Scottish whole energy system scenarios: context document

Energy Strategy and Just Transition plan (ESJTP)

ClimateXChange, on behalf of the Scottish Government, have commissioned the Energy Systems Catapult (ESC) to develop three whole system energy scenarios to generate insights and explore pathways available to meet Scotland’s emission reduction targets.

Purpose of this document

This document provides an overview of scenario modelling commissioned by ClimateXChange on behalf of the Scottish Government, which will help us develop a whole systems picture of the energy system in Scotland. The analysis will inform the development of the forthcoming Energy Strategy and Just Transition Plan (ESJTP).

The document also summarises the benefits and limitations of the modelling and key sector outputs from the model. A key limitation overall is the timing of this work, which was undertaken prior to the full scale of the energy price crisis and global gas market volatility being apparent. This scenario modelling necessarily represents a snapshot in time, and is one part of significant evidence gathering we are undertaking to inform the ESJTP, including deepening our understanding how the current crisis can best be mitigated in the short and longer-term.

We will continue to analyse the outputs from the models over the coming months

A whole systems approach to Scotland’s energy system

The Climate Change Act (2019) sets legally binding emissions reduction targets that require Scotland to reach net zero emissions by 2045 with an interim target of 75% emissions reduction by 2030. The Act also sets out the principles of a just transition, to be applied when developing statutory Climate Change Plans and ensuring that the journey to net zero is fair.

Since the first Scottish Energy Strategy was published in 2017, we have made strong progress in decarbonising our energy system, and have set out a number of specific statements and plans to crystallise our ambition and take action (including the Offshore Wind Policy Statement, draft Hydrogen Action Plan, draft Onshore Wind Policy Statement, Fuel Poverty Strategy, Local Energy Policy Statement, Heat in Buildings Strategy and Good Practice Guidance for Community Benefit and Shared Ownership.

However, we recognise that our energy system is becoming increasingly complex with many interdependencies. As we transition to Scotland’s future energy system, these interactions will grow in both number and scale.

In light of this, we need to explore how the many and varied components of the energy system fit together (a whole systems picture) to support the delivery of our national just transition outcomes, net zero emissions targets and ambitions for a secure and affordable energy system.  

In order to take a ‘whole system view’ we are reviewing available evidence to help provide insights into the technical, economic, financial, social and practical challenges and requirements associated with this transition. These will help us understand more about how Scotland can develop an energy system that is fit for the future.

Energy scenarios

As part of the evidence base, to help inform our whole systems view, ClimateXChange, on behalf of the Scottish Government, commissioned the Energy Systems Catapult (ESC) to develop three scenarios that investigate different levels of societal and technological change in order to generate insights and explore pathways available to meet Scotland’s emission reduction targets.

The ESC is an independent, not-for-profit organisation that helps to link industry, government, academia and research. They take a whole-systems view of the energy sector, helping to identify and address innovation priorities and market barriers, in order to decarbonise the energy system at the lowest cost.

The ESC scenarios will inform the development of the ESJTP by helping to explore options, inform thinking and encourage debate. 

Benefits of whole system modelling

The scenarios have been produced by ESC using their whole energy-system modelling environment, (ESME). The model provides useful insights to be used alongside other evidence and judgement.

Energy scenarios are a useful tool in starting to build our understanding of the energy system in Scotland and its interdependencies. They are one of a suite of tools that help to unpick the challenges and identify the opportunities of decarbonisation.

The ESC model is technology-focused and designed to produce a least-cost pathway that meets input demand and emissions constraints. It is very important to contextualise the model outputs in terms of other forms of analysis including sector specific analysis, and with analysis relating to our ambition for a just transition with particular relevance to the cost of living, economic opportunities and energy security. These themes will be considered fully in the ESJTP.

Limitations of the modelling

Scenarios provide a framework that enables whole-system thinking and decision making. They are designed to be used to explore and navigate what might happen, not what should happen or what we want to happen.

All models, to a greater or lesser degree, are a simplification of a much more complex reality. Some specific limitations in the modelling approach undertaken for these scenarios include:

• whole systems modelling assumptions on potential pace of technology rollout and uptake at the individual sector level can be less granular and more optimistic than sector-specific studies. They can therefore imply, for example, that workforces can be rapidly trained and scaled up
• the model assumptions also imply an optimistic view of the speed at which government, including the UK Governm ent, can act to regulate and legislate to deliver rapid change
• the modelling framework focuses on minimising overall costs, but does not consider ‘who pays’ or the distributional implications of technology pathways
• flexibility and resilience within the electricity system is assumed to be provided by cable connection to the rest of the UK i.e. potential costs of resilience at an entirely Scottish level are not included

• the scenarios are a snap shot in time that capture the costs and model parameters at the time of modelling. This modelling was commissioned in Spring 2021. The ESC’s scenarios do not include impacts of recent geopolitical events and changes in natural gas market prices or the availability of gas for import
• incorporating assumptions about sustained increases in natural gas prices would be likely to have a noticeable effect on the model results