On Tuesday November 5th, NESO published ‘Clean Power 2030’, its practical advice to the government on achieving a power system in 2030 in which less than 5% of generation comes from unabated gas.
Unabated gas is gas burned without processes to reduce the greenhouse gas emissions it produces.
To achieve this, renewables would need to be built out at an unprecedented rate. 5 GW of offshore wind would be added to the system per year—5x the current buildout rate. Upgrades to the transmission network, rapid growth in energy storage, and the buildout of low-carbon dispatchable generation would all be required to enable this.
NESO proposes two pathways to achieve this - New Dispatch and Further Flex & Renewables.
But what would this overhaul of the grid mean for battery energy storage revenues and buildout?
Achieving Clean Power by 2030 would require doubling the current installed renewable capacity
Clean Power 2030 outlines two scenarios for achieving >95% clean power generation by 2030.
The Further Flex and Renewables scenario sees the highest renewable buildout, increasing from 50 GW of installed capacity today to 130 GW by 2030. Additional flexible capacity would be required to support this. 23 GW of battery energy storage systems (BESS) and 5 GW of long-duration energy storage would be built out. In addition to an increase in demand flexibility.
In the alternative New Dispatch scenario, renewables would be built out less quickly, reaching 123 GW by 2030. Less storage would come online, offset by an additional 3 GW of low-carbon dispatchable capacity. This flexibility would be provided by either hydrogen peakers or gas CCS.
While renewable capacity grows, gas would stay online but generate less
This level of renewable buildout is broadly in line with the range of scenarios in the Future Energy Scenarios. If achieved, it would almost meet the targets laid out in Labour’s manifesto: to double onshore wind, triple solar, and quadruple offshore wind. The total installed capacity is 12% lower than this in the Flex scenario.
In both scenarios, installed gas generation capacity remains similar to current levels, although utilization decreases. In Modo Energy’s central scenario, unabated gas meets 8.4% of generation by 2030. If buildout followed the renewables and flexibility pathways from Clean Power 2030, this reduces to 4.6% in the Further Flex scenario and 5.8% in the New Dispatch scenario - both around the 5% target.
Accelerated network buildout and grid connections would also impact batteries
Beyond renewable buildout, Clean Power 2030 would require an accelerated upgrade of the transmission network, as well as planning and grid connection reform. This could impact battery revenues and buildout.
Transmission network improvements could reduce constraint volumes in the Balancing Mechanism
To support the buildout of renewables, NESO demonstrates that the transmission network would need to be significantly expanded. Twice as much transmission infrastructure would be built over the next five years as was built over the previous ten.
This extra capacity would allow power from new offshore wind farms to reach demand centres in the South East, reducing transmission constraints. In Modo’s central forecast scenario, transmission constraints are a major driver of Balancing Mechanism volumes and revenues. Batteries located in constrained regions see up to an 11% uplift in Balancing Mechanism revenues.
An acceleration in network buildout could reduce the volume of constraint management actions in the Balancing Mechanism. This could offset some of the increase from energy balancing actions. Ultimately, the impacts of transmission buildout will be highly locational.
Connection queue reform would be required to accelerate battery buildout
A total of 22.6 GW of battery energy storage is needed to support renewables in the New Dispatch pathway and 27.4 GW in the Further Flex & Renewables pathway. For the lower requirement, this would mean an additional 3 GW of batteries coming online each year. The highest yearly increase in battery capacity was in 2023 at 1.7 GW. In 2024, the increase is projected to be 1.1 GW.
Grid connection queues have been a significant factor in the delay in battery projects coming online.
Consultation on grid connection reform is ongoing with a response from Ofgem expected in Q1 2025. NESO has reiterated the importance of grid connection reform in achieving Clean Power 2030. NESO’s preferred methodology for reform would see a new connection queue built around a project’s ‘readiness’ and alignment to Clean Power 2030.
In addition to this, the connection queue reform would support the Strategic Spatial Energy Plan (SSEP) which the government has commissioned NESO to create. The SSEP will assess the optimal locations, quantities and types of energy infrastructure required to meet Clean Power 2030 targets and beyond.
Clean Power 2030 could provide locational signals for battery buildout
Clean Power 2030 could also offer locational signals about where battery capacity is needed. Some of these signals have already been given in the advice.
The Modo Energy pipeline provides a view of battery projects with a high likelihood of reaching commercial operations out to 2027. Based on the projects in the pipeline and existing capacity, many of the locational requirements for Clean Power 2030 could be achieved as early as 2027.
In both the Further Flex & Renewables pathway and the New Dispatch pathway, the North of England requires the highest battery capacity, with 9.3 GW and 6.5 GW, respectively. The second highest is seen in the South of Scotland.
This follows the need for up to 16 GW of offshore wind in the North of England and 11 GW of onshore wind in the South of Scotland.
However, the North of England would need at least an additional 1.6 GW to achieve either pathway by 2030. An additional 1.7 GW would be required in the South West to support increased solar generation.
Battery revenues increase by 10% from increased renewable generation in Clean Power 2030
Increased renewable generation in the two scenarios reduces average projected power prices by 20%, compared to Modo Energy’s central scenario. With increased wind and solar capacity, renewable generation is sufficient to meet demand more often.
Power prices out to 2030 are at or below £0/MWh 20% of the time in the Flex scenario. This compares to just 8% in the central scenario.