Great British Energy Bill

Baroness Bloomfield of Hinton Waldrist Excerpts

2nd reading
Monday 18th November 2024 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank the Minister, the noble Lord, Lord Hunt of Kings Heath, for so ably introducing this debate on a Bill which relates to one of the most critical issues this country must address: energy security. I very much look forward to the maiden speech of my noble friend Lord Mackinlay of Richborough and that of the noble Baroness, Lady Beckett—a very warm welcome to them both.

This Bill gives the Secretary of State total power to establish the publicly owned Great British Energy, which will receive £8.3 billion of British taxpayers’ money. The purpose of Great British Energy will be to assist the Government in ramping up renewables, which will always be naturally unreliable, to achieve their unachievable target of 100% clean energy by 2030. I am fully in favour of ambitious targets, but this is a target driven by political ideology which industry experts have described as aggressive, unrealistic and expensive—requiring far more than the allocated £8.3 billion of funding. Yet the Bill contains little detail on how this will be achieved. We have not seen a business plan or a framework agreement, nor do we understand how the Secretary of State and Great British Energy will be held accountable.

Over the past month, as was the case both this time last year and in March, we have seen another dunkelflaute, indeed in March the capacity factor—the measure of how often turbines generate their maximum power— failed to reach 20%, and for the past two weeks it has been virtually zero. The UN’s Intergovernmental Panel on Climate Change predicts that average wind speeds in the UK will decline and that wind droughts will become more frequent. 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 than ours. Indeed, it is possibly only Xlinks’ proposed HVDC cable bringing solar and wind-generated energy from Morocco to the UK that comes close to offering baseload power as well as exclusive supply.

Throughout the election campaign, the Government repeatedly promised that Great British Energy would cut household energy bills by an average of £300. A similar claim was made by at least 50 MPs as well as by both the Science and Work and Pensions Secretaries of State. The Chancellor said:

“Great British Energy, a publicly owned energy company, will cut energy bills by up to £300”.


In an interview in June, the Secretary of State claimed that Great British Energy would lead to a “mind-blowing” reduction in bills by 2030. However, the quotes in the weekend press from the wind farm industry are damning. They say that the rush to deliver by 2030

“would create very short-term resource constraints, spikes in prices and the consumer risks losing out”—


a fear also expressed in the recent NESO report that supply chain pressures might add a whopping £15 per megawatt hour to the price of our electricity.

I therefore express my deepest concern that in the other place the Government voted against a Conservative amendment to make cutting energy bills by £300 a strategic priority for Great British Energy. By doing this, they voted against an amendment that would hold them to their word and to their election promise. the Minister confirm by how much they anticipate energy bills to fall by 2030? The pledge to cut household energy bills by up to £300 was not the only promise the Government made. They also promised that Great British Energy would create 650,000 jobs. Yet this too was defeated from becoming a strategic objective of Great British Energy and is absent from the Government’s Explanatory Notes to the Bill and the Great British Energy founding statement. Why?

These are not trivial matters; they are promises that are important to people, and the Government have already put 200,000 jobs at risk through their plans to shut down North Sea oil and gas. The Secretary of State has made huge promises which greatly impact people’s energy bills, their businesses and their jobs. It is therefore crucial that the Government are held accountable. Will the Minister tell the House how the creation of Great British Energy will impact employment in the UK?

The Government have said that Great British Energy is part of their plans to ramp up renewables, which they say will result in cheaper energy and greater energy security. This is simply not true. Instead, the Government’s renewables plans will cost the British people. First, analysis by Cornwall Insight found that the contracts for difference round that the Secretary of State bumped up will increase people’s energy bills. Secondly, if we build renewables faster than we can develop and connect them to the grid, the constraint payments needed by 2030 could increase bills by hundreds of pounds. Why was the need for long-term energy storage not realised before the approval of all these huge solar farms being built on prime agricultural land?

Thirdly, the cost of the transition to renewable energy will be paid for by consumers, through environmental levies on bills. The Office for Budget Responsibility has forecast that this tax will increase by 23% by 2030, highlighting the upfront cost of the Government’s ambition to decarbonise the grid by the end of the decade. In fact, households in the UK are expected to pay the equivalent of £120 per year, via green levies, to fund the Government’s race for clean energy. This is far from the Government’s promise that Great British Energy and the race to renewables would cut bills.

It is clear that the cost of investment in renewable energy projects will be incorporated into prices. Not only will consumers be burdened by environmental levies but experts have warned that the funding required to build new electricity pylons and overhead wires, enabling the connection between wind and solar farms to the grid, is and will be added to bills in the form of network charges. The Government have not modelled the cost of constraint payments, network costs or green levies. What is more worrying is that they have deprioritised new technologies such as small and advanced modular reactors.

The inescapable truth is that intermittent, non-dispatchable renewable energy sources can never compete on level terms with nuclear power, which can harness the extremely high-energy density of nuclear with very little fuel and very little waste. For its entire lifecycle, it is the lowest-carbon electricity source and that is even before the potential uses of its excess heat, such as the creation of green hydrogen, are taken into account. Shockingly, solar requires 17 times more material and 46 times as much land for the same installed capacity as nuclear. Moreover, these new technologies will not only bring supply chain opportunities, jobs and inward investment but will attract data centres such as Microsoft to the UK if we can deliver the kind of co-located energy sources as offered by such companies as TerraPower, X-energy and others.

In the meantime, by increasing the windfall tax by 3% in the Budget, the headline rate of tax imposed on UK oil and gas firms is 78%. Energy firms have described this as “a devastating blow”. This hike will cut investment in UK natural resources and oil and gas production 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. If investment in UK oil and gas decreases, the revenue generated from the energy profit levy, which the Government are relying on to help fund Great British Energy, will decrease. Twelve billion pounds in tax receipts have been lost from the North Sea by pressing ahead with ending oil and gas licences, a move no other major economy has taken. This, combined with £8 billion which will be spent on Great British Energy, is a staggering £20 billion.

I come back to the details of the Bill, or the lack thereof. I repeat that we have not seen a business plan or a framework agreement. This is deeply concerning. We have learnt that Great British Energy will be headquartered in Aberdeen—incidentally, in a country totally opposed to nuclear power—but that the chair will be based in Manchester. Another promise was that Great British Energy would turn a profit for the taxpayer, yet there is nothing in the Bill that elucidates an investment profile or even a targeted rate of return. Why not? The British taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of their money.

We have also not seen an explanation of how this Bill is different from the UK Infrastructure Bank, which was set up to do the exact same thing. Great British Energy is almost a duplicate of the UK Infrastructure Bank. This was established to provide loans, equity and guarantees for infrastructure to tackle climate change, funded by £22 billion. Great British Energy seeks to do something extremely similar but gives far greater powers to the Secretary of State. The UK Infrastructure Bank Bill had important accountability and report measures which are removed from this Bill. Why is this and why should taxpayers be burdened twice?

Furthermore, how is Great British Energy going to link in with the underresourced Great British Nuclear, which has yet to receive this Government’s encouragement to craft a vision that industry, government and the private sector can work collectively towards? Indeed, the word “nuclear” does not even appear in the Government’s new industrial White Paper, and the Minister reported at the all-Peers briefing last week that Great British Energy will not be investing in nuclear at all. What is going to happen to Wylfa?

In conclusion, this legislation is premature, lacking in detail and fuelled by an unrealistic target which will be unnecessarily costly to the people, jobs and economy of this country. This is particularly concerning given the wide-ranging powers the Bill gives to the Secretary of State and the absence of accountability measures and a business plan. We need clarity from the Government on the priorities and intention of Great British Energy. I hope that the Minister—indeed, the Minister for Nuclear—for whom I have the greatest respect, will engage constructively with these concerns.

Drax Power Limited: Ofgem Investigation

Baroness Bloomfield of Hinton Waldrist Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, on the issue of data, I have checked with Ofgem. At the moment, it has no reason to think that Drax is not compliant, but it will not hesitate to act if required. On the question of subsidy to Drax, the noble Baroness is referring to the ROC system of subsidies, which the last Government oversaw for many years. The ROC comes to an end in 2027. The last Government issued a consultation on whether there should be transitional subsidy arrangements. We are considering the results of that work at the moment.

[Baroness Bloomfield of Hinton Waldrist (Con)]

Noble Lords will remember the “Panorama” exposé of the illegal sourcing of wood pellets from Canadian forests, a charge vigorously denied at the time by Drax. Our Conservative Government introduced the strict criteria that allowed Ofgem to conclude that there was not “sufficient evidence”. What plans do this Government have to ensure that Ofgem can continue to investigate any company receiving a subsidy?

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is clearly very important that companies in receipt of the ROC payments—and, indeed, where their biomass electricity generation is classified as low-carbon—are acting according to sustainability criteria. The last Government issued a call for evidence in 2021 and then took two years to publish a strategy, in 2023. On the revision of sustainability criteria, they rather ducked it, saying that they would produce a cross-sector consultation this year, which never happened. We are now working on that. It is clear that sustainability criteria need to be kept up to date. We will ensure that that happens.

King’s Speech

Baroness Bloomfield of Hinton Waldrist Excerpts

Thursday 18th July 2024 Lords Chamber

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I turn back to energy and of course nuclear power in particular. I draw attention to my entry in the register of interests as an adviser to Terrestrial Energy, a generation IV Canadian technology company.

I congratulate the noble Lord, Lord Fuller, on an excellent and meaty maiden speech—the first of many valuable contributions to your Lordships’ House, I am sure. I also congratulate the noble Lord, Lord Hunt of Kings Heath, and the noble Baroness, Lady Hayman of Ullock, on their appointments; they have both given wise counsel to the House. I was also reassured by his opening speech. I am glad that the new Government recognise the challenges of the energy trilemma and that they will continue the good work of the previous Government and speed up the delivery of a domestic clean economy. As was said in the King’s Speech, the Government are determined to lead

“the development of the technologies of the future”.

Net zero cannot be achieved without nuclear power, which absolutely encompasses the technologies of the future. The last Government went some way towards this—albeit too slowly—by putting in place the legislative environment, a dedicated Minister and a public body in the shape of Great British Nuclear, which together aimed to deliver the renaissance that the nuclear industry desperately needs. We once led the world in nuclear technologies. In some we still do, but we could become a world leader in all of fusion, fission and fuels if we could just get a move on. By all means build at gigawatt scale but not at the expense of the small, advanced and micro technologies. This Government just need to quicken the pace.

Why? It is because nuclear energy is a vital low-carbon source of energy for the UK. While renewables such as wind and solar are important in achieving net-zero ambitions, nuclear provides the essential baseload required to meet the increasing demand for reliable energy while keeping emissions low. As the noble Baroness, Lady Moyo, so eloquently warned in her exceptional speech, AI and data centres will result in an explosion of demand for power. Nuclear is the most sustainable energy source; it has the lowest life-cycle carbon footprint and is the only low-carbon energy available 24/7, making it essential to meeting these needs. The nuclear industry is also crucial to economic growth and job creation. Over 77,000 people currently work in that industry, with the majority of these jobs outside London and the south-east. However, the UK must train tens of thousands of additional workers if the Government are to meet the target to deliver 24 gigawatts of nuclear by 2050.

I hope that this Government will continue to support the work of the nuclear skills taskforce, as well as the many outstanding apprenticeship schemes throughout the industry, notably those with the UKAEA, Rolls-Royce, and EDF at Hinkley Point. Some of those at Hinkley Point relocated from Anglesey when the Horizon project failed. I sincerely hope that this Government will continue their plans to redevelop Wylfa. If not at gigawatt scale then please release it quickly as a site for SMRs, as either would enable this young skilled workforce to return home. Incidentally, while it is not one of the industrial heartlands of the noble Lord, Lord Hunt, it is one that is very close to my heart and desperately needs good-quality, well-paid employment—as does Cumbria, another area which cannot be described as an industrial heartland, an observation that will not be missed by his noble friend Lady Hayman of Ullock.

It was also welcome to see the announcement of a sustainable aviation fuel revenue support mechanism Bill, to support the transition to sustainable flying. Of the multiple SAF production routes, those using nuclear energy inputs offer the greatest emissions reduction, and production on a scale sufficient to meet future commercial demand. The Bill can enable designers such as Rolls-Royce SMR, Westinghouse SMR, newcleo and SAF developers, such as the British company Equilibrion, to position the UK as a world leader in commercial nuclear SAF production. Supported by this Bill, these companies offer the UK access to a huge international market in a rare economic and social opportunity to deliver UK growth and thousands of well-paid jobs, while slashing emissions from aviation.

As a stark reminder of the challenge, I point out that the UK will generate the same amount of nuclear power in 2024 as it did in 1976, and less than half that which it did in 2000, with most of our existing capacity to be retired by the end of this decade. While we welcome the progress made at Hinkley and Sizewell, the new Government must build on the Conservative Government’s strong support for nuclear and capitalise on the significant and historic opportunities brought about by new technologies. Just one SMR has the ability to generate up to the equivalent of 150 onshore wind turbines, and benefits from being manufactured at a plant and transported to a site for installation.

While a focus on SMRs would be welcome, it should not be the full focus of the Government. Advanced modular reactors have the potential significantly to support the UK’s net-zero transition. Not only do AMRs offer the ability to recycle reprocessed spent fuel and thereby close the fuel cycle; they could be sited alongside data centres in positions not previously designated as nuclear sites. Many developers of such reactors are keen to progress their projects here in the UK as soon as possible, in some cases using only private finance. For example, Europe’s fastest-growing energy company, newcleo, is willing to advance a project to final investment decision at pace—indeed, multiple projects on multiple sites—without drawing on taxpayer money.

What they need is a level playing field. This means that potential sites for development need to be released by the Government/GBN to developers in a timely manner, and not just land-banked for the winners of the SMR or subsequent competitions. The top-down, winner-takes-all and government-subsidised approach needs to be replaced by an enabling and empowering platform on which developers can raise finance and progress their projects as soon as possible.

Key to this will be quickly progressing agreements regarding the revenue support mechanism of choice—namely, if certain conditions are met and it falls below a certain price, the power generated by developers will be purchased. A simple contract for difference would achieve this and open the floodgates to foreign investment into UK nuclear. The contrast with the situation in, for example, France, is stark. There, the Government are actively helping projects find the right sites and providing much earlier assurance on revenue support, thereby removing the five to six years of project risk borne solely by the developers before a financial investment decision is made.

I urge the Minister to meet the advanced nuclear developers as soon as possible and to work together to find a way to progress multiple projects simultaneously and at pace. There is no net zero without nuclear, and there will be no 24 gigawatts of nuclear by 2050 without new advanced nuclear. This is an urgent matter of necessity and not just ambition. I wish the new Government well in their endeavours.