Electricity: Cost-competitiveness
Lord Howell of Guildford Excerpts(3 months, 1 week ago)
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Lord Callanan (Con)
We already have considered estimates—work on this is going on all the time. It is a constantly evolving picture, and we take into account the views of all experts. It is undoubtedly true that renewables are intermittent: we had huge amounts of solar earlier this week, but, looking at the weather outside, I think we will not have quite so much today. That is why we need a diversified supply—nuclear, long-term storage and intermittent storage—to take account of the fact, which we know is true, that renewables are cheap, effective and quick to deploy, but they are intermittent, which is why we need a variety of technologies.
Lord Howell of Guildford (Con)
My Lords, following that last question, do the costs that the Minister gave include all the grid and system costs, as well as everything that has been referred to? Will the Minister agree that it is important to get these different costs right if we are going to gain public consent for the various incentives, taxes and charges that will be necessary to guide the system forward? As for gas, which is also mentioned in the Question, is it not the position that, in the long term, it will continue to have a substantial place, particularly in generating electricity? Is it the position that we need to ensure that its carbon emissions are handled by carbon capture and storage schemes, two of which are currently beginning? Should we not be giving a lot more attention to this area if we want a net-zero world?
Lord Callanan (Con)
The costs that I quoted are what are called the levelised costs, which are an industry standard, and they take account of other system costs. But, as I said, we will of course need back-up and storage. What the noble Lord said is true: gas will play an increasingly marginal role, but it will play a role in ensuring that we have energy security going forward. The estimates are that we will have about 7% of gas generation by about 2035.
Home Insulation
Lord Howell of Guildford Excerpts(3 months, 1 week ago)
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Lord Callanan (Con)
Indeed, my noble friend makes a very good point about the extent to which electricity usage will grow. Actually, the peak electricity usage in the UK occurred a number of years ago. We have actually been becoming more efficient in how we use electricity, with better lighting, et cetera. Clearly, if we move to more electric vehicles and more electrically powered heating, along with some of the circumstances that my noble friend outlines, electrical use will go up. We are spending many tens of billions of pounds on upgrading the electrical grid and rolling out increasing amounts of renewable: offshore wind, tidal, solar and so on. But in essence my noble friend is right that we need to plan for an electrical future.
Lord Howell of Guildford (Con)
My Lords, following on from that last question, my understanding is that, to have the all-electric, decarbonised, net-zero goal that we really want, we will have to produce and indeed consume about four or five times the present amount of electricity, from various sources. Here we are looking at an area that might reduce the growth of demand by some percentage—and the Minister mentioned the huge figure of some £2.5 billion. Can he give us some idea of what that percentage is? Will we use a quarter less electricity than otherwise, or half, or merely one-tenth? Can he give us a rough idea of where the money is going and what it is going to achieve?
Lord Callanan (Con)
I do not quite understand the noble Lord’s question. We will clearly use more electricity as we roll out more electric vehicles, the electrification of heating, et cetera—but we will use it in different ways. There are ways, for instance, in which we can do load spreading. One of the advantages of smart meters is that they allow people to consume electricity at different times and take advantage of different time-of-use tariffs, et cetera. So, as well as having particular peaks, we can also spread out those peaks over longer times of the day. There is a lot of demand management we can do, as well as increasing the amount of renewables we have on the grid, which we are doing.
Hydrogen Energy
Lord Howell of Guildford Excerpts(3 months, 1 week ago)
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Lord Callanan (Con)
The noble Viscount is absolutely right. I am a huge advocate of hydrogen precisely because of its role in long-term energy storage in the circumstances that he outlined—when the wind does not blow and the sun does not shine. We were debating whether it has a viable use in home heating. I submit that electrification and heat pumps are a much more efficient way of heating homes.
Lord Howell of Guildford (Con)
My Lords, my noble friend seems to have to answer every question on these matters these days, and he has another one coming. My understanding is that green hydrogen can be manufactured—all you need is a wind turbine or two—and stored quite near consumer markets in cities and towns, and that it is very effective for trucks and big mobile users but not much use for domestic heating because you cannot get it through the distribution system. Is that a correct assessment? If so, does it put the hydrogen issue in perspective and remind us that we will need a lot more nuclear, and will have to rely on gas as well, to get anywhere near net zero?
Lord Callanan (Con)
There was a lot in that question. I agree that there are great potential uses of hydrogen in long-term energy storage, as the noble Viscount just mentioned, and in the decarbonisation of some aspects of rail transport and heavy goods vehicles—particularly for non-road mobile machinery, where there are no real electrification options, and we have a number of successful manufacturers in this country. The original premise of the noble Lord’s question is what the best method of home heating is. All the evidence and reports show that, even if it were technically possible to pipe hydrogen into domestic homes, electrification is a much more efficient option.
Advanced Modular Reactors: Criticality Tests
Lord Howell of Guildford Excerpts(5 months, 1 week ago)
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Lord Callanan (Con)
Of course we would not, which is why we are offering support for many of these technologies. The noble Lord’s Question asked about criticality tests—we are aware of that requirement and are in discussions with a number of companies interested in carrying them out in the UK, but these are not simple issues.
Lord Howell of Guildford (Con)
My Lords, as I understand it, Great British Nuclear says that the final decision on smaller modular reactors will not be made until 2029 for the present competition, and that no smaller modular reactor will be in service until 2035—that is five years and 11 years ahead. Can my noble friend explain why it will take so incredibly long, when other countries are racing ahead?
Lord Callanan (Con)
I do not recognise the dates that the noble Lord cited. Great British Nuclear is obviously heavily ensconced in the design selection process at the moment, and I understand that, given a fair wind, the reactors should be online and producing electricity by the early 2030s.
Gas-fired Power Stations
Lord Howell of Guildford Excerpts(5 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan)
I thank the noble Baroness and the noble Earl for their questions, especially the noble Baroness, although I am slightly perplexed. If she thinks that this announcement was unnecessary, why did the Labour Party ask for it to be repeated in this House today, given that it makes the same point? However, essentially, I accept the point that the noble Baroness has made. We think that this capacity is necessary; it is all about security of supply. The estimate is that in 2035, it might account for only 1% to 2% of all of the capacity that might be required. We are looking forward a decade, with uncertain projections of what the demand will be, how much renewable capacity will be available and even what the weather conditions will be like that far ahead. So, this is sensible contingency planning.
On the questions from the noble Earl, we very much hope and expect that these will be hydrogen ready or capable of having CCUS fitted. Indeed, some gas plants are already taking part in the CCUS cluster sequencing process. This announcement is entirely compatible with our net-zero obligations. Indeed, this is net zero: there will be some emissions but those can be abated, eliminated or captured, or the power stations can run on hydrogen.
We are very proud of our record. We have one of the fastest rates of decarbonisation in the G20, and we announced before Christmas that we have reduced our emissions by 50%. We have the five biggest wind turbine farms in Europe, and that capacity continues to be rolled out. This is sensible contingency planning to make sure that the lights stay on at those times when, as we all know happen, the wind is not blowing and the sun is not shining.
Lord Howell of Guildford (Con)
My Lords, I welcome this announcement because it seems to have a strong element of realism and honesty in this whole advance towards net zero, which I personally welcome.
If the aim is to ensure that when we get to net zero, although there will be fossil fuel burning, carbon is captured from that—indeed, there will be gas burning, as there is now, as part of our existing electricity generation —does this not have to go hand in hand with dynamic development of cheaper, simpler and more efficient carbon capture and storage systems, which, if applied to gas burning, will enable us to say, “Net zero is roughly there”? That seems to be the key question, and I hope my noble friend will elaborate on it.
Lord Callanan (Con)
I thank my noble friend for his question. He is, of course, absolutely right, and his extensive knowledge of the power and energy system, based on his previous career, is well respected in this House. I can tell him that we are rolling out CCUS at pace. We have allocated £20 billion for support for CCUS clusters. We are progressing our two initial track 1 clusters: HyNet and the East Coast Cluster. We are in final negotiations with the transport storage systems and the emitter projects, some of which are gas power stations, within those cluster projects.
We again intend to be European and world leaders in CCUS. We have massive storage potential in the seas surrounding us; they have powered this country for many years and will help us to store emissions in the future as well. It is something that could even become a net revenue earner for the UK. We are indeed fully committed to that.
Biomass: Power Generation
Lord Howell of Guildford Excerpts(5 months, 2 weeks ago)
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Lord Callanan (Con)
The noble Lord posed a number of different questions. First, as I said, sustainability criteria are extremely strict. They are policed by Ofgem. I have spoken to the chief executive of Ofgem about this—it is investigating the allegations. It is Ofgem’s job to uphold the rules and it will not hesitate to take action if the rules are breached. We have some strict sustainability criteria, and it is important that Drax and every other producer abides by those rules. Drax is responsible for about 5% of the UK’s electricity generation, and noble Lords should be aware that this is important for keeping the lights on, and for British energy security.
Lord Howell of Guildford (Con)
I agree that there is biomass and biomass, but in this case trees are being cut down to provide wooden frames to replace steel frames in construction, and are therefore contributing to carbon reduction. I understand that the residue of that cutting down—the sawdust and so on—makes up the pellets that we are talking about now for Drax. Should that other side not be borne in mind, together with my noble friend’s view that it is a very complex matter? Just going for the obvious target often leads to the wrong, opposite results?
Lord Callanan (Con)
My noble friend is right. It is a complicated subject and should not be the subject of easy sloganeering or campaigning. A number of different issues are involved. What the primary wood is used for is, of course, a matter for the US authorities and for the Canadians.
Civil Nuclear Road Map
Lord Howell of Guildford Excerpts(7 months, 1 week ago)
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Lord Howell of Guildford (Con)
My Lords, this road map is extremely welcome. However, in view of the fact that Hinkley Point C is now €15 billion over budget and many years late, and has almost bankrupted Électricité de France, with the Chinese partners reportedly stopping all further payments, does my noble friend think it wise to make a replica of the Hinkley Point project at Sizewell C and make it the spearhead of our nuclear programme, when smaller modular reactors and new technologies could be ready many years sooner and with much less burden on the taxpayer and the consumer?
Lord Callanan (Con)
My noble friend makes a good point, but the attraction of using a similar design is that many of the teething problems that have been undergone at Hinkley will hopefully be solved by the time we get to a decision on Sizewell. As I said, my noble friend makes a valid point and, again, it is not a question of either/or. We will continue the development of SMRs and AMRs in conjunction with large-scale nuclear.
Hydrogen Heating
Lord Howell of Guildford Excerpts(8 months, 2 weeks ago)
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Lord Callanan (Con)
With respect to the noble Baroness’s first question, I think she needs to read the letter from the leader of Redcar Council more carefully. I do not think it supports the analysis she gave. Nevertheless, I have said on numerous occasions that no hydrogen village trial will take place without strong support from local residents. On the noble Baroness’s second question, yes, hydrogen does have a high global warming potential, which illustrates the importance of not allowing it to leak at all.
Lord Howell of Guildford (Con)
My Lords, is the National Infrastructure Commission’s report really welcome? What it says in that report is that hydrogen molecules are just too difficult for 23 million domestic supplies at home. It wants to dig up or close down entirely the existing retail gas distribution system as well, because it thinks it does not fit in with our global aims—and it is absolutely right. And it wants to turn us into an all-electric economy. But have we got the slightest clue where all this extra electricity will come from, how it will be transmitted and delivered, and how that can be done at reasonable cost to the consumer? Until we have a clearer view on those things, it is very hard to just say that we welcome the NIC report.
Electricity Network Connection Action Plan
Lord Howell of Guildford Excerpts(9 months, 1 week ago)
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Lord Callanan (Con)
If that were the case then, yes, I would agree with the noble Lord that it is a farcical situation.
Lord Howell of Guildford (Con)
My Lords, the excellent document Powering Up Britain talks about a 100% increase in national grid capacity to deliver an all-electric economy by 2050. National Grid itself talks about a much larger figure: a 200% or 300% addition in the national grid. Can the Minister guide us on which he thinks is the most reliable of those estimates? Can he also tell us how it is all to be financed and, indeed, how the planning system will be sped up so that we can achieve anywhere near that by 2050?
Lord Callanan (Con)
My noble friend asks good questions. The figures are that peak demand for electricity is expected to increase from 47 gigawatts in 2022 to between 90 and 120 gigawatts in 2035, as transport, heating and industry electrify. We think that this will require between 260 and 310 gigawatts of generation capacity connected to the network by 2035. To do all these things, we of course need to reform the planning system, which we are doing through national policy statements and through the action plan announced today.
Climate Financing
Lord Howell of Guildford Excerpts(10 months, 1 week ago)
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Lord Callanan (Con)
The noble Lord asks a good question, which is slightly beyond the remit of the original Question. I point him to the answer that I just gave to my noble friend: empowering women and girls, giving them more control over their own reproductive rights, is very important in this area.
Lord Howell of Guildford (Con)
My Lords, I see that Janet Yellen, the American Treasury Secretary, estimates that it will take around $81 trillion—I repeat, $81 trillion—to get anywhere near the Paris targets by 2050. So, are we in the right ballpark at all in talking about £100 billion? If we are, is there not a need to concentrate on the gigantic coal burning of China, which is still around 1,000 times ours, as well as the huge coal burning of India and America? These account for 60% of the world’s emissions increases; is this not where the money should go?
Lord Callanan (Con)
My noble friend of course makes an important point. My reaction is that it is at least a start. Given the financial pressures on many developing countries, it is important to start the financing process. The £100 billion will be a commitment and will help many poorer parts of the world. He is also right that we need to work with China and the US to drive down their coal emissions. I am delighted that, in this country, coal will be completely gone from our power system by next year.