Energy Bill

Lord Bishop of Chester Excerpts

Tuesday 23rd July 2013 Grand Committee

[Lord Cameron of Dillington]

Perhaps we can get back to the amendment. I support it because connectivity is like an international capacity mechanism, except that it has the ability to incorporate renewable technology and even intermittent power. I say to the noble Lord, Lord O’Neill, that it is not all about the UK. It is about sharing surplus all over Europe. That is the whole point. It is very unlikely that you will get a particular moment when there is no sun in Italy, no wind in Germany or Ireland, no water behind the hydro dams of Norway and no nuclear power coming out of France. There will always be surplus here and there. For instance, at one moment last week in the German market, 33% of the power was being produced by PV. There was a complete surplus in the marketplace. It was disastrous for the coal-fired power stations of Germany because suddenly the price of electricity went very cheap.

The interconnectivity is a transEuropean thing which we can all work together. I believe that an interconnected Europe would be a secure Europe in that way. However, we have a long way to go, and the noble Lord, Lord O’Neill, is correct to refer to the glacial speed. There are different regulations in different countries and different ownership structures, including some nationalised industries and old semi-nationalised industries, which are very inefficient yet determined to fend off any possible competition from abroad. There is also the question of different voltages operating in different countries. Hovering over all these uncertainties are the European public, who seem to want their power but under no circumstances want to have more pylons.

Meanwhile, in all this the EU Commission has made £9.2 billion available for overall connectivity, including gas, when the rough estimate for the electricity grid connections is £104 billion, including £23 billion for subsea cables alone. I ought to correct one other thing that the noble Lord, Lord O’Neill, said: with high-voltage direct current there are almost nil losses in transmission. Although the power stations at either end are obviously more expensive the line itself is much cheaper, particularly if it goes underwater.

The point is that the rest of that money—the £104 billion —has to come from the marketplace but to get even a proportion of that money, the market will need the certainty of international commitment and the certainty of a plan. It will need an EU plan set out by the Commission in a way that guarantees long-term commitment and is signed up to by all the member states involved. Eurelectric, the trade body representing the European electricity sector, says that creating a predictable policy framework would help utilities to finance their investment plans and attract the necessary funds. Incidentally, Herman van Rompuy says that the implementation of such a framework, which includes electricity and gas, could save the EU consumer up to €30 billion per annum. My point is that in order to get a firm and committed EU strategy, we need to start with a firm UK strategy. That, in a nutshell, is why I support this amendment.

[The Lord Bishop of Chester]

My Lords, when I am in a really tedious meeting I sometimes flick to my iPhone if I succumb to the temptation. The Energywatch organisation has a splendid app which tells you exactly what electricity generation is going on at any particular moment. I can tell your Lordships that at this moment we are depending upon supplies from overseas of 7%, or 3 gigawatts. Wind is producing at the moment less than one sixth of that. Over time, I am struck by just what a significant proportion of our electricity already comes in that way. Three gigawatts is not nothing; it is a very significant amount.

When the Minister responds, it would be helpful if she could give some indication as to what security there is. I belong to those who have some anxieties that in three or four years’ time, if economic activity picks up and some outages occur at a couple of big stations that we are not expecting, and if the weather is very cold and the wind is not blowing, we are going to depend upon electricity coming from these interconnectors. We can depend on it only if we know that they will be available. If the weather is also inadvertent in other countries, what security do we have that the electricity will be available from other places? I am entirely with the view that we should have a European electricity market. That is absolutely right but it has to be with certain guarantees for supply in this country, especially when supply gets tight in a few years’ time.

[The Earl of Caithness]

My Lords, I support in principle what my noble friend Lady Parminter is proposing in this amendment. The evidence that we got in Sub-Committee D was that interconnection throughout Europe needed a great deal more money spent on it, as the noble Lord, Lord Cameron, has told us. It needs to be improved, but that is a two-way process. The noble Lord, Lord Cameron, referred to some of the difficulties and I recall those being adduced to the committee.

My concern with this is therefore: what is the point of the UK producing a strategy when nobody else is producing one? We can produce a strategy and the Government can be questioned in the House about it, but if the French are not altering their system so that we are compatible and one can move the electricity to and fro, or if the problems have not been resolved with Norway—as was highlighted, there was a problem getting a connection with Norway or with the Danes—it seems a little pointless us having a strategy. Surely this ought to be done within the EU context. However, my noble friend Lady Parminter and the noble Lords, Lord Cameron and Lord Whitty, have the advantage that since I have left Sub-Committee D, they interviewed the Secretary of State. Although I have read the transcript, I would hope that they can enlighten us on what the Secretary of State had to say on our report, which we will discuss in more detail on Monday.

In some ways, I support the principle of great interconnection, although there will be problems from time to time. I know that the noble Lord, Lord O’Neill of Clackmannan, is more secure about the vote in September next year than I am. I wonder whether there is a way of preventing nuclear energy getting into Scotland because Scotland will not want nuclear energy from England. Can we adapt the grid so that one cannot get nuclear energy; it would only upset the Scots?

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I hope that my noble friends agree that there are already many initiatives under way to enhance our interconnection capacity and are reassured of our support in principle for low-cost overseas generation, where it can be shown to bring about benefits and value for money for UK consumers. On that basis, I hope my noble friend will withdraw his amendment.

[The Lord Bishop of Chester]

I raised a specific point about the extent to which existing capacity, which may get as high as 12 gigawatts, is taken into account in energy security. To what extent is the Government’s strategy on energy security dependent on the interconnection?

[Baroness Verma]

I apologise. I had a note for the right reverend Prelate the Bishop of Chester, but I forgot to allude to it. The loss of supply from interconnection, like other forms of capacity, would be handled by the system operator in the same way as additional capacity would be sought through the National Grid’s balancing services. There would be a mechanism in place.

[The Lord Bishop of Chester]

The noble Baroness may want to write to me rather than answer now, but if supply gets tight under the scenario that Ofgem has said is possible—although we hope it will not come to that—does continuation of the Government’s current strategy at that point depend on the availability of electricity at a level between the current 4 gigawatts and the prospective 12 gigawatts?

[Baroness Verma]

My Lords, it might be wise for me to write in detail to the right reverend Prelate and the Committee with a fuller answer.