The National Grid has just released its annual review “Future Energy Scenarios” which makes for interesting if heavy reading. In its review it is clear that natural gas remains the mainstay of both electricity generation and heating. However changes to the distribution network brought about by decentralisation, whereby electricity is generated for example by solar, wind turbines and in some scenarios perhaps from gas engines running on shale gas rather than large multi GW powerstations will needs be factored in. Where natural gas is used to generate electricity then exhaust gas decarbonisation will be required (even on modern combined cycle gas turbines CCGT) and in the home a move to low carbon heating will be necessary (such as ground source heat pumps). Wind turbines and solar generation are intermittent sources of generation and will be coupled to the more inflexible (base load) nuclear power stations. Battery storage systems will be required to manage the troughs and interconnectors importing/exporting to the continent as appropriate. The continued roll out of smart meters and smart chargers will all help to manage electricity demand.
In order to meet our climate change obligations we have to decarbonise our economy and the National Grid who are responsible for the transmission of electricity and gas in the UK are looking at a number of scenarios in order to meet projected demands.
Of particular interest to our group, involved as we are with a company keen to develop possible shale gas reserves in the UK, are the assessments of gas supply and any role that the National Grid sees for shale gas. In 2,000 we were self sufficient in natural gas and now our needs are met by importing around 50% of our requirements from the continent (natural gas) and LNG (Liquified Natural Gas) from further afield.
In the review on gas supply there are 4 scenarios. In the uncertainty that surrounds the development of a shale gas extractive industry only 2 scenarios are considered whereby shale makes a contribution. The level of pick up for shale production is portrayed as a function of the manner in which development monies might be applied to enhancing the supply from our own North Sea holdings against that which is invested in shale. One scenario considers a slow increase in shale production from 2025 to a peak in 2050 of around 12 bcm, the other a huge expansion from 2020 to 2035 peaking at 25 bcm in 2050.
So its either no shale, some shale or lots of shale.
What is also interesting, reading between the lines is that the grid envisage that shale gas if developed would be connected to both the distribution and transmission networks. (sold as gas and electricity). Now INEOS have intimated that they would use the gas themselves to meet process requirements and maybe to sell for export (abroad). IGas also gave us the impression they would also prefer to sell gas rather than electricity. In the event it is the new Electricity System Operator, a spin off from the National Grid ,who any would be gas producer will have to deal with and who will no doubt wish to influence that decision.