Comment by Ben Shafran, Head of Markets, Policy & Regulation, and Alex Buckman, Innovative Solutions Architect – Flexibility at Energy Systems Catapult.

Taking a ‘whole systems approach’ has become a buzzword when talking about the transition to Net Zero, to the point where it can be hard to tell the difference between substance and rhetoric. So, what do we really mean by a whole systems approach? Why is it important? And how can we use it to guide the energy transition?

To answer the first question, it’s joining up the system from sources of energy to the consumer, across all energy vectors and demands, linking the physical requirements of the system to policy, market and digital arrangements. A practical example from electricity is instructive: the UK has the largest offshore wind farms in the world. But it does not have the supply chain to go with it. New projects face long waits to connect to the grid and electricity generated by existing projects often has to be curtailed because there’s no grid capacity to transfer power to where it’s needed.

These problems are a direct result of UK policies not taking a whole systems approach to the deployment of offshore wind. Contracts for difference (CfDs) made it attractive to develop offshore wind projects. We witnessed a flurry of investors pouring money in to the sector, but this wasn’t coupled with an industrial strategy to build up our domestic supply chain, meaning developers contracted with international suppliers.

Approval for grid reinforcement was largely reactive and can be held up by the planning system, meaning the capacity to take on new connections lags the pace of new projects being developed. And the absence of locational price signals in the wholesale electricity market means that projects are developed with little regard for their impact on system-wide costs.

As we enter the next phase of the energy transition – one that will rely on multiple vectors (hydrogen, gas, electricity etc) to decarbonise and that will bring decarbonisation into people’s homes and communities – a whole systems approach becomes increasingly important. For example, it’s not enough to subsidise the upfront cost of heat pumps – we also need to develop a large, skilled workforce that can provide trusted advice to homeowners, install heat pumps and energy efficiency measures, and develop the digital infrastructure to enable heat pumps to be used flexibly. At the same time, we need to decarbonise the industrial processes that make those heat pumps, and the transport technologies that move them around the world.

A whole systems approach is crucial if we’re to accelerate Net Zero energy innovation and make a tangible difference to people’s lives. If we get this right, we can improve consumer experiences with energy while creating opportunities for the UK’s booming clean tech sector – at home and abroad. That’s why we’re encouraged by other organisations that have taken to the challenge of bringing whole systems thinking to life, such as the new report from the Tony Blair Institute For Global Change: Reimagining the UK’s Net Zero Strategy.

The recommendations in that report echo much of what we identified through whole systems modelling in Innovating to Net Zero 2024. Innovating to Net Zero used the Catapult’s Energy System Modelling Environment (ESME) to explore how the UK can achieve a cost-effective Net Zero energy system. Designing over 3,500 Net Zero systems, it identified innovation priorities for the design, delivery and operation of an affordable, desirable and resilient future energy system underpinned by low carbon products and services as part of a vibrant and competitive economy.

The analysis found that accelerating the deployment of key mature technologies such as offshore wind and solar, large-scale nuclear, and the electrification of heating in our homes and buildings at an even faster rate than we’ve witnessed in the past 10 years is essential to propel us to a Net Zero future.

Reimagining the UK’s Net Zero Strategy is right when it says “[i]nnovation in technology and business models is…the route through which we can contend with the domestic and international dimensions of the challenge to deliver [N]et [Z]ero.” Energy innovation has enabled the UK to halve its emissions between 1990 and 2022, we’ve a long way to go, but we’re making progress. With just 26 years to 2050, we need to accelerate our progress and embrace the socio-economic benefits it can deliver.