Decarbonisation of heat findings report

Our work on heat decarbonisation aimed to investigate the potential benefits of adopting a System Architecture framework to help structure the development of energy system decarbonisation strategies and deal with the complexity of the energy system.

This perspective, with its focus on the spatial, topological, and functional organisation of the system and its components – is likely to be particularly valuable in the context of rapid expansion and transformation of the existing system. Events over the last three years have reminded us that uncertainties can arise from wider geopolitical, economic and supply chain contexts. Impacts of such uncertainties are difficult or impossible to model explicitly. System Architecture provides a framework and battery of techniques to analyse trade-offs and support decision making in the presence of such uncertainties.

Methodology and data collection

A wide-ranging review of models highlighted that no single modelling approach captures all the emergent system features investigated, such as evolvability, flexibility, robustness and feasibility which are key to effective decision making under real world conditions.

Stakeholder engagement formed a key strand of our work, linking modelling to policy making. We explored stakeholder requirements using in-depth Q interviews and a Pugh ScoringOpens in a new tab exercise in a workshop with expert energy system stakeholders including high-level policy makers, regulators and industrialists. We also conducted wider stakeholder engagement and dissemination through a webinar. These activities enabled us to investigate stakeholders’ expectations and visions of the future energy system and their prioritisation of the current decarbonisation policy goals. Interviews generated significant feedback on energy models and modelling practice.

All of the above supported a two-pronged modelling programme. We used the UK TIMES (UKTM) model, pdfOpens in a new tab to explore the concept of evolvability and how different system architectures respond to emerging opportunities and challenges. The former include technical developments that allow reductions in cost. The latter would include unexpected increases in technology and energy costs (The last year has also reminded us of the potential for abrupt reorganisation of supply chains, oil and gas markets, energy supply infrastructure, the global financial system and geopolitics). UKTM was also used to assess the goal of robustness of technology choices, using a probabilistic approach, running multiple scenarios and using Monte Carlo Analysis (MCA) to analyse model output.

In parallel, we used the Energy Space Time Integrated Model Optimiser (ESTIMO) to investigate the flexibility requirements for mid-century, high renewable, zero emission energy systems, in terms of installed capacities of wind and solar generation, storage and interconnectors. Methodologically, the work involved physical simulation of hourly energy flows within the UK economy and, at reduced detail, the EU27, using up to 35 years of historic meteorological data. Both models were used to compare three different heat supply options dominated respectively by individual heat pumps (HP), district heating (DH) and electrolytic hydrogen (EH2). An assessment of the economics and role of hydrogen made from natural gas (GH2) was also undertaken. A global logistic substitution model was also developed to understand the global implications of the growth of PV and wind generation at rates broadly consistent with historic trends. The core methodology in this work was logistic extrapolation of historic trends for global wind and PV deployment, coupled with analysis of the extent to which physical, economic, land, resource and climate constraints might limit growth.

Since 2018, members of the Heat Theme have also engaged in a number of cross-theme and wider collaborations, supporting the production of a series of research papers and other outputs.

Main findings

  • Although models are intended to inform policy decision-making, our findings suggest that they struggle to satisfy multiple, emergent and dynamic policy goals. This constitutes a powerful reason for adopting an overarching System Architectural perspective on energy system transformation. It also means that conceptual development, and empirical and qualitative research should form prominent parts of the energy research portfolio alongside energy modelling.
  • Our work on heat decarbonisation highlights the need to move away from the current dominant focus on cost of the energy system towards consideration of a wider range of system properties including evolvability, flexibility, robustness and feasibility.

Findings in detail

Technologies to achieve heat decarbonisation in the UK

  • Our work suggests three major technologies that could be used to achieve heat decarbonisation: hydrogen boilers, individual heat pumps, and district heating, each with different implications for energy system architecture. All are technically feasible, although ‘high hydrogen’ systems appear to be the most expensive. This is due to the availability of more energy efficient and cost-effective alternatives, and the need for high value hydrogen in other parts of the energy system, such as industrial processes.
  • The energetics of green hydrogen are a major driver of the higher cost for this technology. Green hydrogen requires about four times more electricity per unit of heat output. As a result, the total cost of heat is about 80% more compared to individual heat pumps and to heat pumps deployed in conjunction with district heating.
  • Use of blue H2 for heating substantially increases CO2 and methane emissions, and places additional pressure on natural gas supply, limiting its value as a zero-emission heat supply technology. There may however be a role for a residual contribution from natural gas-fired el0ectricity generation systems operating at low load factors in future net-zero carbon systems, to cover exceptional combinations of demand, weather and plant availability.
  • Technological diversity in the near-to-mid term (2030-2050) may contribute to a more evolvable system, facilitating switching to alternative pathways.
  • Climate change will reduce heat load and increase cooling load by about 20%. Reversible heat pumps, which are relatively easy to retrofit, can cool as well as heat. Other options for heat supply would require separate provision for cooling.
  • Modelling with ESTIMO shows that 40-50% of wind and solar generation are spilled in near-optimal energy system designs. This is because this results in lower total energy system cost than would be achieved if storage and/or interconnector capacity were increased. It is not cost effective to attempt to eliminate spillage by building additional energy storage and interconnector capacity.
  • The largest impacts on energy demand are likely to arise from the electrification of heat, which will increase the exergy efficiency of heat production and delivery by a factor of approximately 3 compared to hydrogen (Exergy is a concept that measures both the quantity and availability of energy. Its adoption, at least qualitatively, in analysis of heat supply, becomes unavoidable as exergy efficiency rises from the very low levels associated with combustion of fossil fuels (≈3%) to levels associated with heat pumps and fuel cells (≈30%). Fuller definitions can be found online).
  • Flexibility will be key to system resilience and costs. The integration of 10s of TWh of flexibility and storage into the energy system could be aided by encouraging the deployment of storage and hybrid energy conversion systems within the design of heat networks in “the Last Mile” (A hybrid system is one in which two or more energy conversion technologies are bundled and controlled in a way that enables a wider range of functionality than would be achievable with a single technology. Examples range from hybrid heat pumps, to the electricity grid). Such a development would have the capacity to reshape the whole UK energy system, buffering ordinary consumers from variations in renewable energy generation, and decoupling dwellings from subsequent developments in energy conversion and storage technologies deployed upstream. We note that much existing research on demand-side flexibility fails to acknowledge both the scale of the flexibility required to operate mid-century, zero carbon energy systems, and the extent to which this is likely to be met upstream of energy consumers.

Findings for modelling and modelling practice

  • A novel outcome of this work is a set of clearer conceptual distinctions between flexibility, resilience and evolvability, and descriptions of how each can be operationalised using energy system models.
  • An understanding of stakeholders’ views on system requirements helped modelling teams to improve modelling practice through the review of existing assumptions on issues such as inclusion of hydrogen as a vector in ESTIMO, and developing the concept of evolvability in UKTM.
  • UKTM currently tends to underestimate impacts of operability for net-zero carbon systems, on storage and interconnector capacity, and fraction of wind and solar energy spilled; this limitation of the model may introduce significant bias into results.
  • UKTM currently does not model supply chain dynamics explicitly. This limitation is likely to become more significant as rates of deployment of new technologies rise.
  • ESTIMO is not designed to model the evolution of technology mixes over time. But by focusing on operation and operability of future, largely-renewable energy systems, ESTIMO complements work undertaken with models such as UKTM.
  • Work to systematically combine estimates from the two separate models is still to be done. Key issues, such as supply chain dynamics, currently lie outside the combined capabilities of both models.

Insights from stakeholders

  • Policy makers and other stakeholders’ do not have a unified or a single perspective on the selection of technologies in the light of system goals, particularly, the goal of equity.
  • Our work with stakeholders shows that two broad strategies for decarbonising the UK energy system exist. The Adaptive Strategy, which tends to represent the supply side, holds that system resilience is a priority that should drive technological selection. The Transformative Strategy, which tends to represent the demand side of the system, holds the view that the use of available technologies in creative combinations and configurations maybe key to the transformation of the energy system.
  • There is an over-emphasis on cost as the primary driver of technological selection and factors such as supply chain dynamics, consumer acceptability and equity are neglected. As the energy transition accelerates these other factors are likely to become more salient and the ranking of energy system goals is likely to change. It is therefore important that sustained and structured stakeholder engagement between the energy modelling community and policy makers/energy system stakeholders is maintained.
  • The complexity of the energy system and the practical impossibility of including all issues in energy system models that are relevant to the objectives of policy makers and other energy system stakeholders, necessitates the adoption of an overarching System Architectural perspective. The System Architecture discipline, with its extensive literature, wealth of historical examples, methods and tools, can help energy researchers to focus their work, enable articulation and prioritisation of system goals (evolvability, equity, resilience, costs), and bridge the gaps between different models, and between policy-makers and energy system modellers.
  • It is is unlikely that cost will be the main factor in determining the future of heat and of the UK’s energy system as whole. Other factors including supply chain dynamics, judgements of political risk and feasibility, and the current dominant position of natural gas in heat supply will also be in play.
  • Although models aim to underpin policy decision-making, our findings suggest that they struggle to satisfy multiple, dynamic and evolving policy goals. This constitutes a powerful reason for adopting an overarching System Architectural perspective on energy. It also means that empirical and qualitative research should form a prominent part of the energy research portfolio alongside energy modelling.

Implications for global trade and reaching the 1.5°C target

Decarbonisation and transformation of the UK will take place in a global context. It would have been remiss of us to have overlooked the latter perspective.

The work on the global logistic substitution model revealed no insuperable physical or, economic barriers to a transition from today’s fossil-fuelled global energy system, to one based largely or, entirely on wind energy and solar photovoltaics (PV). It therefore appears that a process is under way which, if continued, has the potential to displace fossil fuels from almost all markets between 2050 and 2070. However, such a transformation of energy supply will both require, and drive, a deep reconfiguration of global energy demand toward electricity and derived products, itself dependent on multiple other technological substitution processes across sectors and geographies. Reflection on historical transitions, first from biomass to coal, and then to oil, suggest that such a process would profoundly impact patterns of global trade, and ultimately geopolitics. Failure to achieve such reorganisations could delay or, curtail the substitution process, with the consequence that mid-century CO2 targets and the 1.5°C warming target would not be met.

We conclude with a comment on the impacts of the war in Ukraine. These extend well beyond the energy sector and include higher prices for agricultural fertilisers and grain, a partial breakdown in the global financial system, disruption of markets for metals and other resources, and disruption of supply chains associated with technical equipment for all parts of the UK energy system. It is likely that prices of energy and associated commodities will remain high for many months, if not years. More general disruption of global markets also now appears to be under way, as trading blocks and manufacturing supply chains reorganise themselves, and as the dominance of the US Dollar in international trade wanes. The consequences are likely to take years to resolve. The impact in the UK is likely to be a sustained period of reduced real incomes, which will inevitably hit people on low incomes hardest. It appears that what we face is not short-term fuel poverty, but long-term impoverishment. While the larger ambition to align energy demand reduction with energy security, affordability and climate policy goals is essential, a more considered community development approach akin to the one that has been adapted and adopted with great effect in healthOpens in a new tab in the UK and internationally is also likely to be necessary to support the hardest hit.

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