I am pleased to announce the latest steps the Government are taking to decarbonise our electricity system, to meet our net zero target by 2050, delivering on commitments made in the Energy White Paper.
First, the Government have today published a new smart systems and flexibility plan, jointly with Ofgem. Technologies such as energy storage, interconnection and smart charging of electric vehicles are essential to balance supply and demand as we deploy more intermittent renewables to power our buildings and vehicles. Flexibility reduces the amount of generation and network we need to build, and costs for energy consumers—flexibility could reduce the cost of the system by up to £10 billion by 2050. It is critical for energy security as we shift away from unabated gas over the next decade. System flexibility is therefore fundamental in reducing emissions to net zero by 2050.
The transition to a smarter and more flexible energy system is also an opportunity. It will be delivered by UK businesses and will benefit consumers across the country. It will create nationwide jobs, potentially 24,000 by 2050, and drive investment across the UK. The UK is a global leader in smart systems and there is significant export potential—which could contribute as much as £2.7 billion per year to the UK economy by 2050—for the solutions that we will need to deploy at home. As nations confront the challenge of climate change, markets for new green products and services will spring up around the world. Taking action now will help position UK companies and our world-class research base to seize the business opportunities which will flow from it, creating jobs and wealth for our country.
The new smart systems and flexibility plan sets out how we will drive flexibility across the system, including a vision, analysis and suite of actions, focusing on:
Facilitating flexibility from consumers
Removing barriers to flexibility on the grid
Developing markets for flexibility, and
Improving monitoring of flexibility.
Secondly, the Government have published the UK’s first energy digitalisation strategy, jointly with Ofgem and Innovate UK. Energy system digitalisation is essential to enabling millions of assets—including solar panels, heat pumps, batteries and electric vehicles—to be optimised across our energy networks. A digitalised system will spur innovation, remove barriers to new entrants, facilitate new consumer offers and services, and enable system flexibility.
The energy digitalisation strategy sets out a vision and suite of actions to achieve this, focusing on:
Providing leadership and co-ordination to the sector
Incentivising the sector to digitalise, and
Supporting the development of digital tools and infrastructure.
These documents have been produced in close co-ordination with the energy sector.
Thirdly, the Government have published a call for evidence on de-risking large-scale, long-duration electricity storage. Large-scale and long-duration storage can provide additional benefits to other forms of flexibility, in particular by storing energy over long periods of low wind. The Government have developed a call for evidence from industry, investors and other stakeholders on the barriers and financing challenges that this type of storage faces, and how these barriers might be mitigated while minimising distortions in the market. This is the first stage in deciding whether a bespoke de-risking mechanism, such as a “cap and floor” regime is needed to accelerate deployment of this technology on the system.
Fourthly, the Government have published a call for evidence on the barriers to widespread deployment of vehicle-to-grid (and similar) technologies. Vehicle-to-grid technologies enable electric vehicles to balance the system by exporting electricity in return for payment when electricity is scarce—and reimporting it when it is abundant. The Government have developed a call for evidence to gain wider market views on the timescales, opportunities, and barriers as well as invite discussion on potential solutions to the widespread deployment of these technologies. The feedback will aid in creating a policy strategy for this area, help to design future innovation competitions and show the Government’s ongoing commitment to an area where the UK is a global leader.
I will place copies of the 2021 smart systems and flexibility plan and its appendices—appendix I: electricity system flexibility modelling, and appendix II: smart systems and flexibility plan monitoring framework—the energy digitalisation strategy, the call for evidence on facilitating the deployment of large-scale and long-duration storage, and the call for evidence on the role of vehicle-to-X technologies in a net zero energy system in the Libraries of both Houses.