Scaling flexibility technologies a huge opportunity and will help unlock billions in energy costs - report
UK innovators have a major opportunity to develop the flexibility technologies needed to smooth out peaks in power and heat demand according to a new report from Energy Systems Catapult, which predicts the high use of renewables and nuclear, supported by flexibility could reduce energy system costs by at least £70 billion to 2050.
Flexibility from electric vehicles is regarded as especially valuable to the energy system – innovators need to create consumer-friendly propositions to help fulfil its promise, and the ES Catapult has unveiled a new System of Systems map to help innovators visualise how technologies, markets and organisations can interact to deliver savings and market opportunities.
ES Catapult points to the commercial success of some of the UK industry’s “unicorns” – Zenobe, Ovo, Kaluza, Kraken and Octopus, among the most valuable privately owned businesses focused on flexibility, digitisation and integration of the new disaggregated marketplace.
Technologies with the potential to provide this flexibility at scale include electric vehicles (EVs), heat stores and static batteries, hydrogen storage, and digital services and consumer propositions that coordinate and control the storage and release of energy.
Their Innovating to Net Zero 2026 report modelled and assessed four future scenarios for the energy system to understand how variation in energy generation and demand might evolve depending on uptake of new low carbon and flexible technologies.
It has identified five peak gaps in energy supply and demand that will shape the overall scale and architecture of the UK’s cleaner energy system, and the innovations in flexibility technologies and services needed to manage them and unlock opportunities for UK businesses and consumers. The market for flexibility in Europe is expected to reach €12 billion a year by 2030.
Guy Newey
Guy Newey, CEO of Energy Systems Catapult, said:
“Embracing flexibility could help the UK save billions in infrastructure costs – while giving homegrown innovators a platform to scale up and compete globally.”
The findings are based on the Catapult’s internationally peer-reviewed Energy System Modelling Environment models – ESME and ESME Flex – the UK’s leading techno-economic whole system models. The Catapult has published an interactive dashboard for users to explore its scenarios and the energy systems data behind them.
Driving cost out of the energy system is essential if we are to transition to a cleaner energy system at the pace and scale needed, while maintaining political consensus for action on climate change.
As more renewable capacity comes online, and transport and heating become increasingly electrified (through the growing use of EVs and heat pumps) one of the biggest innovation challenges faced is how to balance the energy system when renewable generation is low and demand is high.
The Catapult’s report shows this is where flexible solutions come in. Commercial and domestic technologies and services are needed that store surplus energy and release it to the grid to smooth out peaks in power and heat demand.
Unlocking the potential of flexibility is therefore an urgent priority to help balance supply and demand in near real-time and help UK businesses capture the growing commercial opportunities in national and international markets.
ESME and ESME Flex modelled four scenarios to understand what effect different versions of the future energy system have on ‘peak gaps’ in supply and demand, and hence the future needs and market opportunities for flexibility.
Key findings include:
Electricity consumption could increase by as much as 80% by 2040 in all scenarios through the growing electrification of transport and heat. Data centres could require an additional 28 TWh in 2040, representing 5% of overall demand.
Scenarios with the greatest and quickest deployment of renewable capacity, enabled by low-carbon flexibility have the lowest system costs – with total savings of at least £70 billion to 2050 compared to the most expensive scenario, which has the lowest levels of renewables and low-carbon flexibility.
Flexibility provided by EVs is especially valuable to the energy system. Modelling shows that EV smart charging has huge potential for balancing the grid. V2G shows even greater promise but both need further innovation, including improved integration with the rest of the energy system, to fully deliver on it.
Nuclear and renewables complement each other, reducing total system costs. Modelling shows that no new nuclear deployment could lead to additional gas power plants fitted with CCS (+10 GW) and offshore wind (+15 GW) by 2040, increasing system costs by 1.1% (£50 billion) by 2050.
Heat networks combined with thermal storage technologies could provide 300 GWh of flexibility by 2040.
Households could provide around 76 GW of electricity flexibility by 2040, as well as over 350 GWh of thermal storage.
The commercial sector could provide 8 GW of flexibility by 2040 with building management systems being vital enablers.
The Catapult has created a System of Systems Map that highlights how the energy system is transforming from top-down control of tens of power stations to bottom-up coordination of millions of flexible assets.
Image: Energy Systems Catapult
Historically, a few large fossil-fuel plants have dispatched power, following predictable demand. The system map shows how renewable and flexible storage technologies are increasingly shaping today’s energy system. These are largely invisible to central dispatch as they sit on the distribution network or behind the meter.