Long-duration Energy Storage (Science and Technology Committee Report)

Baroness Bloomfield of Hinton Waldrist Excerpts

Thursday 9th January 2025 Lords Chamber

[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.