Gas Ten Year Statement
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Gas Ten Year Statement UK gas transmission DECEMBER 2011 Gas Transportation Ten Year Statement 2011 Cover Picture Ship name - “Arctic Princess” - Phase 3 Commissioning cargo docking at the Isle of Grain LNG1 terminal 17th November 2010. When built, the Arctic Princess was the largest LNG ship ever built. It has 3 a capacity around 147,000 m of LNG. It is 288m long and 49m wide. LNG is natural gas cooled to -162OC and takes up approximately 600 times less space than when in a gaseous state. This equates to total capacity around 88mcm2 for this ship, which is approximately 1,000 GWh, the total annual demand3 of about 65,000 average UK households. 1 Liquefied Natural Gas 2 Million Cubic Metres 3 Weather corrected actual Page 2 Gas Transportation Ten Year Statement 2011 Foreword Statistics (DUKES2 categories Public Administration and Commercial), Industry and Transport and uses a bottom-up approach that starts at the finest level of detail practical. Welcome to the 2011 edition of the Gas In contrast to the bottom-up approach Ten Year Statement. I hope that you find it used in Gone Green, Slow an informative and useful document. As in Progression uses econometric previous years, the purpose of this modelling at a sector level for both gas document is to set out our assessment of and electricity projections. Demand is the future demand and supply position for related to a number of factors, natural gas in the United Kingdom, and the including fuel price, economic growth consequences for operation of the gas and number of houses. Adjustments transmission network, and subsequent are made for increased levels and investment requirements. appliance efficiency. The layout of this year’s document has The purpose of this approach is to make been adjusted to make our key messages an assessment of the impacts of demand clearer and to be easier to read. and supply on the gas transmission Consequentially some of the detail behind network as the UK moves towards the our scenarios is now explained in our new 2020 renewables target. 1 publication, UK Future Energy Scenarios , I look forward to receiving your views on which was published in November 2011. the Statement, including suggestions as to As with last year, we detail two demand how it might be further improved. scenarios side by side, throughout. These scenarios are Gone Green and Slow Richard Smith Progression: Future Transmission Networks Manager Gone Green is constructed in such a fashion renewable energy and carbon National Grid emissions targets are always achieved. Analysis is carried out in four sectors, Residential, ‘Service’ (equivalent to the Digest of Energy 1 2 http://www.nationalgrid.com/uk/Electricity/ www.decc.gov.uk/en/content/cms/statistics Operating+in+2020/ /publications/dukes/dukes.aspx Page 3 Gas Transportation Ten Year Statement 2011 Disclaimer This Statement is produced for the purpose of and in accordance with National Grid Gas plc's obligations in Special Condition C26 of its Gas Transporters’ Licence relating to the national transmission system and Section O4.1 of the Transportation Principal Document of the Uniform Network Code in reliance on information supplied pursuant to Section O of the Transportation Principal Document of the Uniform Network Code. Section O1.3 of the Transportation Principal Document of the Uniform Network Code applies to any estimate, forecast or other information contained in this Statement. For the purpose of this of the remainder of this statement, National Grid Gas plc will be refereed to as National Grid. While we have not sought to mislead any party as to the contents of this Statement and, whilst such content represents our best views as at the time of publication, readers should not place any reliance on the contents of this Statement. The contents of this Statement (including, without limitation, information as regards capacity planning, future investment and the resulting capacity) must be considered as illustrative only and no warranty can be or is made as to the accuracy and completeness of such contents, nor shall anything within this Statement constitute an offer capable of acceptance or form the basis of any contract. Other than in the event of fraudulent misstatement or fraudulent misrepresentation, we do not accept any responsibility for any use which is made of the information contained within this Statement. The Statement explains our latest volume forecasts, system reinforcement projects and investment plans. It has been published at the end of the 2011 planning process following a re-appraisal of our analysis of the market and expands on the work published in our “Transporting Britain’s Energy2011: Development of Energy Scenarios” document in July 2011. The Statement forms the basis of our industry wide consultation process, Transporting Britain’s Energy, due to restart in the New Year, and is the first element of our 2012 planning process. 6 Special Condition C2 requires that the Ten Year Statement, published annually, shall provide a ten-year forecast of transportation system usage and likely system developments that can be used by companies, who are contemplating connecting to our system or entering into transport arrangements, to identify and evaluate opportunities. Page 4 Gas Transportation Ten Year Statement 2011 Contents 1. Executive Summary 2. Document Scope 2.1 Overview of “Transporting Britain’s Energy” Process 2.2 Structure of Document 2.3 Government Targets 2.4 Scenario introduction 2.5 Other Publications 3. Gas Supply and Demand Scenarios 3.1 Overview 3.2 Demand 3.2 Supply 4. System Operation Challenges 4.1 Overview 4.2 How Network Gas Flows have changed 4.3 Evolution of demand 4.4 Impact of storage flow capabilities 4.5 System Operator challenges 5. NTS Capacity Provision and Investment 5.1 Overview 5.2 Recent Developments 5.3 Future Investment 5.4 Carbon Capture and Storage (CCS) 6. Industry Frameworks Developments 6.1 Overview 6.2 Enduring NTS Exit Capacity Arrangements 6.3 2007 Transmission Price Control Review Changes 6.4 Transmission Charging 6.5 Entry Capacity Regime Developments 6.6 European Developments 6.7 National Grid Licence: Special Condition C27 – Balancing Arrangements 6.8 Facilitation of new types of NTS entry facilities 6.9 SO incentives 6.10 SCR Security of Supply - Significant Code Review 6.11 Modification 0373 “Governance of the NTS Connection processes” Page 5 Gas Transportation Ten Year Statement 2011 Contents Appendices 1 Process Methodology 2 Demand & Supply Volume Forecasts 3 Actual Flows 2010 4 The Gas Transportation System 5 Connection to the National Grid National Transmission System (NTS) 6 Industry Terminology 7 Conversion Matrix Page 6 Gas Transportation Ten Year Statement 2011 Executive Summary Annual Gas Demand Demand and Supply Outlook Gone Green Demand 1,200 Total gas demand for both scenarios is 1,000 relatively flat until around 2018 when they 800 diverge: 600 Gone Green reduces significantly from 400 around 2018, mainly due to lower (TWh) Demand Gas Annual 200 domestic demand (from efficiency gains) 0 and power generation demand 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 reductions as a result of more low Domestic IndustrialSlow and ProgressionCommmercial Powergeneration Exports 1,200 carbon generation. 1,000 Slow Progression reduces post 2021 800 mainly due to reductions in power 600 generation demand as a result of a later arrival of low carbon generation than in 400 Annual Gas Demand (TWh) Demand Gas Annual Gone Green. Domestic demand 200 remains relatively stable as lesser 0 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 efficiency gains are offset by demand Domestic Industrial and Commmercial Pow ergeneration Ex por ts from new houses. Peak gas demand forecasts are not materially different in either scenario due to Annual Gas Supply Sources the assumption that gas fired generation will Gone Green provide back up capacity for wind 120 Actual Forecast intermittency. 100 80 Supply 60 The power generation mix in Gone Green bcm / year 40 necessitates more responsive and flexible 20 supply components than Slow Progression. 0 Under both scenarios, supply sources are 00/01 05/06 10/11 15/16 20/21 25/26 30/31 similar. UKCS traditional Unconventionals Norway LNG Continent Annual Demand inc Exports Both supply scenarios show a continuing Slow Progression 120 decline in UKCS production from just under Actual Forecast half of total supply today to just over a 100 quarter in 2020. 80 LNG is forecast to make up the shortfall in 60 bcm /year UKCS supply increasing from around a 40 quarter of total supply today to 40% in 2020. 20 Page 7 0 00/01 05/06 10/11 15/16 20/21 25/26 30/31 UKCS traditional Unconventionals Norway LNG Continent Annual Demand inc Exports Gas Transportation Ten Year Statement 2011 Executive Summary The required flexibility is anticipated to be delivered from those supplies that are best placed to respond, notably gas storage and possibly also from Liquefied Natural Gas (LNG) imports and through existing or modified gas interconnectors with the Continent. A further consequence of more flexible / responsive supplies is the need for a gas network capable of accommodating greater flow variations, both within the gas day and from one day to the next. Investment Implications Under both scenarios, changing supply and demand patterns will require greater network flexibility (net-flex) from the gas transmission network to accommodate variable flows. The issues surrounding changing supply and demand patterns, where possible, will be accommodated operationally. Operational behaviour will not be enough to manage the increased net-flex requirements of the NTS and so physical assets will need to be built to enhance operational capability. Our RIIO-T17 submission is calibrated to Gone Green (headlines shown to the right), which would trigger £6.7bn8 totex (capex plus opex) over the RIIO-T1 period for new infrastructure and replacement of old.