Energy Bill [ Lords ] (Fifteenth sitting)

Debate between Lord Whitehead and Charlotte Nichols

Committee stage
Thursday 22nd June 2023 Public Bill Committees

[Dr Whitehead]

The Minister is slightly unwisely saying that this is the most exciting part of the Bill. We know that the provisions are exactly bang in the middle of the Minister’s brief as part of the team at DESNZ, as we now call the Department—although I understand that there are instructions not to call it DESNZ. Quite how we pronounce it, I am unsure; for the sake of the Minister, I will undertake not to sneak DESNZ into Hansard.

The provisions relate to the establishment of Great British Nuclear. As a suite of new clauses, they are unexceptionable and the right thing to do in terms of getting Great British Nuclear off the ground—although, in a sense, Great British Nuclear is already off the ground, as it was launched in March. The provisions therefore underpin the activities of an existing body, rather than a created one. It might be useful to briefly consider what GBN is tasked to do in the first instance.

[Charlotte Nichols (Warrington North) (Lab)]

My hon. Friend has hit on an important point. As chair of the all-party parliamentary group on nuclear energy, one of my concerns is the fact that Great British Nuclear is going to be in DESNZ at all. Does my hon. Friend agree that the Cabinet Office might be a more suitable Department, given that the two biggest issues in the delivery of new nuclear are planning and people, neither of which are under DESNZ’s ministerial purview?

[Dr Whitehead]

My hon. Friend makes an interesting point; were I to cede to it entirely it would lead to great distress on the part of the Minister. Nevertheless, she makes the valid point that the exact placing of Great British Nuclear is one for further consideration. For now, it is starting off in DESNZ.

Let me read again from the factsheet that was given to me when the new clauses were being mooted. Under the heading “What will GBN do?” it says:

“GBN is tasked with facilitating delivery of government’s nuclear programme. Its focus will be to de-risk new nuclear development by co-funding projects at the critical early development stage and acting as an expert adviser throughout the process.

Having launched within the auspices of the current legal framework in March 2023, the first priority for GBN is to lead a competitive process to select the best Small Modular Reactor (SMR) technologies for investment. This commenced in April 2023, with market engagement as the first phase. The second phase—the down-selection process—will be launched in the summer, with an aim to assess and select the leading technologies by autumn. GBN will deploy government funding to support the development of these selected technologies.”

That sounds like a good idea but, as the Minister will be aware, a number of companies are actively engaged in small modular nuclear technology, and some of them are far more advanced than others and only one of them is fully British. Not only are they at various stages of advancement in their processes, but they are pursuing processes in small modular nuclear development that are very different in their size and application.

At one end, we have Rolls-Royce’s proposals for a not very small, not very modular reactor at about 440 MW —that is, about the size of a medium to large gas-fired power station. Then we go down through the sizes of a number of other companies engaged in the process, and not just through sizes but from pressurised water through to molten salt through to thorium. Then, at what we could say is the bottom end, and with probably an entirely different function, there are the proposals by Last Energy. My hon. Friend the Member for Warrington North has had considerable discussion with that company. Last Energy has made quite a lot of advancement at an early stage in procuring potential contracts for its plants, should they be built. It considers that its proposals do not need to go through the generic consenting process because they are small versions of existing pressurised water arrangements, so they could get going quickly and early. Indeed, in the United States, Last Energy has already constructed a number of the modular reactors that will go forward. Most significantly, it says it does not require any Government assistance or funding for its purposes.

As far as I can see, though, all those different companies and technologies of different sizes and applications are being placed, through Great British Nuclear, into a competition to find the best technology. The best technology will win, and the winner will then have Government funding to support the development of the selected technologies. I wonder whether, in the context of some of those companies saying that their technology does not need to be selected for Government funding—they can actually go ahead and do it—the development of the competition in that way might be seen as a brake on the development of small modular nuclear in the UK, rather than an assistance.

We must be careful with the competitive process. If it puts the stoppers on development in certain places because the competition has not yet been realised, the people developing the proposals may well say to themselves, “Actually, this is not a very fast process after all.” They are ready to go and can get themselves developing pretty quickly, but meanwhile they have to jump through the hoops of a competitive process that they do not want to enter, and they may or may not come out as the winner in the end.

I am sure the Minister has a good answer to my concerns. If I were very unworthy, I might suggest that the competition was launched to, among other things, ensure that the Rolls-Royce proposals get a good looking at, bearing in mind that they are not as well advanced as some other small modular nuclear developers’ proposals, and putting them all on the same level means that Rolls-Royce gets to the starting point in a better order than it might have done otherwise. However, I am sure that is a very unworthy thing to say and that that is far from the Minister’s mind.

I would like to know whether the competition will include all technologies or exclude some of them. Or will it be a mixed bag of arrangements whereby those that are able to make progress at an earlier stage than the competition suggests are basically left alone, and the competition does not impede that progress? That does not particularly affect the way GBN is set up as far as the new clauses are concerned. As my hon. Friend the Member for Warrington North said, we have a question about the final placement of GBN, but I do not have any objections or particular concerns about the way it is set up. I have more concerns about what it is going to do in the first instance, and whether that will push small modular nuclear forward or not, depending on how the arrangements are carried out.

Energy Bill [ Lords ] (Seventh sitting)

Debate between Lord Whitehead and Charlotte Nichols

Committee stage
Thursday 8th June 2023 Public Bill Committees

[Dr Whitehead]

Yes. The various retail energy companies that have been responsible for the roll-out have in many instances tried their hardest, but they have been overcome by the sort of obstacles that the hon. Member mentions. For example, in an urban environment, meters may be in the basement of a block of flats and then somehow the smart meter is supposed to communicate from the 7th floor to the meters in the basement—the arrangements between the meter and the householder. That is over and above the problems with radio signals and phone signals that there have been in the north of England.

The roll-out is 55% after nine years of active operation, so let us say that that goes on at the same rate, although it very probably will not, because we have captured all the low-hanging fruit as far as smart meters are concerned, and smart meters are getting more and more difficult to install.

[Charlotte Nichols (Warrington North) (Lab)]

My hon. Friend the shadow Minister is making an important point about where smart meters cannot always be installed and some of the difficulties that there have been in this process. I am sure that both he and the Secretary of State will be aware of the situation in the area around RAF Fylingdales, for example, where, because of the strength of some of the radio technology used there, people cannot get a smart meter in something like a 40-mile radius of the airbase. Does he think that the Government considered such things when they put in the 2019 target that they have so spectacularly failed to hit?

[Dr Whitehead]

My hon. Friend is absolutely right: the Government did not consider that. There were discussions at the time of the earlier smart meter roll-out about radio systems that could get over precisely those problems by patching in—that is, going on the back of a good radio signal and patch in on the next radio signal, where the overwhelming radio signal is against signals operating properly. But that decision was not made at the time. It was a one-frequency signal for the south of England and phone arrangements for the north of England, with the results that we now see.

Halfway through the roll-out it was decided to change the specification of the meter itself. Because the process of changing the specification was so slow, a number of retail companies that had large stocks of the original meters continued to install the SMETS1 meters long after they should have stopped installing them—just because they had those stocks, which the new specification had not got round to replacing because of the delays in the so-called SMETS2 meters coming on to the market and being installed. Consequently, a number of meters are still not operating in smart mode, because they are either awaiting update or replacement so that they can go into the smarter system. Of the 31.3 million smart and advanced meters that are currently in homes, only 28.1 million are operating in smart mode. The roll-out is worse than it looks from the overall statistics.

What do we do about all that? The Government have put a clause in the Bill that simply says to retail companies, “Okay, we are going to give you more of the same. We are going to regulate you and give you targets”—which, by and large, the retail companies are not achieving—“and if you don’t achieve those targets we are going to fine you and whip you harder to ensure you achieve them.” Frankly, if we go on in the present direction we will get to 2028, and we do not need detailed maths to demonstrate that we will not be much further forward in the roll-out.

That is important because, in terms of the use of smart meters across the board to collect aggregate data for marking our system as a whole, we probably need about 70% penetration to get the figures right under the circumstances. We are way away from that, and we will be for a quite some time. We may well have a situation where our smart systems are racing ahead, but the means of communication on those smart systems are not, thus the smart system itself is compromised in the medium to long term.

Amendment 100 seeks to put some options in front of the Government. It states that

“the Secretary of State must produce and lay before Parliament a report setting out options for securing a guaranteed roll-out of smart meters to at least 70% of premises in all regions and nations of the United Kingdom by 2025.”

That is a reasonable target to try and aim for. Not that we would necessarily adopt this approach right now, but the amendment then states that the report must consider, among other options, different ways of rolling out smart meters for the future.

Members may push back substantially on obligatory smart meter installation. Do we transfer responsibility for the remaining smart meter roll-outs from the retail companies, perhaps to distribution network operators? That would put an end to the current system, in which literally four or five installers could go up the same street on the same day to try to install smart meters on different premises, depending on what retail company the person was with. There would instead be one body that would be installing smart meters in the various regions, and doing so in a much more systematic way. By the way, a lot of the to-ing and fro-ing that goes on when someone switches supplies to their smart meter, and how that can be transferred in an operable way, would be ended as well.

I am on record from about 2015, I think, saying that it was not a bright idea to have given the roll-out of the smart meter system to energy retailers, and that it should have been given to distribution network operators at that particular point. That is now a widespread view, and, looking back with the wisdom of Captain Hindsight, it is something that we should have considered. We can still consider it now because smart meters are not owned by the companies that install them. They pretty much all employ third parties, which actually own the meters in people’s homes, to run them. We could relatively easily —without transferring the ownership of the smart meters from those third parties—transfer the contracting agent from energy retail companies to district network operators.

The Minister is a little less advanced in years than I am, and may not remember the switchover in television lines from 405 to 625. That was basically accomplished by saying, “You can keep a 405 line television—you don’t have to have a 625 one—but it might not work in a few years’ time if you have kept your 405 TV.” The switchover was accomplished pretty much in good time, and universally. We are asking the Government for a report that considers all the different options for getting us out of the hole that we are in regarding the smart meter roll-out, to ensure that smart meters can fully play the role that we want them to play in our future low-carbon energy economy, and that we have the means to do that and can confidently come back with something better than the flog-a-sickly-horse routine in the amendment.

I hope the Minister will have a positive response to the amendment. I feel so fed up with yet again considering a Bill that just seeks more of the same that I am tempted to press it to a Division if he is unable to come substantially towards what we are saying regarding the future of smart meters. It is that important. I am trying to ensure that some Government Members go home so that we can win, but obviously it is up to the Minister how far he can come towards that view regarding the future of smart meters.