In recent years government energy policy has focussed on the need to reduce global warming. The British Government has, along with many others, set some ambitious targets to achieve this; making electricity generation carbon free by 2030 and eliminating all CO 2 emissions by 2050. Few doubt that such a massive change is the right thing to do, but the process may take a lot longer than they think.
A great deal of progress has already been made in generation; Just over half of UK electricity was generated from nuclear and renewable sources in 2024. Last year the UK became the first G7 nation to end coal fired generation. However, the easy part has been done, getting rid of the final half of carbon based generation will be a lot more difficult and a lot more expensive. We will have to deal with the problems of load balancing with a system that is increasingly unable to load follow. Demand levels can vary during the day from around 25 to 40 GW in the summer and from around 35 to 60 GW in the winter. Increasing use of batteries may help a little here but currently they can only store around 1-2 hours’ worth of power. The system is inevitably going to have to rely on gas fired generation for some time to come. This may well only be feasible with increased deployment of Carbon Capture and Storage. Some progress has been made here with two projects very close to FID. Government will need to provide more clarity on future policy towards CCS together with the necessary support.
The scale of the changes required are immense. Not only is electricity demand expected to increase by 50% between 2019 and 2035, but it will have to be produced and distributed in a completely different way. The investment required will be massive. The National System Operator (NESO) estimates that total investment in infrastructure required will be £40 billion per year from 2025 to 2030, to meet the carbon free target by 2030. To put this in context, the average investment level
between 2020 and 2024 was only £5-10 Billion. New investment will be:-
£58 billion on new networks
New offshore cables required are 3 times as great as those already installed
Batteries must be increased from 5 GW to 22 GW
Pumped Storage/onshore wind must be increased from 14 GW to 47 GW
Solar must be increased from 15 GW to 47 GW
Even NESO describe the task of achieving Carbon Free generation by 2030 as “a huge challenge “.
This may be an understatement!
A key part of the government’s plans for the green transition is to replace gas sales to homes and small business with electricity, specifically by the installation of heat pumps. This is a difficult, but not impossible, task but the scale of changes needed means this will be a very long term and gradual shift, probably much slower than government would like. There are two key issues here.
The first is the sheer scale of the change. The gas market in the UK is over twice the size of the electricity market; 687 TWh in 2024 compared with 319 TWh. The investment required will be colossal, both to replace existing gas appliances and to massively expand electricity generation and distribution.
The second question is how attractive are heat pumps to gas consumers and how easy will it be to persuade them to install them. They do enable substantial savings in energy consumption, but there are a number of drawbacks.
Capital cost is much higher. £7,000 to £14000 compared with around £2000 for a new gas boiler, although grants are available for the switch.
As they do not heat water to as high a temperature as gas, there will be other costs
o Hot water storage £800 to £3000
o New radiators @ £100 to 200 each.
o Wall insulation £9000
o Loft insulation £200
Heat pumps also work best in highly insulated homes, not generally a characteristic of UK housing!
Although heat pump sales are increasing rapidly; 98,000 heat pumps were installed in 2024 ,up 26% on 2023. However, the government target is for 600,000 installations per year, so we are 84% below the target level. There are around 24.5 million homes heated by gas in the UK so it would take 41 years, even at the target rate, to complete the replacement of gas by heat pumps and 250 years to complete the process at the current rate of replacement!
The inevitable conclusion from these and other issues previously outlined is that the electrification of homes and small businesses in the UK will be a very protracted business on the current policy basis. Substantial volumes of gas will be required in the UK market for many years to come and it might be better to recognise this reality in energy policy.
