modelling and analysis. At each stage in the development process we apply our expertise and judgement to ensure we deliver plausible and credible scenarios. Our stakeholders play a vital role in the creation of FES and we engage with them and listen to their feedback and insight, both through specific engagement events and ongoing interaction throughout the year. Figure 4 shows the main stages in the FES process and engagement points during the year, in addition to the continual engagement with stakeholders through industry events, our newsletter, Thought Pieces, surveys, and other means. Figure 4: The FES development and engagement cycle Our engagement and improvement activities during 2017 As the GB energy market and landscape continue to change at a rapid pace, so does our stakeholder base, with new participants constantly joining our stakeholder community. We continually review who we engage with, and how we engage, to ensure that our engagement captures the breadth and needs of our stakeholders. 12

13 Chapter 3 During 2017 we have engaged with our stakeholders in a variety of ways. We made several improvements to our engagement, based on stakeholder feedback and our own insight. We set out planned improvements in our 2017 Stakeholder Feedback Document, and we have provided a review of how we have implemented those actions in Appendix 5 of this document. Through these enhancements to our engagement activities we have engaged with over 650 stakeholders during 2017, representing 430 organisations 1 (see Figure 5). This is an increase from 391 organisations in We have increased our engagement across most stakeholder groups 2 and we have also reached out to new stakeholders within those categories. For example, reflecting changes in the energy industry and beyond, we have increased our engagement with new players such as electricity storage and innovative renewable gas projects as well as the electric vehicle sector and car charging providers. A more detailed breakdown of who we have engaged with is provided in Appendix 4. Figure 5: Organisations engaged with during 2017 Sector No. of organisations Energy industry 187 Customers 77 Small businesses 13 Innovators 44 Supply chain 13 Educational interest 22 Investors 19 Political 15 Non-governmental organisations 21 Media 8 Communities and their representatives 6 Consumer groups 4 Regulators 1 TOTAL 430 Highlights from our engagement activities and associated improvements during 2017 included the following (these are set out further in Appendix 3): Following stakeholder feedback, we have introduced our Future of Energy newsletter to provide more regular communication outside of the main FES events. We published nine editions in 2017, reaching out to over 6,700 subscribers. We have made our engagement more responsive by sharing regular updates on our work and seeking early feedback on our analysis, for example, through our newsletter and online surveys throughout the year. This was something our stakeholders had suggested. 1 2 This comprises of attendance at the launch conference, webinars, workshops and bilateral meetings. In addition to this, we have engaged through the conference live stream, newsletter, FES account and other industry events. We have reviewed our stakeholder classification which has led to some movement between the categories when compared to Overall, engagement has increased across most groups. 13

14 Chapter 3 The FES team attended or presented at over 80 conferences, workshops and other industry events during 2017 where we shared our work and gathered information and insights from stakeholders, including from those that could not attend our engagement events. Stakeholders wanted to hear more of our views and opinion on hot topics, so we published seven articles during 2017 which so far have been viewed more than 10,000 times on our website. Our FES conference in July was attended by over 390 stakeholders, representing 278 organisations from across the energy industry and beyond. We held interactive breakout sessions and for the first time provided a live stream of the event which was followed by around 200 people. Over 200 stakeholders attended our workshops in Cardiff, Edinburgh, London and Warwick in October We made material from the events available on our website and sought views from those unable to attend through an online survey. Throughout 2017 we held bilateral meetings with 60 organisations, a significant increase from 2016 where we held 36 bilateral meetings. During 2017, we received over 500 queries from 169 organisations through our FES account, covering a wide range of topics. 91% of these were resolved within two days. The remaining queries were more complex and took slightly longer than two days. International engagement As part of the development of our scenarios we also engage with Transmission System Operators (TSO) and organisations in other countries. We share views on our current scenarios and ask for their input in developing the next set of our scenarios. Over the past year we have engaged with TSOs and offshore operators from Ireland, France, Denmark, the Netherlands, Italy and Norway. Looking further afield, we have also shared our expertise in developing scenarios with the electricity TSO from South Korea and our 2050 analysis with the Thai Ministry of Energy. 14

15 Chapter 4 Next steps & future improvements Following the publication of this Stakeholder Feedback Document, we will continue with our modelling and analysis to build the 2018 scenarios which will be published in July (see Figure 6). As we develop the scenarios, we will continue to share the emerging analysis with our stakeholders and keep them informed about what is changing from FES 2017 through our newsletters and the FES website. We will also use the newsletter to share our modelling insights, invite early feedback on our work and provide information about our forthcoming engagement events. We carried out stakeholder satisfaction surveys in 2017, which provided valuable feedback on what works well with our engagement and how it could be further enhanced. Based on this we have identified improvements to our engagement and communications which we will implement during These are captured in our Action Plan which can be found in Appendix 2. We will continue to seek feedback from stakeholders as we develop FES to further improve our communication, publications and engagement methods. If you have any thoughts or suggestions, we would be keen to hear them. Please contact us at: FES@Nationalgrid.com Figure 6: Timings of FES and key System Operator outputs 15

16 Chapter 5 Continuing the conversation As we develop FES 2018, we are keen to continue the conversation with you and enable our stakeholders to take part in the future of energy debate. You can do this in the following ways: Sign up to receive our newsletter to keep up to date with our latest news and developments, Thought Pieces and hear about our forthcoming events. Visit our FES website to access the FES publications, including the Stakeholder Feedback Document, newsletters, Thought Pieces and material from our engagement events. You can also visit the National Grid website for more information about other National Grid System Operator publications. Contact us by to ask questions, provide us with your comments and feedback on our publications and events or just to get in touch with one of our experts. Write to us at: Energy Insights National Grid National Grid House Warwick Technology Park Gallows Hill, Warwick CV34 6DA Meet the FES team: You can see who is in the FES team here Social Media: To take part in the debate on the future of energy, tweet on Twitter and join the Future of Energy by National Grid group on LinkedIn. Read our publications and updates via our National Grid UK Facebook page. 16

17 Appendices Appendix 1: Stakeholder Feedback for FES 2018: You Said We Will Appendix 2: Our Stakeholder Engagement Action Plan for Appendix 3: Our engagement and communication activities during Appendix 4: Breakdown of organisations and stakeholder groups engaged with during Appendix 5: Review of 2017 Stakeholder Feedback Document You Said - We Did

18 Appendices Appendix 1: Stakeholder Feedback for FES 2018: You Said We Will Below is a detailed look at the feedback we have received from our stakeholders during 2017 and the insights we have drawn from this for FES We discuss what we will do in response to the feedback or, where we will be taking a different approach, why. We have not listed every single piece of feedback received from our stakeholders but rather categorised the feedback into topics where several stakeholders have given similar comments. THEME You said We will We won t and why HEAT There is a requirement for ambitious home insulation policies and improvements. Home energy efficiency needs to precede any significant take up of heat pumps as the effectiveness of heat pumps is dependent on having well insulated buildings. Decarbonisation of heating needs to be considered on a regional basis. There is scepticism about the aggressiveness of heat pump rollout in the Two Degrees scenario Are there that many properties even suitable for heat pump installation? Given the development of hydrogen projects and government funding support for hydrogen, there should be an increased focus on hydrogen in the scenarios. We developed new modelling for home energy efficiency in FES 2017 and will take this further in FES This will allow us to model challenging efficiency improvements more accurately. We will continue to ensure home energy efficiency and heat pump assumptions and timeframes are aligned. We will reflect this in our modelling where appropriate for example hydrogen projects in the North West and North East of England. We will continue to review our modelling of the deployment of heat pumps. Our rates will be guided by our modelling of home energy efficiency and we will set out our assumptions in FES We included some hydrogen for transport in Two Degrees last year, and will take into account development of hydrogen for heating and include these in our scenario modelling in FES Some of our modelling will have a regional component, but much will still be carried out at national level, and results presented in FES will all be at national level. Other organisations such as gas and electricity distribution networks publish more regional information. 18

19 Appendices TRANSPORT POWER DEMAND AND FLEXIBILITY Recommendation that investment in energy efficiency improvements is often more linked to economic growth than green ambition for example Consumer Power is likely to see more residential thermal efficiency improvements than Steady State. There will be autonomous vehicles in all sectors, not just the private car market. Utilisation of these vehicles will be higher than single user nonautonomous vehicles. Smart charging and dynamic pricing of EVs is required to minimise investment in electricity distribution infrastructure. You need to consider a range of fuels for road transport, not just electric. There will be more Natural Gas Vehicles (NGV) on the road than the lowest scenario projection in FES It is useful to consider the impact of the nonbinding EU 2030 targets on energy efficiency in appliances. Co-location of storage with renewable generation is definitely going to continue to happen as it represents a saving on network costs. We recognise that there is more than one driver for efficiency improvements. In our new Scenario Framework the axes have changed. In our modelling energy efficiency improvements will be linked with the speed of decarbonisation which combines policy, economics and consumer attitudes. We will model the uptake of automated vehicles in all sectors of road transport, to a different extent in each scenario. In FES 2017 smart charging was only universally adopted in Two Degrees. In FES 2018 we will include a level of smart charging in all scenarios. In FES 2017 we included hydrogen and compressed natural gas for road transport. We will continue to evaluate a range of different fuel types in FES 2018 based on technology progress. We will review the likely roll out of NGVs in the various sectors, given the developments in the last year. The EU has indicated a desire to introduce binding targets to reduce energy consumption by 40%. In the absence of targets for individual member states, and uncertainty over future government policy we will review our approach for 2018, taking further research and stakeholder feedback into account. We will continue to model new storage as being co-located with renewable generation. 19

20 Appendices ELECTRICITY SUPPLY Seasonal storage is not feasible from a commercial market perspective due to the high costs. The level of consumer engagement depends on a number of factors such as policy, adoption of smart appliances, infrastructure and financial incentives. Some engagement and automation is already available and continues to evolve. However, high levels of engagement are realistic only under certain circumstances and this is something that needs to be considered. There is little interest in building new diesel reciprocating engines to meet electricity peak demand due to the Medium Combustion Plant Directive and extended Defra regulations. How do you capture developments in Europe when modelling electricity interconnectors? Electricity interconnector flows aren t just about peak. Variability of flows is becoming increasingly important. How is this represented in the analysis? We will continue to monitor advances in storage technology. We will examine the cost differentials between winter and summer to see if arbitrage costs are sufficient to justify interseasonal storage. We will review our modelling of consumer engagement and how it links to reduction in carbon emissions. We will only model a high level of consumer engagement in the scenarios that achieve the 2050 carbon reduction target which reflects the alignment of these factors within our compliant scenarios. We will review the fuel split between gas and diesel when modelling the future growth of small scale peaking plant. We will also update our view of when existing plant will close in line with the Speed of Decarbonisation axis. Developments in Europe will affect the delivery and operation of electricity interconnectors to GB. The analysis in FES 2017 was all based on a single view of Europe. In FES 2018, we will be incorporating different views of developments in Europe based on scenarios that have already been developed and published for those individual countries. In FES 2017 we were able to model electricity flows across interconnectors for the first time, including variability between days. We will review how we can continue to develop this analysis in FES

21 Appendices GAS SUPPLY Only currently consented new nuclear plant will get built. The cost implications of developing / deploying CCS at scale for energy production means that this technology is highly unlikely to become a reality. You should look at the potential split of Transmission and Distribution shale connections. We will review the split based on current available information. For all generating technologies we need to consider a range of possibilities in our different scenarios. The low case for each type might only include plant that is already consented, but we will also have higher levels of development in other scenarios, including plant that has not yet been given consent. We recognise that there is relatively little support for this technology at present. However, there is a possibility that with support and commitment for development, it could be made financially viable and so we will consider it as a potential technology for the future generation mix in some of our scenarios. 21

22 Appendices Appendix 2: Our FES Stakeholder Engagement Action Plan for 2018 We carried out stakeholder satisfaction surveys in 2017 after our conference and workshops which provided valuable feedback on what works well with our engagement and how it could be further enhanced (see Appendix 3). Based on this we have identified improvements to our engagement and communications which are captured below in our Action Plan for THEME You said We will General Engagement FES Publications FES Conference FES Website You would like greater notice of events and pre-read material. We need to ensure our stakeholder audience continues to reflect the changes in the energy sector. You would like to know when stakeholders have the opportunity to contribute to FES. You would like more opportunity to be involved in our engagement events with the chance to take part in debate and discuss areas of interest. You would like more detail and transparency regarding our assumptions and scenarios. You would like to know what has changed from the previous year s FES. You would like to see more regarding carbon trajectories. You would like more opportunities to meet the experts from the team to discuss specific issues. You provided mixed feedback regarding the afternoon of our conference with the sessions not being suitable for all delegates. You would like a meet the team page on our website and to be able to post your comments. We will provide as much notice as possible about our forthcoming events and we will continue to provide pre-read material for our engagement. We will continue to review our stakeholder list and look for new stakeholders to engage with as the energy sector changes to provide rich debate and analysis. We will provide a clearer explanation of our engagement cycle and how and when stakeholders can get involved, and share this regularly through our newsletter and online. We recognise that there is great interest in our events which are generally heavily oversubscribed. We will continue to ensure that a broad range of stakeholders have access to our events and we will continue to look at providing alternatives such as live streaming, webinars, sharing our event material and online surveys. For FES 2018 we will again publish our assumptions alongside the main FES document. We will enhance cross-referencing across the suite of FES documents (i.e. the main FES document, Scenario Framework, Modelling Methods and Charts Workbook). We will communicate to stakeholders what the changes are throughout the year using our newsletter, events and publications. We will consider how our analysis and outputs can provide more information regarding carbon trajectories in FES In planning our events, we will consider appropriate opportunities to meet the team. Our subject matter experts will also continue to answer queries through our FES account. We will review all the feedback received for the conference and look to make changes for the 2018 launch event. We will continue to review and update the FES website, and we will include a meet the team section and comment box. 22

23 Appendices Appendix 3: Our engagement and communication activities during 2017 Below is a more detailed summary of our engagement and communication activities as well as associated improvements that we made during We also include feedback gathered through stakeholder satisfaction surveys which were conducted after the July 2017 launch conference and after our October 2017 stakeholder workshops. FES 2017 Conference July 2017 Over 390 stakeholders attended our FES 2017 conference in London, representing 278 different organisations an increase from 247 organisations in We provided pre-read material to stakeholders in response to previous feedback. For the first time we live-streamed the conference and made the recording available on our website after the event for all stakeholders that could not attend. We made the event more interactive, e.g. we involved the audience, captured their questions and published a detailed Q&A document following the event on our website. Through breakout sessions in the afternoon we provided opportunities to meet our team and to facilitate more interaction with stakeholders, again responding to previous feedback. We shared the conference material on our FES website and through our newsletter. Stakeholders commented that, among other things, they: Liked: The mixture between interactive sessions and explanation; our technical staff being on the front line delivering presentations / discussing their work; that the FES team were helpful and happy to talk and answer questions; the conference being a very valuable thing for National Grid to be doing for the industry as a whole. Would like to see: Even more opportunities to speak to the team in the break out area; more thought being given to the breakout sessions; more information on the scenarios in the exhibition area. FES 2017 Webinars July 2017 Following the FES launch, we held five webinars, including an overview of FES 2017 and four topic specific sessions. These were attended by 110 stakeholders, representing 78 different organisations. We recorded the presentations and shared them with the slides via our website so that those who could not attend had access to the material. The webinar material has received more than 1,600 unique views on our website. Areas for improvement for 2018: We will consult with our stakeholders in 2018 to establish any improvements we can put in place to ensure the webinars deliver value to our stakeholders. Stakeholder Workshops October 2017 We held stakeholder workshops in four locations: Cardiff, Edinburgh, London and Warwick. The main purpose of these events was to obtain stakeholder feedback on the review of the Scenario Framework and to gather information and intelligence to inform the creation of the scenarios for We saw record levels of attendance, with a total of over 200 attending the four events, representing 159 different organisations this is up from 103 organisations in To give stakeholders that could not attend the events the opportunity to get involved, we shared material from the workshops through our newsletter on the FES website. We also 23

24 Appendices launched an online survey to capture their views and suggestions regarding the Scenario Framework. Stakeholders commented that, among other things, they: Liked: The wide range of stakeholders involved, with a good mix of people from different sectors; the format worked well and enabled debate and discussion; the inclusive set up and interactive nature; the opportunity to input into FES. Would like to see: More on how our modelling is done and the assumptions used; more advance notice of engagement events and more material to enable discussion; more opportunities to engage with our modelling teams. FES 2017 publications We created a more concise, accessible FES main document and updated its design, with more infographics and annotated graphs to increase accessibility and highlight key points. We included four sensitivities in FES 2017 to push the scenario envelope and to explore a broader range of possible futures in addition to the core scenarios. We also updated the design and contents of FES in 5 to make it more visual and accessible to those wanting a brief summary of FES. We introduced a new document giving details of our modelling methods. Stakeholders commented that, among other things, they: Liked: The range of issues considered and the level of detail provided; that FES documents convey complicated topics in simple terms and they are clear and easy to use; that the FES in 5 was a good summary and that the main FES was detailed and well-illustrated. Would like to see: More information on the likelihood of the scenarios; more on the social, economic and political framing of the scenarios; more transparency on how we arrived at assumptions for each scenario; more scenarios meeting the 2050 target in different ways. Communication by the FES team In 2017 we introduced our newsletter in response to feedback from stakeholders who wanted more regular communications from the FES team. We published nine editions in 2017, reaching out to over 6,700 subscribers. In order to share our views and to encourage debate across the industry and beyond, we published seven Thought Pieces covering topics from electric vehicle charging to seasonal gas supply. These have been viewed more than 10,000 times altogether on our website. Through our newsletter we launched nine surveys to gather feedback and thoughts on various subjects. This was part of our initiative to engage stakeholders throughout the year, seek early feedback on our emerging thinking and analysis, and give those that could not attend our events the opportunity to get involved in the FES process. We made changes to our website to make it easier for stakeholders to download the FES document, responding to previous feedback. Our website received almost 60,000 unique page views between February 2017 and January During 2017, we received over 500 queries from 169 organisations through our FES account, covering a wide range of topics. 91% of these were resolved within 2 days. The remaining queries were more complex and took slightly longer than 2 days. Stakeholders commented that, among other things, they: Liked: That we are proactive in how we communicate; that we provide information in a timely manner; that we are happy to talk and answer questions; that we constantly encourage our stakeholders to engage with us; and that we are listening to stakeholders views. Would like to see: More documentation of modelling assumptions; better communication to address media misinterpretation of FES; advance communication before event registration. 24

25 Appendices Appendix 4: Breakdown of organisations and stakeholder groups engaged with during 2017 Below is a detailed breakdown of the organisations and stakeholder groups that attended our main engagement events during Event FES 2017 Launch Conference London Event FES 2017 Webinars When Total no. of organisations 13 th July When Total no. of organisations July Stakeholder group breakdown Energy industry Customers Small businesses Innovators Supply chain Educational interest Investors Political Non-governmental organisations Media Communities and their representatives Consumer groups Regulators Stakeholder group breakdown Energy industry Customers Small businesses Innovators Supply chain Educational interest Investors Political Media Communities and their representatives Regulators Event Stakeholder workshops: Cardiff, Edinburgh, London, Warwick Event Bilateral meetings: various locations When Total no. of organisations October When From February 2017 to January 2018 Total no. of organisations 60 Stakeholder group breakdown Energy industry Customers Innovators Supply chain Educational interest Investors Political Non-governmental organisations Communities and their representatives Consumer groups Regulators Stakeholder group breakdown Energy industry Customers Innovators Supply chain Political Non-governmental organisations Communities and their representatives Regulators

26 Appendices Below is the breakdown of the classification for each stakeholder group. Stakeholder Group Energy industry Customers Small businesses Innovators Supply chain Educational interest Investors Political Non-Governmental organisations Media Communities and their representatives Consumer groups Regulators Breakdown Balancing Service providers European Networks European TSO Industry bodies Offshore Gas Companies Offshore Transmission Owners Operating Margin Providers Gas and Electricity Transmission Companies Small Generators Small Renewables Connections Customers Distribution Network Operators Energy Suppliers Generators Interconnectors Shippers Terminal Operators Transmission directly connected demand Independents/ Individuals Local Community Businesses Environmentalists Manufacturers Technologists Partners Suppliers Academics Schools and Universities Banking Investors Shareholders Devolved Administrations European Administration Members of European Parliament Members of Parliament UK Government Bodies Environmental Groups Interested Groups Newspapers and Magazines Social Media and Discussion Forums Television and Radio Impacted Local Communities and Residents Local Authorities/Parish Councils Local Campaign Groups Consumer groups Regulatory bodies 26