ESO publishes new pathways to net zero

The Electricity System Operator (ESO) has this week launched the 2024 edition of the Future Energy Scenarios (FES) framework, a broad and deep analysis of the road to a net zero energy system. The framework sets out three pathways to decarbonise the energy system by 2050, alongside a counterfactual that doesn’t meet our carbon targets. The pathways have varying levels of electrification or hydrogen, and of flexibility in how end consumers use power.

You can read the main FES 2024 pathways report here.

The FES is a crucial resource and framework for energy industry planning. The Regen team, for example, uses it to inform the assumptions in the more ‘bottom-up’ Distribution Future Energy Scenarios (DFES) we carry out with distribution network operators (DNOs) to guide local network planning. We will be digesting the outcomes and assumptions in the new FES pathways in the weeks ahead – however, a few key headlines are starting to emerge.

A clearer ‘pathway’?

In a welcome move, the ESO has framed the FES as a move towards a set of narrower pathways (rather than broader scenarios), aiming to provide some clarity on the uptake of well-established technologies and solutions, while still reflecting ongoing uncertainties for how we are to decarbonise industries and homes.

For example, a central, shared pathway for electric private vehicle take-up (EV cars, motorbikes and LGVs) has now been modelled across the three net zero scenarios out to 2040. This reflects the increasing market share of EVs that can be seen across the UK.

Shifting from a world of broad scenarios to aid planning, towards a clearer central pathway that we invest for, with sensitivities, is an important step to delivering on our ambitious targets.

What about a new government?

So, where do Labour’s commitments fall within the FES envelope exactly? Our analysis shows that:

• The FES 2024 envelope doesn’t currently meet Labour’s 2030 capacity targets. The ESO has been clear that, due to the timing of the new Labour government, its 2030 clean power commitments haven’t been directly reflected in FES 2024.
• However, the Holistic Transition pathway (the new optimised net zero pathway) is only a few years behind on key technologies like offshore wind and solar. The lifting of planning restrictions for onshore wind is also expected to accelerate progress for this technology in England further than what is currently modelled.

Regen’s Accelerating Clean Power paper sets out the steps that the new Labour government can take to set out the future power system through actions on the grid, market reform, planning policy and ensuring a just transition to clean power. Our Progressive Market Reform for a Clean Power System paper sets out detailed proposals for how this can be enabled through a progressive market reform package that reduces investment and implementation risk.

The challenge of adapting industry planning to changing government policy is a useful reminder as we shift to a Strategic Spatial Energy Plan that any energy plan, pathway or scenario will need to evolve and adapt as circumstances change.

Technologies where FES has made significant changes

The new FES has also made some significant shifts in its assumptions on key technologies, in particular:

• The growing pipeline of electricity storage projects has been reflected in a significantly increased near-term projection of grid-scale storage in all pathways. If the proposed reforms to connection policy and queue management are implemented effectively, a number of projects could move through to build-out and connection in the next few years.
• The pace of heat pump adoption has been reduced, reflecting economic challenges and evolving policy support currently facing consumers. However, ESO has stressed the need to accelerate progress on the support for heat pumps, irrespective of pending government policy decision points on hydrogen for heating.
• There is an increased focus on the role of blue hydrogen to decarbonise ‘hard-to-electrify’ industry sectors. However, questions remain about the readiness and economic viability of CCUS technology and hydrogen storage at the scale required.

FES and the new National Energy System Operator

The FES report also highlights that as the National Energy System Operator (NESO) is established, its core objective as the strategic energy system planner will ensure that the FES pathways work in tandem with both the Centralised Strategic Network Plan and the Strategic Spatial Energy Plan processes. In addition to this, as the role, governance and day-to-day activities of the Regional Energy Strategic Planners are bottomed out across 2024, the FES pathways will need to continue to consider and adapt to regional outcomes and priorities for decarbonisation.

This joined-up approach will be essential to plan our energy system for net zero effectively. Regen will continue to work closely with distribution networks and the ESO to ensure that project pipelines, local stakeholder input and local area energy plans are continually reflected in our DFES analysis, and that a feedback loop between the annual FES pathways and DFES deep-dive assessments is maintained.

Regen will continue to delve into the detail of the FES 2024 pathways – in particular focusing on how the national pathway will play out in local places across the UK and how the assumptions fit with the bottom-up evidence from the market on what projects are being developed.

To find out more about our work in this space, please contact

Ray Arrell, associate director.

Grace Millman, senior energy analyst.