Electricity (Risk-Preparedness) (Amendment etc.) (EU Exit) Regulations 2020

Lord Campbell-Savours Excerpts

Tuesday 3rd November 2020 Grand Committee

[Lord Campbell-Savours (Lab) [V]]

Before dealing specifically with this SI, I want to refer to a point repeatedly being raised by colleagues across the House on the delayed handling of SIs. Members have naturally argued for earlier consideration, but at the end of the day there are now huge numbers of measures going through the process and I would not like to see a process introduced that further delayed the introduction of those SIs that are urgently required.

I turn to the SI before us. I will concentrate my remarks on what has been described in Commons debates as smooth working in the supply of energy, as well as the need to avoid a crisis in supply and the development of risk preparedness planning. Providing certainty for market participation and resilience in supply systems is clearly critical if we are to plough our own furrow in the new Europe we are embarked on.

That brings me to the whole issue of interconnectors. In the Commons, Minister Kwasi Kwarteng, when pressed on interconnectors, responded that

“we intend to build many more.”—[Official Report, Commons Delegated Legislation Committee, 7/10/20; col. 3.]

I want to press the Minister on that response as it begs the question: what further interconnector arrangements are under consideration? I have in mind proposals for an interconnector with Iceland, originally made some years ago. But before referring to that particular project, I need to state that my wife is Icelandic and she has relatives who are engaged in the energy debate in Iceland.

The Icelandic proposal is to build an interconnector between Iceland and the UK. It would extend over 700 miles and would carry between 800 and 1,400 megawatts of power. I understand that it would be the largest subsea interconnector in the world. The project partners are National Grid, the Icelandic state-owned generator Landsvirkjun, and Landsnet, the transmission system operator. I want to press the Minister on where we are in the debate on a way forward. I know that she has taken a historic interest in this project as part of her keen interest in energy-related environmental matters, which also include barrages, but there have been hold-ups which are placing question marks over the whole project’s development.

The latest information available to me points to difficulties over the need to upgrade the transmission system which encircles Iceland and which is limited to 100 megawatts’ transmission capacity. An interconnector would be dependent on that ringed transmission system, which is clearly inadequate as currently operated. It would need to be substantially upgraded, if only to supply power to the interconnector. The ring is, in effect, the collector. The problem is further aggravated by the very vocal environmental protection movement in Iceland—which normally I strongly support—which is deeply concerned about damage to the visual environment from ugly power plants and overhead power lines. These considerations form part of a balance of arguments which are perfectly understandable in a country where environmental protection issues are crucial. They are key to Iceland’s ability to attract a worldwide tourist trade.

However, there are now dark clouds on the horizon for the Icelandic economy. First, the future of the aluminium industry, which hitherto has been internationally competitive, is threatened by increasing Chinese competition subsidised by cheap coal. Secondly, the pandemic has long-term implications for the Icelandic economy, which is increasingly dependent on tourism, and huge pandemic-related reductions in tourist movements have had a major effect on national income. Energy exports could certainly help alleviate downturn damage. The country will inevitably have to have that in mind when considering the perfectly legitimate concerns of the environment movement. Equally, the environment lobby there will need to consider the consequences of what may be a long-term dilemma arising out of reduced national income. No one knows where the pandemic is going to take us. The powers that be in Iceland will not be unaware of the looming dangers if alternative sources of national income cannot be found.

Admittedly, Icelandic resilience saw the country through the fisheries crisis in the 1960s and the recent financial crisis, but nevertheless the balance of these arguments may be such that Iceland has to make major compromises in its economic and industrial strategy, which could include a serious debate on potential interconnection business, from which Britain could benefit. I do not envy the heartfelt debate that may now have to take place. No doubt Björk, the Icelandic singer, will wish to consider these matters when she makes her next very substantial financial contribution to the Icelandic environmental movement.

This order is about electricity supplies in the new Europe. It will inevitably lead to the reshaping of the energy supply market, with Europe to the south and, potentially, Iceland to the north. It will be interesting to know where the Government stand on the use of these interconnectors in the policy of preparedness referred to by the Minister which stands at the heart of this statutory instrument.