Energy: Electricity Supply

Lord Ezra Excerpts

Monday 29th July 2013 Lords Chamber

Asked by

[Lord Ezra]

To ask Her Majesty’s Government whether, in the light of the recent report by Ofgem, they consider there will be adequate electricity generation capacity to meet winter demand in the next two to three years.

[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.