Blog: How important is gas in the UK energy system?

While renewable electricity is undoubtedly the ’goody’ in the battle against carbon emissions and climate change, gas is most often cast as the ‘baddy’; a fuel source that should be quickly decommissioned if we hope to achieve our net zero goals. But is it really that clear cut? The UK’s electricity system operator’s (ESO’s) 2024 Future Energy Scenarios report would suggest otherwise. In ‘Pathways to Net Zero’, the ESO defines three credible pathways to net zero by 2050, and gas plays a pivotal part in each of them.

While our reliance on natural gas must undoubtedly reduce if we are to decarbonise the energy system, modelling from the ESO tells us that abated natural gas and greener gases such as hydrogen will be critical to achieving net zero. Bioenergy with carbon capture and storage is also fundamental to each of the FES 2024 net zero pathways.

You can read more about FES 2024 in our blog. 

To understand why gas is going to remain important to our energy system long into the future, we must first ask ‘what does gas do for us today?’. This new series of blogs has been created by the decarbonisation experts here at Xoserve, and draws on the conversations we’ve had with others across the energy industry and academia. It explores the role of gas in industry, heat, and power generation, and aims to support balanced discussions about decarbonising energy; encouraging a whole-system approach to the net zero transition.

What does gas do in our energy system today?

1. Electricity generation

The relationship between gas and electricity is far more entwined than many people outside the energy industry realise. On an average day in Great Britain, around a third of all power generation comes from gas. While this has fallen significantly in recent times thanks to increased renewable capacity, we are still some way from being able to rely solely on renewable sources of power. And with many of the Government’s net zero plans relying on the electrification of heat and transport, the question becomes how to meet that increased demand quickly and cost effectively when gas is no longer a part of the fuel mix?

The obvious answer seems to be: by increasing renewable supply capacity. In theory, this is a perfect solution. It’s also in keeping with the UK’s net zero target that 100% of electricity be produced without carbon emissions by 2035. In practice, things may not be so straightforward. According to research conducted by the BBC in early 2023, green energy projects are experiencing delays of 10-15 years when applying for grid connections. With estimates suggesting we will need five times more solar and four times more wind to meet future demand, and our national electricity infrastructure in need of urgent upgrade to handle this kind of capacity, it’s clear that satisfying the UK’s future demand for electricity will quickly become impossible if gas is withdrawn too hastily.

2. System stability

The next natural consideration is system stability. In a world without gas-fired power generation, we’re not only left with an overall demand gap to fill; we also need to think more carefully about how we keep the system balanced every day. On some of those days, especially in the cold, dark days of winter, demand for electricity will be high but the wind may not be blowing and the sun may not be shining. On other days, wind and solar generation may far outstrip demand.

Today, we are able to turn to gas-fired generation on and off quickly and easily to help balance the grid, but if we want to become more reliant on renewable energy sources, the ability to store electricity becomes critical. Without it, maintaining system stability would become incredibly difficult and power outages may be a frequent feature of our daily lives.

Battery energy storage could go some way to addressing this potential problem. But once again, achieving the capacity we will realistically require within legally-binding net zero timescales is an issue yet to be meaningfully addressed by policymakers. The UK’s installed battery energy storage capacity currently stands at 4.7GW and has been forecasted to reach 24GW by the end of 2030. Combining this with other forms of electricity storage such as pumped hydro and liquid air could take storage capacity above and beyond the Government’s target of 30GW by 2030. Unfortunately, this may simply not be enough - and grid connection remains an obstacle to successful deployment of new storage projects.

3. Energy security

In a recent Decarb Discussions podcast, we spoke to Dr Grant Wilson, Associate Professor at Birmingham Energy Institute about the problems associated with relying on battery storage for system flexibility. He was keen to stress that alongside any considerations of how daily fluctuations in demand would be managed in the future, policymakers should also be prepared for extreme events.

Today, gas not only helps us to keep the grid stable as people move through their daily routines, it also provides seasonal backup and - crucially - provides a safety net when the unexpected happens.

An example is provided by the ‘Beast from the East’ weather event. On 1st March 2018, total energy demand rose from a seasonal daily average of around 1TW to close to 8TW. At the time, it was actually coal-fired generation that saved the day. The UK experienced a gas deficit caused by cold weather, spikes in demand and historically low levels of gas storage, exacerbated by the closure of the Rough site. With coal fired generation set to be phased out by 1st October 2024, the question becomes whether we would be able to maintain an uninterrupted and affordable supply of energy to homes and businesses when extreme events hit, if gas is no longer an option.

4. Domestic heat

It will come as no surprise to most people that 87% of UK homes are connected to the gas grid. We’ve relied on natural gas for home heating for a long time. Unfortunately, it means that around 25% of greenhouse gas emissions come from heat in buildings, according to the Government's Heat and Building Strategy. It makes domestic heat a key focus area for net zero policy makers and an important research and development area.

The Energy Savings Trust tells us that to reach our net zero target, we will need to cut heating emissions to 138 kg per household - a reduction of 95%. Heat pumps running on renewable electricity would provide a perfect response to this problem. Not only can they run efficiently on renewables, heat pumps could also be used for demand side response if widely adopted. With smart devices incorporated to adjust their electrical consumption up or down in response to supply and demand signals, they could provide valuable flexibility to our future grid.

Back in 2020, the UK Government's Ten-Point-Plan detailed an ambition to support the heat pump market to grow to 600,000 installations per year by 2028. The Energy Security Bill took this further by introducing a new Low-Carbon-Heat-Scheme which aims to make heat pumps a more affordable and attractive option for UK homeowners. Meanwhile, the Government-funded Electrification of Heat Demonstration Project found that an estimated 90% of UK homes are technically capable of being heated with a heat pump.

In sustainability terms, it all makes for very positive reading. Unfortunately, the truth is that the practical realities of heat pump installation may prevent uptake from reaching the levels required, within the timeframes required, for net zero ambitions to become reality. Heat pump adoption rates have been relatively slow so far. If they continue at this rate, heat pumps will only provide around 20% of global heating needs by 2030, and the UK trails far behind its EU counterparts.

One of the major obstacles to adoption seems to be cost; both installation and running costs are higher than for a new gas boiler. A further consideration is that heat pumps also only work well in well insulated homes, so while most homes are ‘technically capable’ of being heated with a heat pump, energy efficiency measures will need to be addressed first - another cost to cover.

The reality for many UK households is that while reportedly lower lifetime running costs of a heat pump may be an appealing prospect, getting over the hurdles of insulating their home and installing a heat pump to replace their gas boiler may pose too much of an immediate challenge. The current cost of living is likely to make heat pump installation less of a priority than the need to pay for housing, food and energy on a daily, weekly or monthly basis - and incentives to help with the cost of buying a heat pump are unlikely to cover the full cost of purchase and installation.

As discussed in our recent podcast with Matthew Cole of Fuel Bank Foundation, we risk leaving many vulnerable households behind on the journey to net zero if we transition away from gas too quickly. There are also a wide range of logistical, financial and practical issues which policymakers don’t seem to be taking into account or preparing for yet, despite having the decommissioning of the gas system firmly set in their sights.

5. Industrial heat

Decarbonising industrial heat is another essential element of reaching net zero, and one which arguably poses the greatest challenge. Industrial heat currently accounts for around 14% of UK carbon emissions, and progress towards net zero in this area is reported to be significantly off track.

Manufacturers use heat across many different processes; with the need to sustain high temperatures for prolonged periods often a critical characteristic of those processes. While heat pumps could potentially support decarbonisation of low grade heat up to temperatures of 150°C, electrification of high-grade heat (sometimes above 1000°C) is far more difficult.

Right now, the technology for electrification of high-grade heat simply doesn’t exist. Gas therefore plays - and will continue to play - a vital role in powering a broad range of industry sectors, including metals and minerals, chemicals, food and drink, paper and pulp, ceramics, glass, oil refineries and less energy-intensive manufacturing. Carbon capture, usage and storage (CCUS) is already proving to be a valuable tool in reducing emissions in these sectors, which contribute around £170 billion to the UK economy each year and provide 2.6 million jobs. But without significant and prolonged investment in green gas technologies it will become impossible to achieve the climate friendly, commercially successful industrial clusters that form the central vision of the Government’s 2021 Industrial Decarbonisation Strategy.

The whole system approach to energy

It’s clear there is still much to think about before the future of gas can be closely defined, but the conversation does seem to be slowly shifting and gas is no longer hiding in the shadows. The ESO, soon to become the National Energy System Operator (NESO), recommends a ‘whole system approach to decarbonisation of the energy system. Its report stresses the importance of cross-industry collaboration and recommends that our gas and electricity networks are integrated for the first time.

Xoserve strongly supports this strategy. We know that there will be complex obstacles to overcome, processes to overhaul and systems to update, but only by breaking down silos and working together can we achieve our net zero goals. We hope to support our customers through the transition, and will use our unique industry insights to help smooth the way forward, no matter which net zero pathway is taken.

In our next blog, we’ll take a look at some of the ways in which low carbon gases could be used as a substitute for natural gas, to complement the move to renewable sources of power…

Resources

https://www.theecoexperts.co.uk/blog/how-and-when-will-the-uk-replace-gas

https://greenallianceblog.org.uk/2023/08/02/the-uk-is-sleepwalking-into-a-big-problem-with-its-gas-network/

https://nic.org.uk/app/uploads/Arup-Future-of-UK-Gas-Networks-18-October-2023.pdf

https://www.carbonbrief.org/factcheck-why-banning-new-north-sea-oil-and-gas-is-not-a-just-stop-oil-plan/

https://www.theguardian.com/environment/2023/jul/11/new-north-sea-oil-and-gas-fields-will-not-meet-uks-energy-needs

https://assets.publishing.service.gov.uk/media/65393f4ae6c968000daa9b0e/ccc-annual-progress-report-2023-government-response.pdf

https://www.theccc.org.uk/publication/2023-progress-report-to-parliament/