Long-duration Energy Storage (Science and Technology Committee Report)

Lord Moynihan of Chelsea Excerpts

Thursday 9th January 2025 Lords Chamber

[Lord Moynihan of Chelsea (Con)]

My Lords, I declare my interests as listed in the register. In the spirit of the example of the noble Baroness, Lady Brown, I additionally disclose that, in common with most pension funds, for example, I own oil company shares in my diversified portfolio. However, by far my largest investments in energy are in two companies that, were net zero to be accelerated, should benefit me significantly. The first is in a company that cleans up and decommissions North Sea oil wells when they are to be closed down; the second is an investment in the new nuclear technology, molten-salt fission. Both my investments there are, each of them, an order of magnitude larger than my investments in oil companies, so my economic interests should therefore predispose me to argue in favour of net zero and its emanations. However, as I do not, I can claim that my motives are unsullied, which I would argue is always the best position to be in when contributing to debates such as this.

The report says that we should get on with long-duration energy storage, using green hydrogen as the technology. At first sight, the idea of a “wind plus green hydrogen” solution to creating net-zero electricity is attractive. As the noble Baroness, Lady Brown, said, the output of wind farms is unneeded a good percentage of the time; it is much too expensive to pay them to lie fallow at such times, so let us keep it going, produce green hydrogen from the otherwise unneeded output, and then round-trip that hydrogen back to electricity when needed. The cost of doing this is acknowledged to be expensive but asserted to still be worth the cost. However, that claimed cost is absurdly low. The true cost is so much higher that it comprehensively undermines the entire idea. How did that cost misunderstanding come about? It is because this report relies on the Royal Society’s report, which in turn uses figures from DESNZ from a couple of years ago—and those DESNZ costings have already turned out to be wildly undercooked.

For example, the Moray West offshore wind farm has spent as much money installing its foundations as DESNZ suggested it would cost to complete the entire project. DESNZ’s other assumptions appear equally overoptimistic. Moreover, recent contracts for difference prices suggest that the cost of building wind generation is now rising. Over and over, the DESNZ cost predictions turn out to have been too optimistic. Compounding this problem, the green hydrogen round-trip efficiency is very low, with two-thirds of the energy wasted along the way. At the end of the day, the Royal Society says that the cost of a full green hydrogen system for electricity by 2050 would be in the order of £40 billion a year, but that assumes huge reductions in costs and huge improvements in efficiencies. Using current 2025 technology, the sum cost is nearly four times as much, at £150 billion a year.

Spending taxpayers’ money on long-duration green hydrogen energy storage is yet another example of a speculative, idealistic, “industrial strategy” approach—as espoused by the noble Lord, Lord Livermore, in a previous debate—to the economy. It does not work. The beginning of this steep slippery slope is to be a £500 million investment, likely to be money down the drain for us, although certainly of benefit to the recipients of that money. In decrying this, I am not making a partisan attack: under Prime Minister Boris Johnson, an equally foolish £500 million investment was made in OneWeb, for example, and it is worth pretty much nothing now. It is always the “we know best” attitude that is the problem; as said in the remark some attribute to the noble Lord, Lord Mandelson: “We thought we were picking winners, but it turns out that the losers were picking us”.

In short, the nation and the Government are being led up the garden path, at a cost in order of magnitude above the already eye-watering prediction of £50 billion—and that is even if the idea works, which it may well not. It is time to rethink. The risks, as well as the costs, are currently too large for “wind plus green hydrogen” to be a sensible choice. That in turn means that we do not have a solution to the unbelievably expensive problem of paying for wind power that is not needed and will not be used. Green hydrogen is not the only major problem with the overall net-zero speculation, but it is a big one.