Long-duration Energy Storage (Science and Technology Committee Report)
(1 day, 14 hours ago)
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Baroness Brown of Cambridge
That this House takes note of the Report from the Science and Technology Committee Long-duration energy storage: get on with it (1st Report, Session 2023–24, HL Paper 68).
Baroness Brown of Cambridge (CB)
My Lords, I am delighted to introduce for debate this Science and Technology Committee report on long-duration energy storage. It is my pleasure to welcome the noble Baroness, Lady Gustafsson, of Chesterton, who brings her valuable business and technology experience. I look forward to her maiden speech in response to this debate, and to working with her on issues across science, technology and investment.
I stress that my personal knowledge of this field is closely linked to my external interests in the area as a non-executive director of Ørsted, the offshore wind developer, and the FTSE-listed company and Imperial College spin-out Ceres Power, which licenses intellectual property for solid oxide fuel cells and electrolysers.
I thank all the highly engaged Science and Technology Committee members, past and present, who made leading this report challenging, thought-provoking and fun. As ever, huge credit and thanks are due to the committee staff who assisted in preparing this report: Thomas Hornigold, Matthew Manning, Sid Gurung and Cerise Burnett-Stuart, as well as our special adviser, Professor Keith Bell of the University of Strathclyde.
The inquiry ran from September 2023 to March 2024, with follow-up sessions in April and May last year. We heard from about 30 witnesses, including energy system experts, private companies, the Climate Change Committee and the Department for Energy Security and Net Zero. Some 46 pieces of written evidence were published. Our report was entitled Long-Duration Energy Storage: Get On With It. Since the report was published, we have had a general election and a change of Government, but as the new Government’s target for a largely decarbonised electricity system has been brought forward from 2035 to 2030, the imperative to get on with it is now all the more pertinent.
The climate crisis is worsening. On Monday this week, the serious scientific journal Nature described, uncharacteristically, global average temperatures in 2023 as “off the charts”—and 2024, at over 1.6 degrees above pre-industrial levels, has unexpectedly been even hotter. Nature reports that climate scientists are now considering whether this could indicate that climate change is accelerating. Add to that an increasingly unstable world and energy security is more critical than ever for the UK economy and the well-being of the population. But we do not have much time: 2030 is just five years away.
We have a Department for Energy Security and Net Zero, and long-duration energy storage must be at the heart of its thinking. It is a tool that enables us both to have energy security and to reach net zero. The Government acknowledge that the vast majority of electricity in the UK will need to come from renewables by 2030, and electricity supply and demand will grow significantly as we electrify heating, industry and transport.
But the supply from renewables is weather dependent. In particular, the Royal Society’s report on long-duration energy storage warned about the “Dunkelflaute”: the dark doldrums of winter, when the wind does not blow and the sun does not shine, leading to low renewable generation, sometimes for periods of days to weeks, across the UK and northern Europe. When this happens, some form of large-scale and long-duration energy storage will be needed to keep the lights on. Long-duration storage has another big advantage: rather than curtailing—that is, switching off—wind generation when there is excess supply, as we currently do, we could store that energy and use it later.
If we want our long-duration energy storage to be ready in time, we must act now. If we are to use green hydrogen as our long-duration energy store, which can be generated from renewable electricity via electrolysis, then witnesses told us that storage facilities could take seven to 10 years to build, and storage of any kind needs upfront capital investment. Recent events have made the consequences of energy supply shocks only too clear. Relying on imported fossil fuels damages not only our environment but the UK economy. The recent energy crisis caused by the Ukraine war and restriction of Russian gas supplies to Europe cost £78.2 billion between 2022 and 2024 in government support for energy bills alone. Moreover, the inflation that drove the cost of living crisis was in part driven by the high energy prices, and that damage has been felt by every single household in the UK.
This underlines the value of investment to prevent future crises, but it also demonstrated that, with current economic incentives, the existing energy market will not provide the long-duration storage that we need. We had to partially reverse the closure of the Rough gas storage facility, which had shut down because the private sector argued it was uneconomic to maintain. Energy storage capacity, like vaccines or PPE, is one of those things that Governments wish they had invested in earlier, when they find themselves paying eye-watering sums on global markets in the midst of a crisis.
Not surprisingly, the committee’s report made recommendations around strategic energy storage: a strategic reserve of energy; planning and decision-making for the energy system; targets and policies to support long-duration energy storage; hydrogen as a green energy store; and wider policies to help to minimise the need for long-duration energy storage. I shall discuss some of those key recommendations and some of the Government’s policy responses.
The committee urges the Government to commit to a strategic reserve of energy storage, to be filled when supply is plentiful and maintained to be used in a crisis. The Government have committed in their manifesto to a so-called “strategic reserve” of gas-fired power generation, and have explained that clean power by 2030 actually means 95% clean power from renewables or nuclear, with 5% gas-fired generation kicking in mainly when renewable supply is low. But this is about meeting the frequent requirements for some extra power, and while that is of course crucial it is not about the extremes that we know will happen but cannot predict—the Dunkelflaute or the global crisis.
To be clear, a strategic reserve of gas-fired generation is not the same as what we mean by an actual strategic reserve of energy. The latter could take the form of a volume of gas or hydrogen stored, as we recommended, or indeed other forms of energy storage, such as pumped hydro. The clean power action plan says that we currently need 35 gigawatts of gas generation for long-duration flexibility, but do the Government have estimates for how much gas they will need in a strategic reserve to provide the electricity that we would require in a Dunkelflaute in 2030? How much would we need beyond 2030, with more renewables and when electricity demand is even higher? If gas is to be the backstop for the 2030 target, will there be an actual strategic reserve of gas—a reserve that is government-owned and kept for those extremes? If that is not the case, how will the support mechanism ensure that the store is full when we need it, so we avoid a repeat of the energy crisis that we have just had, with us paying high wholesale prices for gas in a crisis or weather extreme?
The committee said that the Government should get started on no-regrets actions. There is enough analysis of the level of storage that would be needed in a whole range of scenarios that setting an explicit minimum target and getting started on building the strategic reserve is really a no-regrets action. Many key infrastructure decisions are urgently needed. Beyond 2030, to progress towards net zero, any remaining gas-fired plants will need to be fitted with carbon capture and storage, or CCS. New gas plants are supposed to be built to be CCS-ready, but where is the actual plan to capture and store their carbon emissions? How can they be CCS-ready when we do not yet have the networks for transporting and storing CO2 and we do not even know where those networks will be? How can companies take investment decisions to build CCS-ready plants if they do not know how or when the CO2 will be transported for storage? Key decisions are urgently needed about infrastructure—not just the transmission infrastructure for electricity but the transmission infrastructure for CO2 and for hydrogen.
We must act to avoid an increasing challenge of curtailment. The Government’s response to the committee’s report focuses on the role of gas generation to ensure that the lights do not go out. However, without large-scale, long-duration energy storage in a form other than gas, we will not be able to store all the excess energy that UK renewables can generate. So how much curtailment is acceptable and how will we avoid an increase in the frequency with which renewable generators are being paid not to generate electricity?
Is there a transition plan to wean ourselves off gas post 2030? With the assumption that we intend to deliver energy and economic resilience by replacing our reliance on imported gas with other forms of energy storage, how will long-duration energy storage compete with gas subsidised through the capacity market? The Government can argue that long-duration energy storage, for example in the form of hydrogen, cannot scale up to meet security of supply in 2030. Given what we have heard about timelines they may well be right, but if we want to finally break our dependence on fossil fuels and their volatile global prices, as well as to make use of every green joule that we can generate domestically, we need a long-term plan to wean ourselves off gas and scale up domestic large-scale, long-duration energy storage. Can the Minister tell us whether the Government have such a plan?
These are just a few of the many questions from the committee’s report and some elements of the Government’s response. They are not questions for a distant future: 2030 is five years away. That brings me to my next point, about urgency and acceleration. I do not want to give people the impression that long-duration energy storage has been totally ignored. The Government are introducing schemes to support long-duration energy storage through a cap and floor scheme, which we hope will help to finance pumped-hydro storage projects. They are also introducing hydrogen to power and hydrogen transportation and storage business models, although we understand that no subsidies will be delivered until at least the end of this year, as these models are still being developed. Some electrolytic hydrogen projects have been supported in the latest allocation round, and the National Wealth Fund can use some of its funding to support the development of hydrogen projects. We welcome these developments, but bold action is needed to catalyse private investment now. Can the Minister explain how the Government intend to accelerate these plans?
There are further challenges, including skills, public engagement and acceptability, and a range of other issues, which I know some of my committee colleagues will pick up in subsequent speeches.
The Government have set a very challenging, and laudable, target of clean power by 2030, but no one needs reminding that targets are easy to set and much harder to achieve. There are promising signs in the clean power action plan that the Government understand the range of challenges that they must grapple with and are putting policies in place to address them. But policies are not yet spades and steel and concrete, and there are still too many holes in the plan—and not enough holes in the ground—especially around a strategic reserve of energy, starting the no-regrets actions, accelerating the timescales for building long-duration energy storage, and planning to wean ourselves off gas as an emergency backstop, as well as about what happens beyond 2030 and urgency in general. I say again that 2030 is now only five years away, and that is a very short time in terms of developing energy infrastructure. We can, and must, achieve both energy security and net zero, and this requires taking long-term energy storage seriously.
We cannot afford a situation where, every few years, dark doldrum weather conditions send us scrambling to a volatile global gas marketplace, just as the gas price peaks, so that we can keep the lights on. Failure to plan and invest now to avoid this leads us precisely there. Indeed, yesterday, the GB power market came to within 580 megawatts of demand control or a blackout on what was the tightest day for generation since 2011. Incidents such as this and the recent energy crisis, and the lasting societal impact of bailouts and inflation, are a stark warning. If the Government are serious about achieving energy security and net zero—and I believe that these are vital goals—then they must set out a clear plan for how we are going to avoid this situation. That means serious investment and action to cut timelines for energy storage now. I beg to move.
Baroness Neville-Jones (Con)
My Lords, it is a pleasure to welcome the Minister to the House and I very much look forward to her speech in reply. I thank our team of committee staff for their support, especially Thomas Hornigold and Matthew Manning, not only for the way in which they helped us but for their remarkable intellectual contributions to our work, as well as that of our specialist adviser, Professor Keith Bell. I also thank our chairman for her leadership in the discussions on this subject.
The title of our report rather suggested a narrow topic; in fact, it is a very big one. In the six minutes I have, I want to talk about just one aspect in more detail: the planning for long-duration energy storage and hydrogen as an important long-duration storage technology. It is noticeable that, although both the previous Administration and the Government agree that reserve generation power is going to be necessary to complement the variability of wind and solar power, neither has taken their public statements on LDES policy much beyond 2035—indeed, in the case of the Government, beyond 2030. My problem is that, in a very important area, there seems to be a big hole in potential policy.
As our chairman made clear, the committee did not say that hydrogen should be the sole LDES technology, but we did think that, of the technologies currently available—and there are a number already in use, such as pumped hydropower—it was the technology that was best placed to play a central role in providing the power that we need in the quantities that we are likely to need it. We were explicit about the need for early commitments to a strategic reserve, given the time that it takes, as mentioned by our chairman. Seven years is, I think, not excessive, in which you have to conduct tests, develop appropriate storage conditions and create the associated infrastructure, which is not itself a trivial issue. These are all factors that apply to most potential LDES technologies.
I have to say that I interpret the Government’s decision to build gas plants to provide reserve power as an implicit admission that, notwithstanding international undertakings, clean sources of reserve power will not be available in sufficient quantities by 2030. I very much hope that this decision on gas, despite its considerable expense, is only transitional and that there is a serious intention to have a clean energy source solution for reserve power as soon as possible. Can the Minister confirm this when she responds?
The truth is that early decisions by the Government about reserve power are nothing short of crucial, since without the confidence inspired by a framework of relevant and coherent public policy, it is an illusion to think that the private sector will invest the necessary resources. We really must avoid a repeat of the recent experience of paying exorbitant prices for scarce energy because of a failure to provide indigenous sources, of which we are perfectly capable if only we organise ourselves.
There is a temptation to argue that it is not possible to take big decisions on reserve generation until we know more about the capabilities of different possible technologies and have a better idea of the quantum likely to be needed. These issues are real, but, far from being solved by delay, risk levels are only compounded, and in any case they do not give us the answer to the energy quantity question.
A lot depends on what we assume demand will look like. The energy modellers use different assumptions about the forecasts for future energy supply and demand, which in turn depend, in part at least, on assumptions about weather. The Climate Change Committee bases itself on a typical year of weather, accompanied by stress tests of more extreme weather patterns, whereas the Royal Society, in its study, analysed weather patterns over a longer period, which included years in which there was anomalously low power generation resulting from prolonged periods of low wind speeds—the so-called Dunkelflaute, of which we have heard. Not surprisingly, the Royal Society came up with a bigger estimate for the amount of LDES required than did the Climate Change Committee.
No one said that this was easy. However, I wonder whether anybody has much confidence these days in what constitutes typical weather. What we do know is that weather damage is getting bigger and more expensive by the year. The World Economic Forum recently estimated that, by 2050, the global cost of climate change damage will be between $1.7 trillion and $3.1 trillion a year. With such huge costs at stake, it must be right to act now to ensure that, in turbulent times, at least our power infrastructure is as robust as we can make it and capable of meeting a wide range of weather contingencies. Economic growth and economic security literally hang on it—hence the committee’s entreaty to the Government on long-term energy storage to please get on with it.
What are the advantages of hydrogen for large-scale, longer-term storage? It is available in unlimited quantities through electrolysis and is storable for long periods—that is to say, for months or even years. The UK’s geology makes this a pretty cheap proposition. The power losses involved in conversion to electricity mean that, unless cheap sources of spare energy can be found, such as energy release from a nuclear power station, hydrogen is most economically drawn on as a power source when, for whatever reason, there is a shortfall in the power production of renewables and other sources of energy. I ask the Minister to give us what guidance she can on the nature and timing of government plans for long-duration energy storage at scale.
Lord Drayson (Lab)
My Lords, I am delighted to follow the noble Baroness. I join her in thanking the committee staff for their excellent work on this report and their considerable intellectual contribution to it.
I want to emphasise the urgent need for decisive action by the new Labour Government on infrastructure investment. The UK is at an economic crossroads, and the choices we make in the coming months will determine not just the pace of our recovery but our long-term economic prosperity. I am delighted to welcome my noble friend Lady Gustafsson to our Front Bench and am greatly looking forward to her maiden speech. We are fortunate to have such an accomplished technology entrepreneur as our Investment Minister. I was struck that she wrote, in an excellent LinkedIn post last Sunday, that she was suffering from
“the CEO condition which means you want everything done your way”.
It is exactly that CEO mindset that is so needed in the UK Government right now. Nowhere was that clearer than in the evidence that the Science and Technology Committee heard during our inquiry.
It has been widely accepted that, for too long, the UK has lagged behind its global peers in infrastructure development. Indecision and a reluctance to embrace risk and make investment have left us with missed opportunities and anaemic growth. The UK is becoming poorer and falling behind as a result. It is time for that to change and it will need decisive action to achieve it—not consultation and review, but action.
Nowhere is this clearer than in energy infrastructure. A thriving economy requires reliable, sustainable and affordable energy. The new Government are accelerating our transition to a decarbonised grid by 2030 using renewable solar and wind energy. That means it is essential that we also have long-duration energy storage capacity. However, progress on building such a storage facility has been hindered by hesitation and delay. Witness after witness told us how the previous Government avoided decisions and failed to heed clear advice from industry on the need for action—hence the blunt title of our report to get on with it.
Unfortunately, our politics, our Civil Service and our industry regulators have become increasingly risk averse over the past 15 years. Significant investment involving technological innovation is risky. Failure is a real possibility and success requires political courage, a bias for action and skill in managing that risk. In short, we need Ministers with a CEO mindset who understand that the greatest risk lies in not making a decision and who focus efforts on managing risk as implementation proceeds.
If the UK fails to act on long-duration energy storage now, we will not meet our net-zero targets, and we will subject our society and economy to blackouts and higher energy costs. By committing to decisive action now, Labour Ministers can signal that Britain is serious about restoring the nation’s fortunes. They can inspire confidence that the UK is now a place where transformative projects get built and where vision is backed by action.
I have one question for the Minister: when will this Government decide to build the strategic reserve of long-duration energy storage that they already accept will be needed to deliver energy security and net zero?
Lord Lilley (Con)
My Lords, I must begin by declaring that I do not have any relevant interests to declare. Noble Lords might think this is somewhat superfluous, but I do so because the BBC’s “Today” programme, on the rare occasions it reports my remarks on climate policy, prefaces them with a health warning that “Lord Lilley has interests in the oil and gas industry”—as it did after my recent debate on the costs of climate policy. I presume it does so to discredit my views. There is one small problem. Sadly, I have no interests in any energy company. I have had no financial interest in any energy company for over a decade. I have never had any interests in any energy company which would benefit from the policies I advocate in your Lordships’ House.
In the light of my experience, I was concerned that the noble Baroness, Lady Brown, who opened this debate, was asking for trouble in not recusing herself from chairing the committee during this report. I make it absolutely clear that I am not impugning the integrity of the noble Baroness. Her views on net zero are well known. I am certain she does not hold those views because of her financial interests. On the contrary, she holds those interests because they align with and inform her beliefs.
In my case, the BBC had to invent interests that I do not have. In the noble Baroness’s case, the newspapers have already pointed out the interests she properly declared. Ceres Power Holdings, which aims to become the world’s biggest source of green hydrogen, pays her £74,000 per year. Ørsted, which stands to benefit if its surplus wind is used to generate hydrogen, pays her £40,000 per year. I have no problem with that. The House benefits from noble Lords who have active interests in business and industry—not least the very distinguished record of the noble Baroness, Lady Brown of Cambridge.
However, I wonder how the House would treat a critic of climate policy who declared that they received over £100,000 from fossil fuel companies when they chaired a report advocating policies which would benefit fossil fuel companies. All I ask is that those on both sides of the debate accept the good faith of their critics and, in particular, do not traduce the motives of those such as me who want to apply a cost-benefit analysis to these issues as being paid shills or climate deniers.
Let us get on to the report itself. It can be described as an almost priceless report in the sense that there are almost no prices attached to any of its recommendations. My only objective in this and the other debates on net-zero policy is to establish the costs and benefits of the options being presented to us. If the option proposed is cheaper than relying on fossil fuels, that is great; the sooner the better. If it is more expensive, let us compare that extra cost with the social cost of the carbon emitted before we decide to go ahead. I get very suspicious when we are told that we must, as the title of the report puts it, “get on with it”, when we do not know what “it” will cost. Dieter Helm, in his report for the previous Government on their climate policy, said that premature investment in immature technologies has wasted up to £100 billion of British taxpayers’ money. Let us not repeat that folly.
I said that the report was almost priceless. But hidden in box 3 on page 17, it quotes the Royal Society report, which claims that, if we rely on renewables and hydrogen storage, the price of electricity in 2050 will be £60 per megawatt hour, which it says is “comparable to the average” price over the decade from 2010 to 2019. Normally we are told that it is going to be cheaper, but this time it is only comparable—so presumably it will be a bit more expensive. That is rather hard to explain because the most recent auction price for offshore wind was £82 per megawatt hour, indexed against future inflation. That does not include the cost of tackling intermittency and, for example, the cost of hydrogen storage.
The same box says that hydrogen storage will add an extra cost of £100 billion. Strengthening and enlarging the grid will cost another £100 billion. This almost equals the £210 billion the Royal Society says will be required to invest directly in wind and solar generation. Given that the main cost of wind is capital investment, how can almost doubling the capital costs required for a system that is driven purely by intermittent energy and therefore has to have so much expensive back-up result in a fall in the price?
I understand that the Royal Society and the committee are relying on barely credible reductions in costs in all aspects of the process. Sadly, the committee did not consider the benefit of relying for a bit longer on natural gas as a back-up while these cost reductions materialise. The cost of energy is crucial. We cannot overstate the impact high costs have on economic performance. We should not rush ahead and get on with something—the cost of which we do not know—when for a bit longer, and with comparatively minor extra emissions of natural gas, we can avoid those problems.
Viscount Stansgate (Lab)
My Lords, it is a pleasure to take part in today’s debate. I join all speakers—or perhaps all—who have congratulated my friend, the noble Baroness, Lady Brown of Cambridge, on securing it and on chairing the committee with great skill and good humour. I also thank the staff for their tremendous help in producing today’s report. I am glad that the House has had an opportunity to debate it relatively soon after its publication. That may seem strange to some new Members—January 2025 is not particularly close to March 2024—but, considering our subtitle “get on with it”, I hope the new Government will react to this report and debate in that spirit. I say “new Government” because most of this inquiry was conducted under the old Government. Like all other Members, I look forward to the maiden speech of my noble friend Lady Gustafsson, who will join that relatively rare and select group of Members who make their maiden speeches as Ministers and not as Back Benchers.
I have been reflecting on the coincidence that we are having our debate on the same day as the state funeral of President Jimmy Carter. You may think there is no connection but, looking back, one of his achievements was to set up the Department of Energy in the United States in reaction to the oil crisis of the 1970s when OPEC became a well-known word throughout the world. We had set up our own Department of Energy a little earlier; it was 50 years ago this year that the first of the North Sea oil came through.
So, 50 years later, we find the energy landscape transformed and the public are now well adapted to the fact that energy policy shapes their lives. They instinctively realise that the phrase “net zero” is a further transformation which will dominate lives, even if they are not familiar with some of the details of this change. Today’s report should be seen in that context, given that many of the details may not be easily grasped by the public.
As you would expect, we took a lot of very detailed evidence for the report from a wide range of experts. Even on some of the most important areas, such as the need for a strategic energy reserve, there were widely varying views on how large that reserve should be. We know that the Government’s targets are ambitious and the wish to be largely decarbonised by 2030 brings forward the date, so it is all the more important that a committee such as ours takes on an issue such as this and gives it the prominence it deserves. Let us face it, LDES as an acronym does not exactly trip off the tongue, but it represents an important and vital ingredient of our future energy policy. The net-zero policy to which we are committed will mean that we use electricity far more than we do now, and it will be derived from renewable sources. We will specifically use wind and solar, both of which we have a great capacity for.
The residents of a place called Odiham in Hampshire, as noble Lords will recall, last autumn went for an entire week without any recorded sunshine or wind. There is a special word to describe this—I think the chair has already beaten me to get it into Hansard—but we have got to deal with a world in which the sun does not shine and the wind does not blow, otherwise we run the risk of power cuts. The chair alluded to how close we came relatively recently to what many in the world would call “load-shedding”, which is something a first-world country such as ours should not countenance.
In the short time available, I have a few questions for the Minister. First, what is the Government’s current assessment of the scale of the need for LDES and how will it fit into the new energy system? Secondly, what progress is being made in setting up the National Energy System Operator and what effect will future reforms to the planning system have on implementing decisions once ministerial approval is given?
Thirdly, what plans do the Government have for a strategic energy reserve? Will that reserve be gas or might it be an alternative such as hydrogen? Fourthly, if it will involve green hydrogen as a long-duration energy store, how will this fit into the Government’s wider hydrogen policy? What plans do they have for a domestic electrolyser industry, not to mention greater public consultation on its potential use?
Fifthly, what progress is being made towards a strategic spatial energy plan? Sixthly, what plans do the Government have for speeding up the ability of renewable energy sources to connect to the national grid? When we look back on this in years to come, it will be a scandal that it took so long. Seventhly, when the grid connection queue has finally been shortened, what steps do they plan to take to enable electricity to be transferred across the country—even across beautiful parts of this country—by the building of new pylon networks? Can this be achieved without timely reform of planning laws?
Eighthly, is there anything the Government can tell the House about plans to minimise the need for long-duration energy storage, including the use of interconnectors—always bearing in mind that, in today’s dangerous world, as undersea cables are severed, so could undersea connectors? Ninthly, what government support is being given to R&D into other LDES technologies, such as compressed air and battery chemistries? Tenthly, can the Government explain how LDES can and will fit into their longer-term net-zero objectives? Will gas-fired plants be used for LDES? If so, will they be fitted with CCUS?
In conclusion, when a major committee such as the Science and Technology Committee tells the Government that they should get on with it, I want the Minister to know that it is meant in the kindest, friendliest way—but it is meant.
Baroness Bennett of Manor Castle (GP)
My Lords, since I am speaking after the noble Lord, Lord Lilley, and having listened to his contribution, I feel I must defend the BBC’s intention to contextualise his words. I note an article on the LSE’s website, dated October last year, headed “Misinformation in the UK’s House of Lords”, which focuses on statements made in the House by the noble Lord on the climate emergency, and speaks about
“the promotion of misinformation about climate change”.
The BBC is surely taking on board such analysis.
Lord Lilley (Con)
Is the noble Baroness saying that it is right for the BBC to say an untruth because she does not agree with what I say?
Baroness Bennett of Manor Castle (GP)
I am saying that the BBC is trying to—
Lord Lilley (Con)
Will she condemn the BBC for saying that I have interests in an oil and gas company when I do not, and have not for more than 10 years?
Baroness Bennett of Manor Castle (GP)
I have no awareness of the details of the noble Lord’s financial position, but I understand the BBC’s intention to try to make sure that it contextualises the information that is being presented to listeners.
I welcome the Minister to the House and to her position, and thank the noble Baroness, Lady Brown, and the committee for an excellent report and the entirely expected comprehensive and detailed introduction to it. It is a reminder that your Lordships’ House needs more people with a science and technology background, particularly those who are able to look at technological claims critically and, where necessary, sceptically.
I begin with paragraph 12 of the report, which talks about the global energy crisis as being an object lesson in our vulnerability to fossil fuel prices. Those who question the net-zero and 2030 electricity decarbonisation targets really need to focus on that paragraph. We need homegrown or regionally linked solutions, as well as sustainable ones. I pick up the points made by the noble Baroness, Lady Neville-Jones, about the evident state of our climate emergency now, and offer my sympathy to the 130,000 people forced to evacuate Los Angeles. I urge those who doubt the need for climate action to look at those images and question why they still have doubts.
The report covers the fact that the Climate Change Committee forecast that electricity demand will increase by 50% by 2035 and double by 2050 in its balanced pathway scenario. I want to go back further than the committee report does: can we afford that increase in electricity demand, economically or environmentally? Can we make other choices about the way our society works? We think of it in terms of bulk demand for electricity, but we can also think about it in terms of balancing the grid from moment to moment. How can we reduce demand and make sure that that is part of our story, as well as saying that we have got to have the storage?
Paragraph 129 of the report says that long and medium-duration storage is critical,
“but it will not always be the cheapest option”.
The committee stresses that energy efficiency, which I want to focus on, is often a cheaper option. The cleanest, greenest energy you can possibly have is the energy that you do not need to use. I fear that sometimes, when we reach out for technological solutions and think about growth as a mantra or religion, we fail to think about the fact that the cheapest, cleanest, best possible energy is the energy that we do not need to use.
In that context, your Lordships frequently hear expressions of excitement from the Government about the possibilities of so-called AI or large language learning models. One study suggests that a generative AI system uses around 33 times more energy than a machine running task-specific software—33 times more energy to get the same outcome. In 2022, the world’s data centres gobbled up 460 terawatt hours of electricity and the International Energy Agency expects this to double in just four years. Data centres could be using 1,000 terawatt hours annually by 2026.
It is interesting that Dublin, for example, has just put a moratorium on the construction of new data centres. Nearly one-fifth of Ireland’s electricity is currently used by data centres, and that figure is expected to grow significantly. Ireland is starting to ask the question: can and—importantly—do we want to do this?
Finally, perhaps we could do with a little bit of light relief. I suspect that a new word for your Lordships’ House, at least used in this context, is so-called AI slop, which is junk, nonsense material being created at enormous scale by AI-generating machines. There has apparently been a huge explosion of images of Jesus made out of shrimps. Do we want to create energy storage so that AI systems can do that?
Lord Rees of Ludlow (CB)
My Lords, I start by thanking the noble Baroness, Lady Brown, for adeptly chairing the sessions that led to this report. More than that, since she retires from our committee this month, she deserves congratulations on being so effective and benign throughout the last four years.
Today’s debate raises serious issues which cannot be addressed without substantial resources and long-term planning. The backdrop is, of course, that the simplest and cheapest way that the UK can move towards net zero is to exploit energy from the sun and from wind. We need to get more energy from these clean sources than the total amount we generate now, because we need to replace the energy now coming from fossil fuels that is used for transport and heating. Therefore, by 2050 we will be far more dependent on electricity than we are today. So dependent are our cities on electricity already that there would be utter social breakdown within two or three days if there was a complete power cut.
In going carbon free as our contribution to avoiding the global mega risk of extreme climate change, we have exposed ourselves to a new risk: namely, that electricity supply could fail during sunless cold spells in the winter. Coping with this new risk is the theme of this report. It is clear that major annual investment is crucial if the UK is to achieve its net-zero ambition by 2050 and removing the associated risk of that would require the substantial extra expenditure discussed in the report. There will be a strong temptation to spend less and slow down the whole decarbonisation programme, partly on the grounds that the UK’s current contribution to global CO2 emissions is less than 2%, so the global benefit will be minimal if other countries fail to achieve net zero by 2050 or have not even set themselves such a strict target. To many citizens, this will seem just the kind of project that can be progressively cut and deferred in favour of more urgent and local problems.
My main point is that there are other quite different cogent reasons—indeed, compelling ones—as to why the UK should build up an energy store to be drawn on when the system that normally powers the electric grid falls short of our needs. I refer to the consequences of, for instance, cyberattacks on nuclear power stations, sabotage of cables, or failures—either accidental or malign—created in the crucial machinery that controls the grid and is coupling to energy generated by wind or sun.
Even if we never contemplated the kind of aggression which Ukraine is now experiencing, we surely cannot rule out cyberattacks on power stations, sabotage or similar interventions which close down large parts of the grid. There is bound to be a delay in restoring power after such events so, to bridge such a delay, there needs to be an emergency store of energy which will prevent possible utter social breakdown.
The optimum infrastructure needed to cope with these emergencies would not be quite the same as what is needed to cope with calm, sunless winters, but there is plainly an overlap. Most people would feel far more motivated to support long-term energy storage if it also contributed to the just as important task of rendering us more resilient to technological breakdowns or malign attacks. The probability of those attacks is hard to estimate, as is the probability of other failures, but it will surely increase with time in our unstable world. Most people worry more about these than the projected effect of climate change, which motivates the net-zero target.
I suggest that the risks stemming from the shift towards solar and wind energy, which are the themes of this report, should be added to the already threatening risks from advanced technologies, especially as there may be an overlap in the benefits of particular measures to counteract both of them. There is more chance of getting these measures if they have two reasons for being done, rather than just one.
Lord Borwick (Con)
My Lords, this is a very good report by the House of Lords Science and Technology Committee, and I thank all our great staff, but I regret that I cannot be as complimentary about the Government’s response. The rules of the House of Lords prohibit a committee from expressing urgency by visual design or typographically. Perhaps the committee thought that “get on with it” was sufficient, but I do not consider that the sense of urgency that we found on the matter was reflected in the response.
The position is simple: windmills have a 97% or 98% availability rate. These figures are only from the internet, and I would be happy to be corrected by more knowledgeable noble Lords. The problem is that failures occur mainly when the wind dies down. Then, it happens to all windmills in a given area at once. Can the Minister confirm that this very nearly happened yesterday, which would have made a dramatic opener for this debate?
The Germans have a word for the winter phenomenon of a Dunkelflaute—mentioned by our chair, the noble Baroness, Lady Brown—which seems to have entered the English language. It is a period of time—several days—of flat calm and low clouds, in which neither windmills nor solar panels can produce much power. There is very little that anyone can do about it. One has to hand it to our German cousins for producing such a fine onomatopoeic word.
As a country, we have decided that we will deliver a zero-emission electricity grid at some stage. The committee has tried to point out the complexity of doing so and of providing a back-up system without billions of pounds of expenditure; it is impossible to do it at reasonable cost.
One solution is that we should have a fleet of nuclear power stations. The trouble is that we know that, but we are not happy with the risk of the small modular reactor. We should be happy, because we know what the risk is now: it is different from and smaller than the risk unknowable from a hydrogen-based solution. Another solution is to start fracking. The 0.5 level on the Richter scale, which must not be exceeded, is less than the vibration caused by 10 Lords a-leaping, and we survive that at Christmas every year.
In the 1970s, this country and its population were used to power cuts. Our electricity was dominated by coal and the country was dependent on unionised coal miners doing their hard work in low places. They were suffering conditions with no end of industrial disease, in addition to mesothelioma, for which we are paying even now. We were used to and prepared for power cuts. I was told that, in 1973, during the end of the three-day week, the Department of Industry—working for Tony Benn as Secretary of State, the late father of my friend, the noble Viscount, Lord Stansgate—had to negotiate a solution to the problems caused by the bankruptcy of BSA and the motorcycle industry. The meetings took a long time, but the department could not show any lights that proved that they were working on an off day. So they set up trestle-tables in the gents’ loo at the department, confident that there would be no female lawyers or executives in any of the teams negotiating, and that they would not be discovered as there were no outside windows. The point is that the department was ready to solve the problem; we have lost that ability today.
We are a changed society and many more times more dependent on electricity now than 50 years ago. I am not sure what today’s teenagers will say when they cannot recharge their iPhones, nor indeed how they will say it. I suppose that they will be forced into conversation with their parents, who will moan that they cannot recharge their electric cars either. We do not have candles stored in every house, nor matches to light them. The point is that we are many times more vulnerable to the effects of power cuts than we were 50 years ago, and, at the same time, many times more likely to get one thanks to a Dunkelflaute affecting our windmills. They will stop, and no amount of political hot air will restart them. Unfairly, the Government will be blamed for the weather; their actual crime will be not having a decent back-up system in place to save us from this utterly predictable disaster. A few days’ interruption 50 years ago was possible to cope with then.
Our report pointing out this urgency was able to generate a government response identifying the process to develop an answer. No doubt, it is an impeccable process. We do not need a process; we need a solution. Otherwise, we will do what Governments often do: seize on an expensive solution that looks like action and blame their predecessors for the problem. The electorate will not believe the politicians, and, as usual, the electorate will be right. The problem comes from our decision to have a zero-emission grid, but given current technology, there is no simple solution. The only thing we can say is: “Get on with it”.
Baroness Young of Old Scone (Lab)
My Lords, I declare an interest as the chair of the Labour Climate and Environment Forum. I joined the Science and Technology Committee just as it was finalising its long-term storage report, so I am afraid that I cannot claim any credit whatever. However, I am pleased that I can speak today in support of this important report and of our admirable chairman, who was quite unfairly attacked by the noble Lord, Lord Lilley—but let us not keep that debate going.
I also add my welcome to the Minister my noble friend Lady Gustafsson; I look forward to her maiden speech in response to this debate. With her investment role, she will understand that driving investment is probably the only issue in this topic that absolutely has to be grasped.
As many noble Lords already pointed out yesterday, the power grid operated in exactly the way that a long-term energy storage system should be designed to avoid: the temperature dropped, the demand for heat and power went up, the wind and sun were absent—the famous Dunkelflaute—and the reserve gas-fired power stations had to be cranked up at great expense, because everybody else in Europe was calling for gas at the same time. We cannot go on like that.
When Conservative Ministers came to the Select Committee a year ago and we probed how they saw such a situation being dealt with in the long term, we were quite hard on one of them, if I remember correctly. He eventually lost his cool completely and snapped, “That is why we need to have a reserve of gas-fired power stations, even if they are unabated. Something’s needed to keep the lights on”. I was a bit disappointed in that as a response.
I am glad to say that we have moved on considerably from then. The Clean Power 2030 Action Plan, which was published in December, is a major step in the right direction. It is only a first step, in a route map that needs to be clearly laid out, to the decarbonising of power to avoid the spectre of dependency on expensive, insecure and polluting unabated gas. It is interesting that polling of the public that we did last year for LCEF showed that, at the height of the energy price crisis, the public ranked energy security equal with reducing the cost of energy as important in their mind.
The 2030 action plan outlines intentions to capture and store excess renewable energy generated when the sun shines or the wind blows and we have more electricity than we need. As noble Lords have pointed out, we currently pay renewable energy generators not to produce this surplus energy, which, even given the polite title of “curtailment”, is bonkers in anybody’s books. The plan, of course, focuses only on the revised target date for zero-carbon energy of 2030—the clue is in the title—but, for longer-term back-up and storage, it points in the direction of travel beyond 2030. It outlines what measures need to be put in place and some initial timetables, although not enough. This is all vital if we are to inspire confidence in investors and leverage private money to tackle the task.
Can my noble friend the Minister today provide us and the investment market with additional assurance about the Government’s intentions beyond 2030? I have some specific questions. First, are the Government clear that long-duration energy storage, which provides highly flexible power, is the missing piece of the energy jigsaw and that it will reduce our reliance on unabated gas generation, allow variable renewables to be used more efficiently, reduce costs, enhance our energy security and contribute to the reduction in carbon emissions?
Secondly, do the Government support the central role of hydrogen storage, along with other technologies such as pumped hydro storage, battery technologies and compressed air? Do they support the central idea that a reduction in the reliance on gas, as outlined by the Royal Society, will reduce costs?
Thirdly, are the Government committed to providing an investable policy environment, including a cap and floor regime, for long-duration energy storage technologies and policy support through dispatchable power agreements and other mechanisms beyond 2030, to enable the construction of hydrogen storage projects and supporting pipelines?
Fourthly, does my noble friend the Minister judge that we are providing enough support for projects aimed at testing the viability of carbon capture and storage, to achieve both the decarbonisation of gas-fired power stations and the creation of a sustainable hydrogen supply chain?
All these issues have a strong spatial element, and noble Lords will recognise that I cannot speak without mentioning the Government’s land use framework, which we hope is about to emerge. There are some very interesting steps, such as is happening in Hull, to co-locate various cutting-edge testing projects, such as CCUS and hydrogen projects, to see the value of co-location and to explore the spatial aspects of these technologies. Can my noble friend the Minister tell us when we might see the strategic spatial energy plan and what it will contain? Can she say how it will nest in the Government’s overarching land use framework, which will deal with all the key demands for land? We heard from the Defra Minister on Tuesday that it will be launched for consultation this month—but I heard that last Christmas, too.
Our excellent chair and many other noble Lords have already addressed the need for speed, and I will finish, very briefly, with my view that all these strands need to be progressed with commitment and vigour, to give confidence to the investment market as well as to hit targets. Large-scale hydrogen will take seven to 10 years to build. Although the word of the debate may be “Dunkelflaute”, I prefer the title of the report: Get On With It. I am not as well brought up as our admirable Select Committee’s chairman, so I would urge, even more starkly, the use of the admirable phrase “JFDI”. For those who do not know what that means, it is simply, “Just do it”, with a little embellishment that I will not repeat for fear of offending the Hansard writers.
Baroness Neuberger (CB)
My Lords, first, I echo other speakers in paying tribute to my noble friend Lady Brown of Cambridge, who will be rotating off the Science and Technology Committee shortly and has been a superb chair. Secondly, I too thank our wonderful staff, Matthew Manning, Thomas Hornigold, Cerise Burnett-Stuart and Sid Gurung, as well as our special adviser, Professor Keith Bell. I have particular reason to thank them because I knew remarkably little about this subject when we started. I am immensely grateful for their patience and willingness to educate somebody who knew nothing about this at considerable speed.
I want to cover a broad-brush subject. What do the Government intend to do to address questions of public acceptability of some of these new technologies and the public’s safety concerns about some of them? Take, for instance, the issue of large-scale storage of hydrogen, which we will probably have to go to at some point. The Government are now proposing gas as a back-up, as far as 2030 at least, but if hydrogen storage is ever to be part of the mix, presumably real planning will have to take place and storage facilities will need to be found. If gas is the short-term back-up, presumably the option of using decommissioned gas storage, raised with the committee by Centrica, is unlikely.
The previous Government responded to the prospect of repurposing Centrica’s gas storage for hydrogen by saying that they felt the technology was not ready at this point, so they would favour salt caverns for now. That being the case, the Government need to move fast to identify salt caverns and convince local residents that the storage is safe. If there are local objections to hydrogen storage, that could slow down or even prevent the development and have a huge knock-on effect on the whole hydrogen industry and energy infrastructure plans. Public acceptance might then ebb away, which would have a knock-on effect yet again on getting infrastructure plans through the planning system. This is like a pack of cards, and it all falls down if we do not get on with it.
It is not just hydrogen. Government will still need to ensure that other new technologies are brought into play. Without a careful and lengthy public information campaign, will those technologies be acceptable to the public? We have been seeing a gradual reduction in the acceptability of electric cars, as judged by sales, even though the technology is relatively simple and it is publicly acceptable—indeed, desirable—to want to reduce our dependence on fossil fuels. If that is what is happening with electric cars, does it not suggest that the Government may have a problem convincing the public about long-term hydrogen storage or long-term batteries? Surely the work on convincing the public should begin right now.
The previous Government responded to our recommendation of a public education campaign by saying:
“We welcome the recommendations regarding commissioning further research into the safety and public acceptability of hydrogen storage and will consider this as our overall evidence base on hydrogen storage develops. We will also ensure that relevant information is made publicly available as the evidence base develops. We will consider how and when it is best to conduct further research into public perception of hydrogen. For example, it may be best to consider this once we have more certainty on where initial hydrogen storage infrastructure will be located”.
That does not suggest that anybody is in much of a hurry for that, even though it assumes that there will be some hydrogen storage. Unless we get on with it, any hydrogen-to-power developments, which would require infrastructure to store hydrogen and transport hydrogen to the power plant, will not be ready when we run out of energy. We have heard about yesterday. Some of us probably noticed that all the lights went out around this Chamber only a few minutes before this debate began, which I presume was a sign of some kind.
All this has to be joined up, alongside a proper public information campaign. At the moment, messages from government are somewhat confused. The present Government’s Hydrogen Strategy Update to the Market statement was published in December. It made no mention of a strategic reserve of hydrogen, although it did say that the Government will support hydrogen to power. Yet long-term concerns suggest that if you are going to do that, some hydrogen storage will be necessary, and that is not widely understood.
Our report was entitled Long-duration Energy Storage: Get On With It. I hope that the Minister, whose maiden speech we are all looking forward to, can reassure us that the Government have a sense of urgency about this whole subject, and in particular about informing and educating the public. The public will not forgive us if that does not happen.
Lord Wei (Con)
My Lords, I extend my gratitude to the noble Baroness, Lady Brown, for initiating this crucial debate. I too am very much looking forward to the maiden speech by the Minister, the noble Baroness, Lady Gustafsson, and welcome her to the House. I declare my interest as an advisor to Future Planet Capital, a venture capital firm that invests in impactful technologies pertinent to this discussion, and my personal commitment to the energy transition. It has been an honour to serve on this committee and to work with its very able team, whom I also thank.
I welcome the report’s focus on the urgent need to scale up long-duration energy storage to meet the twin challenges of achieving a sustainable future and securing our energy supply in the face of renewable intermittency and increasing geopolitical black swans. However, I will focus on the role that innovation can play if sufficiently supported to scale up solutions by cultivating genuine market demand, at the right low prices and faster, for long-term energy storage.
First, we must do more to enable large energy users—industry, data centres and other high-demand sectors—to create a market for innovation in both storage and modular power generation. These organisations, with their predictable energy needs and financial capacity, are better placed to pilot advanced technologies. Whether through industrial partnerships or new regulatory frameworks, fostering collaboration between energy-intensive industries and technology developers, we could develop and deploy localised, modular solutions such as small-scale hydrogen storage, modular reactors, more universal bidirectional EV charging—essentially using our vehicles as an energy store—or other emerging technologies, over short and long periods. Many of these were touched on in the report. This approach could reduce reliance on large-scale, grid-intensive centralised solutions and catalyse a market-driven pathway to resilience, moderating short-term demand and building longer-term storage solutions.
Secondly, while hydrogen storage in salt caverns has received significant attention following the report’s launch, as well as gas more recently, it is vital that we broaden our portfolio of solutions to give ourselves radically more affordable and more resilient options. Emerging modular storage methods, including safer hydrogen hydrates technology and advanced battery chemistries, still hold promise for providing flexible, cost-effective alternatives. Encouraging diverse scaled-up storage innovation will mitigate the risk of overreliance on a single, expensive and centralised approach, particularly given Treasury constraints. We need a big push to get all parties to help accelerate the most promising breakthrough technologies for storing and generating baseload supportive energy and storage, avoiding lock-in to older, higher-cost solutions. I have seen technology coming down the line that could increase industrial energy capacity by at least 50%. It would be a shame to overlook or close the door to such solutions in favour of ones that are more costly, even if more proven and established in the short term.
Thirdly, the report rightly highlights the urgency of fast-tracking planning, deploying capital and creating necessary price signals. Should we not go much further and consider putting in place a task force, akin to the Vaccine Taskforce, also empowered with a venture capital chair’s mindset, to cut through red tape, make rapid decisions and make smart, risk-managed bets with key stakeholders regularly, especially in relation to procurement? This would deliver the energy storage needed to prevent blackouts and secure cheaper energy faster, using modular baseload and emerging technologies.
In closing, I have some questions for the Minister. What actions are being taken to incentivise large energy users in driving market-based innovation in and scaling-up of storage and modular power generation? How are the Government supporting diversification of storage technologies, particularly for localised and industrial applications? What steps are being taken to develop the task force-style approach to cut through and get us to where we need to be at the right price and in ways that will bring the populace along with us? The time for bold, co-ordinated action is now. By leveraging the innovative capacity of our industries and innovators and focusing on diverse, scalable solutions, we can still secure a resilient and sustainable energy future for our country.
Lord Whitty (Lab)
My Lords, I join others in thanking the noble Baroness, Lady Brown, both for the report and for the clarity with which she has introduced this debate. I also thank the committee and its staff. Every time the last Government introduced an energy Bill or an energy Statement, I asked what they were doing about storage. I did not get any clearer reply than the committee evidently got from Ministers then. I do not think things have improved subsequently, but I welcome the Minister, the noble Baroness, Lady Gustafsson, and I hope that in her reply she will indicate which departments are responsible for which in this area—I am glad to see the noble Lord, Lord Hunt, here. I mention this partly because I listened to the introduction from the noble Lord, Lord Borwick. I worked for the father of the noble Viscount, Lord Stansgate, as a Minister even earlier, when we had separate ministries of technology and of fuel and power, and they failed to get on. Subsequent Prime Ministers have altered the demarcation several times since, and I would like to know what the new Government’s structure is, not only between those two departments but right across Whitehall.
It is important that we focus on storage. I have asked the previous Government and I ask this Government whether they agree that we will not approach the recommended path to net zero unless we have a very significant storage contribution reasonably quickly and, hopefully, as cost effectively as we can manage. I hope that this Government will rapidly move to a clear strategy for storage—of all technologies.
In the meantime, I want to concentrate on one dimension of this, which is the availability of hydrogen for both production purposes and storage, and the way in which we produce hydrogen at scale which does not itself create carbon emissions and slow down the approach to net zero. The last Government issued a number of White Papers on hydrogen; this Government have issued one, but it does not answer that question. At present, nowhere in the world to my knowledge is very substantial, at-scale production of green hydrogen being made available to industry. We have grey and blue hydrogen and we have moves to make hydrogen production somewhat cleaner and more cost efficient, but we do not have green hydrogen at scale. Yet most of the sectors which we are intending to transform by 2030, or, in some cases, by 2035, require some input of hydrogen.
The last Government and this Government have implied, but never stated definitively, that they have abandoned any idea that hydrogen will be the main replacement for natural gas in our home and office heating systems, except in very exceptional circumstances, but there are still places where the assumption is that hydrogen will be used: in heavy industry, possibly in heavy transport and possibly even in marine and aviation. There will be lots of demand for hydrogen. Hydrogen for storage will be but one of them. Yet we are not clear how we produce that hydrogen in a way which is not itself a contributing factor to emissions of carbon if we use methane and other means.
I hope that this Government will commit themselves to making clear within the next 12 months or so where the hydrogen is going to come from, how rapidly we are able to deploy it and what technologies will be used in addition to hydrogen to provide the necessary electricity storage, which the committee has drawn attention to. Unless we answer that question, we will fail not only on long-duration electricity storage but on providing decarbonisation of some of our most significant industrial and service sectors. I hope therefore that, in whatever government department it is, attention is drawn over the next few months to hydrogen production, because even with major policies as advocated by the noble Baroness, Lady Bennett, on demand reduction and energy efficiency, we will not meet that transition pathway without it.
Lord Krebs (CB)
My Lords, I had the privilege of serving on the Select Committee during much of the period of preparation of this report, and I join others in thanking our excellent chair, my noble friend Lady Brown of Cambridge, as well as thanking her for her outstanding introduction to this debate. I also thank the staff of the Select Committee, who, along with the specialist adviser, provided us with such excellent support. I join others in welcoming the Minister for her first outing at the Dispatch Box and I look forward to hearing her maiden speech. I should declare a relevant interest: that I am chair of the independent advisory board of Drax power, which generates electricity through burning biomass, and I advise it on sustainability of biomass.
I think nearly everybody agrees that we will need long-duration energy storage to cope with the intermittency in renewables, as we have already heard. Therefore, the questions really are how much we need, what technologies we will use to generate long-duration energy storage and how it will be funded. Let me talk about the first of these. To estimate how much long-term storage will be needed, we need to know how frequently and for what duration these periods of cloudy, still weather will occur. Different experts who presented evidence to the committee took different approaches to attempting to answer this question. The Climate Change Committee for example, along with the National Infrastructure Commission, as the noble Baroness, Lady Neville-Jones, has already said, used an analysis of year-to-year variation as well seasonal variation based on a combination of data and climate models. On the other hand, the Royal Society modelled a long sequence—it happened to be 37 years—arguing that wind and sun can vary on not just year-to-year timescales but decadal timescales.
If the Royal Society is correct, the amount of long-duration energy storage required will have to take into account those long-duration fluctuations, and this may in part explain why its analysis suggests the need for a much larger strategic reserve than indicated by some of the other analyses. The Royal Society concludes that the total amount of storage needed by 2050 may be as much as 100 terawatt hours. This would be equivalent to 5,000 Dinorwig pumped hydroelectric dams, or 50 clusters of 10 caverns for hydrogen. My question to the Minister is this. Do the Government agree with the Royal Society’s conclusion that plans for long-duration energy storage should reflect decadal-scale variations in renewable generation and not just interannual or seasonal variation?
I now turn to funding long-duration energy storage. The Government have said that they will introduce a cap and floor to give investors the security of a guaranteed minimum return while protecting consumers from excessive price rises, and this is in line with our recommendation. However, as has already been said by others, we also conclude that a commercially viable cap and floor funding arrangement would incentivise businesses to sell their stores rather than to keep them for events that might occur only once every 30 years. Can the Minister therefore tell us whether the Government plan to pay for a strategic reserve of energy storage not driven by short-term commercial incentives?
While the Government have not yet stated explicitly how much LDES they think they will require by 2050, the 13 December action plan, which has already been referred to, refers to 4 to 6 gigawatts of long-duration energy storage by 2030, out of the 40 to 50 gigawatts of dispatchable power needed. The rest will come, as has already been said, from gas, biomass and nuclear. I add in parenthesis that the evidence we heard regarding the amount of storage needed was expressed by some witnesses in terms of power—gigawatts—and by others in terms of energy, terawatt hours.
The Government’s action plan for clean power by 2030 is comprehensive, but I end by asking the Minister whether she could expand on the section on long-duration energy storage by giving us a little more detail about the longer-term future. First, what is the Government’s estimate of the need for LDES, both by 2035 and by 2050, and is there a road map beyond 2030 for achieving this—apart from the use of unabated gas, as suggested on page 117 of the action plan?
Secondly, what is the envisaged mix of different technologies in LDES? Page 116 of the action plan refers to nascent technologies such as liquid air and flow batteries. Is there also a role for hydrogen?
Thirdly, if, as our report recommends, hydrogen storage is going to be a significant part of LDES, have the Government decided whereabouts in the country these storage caverns are going to be located? Moreover, as my noble friend Lady Neuberger has already mentioned, have the Government considered how to engage with local communities to consider the acceptability of having large amounts of hydrogen stored under their homes?
Lord Moynihan of Chelsea (Con)
My Lords, I declare my interests as listed in the register. In the spirit of the example of the noble Baroness, Lady Brown, I additionally disclose that, in common with most pension funds, for example, I own oil company shares in my diversified portfolio. However, by far my largest investments in energy are in two companies that, were net zero to be accelerated, should benefit me significantly. The first is in a company that cleans up and decommissions North Sea oil wells when they are to be closed down; the second is an investment in the new nuclear technology, molten-salt fission. Both my investments there are, each of them, an order of magnitude larger than my investments in oil companies, so my economic interests should therefore predispose me to argue in favour of net zero and its emanations. However, as I do not, I can claim that my motives are unsullied, which I would argue is always the best position to be in when contributing to debates such as this.
The report says that we should get on with long-duration energy storage, using green hydrogen as the technology. At first sight, the idea of a “wind plus green hydrogen” solution to creating net-zero electricity is attractive. As the noble Baroness, Lady Brown, said, the output of wind farms is unneeded a good percentage of the time; it is much too expensive to pay them to lie fallow at such times, so let us keep it going, produce green hydrogen from the otherwise unneeded output, and then round-trip that hydrogen back to electricity when needed. The cost of doing this is acknowledged to be expensive but asserted to still be worth the cost. However, that claimed cost is absurdly low. The true cost is so much higher that it comprehensively undermines the entire idea. How did that cost misunderstanding come about? It is because this report relies on the Royal Society’s report, which in turn uses figures from DESNZ from a couple of years ago—and those DESNZ costings have already turned out to be wildly undercooked.
For example, the Moray West offshore wind farm has spent as much money installing its foundations as DESNZ suggested it would cost to complete the entire project. DESNZ’s other assumptions appear equally overoptimistic. Moreover, recent contracts for difference prices suggest that the cost of building wind generation is now rising. Over and over, the DESNZ cost predictions turn out to have been too optimistic. Compounding this problem, the green hydrogen round-trip efficiency is very low, with two-thirds of the energy wasted along the way. At the end of the day, the Royal Society says that the cost of a full green hydrogen system for electricity by 2050 would be in the order of £40 billion a year, but that assumes huge reductions in costs and huge improvements in efficiencies. Using current 2025 technology, the sum cost is nearly four times as much, at £150 billion a year.
Spending taxpayers’ money on long-duration green hydrogen energy storage is yet another example of a speculative, idealistic, “industrial strategy” approach—as espoused by the noble Lord, Lord Livermore, in a previous debate—to the economy. It does not work. The beginning of this steep slippery slope is to be a £500 million investment, likely to be money down the drain for us, although certainly of benefit to the recipients of that money. In decrying this, I am not making a partisan attack: under Prime Minister Boris Johnson, an equally foolish £500 million investment was made in OneWeb, for example, and it is worth pretty much nothing now. It is always the “we know best” attitude that is the problem; as said in the remark some attribute to the noble Lord, Lord Mandelson: “We thought we were picking winners, but it turns out that the losers were picking us”.
In short, the nation and the Government are being led up the garden path, at a cost in order of magnitude above the already eye-watering prediction of £50 billion—and that is even if the idea works, which it may well not. It is time to rethink. The risks, as well as the costs, are currently too large for “wind plus green hydrogen” to be a sensible choice. That in turn means that we do not have a solution to the unbelievably expensive problem of paying for wind power that is not needed and will not be used. Green hydrogen is not the only major problem with the overall net-zero speculation, but it is a big one.
Baroness Lane-Fox of Soho (CB)
My Lords, I declare my interests as noted in the register, most particularly as president of the British Chambers of Commerce and as a director of Peers for the Planet.
Last year, the British Chambers of Commerce published its green innovation challenge report, and there is much overlap with this excellent report, so expertly introduced by the noble Baroness, Lady Brown. We share concerns about the UK’s energy transition. We also emphasise the need for robust, long-term strategies and institutional frameworks to address gaps in policy and delivery. Some of the specific policies we called for include a new public body to oversee climate policies, strengthened resources for the Climate Change Committee, and faster grid upgrades to support net-zero goals. Both reports advocate for better cross-sector collaboration and government/business partnerships to overcome the challenges in infrastructure, financing and policy consistency.
There are a couple of themes I would like to build on. The first is speed: “get on with it” is the perfect mantra. Both reports emphasise the need for immediate action. The Lords’ report warns that delays in LDES deployment could derail 2035 decarbonisation targets. Our BCC work similarly calls for swift implementation of policies to address grid bottlenecks and accelerate renewable deployment. As a live example, Sizewell C currently has 1,000 people on the ground working, and significant plans for local supply chain investment and skills development, yet it is still waiting for a decision, which has taken years, so that it can become a functioning and sustainable energy source. A process has been promised in the CSR, but this is too slow and is indicative of a national issue. I could not agree more with the speech of the noble Lord, Lord Drayson, on the importance of more infrastructure investment and planning, and I defer to his great expertise on this issue.
As I have travelled about, talking to businesses of all sizes, a common theme has been the incredible urgency of local infrastructure decisions. The BCC is calling for grid upgrades to support renewable integration and storage deployment. For example, we are asking for the speeding up of investment into the electrification of the London-Sheffield line, which is estimated to create over 4,000 jobs and £61 million in local economic value. An example from a different area is the decision to build the Rampion 2 offshore wind farm. This project is projected to add 60 gigawatts to our supply, as well as thousands of jobs, but the decision is delayed in DESNZ. There are too many examples of unacceptably long timeframes.
Secondly, supporting innovation is non-negotiable. Both reports highlight the importance of partnerships between government and industry to overcome barriers to innovation. I hope the Government build on some of their early announcements and unlock more opportunities for growth in climate-based innovation and entrepreneurship, of which there are so many. There is much that is positive, such as the introduction of 10-year R&D budgets, which can help address short-term funding cycles that hinder innovation. This stability is expected to foster meaningful collaborations between research institutions and industries, particularly in clean energy and climate technologies.
However, I was dispirited to read in some recent research that, while the UK benchmarks pretty well with other European countries on venture capital investment into climate tech, the total amount in 2023 and 2024 fell from its high in 2022 and is set to fall further this year. If you look at the total itself, I believe it is shockingly low, at just £4.5 billion. It needs to be 10 times this if we want to enable the innovation we need as a society and the growth we want as an economy.
The announcement of regulatory modernisation is welcome, and the planned regulatory innovation office is a step forward in enabling regulators to adapt to emerging technologies, including those in the area of clean tech and the AI overlap. This could accelerate approvals for climate innovations, but the details are still scarce, and more clarity needs to come quickly.
However, I have never been more confident and excited than now: one of the UK’s leading entrepreneurs is on the Government’s Front-Bench team. I welcome my friend, the noble Baroness, Lady Gustafsson, to the Front Bench. Known for her commitment to the UK and its innovation, as well as her experience of scaling a global company, there is no doubt that her knowledge will be invaluable. I could not be more thrilled to call her a colleague and wish her good luck through the inevitable butterflies of her maiden speech.
As has been noted, we debate today against the backdrop of the horrifying fires in LA, and we are witnessing the climate catastrophe in real time, so I add my voice to the calls for the Government to adopt the committee’s friendly mantra of “get on with it”. The direction of travel is welcome, but the pace of decision-making and execution is not.
Viscount Hanworth (Lab)
My Lords, at this late stage of the debate, I am bound to be repeating much of what has already been said. I beg your Lordships’ indulgence for this. My speech may therefore be regarded as a summary as much as a commentary.
Today, we depend largely on renewable sources of energy for generating our electricity. Wind power is the largest component in the mixture of renewable power, and its highest share was achieved on 19 November 2023—between, I believe, 4.30 am and 5 am—when it reached 69%. Such widely proclaimed facts tend to divert our attention from the unreliability and intermittency of renewable sources of power. They are in short supply in periods when the wind does not blow and the sun does not shine.
In such circumstances, our present recourse is to rely on gas-fired power stations to fill the gap in the supply of electricity. These stations are a legacy of a previous era of electricity supply, when North Sea gas was plentiful and cheap. The gas-fired power stations rapidly replaced the coal-fired power stations. However, gas is not cheap and, moreover, burning it releases carbon dioxide, which is the principal agent of global warming. If we are to continue to rely on these power stations, the carbon dioxide that they release must be captured and sequestered underground.
In the absence of gas-powered electricity generation, additional sources of power must be found. Also, a means of storing energy must be found that is available for generating electricity at times when the renewable energy is in short supply. Two leading questions arise. The first concerns the urgency with which these recourses should be pursued, and the second concerns the proportions in which the storage and the additional power should be provided.
The report of the Science and Technology Committee that is the subject of today’s debate emphasises the urgency with which long-term energy storage must be provided, and makes it abundantly clear that the necessary actions to avert an energy crisis are not being taken in good time. To substantiate this aspersion, one needs only to read the recent documents published by NESO—the National Energy System Operator—which is the agency responsible for advising the Government. A simple way of assessing its outlook is to search for “storage” throughout its documents. One will discover that it is to be found mainly within the phrases “carbon capture and storage” and “storage heaters”. There are few instances of the phrase “long-term energy storage”, nor is there any assessment of the available capacity for such storage.
A truth that is revealed by the report of the Science and Technology Committee is that there is only a limited capacity in the UK for storing gas. The current capacity is devoted to storing natural gas. We are told that the UK stores 10 terawatt hours of natural gas, compared with 217 terawatt hours in Germany, 122 in France and 162 in Italy. This startling disparity is explained by our tendency in the past to treat natural gas from the North Sea as if it were on tap. It is no longer readily available to us in this manner.
We must envisage a greatly enlarged future demand for gas storage in underground locations. It will have three aspects. In the short term, there will be a continued and, indeed, increased demand for the storage of natural gas. An enlarged store should partly protect the UK from the volatility of gas prices. There would also be a requirement for the underground storage of captured carbon dioxide, which would permanently pre-empt some of the storage capacity. There should also be a requirement for storing the hydrogen that would be required to alleviate the intermittent scarcity of renewable energy.
The committee report tells of a lack of concern on the part of officials in the face of these circumstances. They are unable accurately to assess what the future requirements for gas storage might be. In the absence of certainty, they are disinclined to take action. The report suggests that action must be taken immediately despite this uncertainty.
The report also suggests that long-duration storage facilities can take seven to 10 years to build and require considerable upfront investment. The problem in providing this gas storage is due in part to the difficulty in devising appropriate incentives to encourage the private sector to undertake the task. A so-called strategic reserve of gas, to be called upon in the rare event of a prolonged dearth of renewable energy, does not offer an attractive investment prospect for private enterprise. This has been demonstrated by the partial closure by Centrica of the Rough offshore gas storage facility on the grounds that it was uneconomic to maintain it. I would suggest that the appropriate word here should be “unprofitable” rather than “uneconomic”.
Neoclassical economic doctrines have come to dominate the thinking of politicians and civil servants, which has made it difficult for them to accept that there is no viable market solution to this conundrum. They hesitate to accept that such a strategic reserve should be in public ownership.
The next matter concerns the sources of our energy. A report from the Royal Society proposes that we should rely almost exclusively on renewable sources of energy—on the wind and the sun. It is proposed that surpluses of electricity from these sources should be used to generate hydrogen by the electrolysis of water. Then, in times of a dearth of renewable energy, the hydrogen should power turbines and reciprocating engines, driving electricity generators. The proposal would involve a major investment in energy infrastructure. Facilities for generating hydrogen and using it to generate electricity are also required. Additionally, a network for piped hydrogen would be required. The electricity network would need to be updated to transfer the power from the remote places where it is generated to places where it might be used. Alternative recommendations involve various amounts of electricity generated by nuclear power.
Viscount Hanworth (Lab)
I shall be fairly brief. One recommendation, which I strongly support, proposes that small advanced modular reactors should be deployed to provide heat and power for both domestic and industrial users. The inherent safety of fourth-generation nuclear technologies will allow the reactors to be located near the industrial users, thereby reducing demands.
Viscount Hanworth (Lab)
Please let me encapsulate this final point. The time is advisory, not mandatory. I have a major point to make.
The small size of the reactors would be an advantage in this connection in comparison to the so-called small modular reactors which typically have a power output of 300 megawatts, which is more than an industrial user might require. Batteries of advanced modular reactors could be used to create large electricity-generating power stations. A sad fact to which I must testify is that Britain is losing its projects for developing such reactors—they are closing though lack of funds or finding sponsors in other countries.
The Earl of Erroll (CB)
My Lords, I congratulate the Science and Technology Committee on this report. It really hits the nail on the head in the need to think about things. One thing that always amuses me is that people keep talking about doing these things “at pace”. Surely they mean “speedily”. A pace can be slow as well as fast, so it is an ambiguous word to use.
Anyway, enough of that. We all talk about transmission and central storage, not always but quite a bit, whereas living in the country I am only too aware of the importance of having electrical back-up. We have a diesel generator, which cuts in sometimes two, three or four times a year. We are not very far from London, only 60 miles, just off the A1, but nothing like that is reliable. We need reliability because, for us, internet communication is essential for filing stuff to the Government on time. If you are late, you get fined, so it is not an option.
The other thing about local storage is that it reduces the load on central systems. It does not necessarily have to be electric. I was just looking at heat batteries because I am putting something in in Scotland and thought they might be good because they use phase change materials to store the heat and you get it back when you want it. We should look at that sort of stuff.
How we use whatever energy source we are going to use is key. I want to focus on the problems of heavy-duty transport, particularly vans and lorries going out from depots, with everyone buying from central depots on the internet. They have problems with this, because fuel cells are not commercially viable or affordable. Electricity is an obvious thing, but in moving machinery batteries are not an option for much of the market—they have been tested and shown not to work. Two large companies are delaying putting them into effect although they were under pressure to do so; they are not buying them at the moment.
Another problem is that you cannot get power through the grid to distribution depots. One site was quoted tens of millions of pounds to get a sufficient supply. The planning system is blocking delivery of electric charging points, which are needed for a lot of stuff in northern and remote parts of the motorway and for A-roads. The planning system is blocking them because they want substations or need more heavy-duty copper cables. That is a big problem, so I entirely agree with the noble Baroness, Lady Lane-Fox, and support everything she was saying about prevarication in the planning system blocking a lot of stuff that will be needed in future.
Transport fleets have a problem in reducing their overall carbon emissions and modern adapted diesel engines are ideal for heavy transport. The problem is that the DfT is blocking the approval of hydrogen internal combustion engines, or H2ICEs. The technology was adopted by the EU in April 2024 but it is blocked over here and therefore cannot get research funding, grants or support from the Government. It also will not be approved by the DfT when trying to evaluate sites or companies in getting towards net-zero targets. The fact that this British modern technology in research is not eligible for support here means, I have been told, that a leading UK company is actively considering moving to the EU and the US because it will get subsidies and government support over there, and that saddens me.
Another part of the solution would be to generate the hydrogen near the depots. You would have wind farms and solar, say, next door to the depot, hydrolyse the hydrogen directly, and then it can be used there locally. Again, that takes the pressure off trying to centralise all these systems. Another area I heard about that is apparently not getting any government support is carbon-negative ways of generating hydrogen locally. They should be supporting innovative stuff such as that. As mentioned by several noble Lords, small modular reactors would also take local pressure off the grid. That would be very sensible. Many of these ideas are quick and affordable and it saddens me when I hear that the British Government have apparently given £188 million to Tesla over the last eight years. We could have been supporting innovation in the UK instead—that would be far more productive.
Another point that I was thinking of making, but I did not know whether I would have the time and I do not know whether my science is faulty, is that hydrogen has a much lower energy density than the hydrocarbon in natural gas. Therefore, you cannot just shove hydrogen down the gas system into houses for heating and all the things that system is used for at the moment because you will not get the same heat out at the other end from the same volume of gas. I do not know quite what is happening on that; I think there is a lot of research, and people talk about adapting boilers and all sorts of other wonderfully expensive ways of trying to get round the problem. Sometimes everyone thinks that there is a magic word that will solve all the problems, but very often that is not true. However, we need to get on with it. That is the most vital thing in this report.
Baroness Northover (LD)
My Lords, I too pay tribute to the noble Baroness, Lady Brown, for her leadership of the Select Committee on Science and Technology, of which I am a member, her expert chairing of this inquiry and her compelling introduction to the debate. She brings great expertise to the committee and has an ability to horizon scan in a way that has been vital to the committee. She will be missed as our chair as her term comes to what feels like a premature end. I also thank the staff members who supported this inquiry, in particular Thomas Hornigold, our policy analyst, whose clarity and brilliance were an enormous help to us and certainly to me.
I too look forward to the Minister’s maiden speech. As Minister of State for Investment, she has a key responsibility in this area. Is she already looking at it? I am extremely glad that the noble Lord, Lord Hunt, is alongside her on the Front Bench. Both have a track record of delivering.
The noble Lord, Lord Drayson, is right to emphasise that this is not an area for hesitation or delay. As he put it, consultation and review are not what is required here; it is action. Indeed, the greatest risk is, as he said, indecision. Does the Minister agree? The noble Lord, Lord Wei, pointed to the Vaccine Taskforce as a model for how this might be taken forward. What does she think about that model?
As others have mentioned, we need only to look at what is happening in Los Angeles or at the floods in Manchester over Christmas to remind ourselves of the greater extremes in weather that we are experiencing and the urgent necessity to address climate change. The noble Lord, Lord Lilley, who I am glad to see is just returning to his place, has flagged cost-benefit, but I wonder what the financial cost of rebuilding Los Angeles will be, let alone the human cost.
It is very welcome that the Government have brought forward plans to reach net zero. This requires huge scaling up of renewables and major changes to the grid and to planning regulations. As the economy moves away from fossil fuels and to greater consumption of electricity generated renewably, there are, of course, major challenges. As other noble Lords have said, a major challenge is, if you anticipate huge demands for electricity, what you do when the wind is not blowing and the sun is not shining, potentially in the European winter—the Dunkelflaute to which people have referred.
Therefore, there is a need to store energy for those times. As the noble Lord, Lord Krebs, said, that is a no-brainer, and that is agreed. It is a matter not of short-term battery storage but, as the title of the report says, of long-duration energy storage. As the noble Baroness, Lady Brown, said, this issue has become even more urgent because of the change of Government and the welcome determination to decarbonise the economy earlier than the previous Government aimed to do.
The Royal Society made a thorough investigation of long-duration energy storage and reported, but seemingly with little traction. It also fed into our deliberations. Like the Royal Society, the conclusions we reached were that the best option is hydrogen storage and that the UK is well suited for this with salt caverns that could be used for this purpose. Given that potential UK capacity, energy could be exported at time of need to the continent. Therefore, does the Minister recognise this as an important economic opportunity? This also means that, when there is overproduction from renewables, it could be stored as opposed to being switched off or wasted. However, as the noble Baroness, Lady Brown, said, to build such storage could take up to a decade and would need capital investment up front because of the delayed and unpredictable nature of the return on this investment. The noble Baroness, Lady Neuberger, is right about the urgency of public education and engagement on this.
Relying on fossil fuel back-up in the short term, as the Government seem to be emphasising, has its risks. Clearly, this is not environmentally friendly, and the point at which such back-up is required could well be when others too are seeking such assistance, and prices are likely to be high. In addition, it potentially means that any excess renewable energy cannot be stored, and the gas plants may need subsidies to keep going, as they are not likely to be fully used since they are intended to fill gaps.
Our report laid out what we heard about the need for planning our energy needs, the necessary infrastructure to be built and planning reforms to be taken forward. I look forward to the Minister’s response on these. As many speakers have said, given the scale of what is required, are the Government seizing this responsibility and, if so, how?
If the hydrogen storage proposed in this paper seems an expensive route to go down—one or two noble Lords mentioned that—then it is worth noting, as the noble Baroness, Lady Brown, said, that the Government spent almost £80 billion on support for energy bills after the invasion of Ukraine and the shock increase in energy prices. Even then citizens faced high bills, and they still are. That was not, of course, just in the UK. We need only to look to the destabilising effect of the invasion of Ukraine, the sudden and huge increase in gas prices that followed that, the pressures on the cost of living and the economic, social and political fallout of that. The rise of populist and nationalist parties across the world owes much to that cost of living increase.
The first duty of a Government is to keep citizens secure. The noble Lord, Lord Rees, is right to emphasise risk, including from technological breakdown and malign attacks, but that is the significance of the security of energy supply that we are addressing in this paper. The Minister has our report. I hope we will hear substantial answers today—the potential actions of a CEO. That is why this Government have brought some wonderful experts into ministerial positions, including the noble Baroness herself and, of course, the noble Lord, Lord Vallance. If she does not yet have the necessary answers in her brief, I hope she will go back to her new department with her new responsibilities and make sure that planning for long-duration energy storage is urgently taken forward. In other words: get on with it.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I congratulate the noble Baroness, Lady Brown of Cambridge, and her committee on initiating the research that led to the production of this important report, and the noble Baroness on setting the scene so well in her opening speech. I know that we all look forward to the maiden speech of the noble Baroness, Lady Gustafsson. She brings much-needed technical expertise and business experience as a leading light in a sector which we hope will serve the country well. I offer her a very warm welcome.
It is clear that most noble Lords participating in this debate agree with the report’s central tenets: that long-duration energy storage is essential if the Government are to achieve the target of net zero by 2050, as introduced by the previous Conservative Government, and that we do indeed need to get on with it. The OBR estimates that the Government spent some £78.2 billion between 2022 and 2024 on support for energy bills during the spike in prices resulting from the Ukraine war. Some of these costs could have been mitigated had we developed more long-term storage capacity earlier.
This need is even more urgent considering the Government’s ideologically ambitious target of clean energy and a decarbonised grid by 2030, which will ensure that fossil fuels are phased out. Of course, as noble Lords would expect, at this point I take the opportunity to remind the Government that a greater proportion of nuclear power providing baseload would also reduce the amount of energy storage required, even with the risk of cyberattacks, as rightly warned by the noble Lord, Lord Rees.
To replace fossil-fuel derived energy, the Government are ramping up renewables—onshore and offshore wind and solar which, by their very nature, are unreliable. As I said at Second Reading of the Great British Energy Bill, over the last few months we have seen another Dunkelflaute—an extended gloomy period of low winds and little sunshine. In March, the measure of how often turbines generate their maximum power failed to reach 20% and we have recently seen levels drop to near zero. Relying on new interconnectors to Belgium and Holland will not offer energy security, if either their wind farms suffer the same weather conditions as ours or their countries’ needs are greater.
The noble Lord, Lord Krebs, was right to say that we need to start with first principles. That is: how much power the whole system needs and, importantly, for what periods of time. The Royal Society makes a start by estimating that the need is to store approximately one-third of current annual UK electricity generation, well over 100 terawatt hours, and that the annual demand for electricity could reach 570 terawatt hours by 2050. It found not only that a strategic reserve of long-duration storage would be particularly important to address supply shortfalls from renewables but that a portfolio of different types of storage would assist in lowering the average cost.
Britain has just 2.8 gigawatts of long-duration energy storage capacity, from four pumped hydro plants in Scotland and Wales—not yet much of a contribution—so I urge the Government to provide more support for what is often called the poster child of storage technologies. The Dinorwig hydro scheme in north Wales, set up 40 years ago by the then CEGB, is still operational and two of the original four shafts are being brought back into service by the current owners, EDF. The Government now have the chance to support the proposed Dorothea project in the Nantlle valley, using the lake in combination with the nearby slate mines, which extend well below sea level. Supported by the local Gwynedd council, the construction phase would bring 1,000 jobs to the area over the next 10 years. Many of the engineering and other relevant skills already exist in that area. Ofgem has been charged with devising the business model to support long-term storage projects, including a cap and floor scheme. I urge the Government to resist devising a one-size-fits-all scheme. The projects in Wales and Scotland face very different challenges and costs.
The storage of power increases the flexibility of the grid and minimises the likelihood of wasted renewables in instances of excess supply. This waste is expensive: I note that the cost of paying wind farms to switch off soared by 91% in 2024 to nearly £400 million. It has sadly meant that constraint payments have made it very lucrative for wind farms to be switched off. While we must investigate and consider all solutions for long-term energy storage, we must not lose sight of pursuing the most efficient means for energy storage. The previous Government recognised all of this, which is why we consulted on policy mechanisms to support low-carbon storage and introduced a target in the British Energy Security Strategy to deploy enough to balance the electricity system. Not only that but we moved to reform the energy systems, establishing the future system operator and consulting on a long-duration energy storage business. We also addressed the challenging economics of these storage projects and actively consulted on introducing a cap and floor mechanism to implement additional financial support.
Domestic energy storage is not solely about a resilient decarbonised grid; it is about the security and stability of the whole economy. It is vital that we acknowledge the UK’s North Sea oil and gas industry when discussing the future of our energy storage and security. That industry has suffered under this Government: their tax on the North Sea oil and gas industry is punitive. For three consecutive days in December, 60% of electricity came from gas, as wind output dropped at the same time. German consumers were then having to pay an average of €395 per megawatt hour, for the same reason. We shall still need gas in the transition while storage technologies and grid improvements catch up with needs.
By increasing the windfall tax by 3% in the Budget, the headline rate imposed on UK oil and gas firms is a staggering 78%. This hike has already cut investment in UK natural resources and will make the UK increasingly dependent on imported supply. Not only will this compromise the UK’s energy security but consumers will be exposed to price fluctuations. This country could become increasingly dependent on imported electricity and therefore be forced to pay the market price for power, as fossil-fuel power generators are closed quicker than the rate at which we are increasing the necessary capacity to replace them.
The development of long-term energy storage technologies must also occur alongside the development of the national grid. Increasing energy storage is pointless if we have no means to transmit and distribute the electricity. It has been reported that, to achieve their target of clean energy by 2030, nearly 1,000 kilometres of new power lines will have to be built to support these efforts. The Government need to confront the fact that the infrastructure for the electricity network will need to be built at a far faster rate than it has been over the last decade if the Government are to meet their pledge.
The timeframe for obtaining grid connections for a new energy project can be as long as 10 years. This is not a new phenomenon: the previous Government understood these complexities and commissioned the Winser review, which laid out 43 recommendations to reduce grid connection wait times. The Government must be prepared for this connectivity challenge, as it will directly impact the delivery of our renewable energy projects.
I will make a few final points. It is right that the urgency of this issue requires Ofgem to devise support mechanisms in a much shorter timeframe than historically has been achieved. The role of Ofgem has been expanded inexorably over the past few years, and I hope it continues to receive adequate support. Although research into all technologies is equally urgent, attention must be paid to their relative efficiencies. Direct electrification—namely, not converting it to anything else before use—obviously delivers very high efficiency. Converting it to anything else for storage obviously delivers less. The main issues with using hydrogen or ammonia as an energy carrier or a storage medium is that they are energy inefficient—between 25% and 40%—added to which, ammonia is horrendously damaging to the environment.
The noble Lords, Lord Whitty and Lord Moynihan of Chelsea, are right to be cautious. Many hydrogen projects around the world are being scaled back or abandoned due to the high costs and unrealistic projections on adoption. Less than 1% of global hydrogen production is green; the other 99% is either blue or grey, which has a significant impact on CO2. I urge the Government to place emphasis on the energy efficiency of technologies—not only pumped or compressed air storage but some of the newer forms of advanced battery technology, where the efficiency is much higher, despite other challenges such as their capital cost.
In summary, I acknowledge that there are no easy answers. I wish the Government well in navigating the technologies available and in the critical evaluation of the many claims made by their competing proponents. The noble Baroness, Lady Brown, is absolutely right to urge the Government to just get on with it, but please do so with an eye to their relative efficiencies.
The Minister of State, Department for Business and Trade and Treasury (Baroness Gustafsson) (Lab) (Maiden Speech)
My Lords, I am very grateful to the noble Baroness, Lady Brown, for initiating this debate, and I thank both her and the members of the Science and Technology Committee for their work. It is a privilege to respond on behalf of the Government in my maiden speech to the House. Before I address the points raised, allow me a few moments to introduce myself and share the passion that drives me in this role, along with the profound sense of responsibility that I feel in undertaking it. Noble Lords can watch me as I tackle the butterflies that the noble Baroness, Lady Lane-Fox, referred to earlier.
I come to this Chamber via a route that probably differs from that of a typical Government Minister—and I am not just talking about the fact that I keep getting lost in the long winding corridors of this very beautiful building. My career to date has been spent at the sharp end of innovation, which, as I have learned, is both a gift and a challenge. It is a duality that is particularly clear in the world of cybersecurity, where attackers and defenders are fighting for dominance in ever-shifting digital landscapes.
I began my career as a mathematician, drawn to the precision and clarity of numbers. Mathematics offers a comforting world of absolutes: zeroes and ones, truths and proofs, which are the binary building blocks of certainty. But life is rarely so straightforward. Just as mathematics moves from neat formulas to complex algorithms, life reveals shades and uncertainties. My path led me from the abstract elegance of equations through training in accountancy and working in venture capital to the dynamic and unpredictable world of technology. As the co-founder and former CEO of Darktrace, I had the privilege of witnessing first hand the daily progress that technology can make.
Working in innovation is exhilarating and, at times, exhausting. It is a constant project—innovate, or be out-innovated. It is like running along a beautiful mountain path: around the next corner could be the most beautiful view that takes your breath away, but the next runner could be right behind you. Stop for even a moment, and you might just find yourself caught. It is ambition and a quiet confidence that keep us running and protect us from complacency.
This Government are not short of ambition. The UK’s goal to become a green energy superpower by 2030 is what drew me to this role, and there is no better place to build an ambitious company than the United Kingdom. We have the lowest corporation tax in the G7; some of the most competitive R&D tax incentives in the world; world-class universities; and forward-thinking policies. We must celebrate what we do well. The UK is a global leader in technology and innovation, with a tech ecosystem worth over $1 trillion. We are rightly proud of the companies that have been built here and of the talent that continues to drive our success.
As I turn my focus to energy, I am inspired by that same sense of ambition. Energy is the lifeblood of progress, and the challenges that we face—achieving net zero, securing supply and driving innovation—demand bold thinking and confidence in our ability to lead, innovate and turn challenges into opportunities. Just as innovation must balance opportunity with risk, so too must our energy policies balance sustainability with security, and ambition with pragmatism. I look forward to contributing to these debates with the same spirit that has defined my career: one of ambition, collaboration and an unshakeable belief in the potential of this country.
I extend my thanks to colleagues across the House who have welcomed me so warmly and shared their thoughts and insights into parliamentary and ministerial life, particularly to my two supporters, the noble Lord, Lord Vallance, and the noble Baroness, Lady Lane-Fox, and to my two predecessors as Minister for Investment, the noble Lords, Lord Grimstone and Lord Johnson. I also thank the staff of the House, Black Rod and her staff, the doorkeepers and clerks, and those who have kindly pointed me in the right direction when I have been going the wrong way down those winding corridors. I thank noble Lords for this opportunity to serve, and I look forward to working with them to achieve great things.
Today, noble Lords have offered their thoughts on this and the report from the Science and Technology Committee. I want to reflect on these contributions now and respond to as many of the points as I can. First, on progress made on hydrogen, the noble Baroness, Lady Brown, and the noble Viscount, Lord Stansgate, asked what progress the UK has made on long-duration storage since the publication of the report by the Science and Technology Committee back in May. The answer is: a great deal. In the Government’s procurement of hydrogen infrastructure, we have published an early market engagement notice. What does that mean? Well, it allows developers to register their interest early and start planning ahead. We recognise that these projects will be vital, and we are going to need colossal amounts of hydrogen storage. That is why we have already started engaging with a range of potential suppliers in the hydrogen storage market, which is the right approach to take. In addition, government recognises the value of strategic energy reserves as a source of energy resilience and security of supply, balancing system flexibility, particularly during periods of energy supply shortage—Dunkelflaute periods, as the noble Baroness and other noble Lords have noted. Government will continue to explore options around the role that storage can play, including providing strategic energy reserves in supporting future energy system resilience in a changing energy landscape.
I move on to progress made on electricity, which the noble Lords, Lord Lilley and Lord Moynihan, asked about. Of course, in the committee’s report and today’s debate, we have seen a lot of discussion about long-duration electricity storage specifically. Here again, I believe the Government are making real progress. In October last year, we announced the long-duration electricity storage support scheme, which will be delivered by Ofgem. The next steps are as follows: a technical decision document will be published next month with the final design details of the scheme. Applications will then open in the second quarter of this year. After that, we expect the first agreements under the cap and floor scheme to be agreed early next year.
It is important to stress that this scheme is tech neutral. What does that mean? It means, basically, that any technology that meets the definition of long-duration storage with electricity in and electricity out can be part of an application. These applications have to show that the technology would not be built without the cap and floor scheme, which is the additionality principle. For example, longer-duration lithium-ion batteries and closed-loop hydrogen-to-power systems may be eligible, as would traditional technology such as pumped storage hydro, liquid and compressed air, and flow batteries, but to get approved, all applications need to prove that they represent the best deal for consumers.
Some noble Lords raised the subject of costs to consumers. This scheme works on an insurance-type model, unlocking investment in these assets without upfront subsidy. A very similar approach has been used for electricity interconnectors; these have delivered about 10 gigawatts of capacity without a single penny of taxpayer subsidy. That is enough to power about 750,000 homes, and revenue was actually returned to consumers via the cap, so this really can be a model for success. However, I am keen to stress to noble Lords that neither the Government nor industry are waiting for the cap and floor scheme to be rolled out before making headway in this area. There is already significant development under way in anticipation of the cap and floor scheme. SSE, for example, has completed its exploratory tunnelling on the Coire Glas pumped storage hydro project in northern Scotland, ensuring that it is ready to seize the potential for future growth. Meanwhile, Highview Power has reached a £300 million final investment decision on a brand new liquid air energy storage site near Carrington; it is a major step forward in both the company’s and our country’s journey to net zero.
To specifically address curtailment costs, raised by the noble Baroness, Lady Brown, beyond storage, a key priority for the Government is to accelerate the building of electricity network infrastructure to increase capacity on the network and reduce constraints. This will also ensure new sources of low-cost, homegrown and clean generation that can connect to the grid. We are working with Ofgem, the National Energy System Operator and the transmission owners to break down the barriers to this. The work includes reforms to the planning system, unlocking supply chains and mobilising the investment required via the upcoming transmission price controls.
A number of noble Lords, particularly the noble Baronesses, Lady Neville-Jones and Lady Lane-Fox, and the noble Lords, Lord Drayson and Lord Wei, spoke about electrolyser supply chains and wider support for green energy. We are building on the momentum we have already generated, ensuring that the right financial tools and support are there for those businesses that are leading the UK’s charge towards becoming a clean energy superpower. Our new national wealth fund and the creation of Great British Energy ensure that tens of billions of pounds of investment are there to support clean energy supply chains. This builds on the achievements we have already seen in the industry.
Take green hydrogen equipment suppliers: they doubled the number of electrolysers produced in 2023 compared with 2022, which is extraordinary growth in this part of the market. ITM Power’s gigafactory in Sheffield boasts one of the largest electrolyser factories in the world, with massive levels of capacity, and certainly enough to produce low-carbon hydrogen for use across the economy. It is fair to say that UK hydrogen companies have some of the best fuel cell, hydrogen production and material technologies going. I want them to retain that competitive advantage.
As noble Lords know, we have identified clean energy as one of the key growth-driving sectors in our industrial strategy. We want to channel investment into these sectors so that the UK remains ahead of the pack when it comes to the development and deployment of green energy. We have already taken action to inject some much-needed agility into our planning system. Our planning and infrastructure Bill is set to speed up the process for the delivery of major infrastructure projects. At the same time, the Department for Energy Security and Net Zero is running a pilot hydrogen planning unit programme. It has been charged with upskilling planners working in councils on hydrogen. We want them to feel confident in taking decisions on hydrogen planning applications, and, with support from central government, they will be.
DESNZ is also in the process of drafting planning guidance for industry to support projects going through the planning process. That is because we know that clear regulatory guidance will be a game-changer in helping get novel hydrogen projects off the ground. It will help build even more confidence and investment into UK hydrogen development.
Let me turn my attention to progress with the National Energy System Operator and the strategic spatial energy plan, which my noble friend Lady Young, among others, asked about. One of the report’s recommendations, which we have already discussed today, is the establishment of the National Energy System Operator. As noble Lords will know, this was formerly known as the future system operator. The Government’s position is this: we believe that the National Energy System Operator is perfectly placed to help different parts of our energy system work in harmony. It can act as that whole energy system planner.
We formally launched NESO in October last year. Working alongside the Scottish and Welsh Governments, we commissioned it to develop a strategic spatial energy plan. This is really exciting. It is the first ever spatial energy plan for Great Britain. It means a hands-on, planned approach to energy infrastructure across land and sea. It builds on the independent advice provided by NESO on how to deliver clean power by 2030. This plan will cover energy and hydrogen. It will identify super cost-effective locations for hydrogen production, transport and storage, working in tandem with electricity network development. The committee’s LDES report called for more details on how the National Energy System Operator will produce this plan. We are now consulting on the methodology and will provide further details shortly.
My friends, the noble Baroness, Lady Brown, and the noble Lord, Lord Whitty, asked about government ambitions for hydrogen energy storage development and what the future holds. The point raised by noble Lords in this debate was about the Government’s long-term commitment to hydrogen transport and storage, alongside the setting of capacity targets. Our position is clear: we will design business models for hydrogen transport and storage. We are delivering on that commitment, ensuring that the support is there for both, while maintaining a rigorous and fair assessment process.
As noble Lords will be aware, we want to see this next generation of infrastructure being delivered by 2030. As further evidence on hydrogen production and demand emerges, we will have more details about how our needs for infrastructure will guide business models in the future.
The noble Baroness, Lady Neuberger, and the noble Viscount, Lord Stansgate, raised questions about the public perception of the health and safety of some of these ideas. I want to touch on another issue that the Science and Technology Committee has acknowledged, which is the public perception. Although there is no evidence that hydrogen is unsafe, I am aware that the committee has challenged the Government to up our game in building public support for the technology. Here we are taking a common-sense approach. Safety obviously has to be our number one priority. We have a proud record on the safe production, transportation, storage and use of hydrogen. Projects developed by UK firms such as Bramble Energy, Ceres Power and ITM Power have helped establish us at the forefront of the global shift to hydrogen.
We want to maintain that reputation, and we recognise that health and safety regulation will be key to that. On this point, the Department for Energy Security and Net Zero is working in tandem with the Health and Safety Executive. The HSE in turn is making sure that the right regulations are there to help, rather than hinder, the safe adoption of net-zero technologies, including hydrogen. It is taking into account all the potential risks for those who build, operate and maintain hydrogen facilities.
Allow me to comment further on carbon capture and storage. The noble Baroness, Lady Neuberger, in particular, addressed this. This relates to some of the points also made by the noble Baroness, Lady Brown, on ensuring that we have sufficient transport and storage infrastructure for carbon capture, usage and storage, and our planned use of gas post 2030. Last year the Government reached commercial agreement with the private sector and announced up to £21.7 billion of available funding over 25 years to launch the UK’s new carbon capture, usage and storage industry.
In December, contracts were signed with Net Zero Teesside, the world’s first at-scale gas power plant with carbon capture, supplying up to 1 million homes with low-carbon secure power from 2028. Combined with the Northern Endurance Partnership, the supporting CO2 transport and storage project, the East Coast Cluster will capture and store carbon emissions from the region.
In addition to the East Coast Cluster and the HyNet cluster, the UK has an exciting pipeline of further CCUS clusters at a mature stage of development. These include Acorn in north-east Scotland and Viking in the Humber, which contain power CCUS projects at the heart of their plans. The gas system will continue to play an important role as we decarbonise, but the amount of gas that we use must decline, and the way we use gas must change in order to reduce our reliance on fossil fuels and achieve clean power by 2030, accelerating to net zero by 2050. As we do so, we are working across government and industry to better understand the future of the gas system through various credible scenarios, identifying key challenges and opportunities along the way.
I am conscious that there are some points I have not yet addressed, particularly those raised by the noble Viscount, Lord Stansgate, and I will make sure we write to him in detail on all the points raised. I will endeavour to include the word “Dunkelflaute”, which is clearly the word of the debate.
Let me turn to the phrase of the debate—“Get on with it”—and, in that spirit, allow me quickly to conclude. A huge amount of work has been under way to support long-term energy storage, whether that is investment, skills, health and safety, or the cap and floor scheme that we generated with Ofgem. The continued support and scrutiny of the Science and Technology Committee are vital in holding the Government’s feet to the fire for the scale and pace of our delivery. But the Government are not doing it alone. We are working with industry across the clean energy sector to ensure that the UK remains a world leader in this space. We are taking action to push forward long-duration energy storage in the UK as part of our pursuit of net zero and our ambition to become a clean energy superpower by 2030.
The Government are looking forward to working with noble Lords in delivering on that pledge, and I am looking forward to working with them too. Together, we will realise a cleaner, greener future.
Baroness Brown of Cambridge (CB)
It is my pleasure to congratulate the noble Baroness, Lady Gustafsson, on her maiden speech and again welcome her to the House. Most of us will be feeling enormously grateful that we did not have to give our maiden speeches under such pressure and on such a challenging and complex area. She has clearly mastered her brief with great skill, and it is encouraging to hear her passion for this important area.
I will make just a few comments. On the urgency and timescales, we have heard about a range of positive developments but there is an optimism on timing that worries me. The noble Baroness talked about business models being designed for hydrogen storage; they are not yet available, but the desire is for infrastructure to be delivered by 2030. She is a mathematician so I do not need to remind her that it is only five years away, yet those sorts of infrastructure projects typically take seven to 10 years—that was the shortest kind of timescale. We have to recognise that some of this will not be delivered by 2030, but we also need to make sure that we are driving this and, as many noble Lords said, taking appropriate risks to really try to accelerate, use the new technologies and deliver the cost reduction through implementation, because that is the only way we will reduce the cost of these new technologies.
I hope we will start to see more evidence of the public engagement that we need, and get the public on board with the changes that the future energy system is going to deliver, whether that is getting them to understand that we need pylons, even though they do not like them, or that hydrogen storage near their homes, for example, will be done in a way that genuinely will be safe. We need to start to see that public engagement, and I do not think it is yet happening or visible.
The Minister has said many positive things which I very much endorse, but I am still concerned that we need clarity about a strategic energy reserve. Do the Government see this as a reserve of energy—of joules—or do they see it as a generating capacity issue? Talk about a cap-and-floor mechanism for long-duration energy storage makes me worry that we have not quite got the concept of a strategic energy reserve. If we incentivise the development of a strategic energy reserve—meaning that you make money by moving energy in and out of it—then almost certainly it will not be full when the Dunkelflaute happens. We really need clarity on how the Government see a strategic energy reserve and whether they are thinking that we perhaps need a reserve, as the report suggested, that the Government own. It is hard to see how to make a business model for keeping a lot of something that is quite expensive to use just in case it is needed every 10, 20 or 30 years. I want to make absolutely sure that we have got that very important point across.
Finally, I thank the noble Lord, Lord Lilley, who has given me a timely reminder that I need to fill in my tax return. He reminded me of some useful numbers that will be appearing on it, and that I need to take the advice of our report and just get on with it. I commend the report to the House.