The path to 2050: spending wisely on preparedness ?

Mr George Day, Energy Technologies Institute

Overview

The Energy Technologies Institute’s peer-reviewed model of the UK’s national energy system (the Energy System Modelling Environment or ‘ESME’), enables policy-neutral analysis of optimal energy system choices to meet the UK’s 2050 carbon targets.

The ETI has used insights from ESME analysis to underpin its strategy for investing in accelerating key low carbon technologies, as well as developing a broader characterisation of potential future overlapping phases in the UK’s low carbon transition.  The phasing emerging from the ETI’s analysis can be broadly summarised as consisting of:

•           An initial ‘preparedness’ phase up to the mid 2020s, characterised by investment in a process of developing and proving a portfolio of the most valuable technology options

•           A ‘decide and deploy’ phase from the mid 2020s running to the 2040s, where major  decisions about infrastructure and the energy system will need to be taken, alongside delivery of more substantial investment in the roll out of technologies to cut emissions  in power, heat and transport

•           A ‘next generation’ phase from the mid 2030s onwards where key low carbon technologies will need to be improved and optimised.

This paper will focus on identifying and assessing the costs of delivering the preparedness phase for the UK, during which major policy support will be required to support the early development and deployment of the key low carbon energy options.  The paper will explore and present approaches to estimating these ‘policy costs’ of delivering genuine preparedness by the mid 2020s.

Approach

ESME modelling of energy system transition scenarios will be used to underpin understanding of the technology options for the UK which can deliver greatest value (in terms of energy system cost savings) and resilience (in terms of robustness to alternative views of future energy system demands and costs).   The paper will then assemble estimates of the requirements and costs needed to develop the UK’s preparedness to deploy these key technologies.  These estimates will draw on a mixture of:

•           published sources (e.g. from cost reduction initiatives, estimates of first of a kind and ‘nth’ of a kind costs),

•           analysis from ETI technology programmes and modelling and

•           analysis of the market and policy constraints that will need to be addressed (e.g. the costs of subsidising early development of CCS or bioenergy options)

Findings and conclusions

The paper will present key learnings from the assembly of evidence and compare against the UK’s current pattern of policy support for the development of low carbon technologies (e.g. through the levy control framework).  The paper will draw out broad conclusions on the current mechanisms for allocating resources between technologies (e.g. through the electricity market reform delivery plan and other mechanisms), and identify potential approaches to rebalancing policy support for the ‘preparedness’ phase of UK decarbonisation.

References:

Various DECC documents including those covering the levy control framework, electricity market reform delivery plan,

ETI ESME modelling & ETI Technology Strategy

Keywords:

Energy policy, modelling, scenarios, low carbon technology.