Blog: Future Energy Scenarios 2024

The intention behind the new FES report is one we should all subscribe to. It’s a call for decisive action on net zero, and for the policy and investment that will help to deliver a ‘fair, affordable, sustainable and secure clean energy system by 2025’.

Like the ESO, Xoserve sits at the centre of the energy industry. And like them, we recognise that getting to net zero will require a complete transformation of our industry as well as national infrastructure. It’s an incredibly complex challenge. Only by breaking down silos, opening up conversations and working in close collaboration with the Government, Ofgem, stakeholders and customers will we be able to get where we need to be.

In FES 2024, the ESO emphasises the need for a holistic approach to planning and facilitating energy system decarbonisation. It calls for the integration of gas and electricity networks, representing a fundamental change to the status quo, and for the optimisation of markets across vectors.

Xoserve strongly supports change in each of these areas. It’s time to recognise that there is no one perfect fuel or ideal technology and that achieving net zero goals will depend on getting the mix right. We would like to lend our voice to the argument for a ‘whole system’ approach and to increase the value we can deliver, by providing data and our unique insights from the gas industry to help make energy system integration a reality.

The three new, net zero pathways

While previous FES frameworks explored a wide range of net zero outcomes; based on supply and demand forecasts, alongside influencing factors such as societal change and the speed of decarbonisation, FES2024 replaces these reactive scenarios with proactive pathways. ESO stresses that a level of uncertainty necessarily exists, but that it wants the pathways to provide realistic, strategic routes to reach net zero by 2050.

Crucially, the new pathways consider network constraints and acknowledge that interaction between networks and whole system optimization, will be key to finding the most fundamental future energy system. Let’s take a look at each pathway and consider what they may mean for the gas industry.

1 – Holistic Transition

The Holistic Transition pathway would get us to net zero through a mix of electrification and hydrogen, with hydrogen mainly around industrial clusters. Almost all remaining gas used for power and hydrogen production would be abated through carbon capture and storage (CCS).

To reach net zero on this pathway, we would be aiming for electricity and hydrogen to work together to supply 60% and 19% of the 2050 energy demand respectively. Wind and solar uptake would be high, and nuclear energy will also have a role to play. Early deployment of bioenergy with CCS (BECCS) as well as direct air carbon capture (DAC) is crucial to securing the required negative emissions of 51MtCO2. Both consumer engagement and supply side flexibility will need to be high.

2 – Electric Engagement

The Electric Engagement pathway would get us to net zero mainly through electrified demand. We would need 66% of overall energy demand to be met by electricity. Once again, hydrogen would be a central requirement of the pathway; providing 19% of the overall energy needed to fuel industry, aviation and shipping.

On the Electric Engagement pathway, a high nuclear capacity would be needed alongside renewables. Once again early deployment of BECCS and DAC play a key role but this time demand side flexibility and consumer engagement really step into the spotlight, with electric vehicles, heat pumps and smart technologies helping to reduce demand.

3 – Hydrogen Evolution

On the Hydrogen Evolution pathway, hydrogen would supply 30% of overall energy demand in 2050. This pathway relies on fast progress for hydrogen technology in industry and heat. There would also be the expectation that consumers will switch to hydrogen boilers, although energy efficiency in homes and businesses will be key to reducing demand. Overall, consumer engagement is low although electric vehicle uptake is strong.

Unlike the other pathways, this one requires a high level of hydrogen dispatchable power plants, reducing the need for renewable and nuclear capacity. Reliance on natural gas for power and hydrogen production would be higher than the other pathways, although this would be abated. BECCS will once again play an important part.

All three FES 2024 pathways have several things in common. Most importantly, they all achieve a decarbonised energy sector by 2035. In each pathway, the power sector achieves negative carbon emissions through the use of BECCS, offsetting hard to abate emissions from elsewhere in the economy. Each pathway also sees a reduction in demand for residential heating due to improved insulation of households. All three FES pathways also require a dramatic reduction in the use of unabated natural gas after 2035.

It is this reduction in the use of unabated natural gas that is missing from the ‘Counterfactual’; a scenario included in the new FES report in which decarbonisation efforts fall short and net zero goals are missed. In the Counterfactual, decarbonisation opportunities that exist from storage and flexibility are never fully realised, renewable capacity is much lower, hydrogen use is limited and both space heating and power generation continue to depend heavily on natural gas. The Sixth Carbon Budget is also missed by a significant margin.

The outcomes depicted in the Counterfactual provide a stark contrast to the positive and ambitious net zero pathways, underlining once more the need for decisive action on energy decarbonisation.

Key actions for a net zero future

The FES2024 defines eight key actions which must be taken, regardless of which pathway is followed. Xoserve believes that all are equally important, but that one stands out as requiring immediate focus from policymakers and industry stakeholders.

Action 2: Deliver market reform, considering electricity, gas, hydrogen and CO2, to ensure we have energy markets that provide for and work with a reliable and strategically planned energy system.

Why is this action point so important? Today fossil fuels make up 79% of total energy supply. To achieve net zero, our reliance on natural gas must be reduced and Xoserve wants to help the gas industry prepare for its low carbon future. We know that this will only be possible with the right market mechanisms in place.

Whichever net zero pathway proves to be the best way forward, one thing is certain: gas will continue to play an important role in our energy system during the net zero transition - and far beyond.

Each of the pathways in the FES 2024 report recognises that abated natural gas and greener gases including biogas and hydrogen will be crucial for hard-to-electrify applications long into the future. The most important thing we can do to accelerate progress and ensure energy security and sustainability is to refocus the conversation to include gas more fully, and recognise the need for cross-industry collaboration. Whole system thinking is the only way we will reach net zero.

Get in touch

To learn more about how Xoserve supports the decarbonisation of gas, take a look at our decarbonisation knowledge centre.

If you have any feedback, questions or suggestions for our Decarbonisation Team, please email us.

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