Energy: Winter Supplies
Debate between Baroness Verma and Lord Ezra
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, we continue to actively manage risks to the secure energy supplies on which we depend. Working with Ofgem and National Grid, we have introduced new electricity system balancing measures through which we expect de-rated margins to remain around 6.5%; this is within the reliability standard of 4%. Our gas infrastructure is resilient, and import infrastructure can meet nearly double our annual demand without even counting on significant domestic production. We also engage closely with the EU and our G7 partners on measures to increase the EU’s energy security.
Lord Ezra (LD)
My Lords, I thank my noble friend for her Answer, but will she kindly elaborate further on the security of electricity supplies? In view of the fact that the reserve capacity is down to very low levels, and that a number of stations have had unexpected outages—including Didcot B, announced today—can she indicate whether there are likely to be disconnections during peak winter conditions?
Baroness Verma
My noble friend is right to highlight the outages. However, as I stated in my initial Answer, the grid already has existing options for companies to receive payment to reduce the amount of electricity they are taking from the grid at a time of peak demand during winter months. They are finalising new agreements with additional power stations to provide reserve services following the recent loss to which my noble friend referred. The national grid has around three gigawatts of additional tools to boost supply when margins are very tight and is in the process of extending our mutual assistance arrangements with both France and the Netherlands.
Fuel Poverty
Debate between Baroness Verma and Lord Ezra
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, the recent fuel poverty statistics show that, in fact, fuel poverty fell by nearly 5% in England in 2011-12, the latest year for which data are available. We welcome this modest fall, which was built on a fall in the two previous years. Overall, fuel poverty has fallen by nearly 9% since 2009, but we recognise that it is an extremely complex issue. It is a long-term issue requiring a long-term response.
Lord Ezra (LD)
My Lords, I thank my noble friend for her Answer. Bearing in mind that fuel poverty arises from low-income families living in badly insulated homes, of which there are more than 2 million in England, does she agree that dealing promptly and effectively with this problem would have two beneficial effects: first, to improve the living standards and health of those affected; and, secondly, through increased energy efficiency, to reduce import dependence?
Ukraine: Gas Supplies
Debate between Baroness Verma and Lord Ezra
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, we currently do not have any disruption to gas supply through Ukraine. We have a range of different gas supply sources and high storage levels. The risk to our energy supply is low. We do not anticipate that a disruption to gas transiting Ukraine would have an impact on the UK’s physical gas supply, particularly as we currently source less than 1% of our gas from Russia, but we are monitoring the situation very closely.
Lord Ezra (LD)
My Lords, I thank my noble friend for her Answer, but even if, as we hope, the crisis in Ukraine blows over, should we not, as a matter of long-term policy, aim to reduce our dependence on imported gas and to regain energy self-sufficiency, which stood us in good stead over so many years?
Energy: Winter Supply
Debate between Baroness Verma and Lord Ezra
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, we expect the energy market to deliver over the winter of 2013-14 as it has always done. We have a range of options in place to meet any tightening of margins. National Grid has existing system-balancing tools to respond to any short-term demand or supply fluctuation, and it is consulting with Ofgem on extending the existing tools to manage any predicted risks mid-decade in electricity. For the medium to long term, in the Energy Bill currently going through your Lordships’ House we are ensuring that we get the levels of investment needed to deliver secure energy supplies through a diverse mix of energy sources.
Lord Ezra (LD)
My Lords, could my noble friend kindly elaborate on her reply? In the case of gas, bearing in mind that we are now importing more than 50% of our requirements and that storage is limited, is she satisfied that we will have enough to meet peak winter demand? In the case of electricity, bearing in mind that it is estimated that reserve capacity could be as low as 5%, instead of 15% or above as normal, is she equally satisfied that we will be able to meet peak winter demand?
Energy: Electricity Supply
Debate between Baroness Verma and Lord Ezra
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, the Government work closely with Ofgem and National Grid to consider the outlook for generation capacity each winter. Ofgem’s report is valuable for aiding this process. The Government are taking the necessary steps to ensure that we have enough capacity to maintain a secure electricity supply at the most economic cost to the consumer. This will be achieved through new system balancing services in the short term, if Ofgem decides they are needed, and then through the capacity market. We have confirmed that we will initiate a capacity market in 2014 for delivery in 2018.
Lord Ezra
My Lords, I welcome the measures proposed in the Energy Bill to avoid future shortages of electricity supply. However, as my noble friend has pointed out, these measures cannot come into effect until 2018. Meanwhile, Ofgem, in its report of 27 June, has pointed that reserve electricity capacity could fall as low as 2% by the winter of 2015. This has been brought about by more capacity being closed or mothballed than new plant coming in. Could not a better balance have been achieved, bearing in mind that Ofgem has been warning about this problem since 2009?
Baroness Verma
My Lords, my noble friend raises a number of very important points. While I cannot answer for what the previous Government should have done, since 2010, the coalition Government have been working closely with Ofgem and National Grid to address the security of supply as a very high priority. A significant amount of potential capacity is available through de-mothballed plant and demand-side response. The measures being consulted on by National Grid and Ofgem would, if used, enable the procurement of the amount of capacity needed to ensure security of supply, allowing them to respond accordingly.
Energy: Electricity Generation
Debate between Baroness Verma and Lord Ezra(11 years, 8 months ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, I begin by wishing my noble friend a very happy 94th birthday, which I know he celebrated a couple of days ago. The Government are taking decisive steps to secure our supplies. We are reforming the electricity market to drive the investment we need to ensure that we have a diverse range of energy supplies, and through the Green Deal and ECO, we are looking to reduce our usage of energy. I am also pleased to announce that we have had investment from Carrington gas, which will come on stream in 2016, and Hitachi’s investment of £700 million in purchasing Horizon demonstrates that the Government’s approach is right, and that the UK remains an attractive place to invest.
Lord Ezra
My Lords, I thank my noble friend for her kind remarks. In spite of advancing years, I continue to take a keen interest in energy matters. Does the Minister agree that, while in the medium and long term, shale gas, new nuclear and other installations may help to meet increased electricity demands, there is a serious short-term problem, to which she referred? In that connection, will she indicate what steps the Government will take, in addition to those that she mentioned, to avoid a possible shortage of electricity-generating capacity within the next two to three years, bearing in mind the early closure of existing coal and some nuclear plants, and the warning from Ofgem that, as a result, reserve electricity capacity will fall well below normal levels?
Baroness Verma
My Lords, the Government are taking action to ensure that the UK economy continues to enjoy high levels of electricity supply security in the short, medium and long term. Our proposals for electricity market reform will drive investment, ensuring that we have a diverse mix of energy sources. Those proposals also include legislating for a capacity market to ensure that we have sufficiently reliable capacity on the system in the long term. The legislation, which will come to your Lordships’ House for consideration shortly, will enable a capacity market. With regard to the short term, we expect to see some reduction in margins as we move towards the middle of the decade; we saw similar reductions in the previous decade.
Energy: Green Deal and Energy Company Obligation
Debate between Baroness Verma and Lord Ezra(11 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, following its successful launch on Monday, I expect the Green Deal to revolutionise energy saving in our homes. It will transform the energy efficiency market, giving consumers real choice and control over how they can improve their properties. The new energy company obligation will ensure that those who struggle most to heat their homes affordably will get the help that they need. The reaction of industry and other groups has been more than encouraging. I am pleased with the warm reception from the party opposite for the Green Deal.
Lord Ezra
My Lords, I thank my noble friend for that reply. I agree that the Green Deal and the energy company obligation are innovative schemes, and I hope that they are very successful. However, there is one aspect that I am a little concerned about—the rate of build-up at a time when fuel poverty is still increasing. There may be a lapse before these schemes get fully under way. Would my noble friend care to comment on that aspect? In that connection, would she also comment on a number of reports that have come out on the fact that there have been some lay-offs in the insulation sector?
Baroness Verma
I begin by thanking my noble friend for his very warm welcome. The Green Deal targets energy efficiency schemes and is one of the most effective ways in which to tackle fuel poverty. That is why the minimum of 40% of eco will help to support low-income households. The eco-affordable warmth and carbon saving community obligations will support around 230,000 low-income households each year. The insulation sector as a whole has a real opportunity to grow from the success of the Green Deal, and we estimate that overall jobs in the sector will increase from the 26,000 recorded in 2011 to about 60,000 in 2015.
Energy: Self-sufficiency
Debate between Baroness Verma and Lord Ezra
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, I begin by paying tribute to my noble friend for his contributions and consistency in bringing this and similar Questions to our attention. The Government are committed to maximising all UK energy resources, including from the UK continental shelf and from UK-based renewables. However, all plausible scenarios of future energy use up to 2050, such as those set out in the Government’s carbon plan, require some fossil fuels. The amounts of oil and gas produced from the UK continental shelf are declining year on year. This means that it is unlikely that the UK could become completely self-sufficient in energy. However, import dependence is not new to the UK. We were heavily dependent on imports until the 1980s. We work closely with international partners such as Norway.
Lord Ezra
My Lords, as the House knows, historically this country was self-sufficient in energy supplies thanks to coal, natural gas and oil from the North Sea. However, as my noble friend mentioned, we had to import no less than one-third of our requirements in 2011. Does my noble friend agree that it will remain a major plank of the Government’s energy policy to reverse this trend as soon as possible? Secondly, will she confirm that there will be adequate electricity supplies and generating capacity, in view of the recent report of Ofgem that stated that there might be a reduction in capacity in the next four years?
Baroness Verma
My noble friend is absolutely right that we need to try to maximise the economic recovery of oil and gas from the UK continental shelf, and our most recent licensing round has been the most successful ever. We are committed to working with industry to create a new world-leading, cost-effective UK carbon capture and storage industry, and policies such as the Green Deal and the introduction of smart meters will reduce our energy demand and ensure more efficient use of the fuel that we use. Our ongoing work is to achieve renewable targets which significantly increase the proportion of clean domestic energy in the mix. Ofgem’s recent report provides a comprehensive analysis of the security of supply. We are looking at it very carefully and will respond formally by the end of the year.