Baroness Jones of Moulsecoomb
To ask Her Majesty’s Government what assessment they have made of the potential for home battery storage to change the dynamics of energy supply and demand.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the Government and Ofgem published a smart systems and flexibility plan in July 2017, which outlines a series of actions to support the transition to a smart energy system. They include an assessment of changes in our energy system and measures to address the barriers to storage, whether in the form of home batteries or the range of grid storage technologies.
Baroness Jones of Moulsecoomb (GP)
I thank the Minister for his reply. I am sure that the Government have thought this through—or not—but as nuclear subsidies increase and the cost of national grid electricity rises, more people will move to solar and domestic storage of energy. That means that people still using the national grid will be the poorest in society because they cannot afford all these extra measures. Have the Government thought through how the poor will be relieved of paying for very expensive electricity?
Lord Henley
Obviously there will be changes as more people make use of storage. That will have an effect on the grid because if some people increase their use of storage, they may even be able to go off-grid in future. The noble Baroness is right to draw the House’s attention to that issue. That is a matter for Ofgem; it can certainly look at that to make sure that it can create a level playing field for all consumers.
Lord Howell of Guildford (Con)
My Lords, I declare my interests in energy, as in the register. Is my noble friend aware—I am sure that he is—that offshore wind producers are now saying that they can produce electricity at £62.50 per megawatt hour? Of course, commercial storage will make it considerably lower, if we go for it. Does that not cast a shadow over the costs of the contract at Hinkley Point C, which are for £92.50 for the next 35 years, indexed? Is it not time to question some of these lavish expenditures, which are having very little effect on carbon reduction and greatly increasing the charges to poor consumers?
Lord Henley
My Lords, at this stage, I do not want to get into the wider question of Hinkley C costs. I think it would be rather dangerous for me to go down that route. My noble friend is right to say that increased use of home battery storage, possible greater use of batteries in cars as a means of storage in years to come and greater use of other forms of storage, which the noble Baroness and my noble friend referred to—he is probably aware that we already have about 5 gigawatts of storage in the system, which is mainly pumped hydroelectricity—have implications for costs throughout the grid, which will need to be addressed.
Lord Campbell-Savours (Lab)
Has an audit been carried out of lithium resources worldwide or has it all been left to market forces?
Lord Henley
My Lords, so far, we have seen the cost of lithium-ion batteries drop by some 50% over the last five years, since 2012. That implies that resources of lithium are more or less okay and that market forces are driving costs down. I do not have the figures on long-term estimates of quantities of lithium, but that will be taken into account by the market in due course.
Lord Broers (CB)
My Lords, with respect to the previous question, would it not be a good idea for the Government to follow that issue rather carefully, so that the consumer can have a realistic price? Solar cells and storage batteries are expensive, and people selling them do not always give straightforward information. It would be a good idea, would it not, for the Government to look at this in some detail, so that consumers can be given reliable advice on the cost of such storage?
Lord Henley
My Lords, as I said in my answer to the previous question, the cost of lithium-ion batteries has come down considerably—by 50%. Batteries are still expensive but it is in the interests of some consumers to buy them to even out their use of electricity and make savings. Obviously, any advice that they can get, which was partly behind the Government and Ofgem’s smart systems flexibility plan, would be of use to those consumers.
Baroness Maddock (LD)
My Lords, the more smart meters are installed in our homes, the more potential there will be for battery storage. Will the Minister assure us that the promise the Government made of 26,000 smart meters in our homes before 2020 will really happen?
Lord Henley
My Lords, we are on track for that. As the noble Baroness will be aware, legislation dealing with this is coming forward. I hope we will get there; I see no reason why not.
Lord Hayward (Con)
My Lords, does my noble friend not agree that one way to change the dynamics of our energy supply would be to approve the Swansea tidal lagoon as quickly as possible, a decision on which has been pending for rather a long time?
Lord Henley
My noble friend makes a very interesting point. No doubt that will be addressed, but it is somewhat wide of the Question relating to battery storage. It obviously will have an effect on our production of electricity overall.
Lord Brooke of Alverthorpe (Lab)
My Lords, given the performance review in the summer and the driverless and electric vehicle charging point Bill currently in the House of Commons, why is there so little in the Bill to incentivise people to purchase batteries?
Lord Henley
My Lords, I do not think there is so little. There is quite enough to encourage people to buy batteries. That is why they are and why we have seen a reduction in their price.