Great British Energy Bill Debate
Full Debate: Read Full DebateDepartment: Department for Energy Security & Net Zero
Lord Offord of Garvel
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Great British Energy Bill
Lord Offord of Garvel ExcerptsMonday 13th January 2025
(2 days, 13 hours ago)
Lords ChamberRead Full debate Great British Energy Bill 2024-26 View all Great British Energy Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 43-III Third marshalled list for Committee - (9 Jan 2025)
Lord Offord of Garvel
“(1A) The Secretary of State must give a specific direction to Great British Energy that it must report to the Secretary of State on the progress made by Great British Energy towards the strategic priority of reducing household energy bills by £300 in real terms by 1 January 2030. (1B) A report under subsection (1A) must include a projection of how Great British Energy’s activities are likely to affect consumer energy bills over the following five years. (1C) A report under subsection (1A) must be made within two years of the day on which this Act is passed, and annually thereafter.(1D) The Secretary of State must lay a report made under subsection (1A) before Parliament.”Member's explanatory statement
This amendment would require an annual report to be laid before Parliament on how Great British Energy’s activities are contributing towards taking £300 off consumer energy bills.
Lord Offord of Garvel (Con)
My Lords, I rise to move Amendment 59 and to speak to Amendments 60, 61, 63, 65, 69, 70, 72 and 76 in my name.
Amendment 59 requires an annual report on how Great British Energy’s activities are contributing to reducing consumer household energy bills by £300. This frequently repeated claim, that the purpose of Great British Energy is to save each household £300 on their energy bills, seems conspicuously absent from the legislation, which states that the “objects” of Great British Energy are only to facilitate, encourage and participate in the production of energy,
“the reduction of greenhouse gas emissions … improvements”
in
“energy efficiency, and … measures for ensuring security of … supply”.
It is imperative that the Government be held accountable for their promises. The Secretary of State has reiterated that clean energy will deliver cheaper energy, and this has been repeated in this House, in the other place, on the campaign trail, in videos and on leaflets. It is therefore important to enshrine accountability for that ambition in the Bill that creates the institution of Great British Energy. We must introduce a mechanism by which the Secretary of State and Great British Energy are accountable to households for their pledge to reduce bills through investment in renewables, and for their specific promise to reduce household bills by £300 per household.
Amendment 60 in my name also seeks to introduce a mechanism by which the Secretary of State and Great British Energy are held accountable. Amendment 60 holds the Government to their word by requiring Great British Energy to report to the Secretary of State on the progress made towards creating 650,000 new jobs—another election pledge.
Amendment 61 in my name introduces a specific strategic priority for Great British Energy to develop UK energy supply chains and requires that an annual report be produced on the progress of meeting this strategic priority. It is essential that our transition to net zero does not increase our reliance on foreign states, particularly hostile foreign states. I am sure we can all agree that we want the so-called “clean energy” transition to utilise British industry, whereby offshore wind turbines and solar panels are produced by domestic manufacturing companies and erected by British workers. It is with that in mind that I bring Amendments 61 and 76.
Amendment 61 requires a fixed percentage of materials sourced or purchased as part of any investment made by Great British Energy to be produced in the UK and supplied from UK manufacturers. The transition to net zero presents our country with a great opportunity for investment and job creation; we must ensure that it is domestic companies and the British people who benefit from the increased investment promised by Great British Energy.
We must not outsource our energy transition. Amendment 72 in my name requires Great British Energy to report on the impact it has on imported energy. The Government’s target to achieve clean energy by 2030 must not increase our reliance on imported energy, which risks jeopardising our energy security and exposing British consumers to price spikes. It is already concerning, given that the hike in the windfall tax to 78% is already cutting investment in UK natural resources and oil and gas production, and will make the UK increasingly dependent on imported supply.
The distribution and transmission of electricity is intrinsic to the production of clean energy as set out in Clause 3. It is therefore critical that Great British Energy should take all reasonable steps to ensure that access to the national grid is ready for any energy infrastructure invested in by Great British Energy, and Amendment 65 in my name works to do just that.
The “Great Grid Upgrade” is without doubt a necessary component of our journey to net zero by 2050. Currently, new energy infrastructure—new wind turbines and new solar farms—have a significant wait time for grid connection. That is why the previous Government commissioned the Winser review, setting out recommendations on how to reduce this timeframe. The previous Government accepted advice on all areas—all 43 recommendations—to ensure that we could continue the work to drive down construction and connection times.
Despite the work that we on these Benches initiated in government by accepting these recommendations, the timeframe for obtaining grid connections for a new project can be as long as 10 years. In fact, a project without grid connectivity today might not come online until the mid-2030s, well beyond the Government’s ambitious goal of grid decarbonisation by 2030. It is therefore essential that the development of the national grid coincide with the development of renewable energy production.
Amendments 69 and 70, in my name, require GBE to report to the Secretary of State on the impact of each investment on carbon emissions and on the progress made by GBE towards reducing those emissions. I am grateful to my noble friends Lord Petitgas and Lord Trenchard, whose Amendment 80 would require Great British Energy to produce a quarterly unaudited and an annual audited report, including on the rate of returns for and the carbon emissions resulting from each investment. I support my noble friends’ amendment, which neatly covers both emissions resulting from, and the rate of return of, each investment. I expect that the latter will be debated thoroughly in the following group.
Supposedly, Great British Energy is to be established to drive the Government’s clean energy by 2030 goal and net-zero target, yet the Bill makes no provision for reporting on the impact of each investment on carbon emissions, which is critical if the Government are to achieve that pledge. Amendments 69 and 70 in my name, and Amendment 80 in my noble friend Lord Petitgas’s name, seek to rectify that, as does Amendment 85A in my noble friend Lord Hamilton of Epsom’s name, which I wholeheartedly support.
Finally, I return to the strategic priorities of Great British Energy as set out under Clause 5. As I have discussed previously, it is critical that we have sufficient oversight of and reporting measures on the financial assistance provided to Great British Energy. In that vein, Amendment 63 requires Great British Energy to report on the projected cost of fulfilling all its strategic priorities.
I trust that the Minister has listened to and carefully considered the array of issues raised in the amendments in my name and in those in my noble friends’. We must not lose sight of the sweeping powers that the Bill provides to the Secretary of State in issuing Great British Energy with directions over which Parliament will have no oversight. We must give due consideration to the purpose and impact of each direction. I beg to move.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, Amendment 77 in my name
“would require … 75 per cent of all materials purchased as part of an investment by Great British Energy”
to be produced in the UK. I will speak only briefly, as my noble friend Lord Offord of Garvel’s Amendment 61, for which I thank him, similarly requires a fixed percentage of materials sourced or purchased as part of any investment made by Great British Energy to be produced in the UK and supplied by UK manufacturers. However, I will make some additional points.
It is essential that the race to clean energy by 2030 and net zero by 2050 benefit British industry. As my noble friend Lord Offord explained, we must not outsource our energy transition. I draw attention to the warning from the former head of MI6 that the courting of Chinese investment risks handing power to Beijing. Up to 40% of solar panels in Britain are produced by companies linked to forced Uighur labour in eastern China. Furthermore, Chinese businesses have funded or provided parts for at least 14 of the 15 offshore wind projects in, or about to be in, operation. Firms owned by the Chinese Government have large stakes in three projects, together producing the energy for 2 million homes. While the Government’s energy agenda is overly ambitious, it could benefit the domestic manufacturing industry if we look to prioritise British industry over that of foreign states.
I am sure that the Government will have no hesitation in supporting my amendment, considering that the Secretary of State has repeatedly said that Great British Energy will deliver jobs for the British people. Can the Minister tell the Committee what impact Great British Energy will have on British industry? Will he confirm that the Government’s clean energy targets will not increase our reliance on foreign supply chains?
Lord Hunt of Kings Heath (Lab)
My Lords, I do not really think I can go any further than the remarks I have made this afternoon. It will ultimately be for GBE’s board to decide how it will arrange its board committees. I have noted what the noble Lord said about an investment committee. I will certainly draw his remarks to the attention of Jürgen Maier, who may not be an investment expert, as the noble Lord suggests, but my goodness me he has a lot of experience in this sector.
Lord Offord of Garvel (Con)
My Lords, in bringing the debate on these amendments to a close, I can deal head-on with the Minister’s comments and those of the noble Earl, Lord Russell, about the time given to the Bill. We have so far had one and a half days in Committee and we have one further day allocated, which will be only two and a half days on a Bill that spends £8.3 billion of taxpayers’ money, has no detail on how that money will be spent and gives endless power to the Secretary of State for Energy. It is entirely reasonable that we scrutinise it. The weekend’s press was full of the energy crisis that we face, with the shortage, storage and national grid issues.
Lord Hunt of Kings Heath (Lab)
My Lords, with the greatest respect, there is no energy crisis.
Lord Offord of Garvel (Con)
As I said, the point of government is to ensure that there is no energy crisis and at the weekend we had reports of there being gas supplies for less than one week, which is concerning to the public. Therefore, it is only fair and reasonable that Parliament debates that in some detail.
Lord Hunt of Kings Heath (Lab)
My Lords, what we had was one company looking for government subsidies using the opportunity to make alarmist headlines.
Lord Offord of Garvel (Con)
The point is that this is a topical debate that the whole of the public are interested in. They understand energy prices like nothing else now. They understand that, in terms of their household budgets, this is a major part of their cost of living and it is only reasonable that we get to debate this.
The amendments in this group are straightforward and simple. They are nothing to do with micromanagement; they are only to do with the accountability and transparency of this new company, which, as my noble friend Lord Petitgas pointed out, is not an operating company. The public think this is a company that makes cheap energy. It is an investment company sitting on one floor of a building in Aberdeen making investment decisions, and we have no idea how it will do that.
At the last election, the Government made promises to working people on this topic: to reduce energy costs, create jobs and drive forward our energy transition. Therefore, taking my noble friend Lady Noakes’s constructive point, we can argue about how we deliver the substance of these amendments, but we should not ignore the substance. Is it not fair and reasonable that we have in the Bill some consideration of government promises made to the public about the cost of energy—£300 in savings, which, incidentally, is £8 billion, the same amount as is being invested in 28 million households at £300—or the fact that 650,000 jobs are to be created? Is it not reasonable that the Bill somewhere talks about the fact that we want a strategic priority for the UK to develop its own energy supply chain? Is it not unreasonable that we have amendments that deal with how we make sure that the supply chain is fair? We have talked about a fair transition: well, where is the fair transition, to pick up what the noble Lords, Lord Bruce and Lord Alton, said, when we destroy our own highly skilled jobs in the north-east or end up using products made under dubious circumstances in overseas territories?
I would argue that all these amendments need to be considered. There is consensus in this House that we need energy security and that we need to get to 2050. The question is: why is this being speeded up artificially when we and the technology are not ready? Why are we doing this artificially?
My final point has been mentioned by many noble Lords so far: none of this works without the plumbing working. The national grid needs a serious upgrade and comprehensive investment to deliver this. If in these straitened times—we are continually reminded by the Government Benches that there is no money—there is a spare £8 billion, should it not be better used by being put into the national grid once and for all? In the meantime, given that we are where we are in Committee, I beg leave to withdraw the amendment.
Lord Offord of Garvel
“(1A) The Secretary of State must give a specific direction to Great British Energy that it must report to the Secretary of State within three months of each investment it makes on the impact that the relevant investment is projected to have on wholesale electricity prices over the following ten years.(1B) The Secretary of State must lay a report made under subsection (1A) before Parliament.”Member’s explanatory statement
This amendment would introduce a requirement that Great British Energy reports to the Secretary of State (and subsequently Parliament) on the projected impact that each of its investments would have on wholesale electricity prices over the following ten years.
Lord Offord of Garvel (Con)
My Lords, I rise to move Amendment 62 and to speak to my Amendments 64, 68, 71 and 75. Aside from the promises to cut consumer energy bills and create 650,000 new jobs made by the Government throughout the election campaign, the British public were assured that GBE would turn a profit for the taxpayer. Yet there is nothing in the Bill that elucidates an investment profile or targeted rate of return. Why not? The British taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of public money.
With that said, Amendment 64 requires GBE to provide an annual report to Parliament on its annual rate of return on investment and a projection of the following year’s expected rate of return on investment. That point was picked by my noble friend Lord Petitgas in the previous group. The company intends to invest in and de-risk projects in new clean energy technologies and it would be useful to see the return on investment of these projects. The point was well made in the last group and this amendment continues to hammer that point home.
During the last election, the Government made countless promises on bills and energy costs—again, a point we heard in the last group—that were rehearsed, debated and put out by the Prime Minister, Chancellor and various Cabinet Ministers, who gave the figure of £300. Once again, it is only fair that we have amendments that hold the Government to account on these promises made to the British people. It is widely understood that the cost of electricity is a matter of serious concern and, again, as has been indicated, it is now the major part of any household’s weekly costs. Therefore, it is deeply worrying that the Government are voting against enshrining these promises in law when they made them so directly to the British public.
The Government have said that GBE is part of their plans to ramp up renewables, which they say will result in cheaper energy. But, again, we do not have the background and analysis. The only analysis we have had so far, from Cornwall Insight, found that in the last contracts for difference, the Secretary of State, on these assumptions, will potentially increase people’s energy bills by £5. So, again, we have conflicting reports from different experts in this space. The Office for Budget Responsibility has forecast that removal taxes will increase by 23% by 2030, again highlighting the cost of this transition to the ordinary consumer. It is with that in mind that I bring forward Amendment 71, which requires GBE to produce and report
“a cost benefit analysis of the price of electricity produced from renewable energy technologies compared to that produced from gas”,
which plays a critical role in energy generation.
I return again to the Government’s promises of 650,000 jobs with no detail as to how that will be deployed, other than the fact that we know there may be 100 or so in the Aberdeen headquarters. I believe that the Government’s punitive attack on the North Sea oil and gas industry will actually cost jobs, as the noble Lord, Lord Bruce, already mentioned in the last group—some 200,000 highly paid, highly technical jobs in the North Sea, which are critical to the transition to the new green energy world for which we all wish.
Finally, Amendment 75 would require GBE to carry out an environmental impact assessment on each investment it makes. The Secretary of State and GBE should give due regard to their role in maintaining the protection of our environment while ensuring that they deliver healthy returns on investment.
I am pleased to speak to this group. I look forward to the corresponding debate. The function of GBE as a type of investment body is central to its operation as a company. It is therefore essential that the Bill makes provision to report on the success and impact of each investment it makes, backed by £8.3 billion of taxpayers’ money. I beg to move.
Viscount Trenchard (Con)
My Lords, I congratulate my noble friend on his clear and well-argued introduction of his amendments in this group, to most of which I have added my name. As he said, the taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of his money. State-owned companies do not have a great track record in realising a strong, positive return on their invested assets.
Unless GBE does that, it is likely to have a negative, rather than a positive, effect on wholesale electricity prices. Amendment 62 will ensure transparency on that. GBE intends to invest in and de-risk projects involving new clean energy technologies. It is clearly necessary to have full transparency as to the rate of return on each of the investments that GBE achieves. The amendment would require GBE to consider every single investment it makes in terms of the impact that it will have on electricity prices in the future. Does the Minister not agree that this would be a good discipline for GBE? Amendment 64 would ensure that we have such transparency on the whole portfolio of GBE’s investments across the board.
Amendment 71 contains a requirement for a cost-benefit analysis of the price of electricity generated by each of its investments compared with that of electricity generated by gas. We certainly need to know that. Many of us think that we are already saddling the consumer and industry with unnecessarily expensive electricity. The grid is always bound to draw electricity from renewable sources when they are available, in priority to gas. This means that gas power stations are constantly being fired up and down, and are seldom operated at full capacity. This distorts the price of gas, which in turn distorts the price of electricity because gas power stations produce much cheaper electricity when operated consistently at or near full capacity than they do under the current modus operandi. The price of gas used in the cost-benefit analysis required by this amendment ought to be the price achievable from constant operation rather than the distorted price resulting from prioritisation of renewable sources.
I also refer briefly to Amendment 75. It is clear that the main purpose of GBE’s collaboration with the Crown Estate is to build a large number of offshore wind farms in coastal waters. This amendment will require GBE to consider carefully the environmental impact of its activities on marine life and inshore fisheries, among others.
The Government have made much of their determination to cut energy bills. Their refusal to accept Amendment 71 and other amendments would show that they are less than certain that their plans will result in lower energy prices. I look forward to hearing the Minister’s response.
Lord Hunt of Kings Heath (Lab)
My Lords, I want to make just two points. The noble Lord, Lord Teverson, made a very interesting and wise contribution. I say to the noble Lord, Lord Hamilton, that of course I have heard the expression that Governments are not very good at picking winners. That is why we have set up GBE. We will have a company with people with expertise to enable investments to take place within the context we set under Clause 3 and Clause 5 as strategic priorities. None the less, it will have operational independence.
The noble Lord, Lord Teverson, is right; noble Lords in their various amendments are seeking to pin down GBE through excessive reporting requirements. The risk is that GBE, far from being allowed to flourish and develop, will be inhibited and micromanaged. That is why these amendments are wholly inappropriate in relation to Clause 6. The power of direction is not to be used in the way that noble Lords are suggesting; it is a backstop power. What is the point of setting up GBE if we are to undermine its independence in the way these amendments suggest?
Lord Offord of Garvel (Con)
My Lords, as in the previous group, these amendments are not designed in any way to micromanage. There is very little in the Bill that gives us any indication of how this company will operate. As indicated by my noble friend Lord Petitgas, it is an investment company without an investment committee or any investment directors. All that is being sought by these amendments is some level of accountability and scrutiny.
Once again, I say that when promises are made to the public that the Bill will address their concerns, it is not unreasonable that we ask for amendments to be made accordingly. For example, looking at employment in Amendment 68, we are simply asking for a report—as the noble Lord, Lord Bruce, said—on the impact these investments make on employment and bills. Why is that an unreasonable thing to say? We have 200,000 people in highly skilled jobs in the North Sea. They are worried that they are about to be phased out unilaterally and prematurely. Why is it unreasonable to have somewhere in the Bill a requirement that GBE comes to Parliament and explains what it is doing in relation to employment in this key sector?
As we have said before, the Bill has failed to substantiate the promises made. The job of the Opposition is to highlight that and to make it clear that this needs to be debated and scrutinised. That is what we will continue to do. In light of that, for now I will withdraw the amendment.
Lord Offord of Garvel (Con)
My Lords, I thank the noble Earl, Lord Russell, the noble Lord, Lord Cameron of Dillington, and my noble friends Lord Roborough, Lord Howell, Lord Trenchard, Lady McIntosh and Lady Noakes for their contributions on this group. The debate raised critical issues regarding the sweeping powers, as we highlighted, given to the Secretary of State. Why is it that any and all directions that the Secretary of State gives to GBE are hidden from the eyes of the public and lack parliamentary scrutiny? Considering once again that GBE is funded by £8.3 billion of taxpayers’ money, is subject to an unlimited cap on financial assistance and will not cut the British consumer’s energy bills, this is deeply concerning.
Let me turn to the amendment of the noble Earl, Lord Russell. Amendment 66 would ensure that the Secretary of State does not give any direction to GBE without first delivering an oral Statement before Parliament setting out those directions. I am acutely aware of the lack of detail in this legislation, and it is crucial that we have proper oversight of the wider activities of GBE as ordered by the Secretary of State. It is not only I who thinks this: the Government have agreed. In fact, in Committee in the other place, the honourable Member for Rutherglen, Michael Shanks, said that the Government want Great British Energy to be
“accountable, transparent and clear about how it is delivering on its objectives”.—[Official Report, Commons, Great British Energy Bill Committee, 15/10/24; col. 168.]
I therefore see no reason why the Minister should not support amendments that seek to improve accountability and reporting measures in the Bill and ensure sufficient oversight of the objectives, directions and activities of GBE. If the Prime Minister stands by his statement that he would not make a single promise that he was not confident he could deliver, the Minister ought to support these amendments, which would ensure that GBE was indeed “accountable, transparent and clear about how it is delivering on its objectives”.
The UK Infrastructure Bank, referenced by my noble friend Lord Trenchard, was set up with the explicit purpose of financing projects to drive our energy transition, and it already includes rigorous safeguards to ensure that taxpayer money is spent effectively. Governed by strict rules and subject to detailed annual reporting, it provides the public with comprehensive information on its performance and investments. Given that these robust mechanisms are already in place for the Infrastructure Bank, is it not fair—indeed, essential—that GBE undergoes the same level of scrutiny and oversight? If we are truly committed to safeguarding public funds, surely the same level of accountability should applie to all publicly funded energy initiatives.
Amendment 87 in the name of my noble friend Lady McIntosh would require a Minister to table a motion for resolution in each House of Parliament on any directions that are given by the Secretary of State to GBE before the directions are adopted. In a similar fashion, Amendment 66 in the name of the noble Earl, Lord Russell, would prevent the Secretary of State from directing GBE unless they have delivered an oral Statement to Parliament. I am grateful to both noble Lords for bringing these amendments, which will undoubtedly improve the levels of scrutiny and oversight to which the directions which are given to Great British Energy will be subject.
The only details included under Clause 6 are that
“Great British Energy must comply with the directions”
and that:
“The Secretary of State must publish and lay before Parliament any directions given to Great British Energy”.
This is simply not good enough. It is the bare minimum to allow Parliament to have sight of the directions issued to Great British Energy before they are acted on. In fact, it would be negligible to allow Great British Energy to be directed without sufficient parliamentary scrutiny. I therefore trust that the Minister has listened carefully to the concerns raised by Amendments 66 and 87.
Amendment 86, tabled by the noble Lord, Lord Cameron of Dillington, seeks to ensure that, before giving any direction to Great British Energy, the Secretary of State must consult
“the National Energy System Operator”—
known as NESO—
“the Climate Change Committee and the Gas and Electricity Markets Authority”.
I discussed in detail the importance of consultation in our debate on Amendments 56 and 116. As I said, engagement and consultation with the relevant parties is crucial if GBE is to be a success. The Secretary of State must not act in isolation. It is crucial that he or she consults with the relevant stakeholders. I therefore welcome the amendments in the names of the noble Lord, Lord Cameron of Dillington, the noble Earl, Lord Russell, and my noble friend Lady McIntosh. I look forward to the Minister’s response on the concerns raised by noble Lords in the debate on this group.
Lord in Waiting/Government Whip (Lord Cryer) (Lab)
My Lords, I now turn, as you would expect, to Amendments 66, 86, 86A and 87, tabled by the noble Earl, Lord Russell, the noble Lord, Lord Cameron, the noble Baroness, Lady McIntosh, and the noble Viscount, Lord Trenchard. As I have said, and as my noble friend has said previously, Clause 6 sets out that the Secretary of State will be able to give directions to Great British Energy, and that Great British Energy must comply with those directions.
As Great British Energy will be operationally independent, the intention is that the power will be used only when it is really needed. This will ensure that GBE has the space it requires to fulfil its role and deliver its strategic priorities. I draw the House’s attention to the comments made by the noble Baroness, Lady Noakes, in this context.
The purpose of the clause is to ensure that there is a mechanism in place should any urgent or unforeseen circumstances arise. For example, it could be used if the Secretary of State considers that they need to give GBE a direction that is in the interest of national security or otherwise in the public interest. The amendments before us would risk delaying the Secretary of State’s ability to give Great British Energy that direction, potentially compromising national security under certain circumstances.
The noble Earl, Lord Russell, raised the perfectly reasonable points of accountability and scrutiny. I am not impugning his motives—or the motives of anybody else who has tabled amendments—but if there was an issue of national security that perhaps took place at the start of a recess, it would seriously hamper the Secretary of State’s ability to act.
The noble Earl also raised, interestingly, the possibility of Labour losing the next election. It may come as a shock, but we are not actually planning to lose the next election. However, the mechanism of accountability and the decisions of this Government and future Governments are subject to the views of voters. That is part of the democratic process. We might not like a future Government exercising the directions we have put on the statute book, but that probably applies to past Governments as well. It is part of the democratic process and the process of accountability and scrutiny.
The amendment in the name of the noble Baroness, Lady McIntosh, would take this point further by requiring the resolution of each House, which I genuinely do not think is practicable. However, to ensure transparency and accountability, any directions given to Great British Energy will be published and laid before Parliament before they are given.
Further, Clause 6 requires that the Secretary of State must consult GBE and other persons considered appropriate, before giving directions to GBE. This means that GBE’s management and its board—yet to be appointed—will have the opportunity to express any reservations they have about the direction to Ministers before any such direction is made. If appropriate, this could include the National Energy System Operator, the Climate Change Committee—which has been consulted by successive Governments—the Gas and Electricity Markets Authority, Great British Nuclear and the National Wealth Fund, as well as groups not referenced in Amendment 86.
The noble Lord, Lord Cameron, mentioned at least two of the organisations on that list; he mentioned others too, as I think did the noble Viscount, Lord Trenchard. We could end up with a list as long as your arm of bodies that have to be consulted, which would seriously hamper the Secretary of State’s room for manoeuvre.
Finally, it is not unusual for a Secretary of State to be able to direct an arm’s-length body and such powers are found in several pieces of legislation—again referenced by the noble Baroness, Lady Noakes. In the specific context of government-owned companies, such powers are, for example, included in the Energy Act 2023, which created Great British Nuclear, where named stakeholders are also not included in the directions clause.
For these reasons, I hope the noble Earl recognises that adding this detail would not be beneficial and will withdraw his amendment.
Lord Teverson (LD)
My Lords, onshore wind has a remarkably small footprint in terms of its use of the land, which seems to get forgotten. I can see 30 wind turbines from my bedroom window; the nearest is about 1 kilometre away. They are excellent: they show that renewable energy is working. We should have more of them, and I hope that the Government will continue to make it easier for these developments to take place towards our 2030 objective of decarbonised electricity.
Lord Offord of Garvel (Con)
My Lords, I speak in support of the amendments in the names of my noble friends Lord Fuller and Lord Roborough—Amendments 67, 73, 104 and 105. In bringing forward these amendments, my noble friends raise the matter of great importance that is the agricultural industry, which has been subject to punitive measures by the Government in the form of the family farms tax raid.
Amendments 67 and 104 prevent Great British Energy from supporting projects on or owning land that is grade 1, 2 or 3 to prevent the loss of good and high-quality agricultural land. Alternatively, Amendments 73 and 105 encourage GBE to pursue developments on land that is designated grade 4 or 5 —essentially, the worst agricultural land. It appears obvious that the Secretary of State, who directs Great British Energy, will support an approach that balances the need for renewable energy with the need to preserve our nation’s food security.
As explained by my noble friend Lord Fuller within his allotted time, the purpose of this group of amendments is to protect the best and most versatile land for food production. I echo the concerns of my noble friend Lord Roborough that some of the largest and most significant solar developments seem to be approved without due consideration given to the quality of the land which is being sacrificed in the process. It is an undeniable fact that grade 2, the best and most versatile agricultural land, is being lost to existing solar developments. That is not merely a matter of farming but of our country’s food security. As my noble friend Lord Fuller so neatly put it, at best Great British Energy may help to turn our lights on and heat our homes, but there will be no food on the British people’s plates.
The question is not whether we should develop renewable energy but where we should develop it. The goal of achieving energy security should not come at the expense of food security. I ask the Minister to give us his full assurance that under no circumstances will the Secretary of State approve developments that undermine our nation’s ability to feed itself.
Recent analysis of land take by ground-mounted solar installations shows a concerning trend: solar developments are disproportionately targeting the best and most versatile land—that is, land classified under grade 1 and 2. Across England, only 17% of land is classified as grade 1, yet 19% of the land used for solar installations falls into this category. This trend violates the general recommendation to avoid productive agricultural land development. In contrast, grade 5 land, the poorest agricultural land, has been disproportionately avoided. That is exactly the type of land that solar projects should be prioritising, yet it remains underutilised. Only 0.5% of solar installations are on grade 5 land, despite such land constituting 8% of England’s agricultural landscape.
The issue is particularly pressing, given the Government’s ambitious target to triple solar power capacity to 50 gigawatts by 2030. As we expand solar energy, more and more land will be acquired. However, unless active measures are taken to ensure that the correct land is used for these installations, we will continue to see the loss of high-quality agricultural land, exacerbating concerns over our nation’s food security. Amendment 73, therefore, is vital: it seeks to ensure that renewable energy development does not come at the cost of our most productive agricultural land.
Lord Hamilton of Epsom (Con)
My Lords, it seems quite extraordinary that no reference is made in this Bill to nuclear because, let us face it, if you want to have clean energy generation, nuclear is the only thing that is available at the moment. My noble friend Lord Trenchard must be right when he says that we should be much more seriously considering both small modular reactors and large ones for our energy supply in future, because that is going to be the only way we really get clean energy. I find it quite extraordinary that this has all been parked somewhere separately when it all should be integrated. We should certainly be looking at the potential for nuclear, because that is where the future lies.
Lord Offord of Garvel (Con)
My Lords, I express my gratitude to my noble friend Lord Trenchard for tabling the amendments that we are discussing in this group. All three amendments address a matter that many in this House have questioned—that being GB Energy’s role and involvement in the production of nuclear energy and its relationship with Great British Nuclear. Amendment 85B requires GB Energy to consult with GB Nuclear before it invests in nuclear energy. Amendment 85C requires GB Energy to report on the impact of its investments in nuclear energy and private investments in the UK nuclear industry. Amendment 118C ensures that the Secretary of State reports on the impact of the Bill on the competitiveness of the UK nuclear industry.
Nuclear energy will be critical to achieve the Government’s net-zero targets. However, historically, those on Government Benches have dismissed nuclear’s role in the energy mix. Let me draw on the Government’s own nuclear record. Since the 1970s no new nuclear power stations have been built under a Labour Government. Instead, all nuclear power stations still in operation were commissioned under Conservative Governments. Labour’s longest-serving shadow Energy Minister, Alan Whitehead, even said that we do not need nuclear. I disagree, and I am sure many in this House do too and I call on the Minister to update Labour’s thinking on this matter.
If the Government, via GB Energy, recognise the importance of nuclear, it is only right that they consult with GB Nuclear before investing in nuclear technology. Can the Minister confirm exactly what relationship is envisaged between GB Energy and GB Nuclear? Have the Government already consulted with GB Nuclear on the functions of GB Energy, and if so, will they continue to do so? We urgently need the development of new nuclear sites, as energy generated from nuclear technologies is both reliable and low carbon. Therefore, it is essential that GB Energy and GB Nuclear have a more formal collaboration. Industry bodies such as the Nuclear Industry Association have called for greater clarity on the interaction and relationship between the two organisations.
Lord Hamilton of Epsom (Con)
My Lords, I am very keen that my noble friend Lord Ashcombe should reintroduce the whole prospect of hydrogen, because I thought that it was rather rubbished by my noble friend Lord Roborough, who said that it was all going to be much too expensive. I think that the future lies in hydrogen, and I hope that it will be developed much more cheaply, so that it can be available for so many different uses, not only in power stations but also in aircraft, heavy vehicles and so forth. As I understood it, it was being developed and the price was coming down, but maybe I am completely wrong on that. I would be very grateful to hear from the Minister what the position of liquid hydrogen is: whether it is still prohibitively expensive and not likely to be a solution to our problems or whether the future lies in liquid hydrogen.
Lord Offord of Garvel (Con)
My Lords, as we have heard throughout the debate on this Bill, as well as in the other debates in this House on the future of our energy, we know that renewable energy by its nature will always be unreliable. It is, by its nature, intermittent. Many of us have expressed concern that this undeniable fact will result in shortages. As has been mentioned by my noble friend Lord Murray, last year Europe in fact experienced several episodes of Dunkelflaute. On the other hand, as has been highlighted by my noble friend Lord Ashcombe, what happens to energy supply in periods of persistent sunshine and wind?
Unfortunately, we find ourselves in a position in which the national grid is unable to cope with excess renewable energy supply. Grid capacity is a particular challenge for the offshore wind sector, because those sites are necessarily located far from sources of demand. Currently, the national grid pays renewable energy generators billions to reduce supply when there is more renewable electricity than the grid can manage. This problem will only be compounded by the Government’s ambition to build renewables faster than we can develop and connect them to the grid.
With that in mind, we should address the fact that the timeframe for obtaining grid connections for a new energy project can reach 10 years. Not only this, but a project without a grid connection today may not come online until well after the Government’s target of grid decarbonisation by 2030. There is no doubt that the renewable energy projects that will supposedly be supported by the establishment of Great British Energy will face the same connectivity difficulties.
As my noble friend Lord Ashcombe highlighted, over £1 billion was coughed up by bill payers last year to pay renewable energy generators to curtail excess supply, including £20 million in one day alone. This will only worsen under the Government’s agenda, and it will be consumers who will bear the cost via their energy bills. If renewable generation is scaled up so rapidly without the grid capacity to transmit it to the areas of high demand, those curtailment payments will only increase. We know that excessive curtailment fees are already being paid to wind farm operators who are generating more power than can be used. This is paid to get operators to switch off their wind farms and avoid overloading the grid. How ridiculous is that? We expect these curtailment costs only to rise under the new Government’s regime, and by 2030 it is possible that there will be a staggering £20 billion a year in subsidies and in maintaining back-up grid capacity. That equates to roughly £700 per household each year.
I turn to the amendments in this group in the name of my noble friend Lord Murray of Blidworth, which I support in their entirety. Amendment 85E requires Great British Energy to
“report annually on the impact of each investment it makes on the levels of curtailed renewable energy in the UK”.
Amendment 85D requires Great British Energy to
“invest in additional energy storage infrastructure to store excess renewable energy”,
and thereby minimise the cost of curtailing excess supply. In tabling these amendments, my noble friend has addressed many of the issues that I have discussed.
It is essential that the establishment of Great British Energy does not cost the taxpayer more than the already allocated £8.3 billion, and that it assesses the impact of its investments on the cost of wasting excess supply and prioritises the means of storing renewable energy. I hope that the Minister will agree.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Lord, Lord Murray, for Amendments 85D and 85E, which are focused on the issue of renewable energy curtailment. I must repeat, as I said earlier, that this debate is, in essence, about technologies, rather than the appropriate use of the directions in Clause 6. However, I assure the noble Lord that we are determined to increase significantly the deployment of short-term and long-term duration electricity storage to reduce curtailment.
I, too, was present in the debate on energy storage last Thursday, which was very interesting. My noble friend Lady Gustafsson recognised then that a variety of energy storage technologies would be needed to achieve net zero. That includes technologies such as lithium batteries and pumped hydropower storage—which can deploy at different scales and provide output over different lengths of time—and it can include emerging technologies, such as liquid air energy storage and flow batteries. Low-carbon hydrogen, too, can act as a low-carbon flexible generating technology and provide very long duration energy storage.
Today, around 7 gigawatts’ worth of grid-scale electricity storage is operational in Great Britain. This is made up of 2.8 gigawatts of pumped hydrogen and 4.3 gigawatts of grid-scale lithium battery storage. I add that we have announced a long-duration energy support scheme. We will publish a technical document in February. Applications will open in the second quarter, and we hope that the first agreements under the cap and floor system will take place in early 2026. It will be technology neutral, and it will be for projects that could not be built without the cap and floor system.
There are some developments in train: SSE, for instance, is doing exploratory tunnelling in the north of Scotland for pumped-storage hydro. Highview Power has reached FID in terms of liquid air energy storage near Carrington. Points on curtailment costs are well made; we see it as a key priority to accelerate network infrastructure to increase capacity on network and reduce constraints.
I do not think there is a lacuna; the Bill is constructed in the way it is. We have Clause 3 and the strategic statement of priorities in Clause 5. I hope I have reassured the noble Lord that the substantive point he raises is important and accepted by the Government.
Lord Ashcombe (Con)
My Lords, it is worth stating what is going on out there on the national grid right now. Gas and wind are supplying between 42% and 43% each; therefore, it is the gas price that is driving the price for everything. We are in the unusual position right now where we are exporting electricity to the continent because they need it more than we do. To have 42% driven by gas, with the price at over £100 a megawatt hour at the moment, seems worrying, and what we can do to curtail that must be important; but gas is not going away any time soon, and we have to be careful about how we moderate the reduction in it.
Lord Offord of Garvel (Con)
My Lords, I whole-heartedly support Amendments 85G and 85H in the name of my noble friend Lord Fuller, as well as Amendment 85F in the name of my noble friend Lord Murray of Blidworth. The objects of GB Energy, as outlined in Clause 3, state that they are restricted to
“facilitating, encouraging and participating in ... the production, distribution, storage and supply of clean energy”.
The Minister has made a virtue in this House that the Bill does not focus on any one particular technology or solution, but would it not be correct to assume that GB Energy has actually been set up in an effort to boost the production of renewable energy in the UK? Otherwise, what is the investment of £8 billion to be spent on? The Government say that GB Energy is part of their mission to make the UK a clean energy superpower, but how can we ensure that it delivers on these promises? I have seen in both the previous days of debate in Committee that the details in this Bill are at best scarce, and the Bill makes no provisions to report on the impact of each investment that GBE makes on renewable energy production. How, again, are we supposed to measure its success in delivering for the British people, as promised throughout the election campaign?
It is in the public’s interest to disclose the impact of GBE’s energy investments and activities on the level of energy produced from renewable sources, whether that be solar, wind or hydrogen. It seems incredible that this Bill, which establishes a so-called clean energy company, does not include a means by which GB Energy is required to report on the generation of clean energy. Indeed, this is an alarming oversight.
My noble friend Lord Fuller has rightly outlined an additional reason as to why the reporting on the impact of GB Energy’s investment on the levels of renewable energy generated is so critical. As has been mentioned many times, Europe has recently experienced another dunkelflaute. Just last month, for three consecutive days, more than 60% of electricity generation in the UK had to come from gas, as wind output dropped. At the same time, our partners in Germany paid the highest average price per megawatt since the Russian invasion of Ukraine, with a lack of wind being the main factor behind this escalation.
It is essential that renewable energy generation associated with GB Energy’s functions is closely monitored, if we are to maintain our energy security. The Secretary of State has said that one of the aims of GB Energy would be to improve our energy security— this, too, is mentioned in Clause 3. However, I am deeply concerned that the Government’s tunnel-visioned focus on green energy alone risks threatening our energy security. I am sure the Minister will want to see the successes, maybe even the failures, of GB Energy in helping to generate renewable energy. If this is true, he will have no problem in offering support to the amendments in my noble friends’ names. Ultimately, these amendments require the most basic and necessary levels of reporting.
Lord Reay (Con)
My Lords, I will speak to Amendment 131 tabled by my noble friend Lord Lilley, to which I have added my name. It would require GB Energy to publish a report on the projected costs of long-duration energy storage. I regret that I was unable to speak at Second Reading, for which I apologise.
This is an ambitious Bill that is part of an ambitious policy. It is a policy that is fundamental to a frighteningly large part of our lives: the availability of energy, the dependability of energy supply and the cost of energy. According to whether Governments succeed or fail in these areas, economies sink or swim, and functions slide into dreary and dangerous dysfunctionality. They bloom like an English country garden in midsummer or wither, shrivel and slumber like any garden anywhere on these islands in coldest, darkest, most forbidding winter.
Energy is a policy area to which the precautionary principle should clearly apply. It is not an area where we should make a habit of leaping about in the dark or buying pig after pig in poke after poke or moving forward, fingers crossed, on a wing and a prayer.
It is the very opposite of such an area. It is a subject on which clear-sighted, far-sighted sceptics, expert sceptics, industry sceptics, and seriously sceptical scientists and engineers with the national interest at heart deserve a hearing. The stakes are just too great—the Bill is well named—for turning a deaf ear or blind eye in their direction, as indeed we were forcibly reminded last week. Last Monday, the Secretary of State for Energy was bragging that wind power was the UK’s biggest source of electricity in 2024. He said that it was
“a huge moment on our journey away from energy insecurity”.
Less than two days later, NESO issued a warning that there was a close to 30% chance of power cuts that very evening.
Although the operator managed to eliminate this risk by sourcing back-up power, this came at vast expense, as my noble friend Lord Fuller pointed out, with prices rising to a staggering £5,500 per megawatt hour, around 80 times the average price in 2024—the highest energy prices in Europe. These are costs that the consumer and business in this country must bear, and part of the reason why our energy costs are as high as they are. Our industrial energy costs are four times those in the United States and 46% above the IEA median. The Government’s policy of net zero at any cost will serve only to make this dire situation worse.
As many of us know, the operator last week came very close to disaster, with only 580 megawatts of headroom. This is equivalent to less than a single power station cutting out and, just three hours after the peak, two power stations with a combined capacity of two gigawatts did indeed trip out, exhibiting how close we came to the lights going out. This near-miss should be a wake-up call to this Government and a signal that we need to change course. It should be, but will it be? I confess that I am not holding my breath. As things stand, the Government’s policy to pursue intermittent wind and solar and to neglect baseload power such as gas and nuclear in all likelihood will cause the country to run into severe problems in the future and, as we have seen, power cuts could happen any week.
The Government believe that long-duration energy storage will be able to balance energy supply and demand over time. This early-stage technology, driven by hydrogen, will potentially allow storage of energy from renewables over extended periods of time up to months and years. Battery storage, on the other hand, at present only has the ability to store energy in a small capacity for a mere two hours.
In a debate on the Science and Technology Committee’s report on long-duration storage, held on Thursday in this Chamber, the newly appointed Minister for Investment, the noble Baroness, Lady Gustafsson, stated that
“we are going to need colossal amounts of hydrogen storage”.—[Official Report, 9/1/25; col. 845.]
What this equates to are colossal subsidies at colossal expense to taxpayers—a cost that the Government are currently showing no sign of wishing to calculate.
In theory, wind plus green hydrogen appears to be a sensible idea that uses the output of wind farms when not required for the grid to generate green hydrogen, which then gets converted into electricity. The document that underpins the Government’s promotion of long-duration energy storage is, as my noble friend Lord Lilley pointed out, the Royal Society report produced in 2023. The report estimates that, by 2050, public and private costs required to establish long-duration energy storage in the UK will be £100 billion for actual storage, £100 billion to increase associated grid capacity and £210 billion for the wind and solar capacity required.
Unfortunately, there are multiple issues with the report in terms of its costings and assumptions. The report is based on unfeasibly low costs for hydrogen electrolysers, storage and generation. It assumes no leakage of hydrogen stored underground at high pressure for up to a decade. The return on capital assumption posits that investors will be attracted by a 5% return, but a return of two to three times that would be required in today’s marketplace to invest in a risky, early-stage technology such as this.
This is even without the recent sharp increase in gilt bond yields, with the cost of borrowing rising to the highest level for nearly 30 years, which is making every equity investment more expensive. These costings were produced before the surge of inflation a couple of years ago, which means that they are too optimistic. Even if the costs are achievable by 2050, the infrastructure will need to be built using today’s cost base, which will push up the cost base dramatically.
Substantial hydrogen electrolyser capacity will be required, which will need thousands of engineers that the UK does not possess. Perhaps the Minister could tell us where all these engineers will come from, particularly as there is strong international competition for this capacity from the EU and the US, which have significant hydrogen subsidies.
Even after the construction of a long-duration energy storage system, with its vast cost, the overall grid is likely to remain unreliable. The large storage caverns proposed by the Royal Society will take 10 years to fill and could empty in 12 months of extremely low wind. What happens if you have more than one year of very low wind over the 10-year period it takes to restock the storage caverns? Further questions surrounding the viability of this technology include the possible negative reaction of residents to having large caverns of hydrogen situated beneath their homes. The Government’s pronouncements suggest that they will plough ahead with granting subsidies to energy storage developers without having conducted adequate research on this issue.
At the same time that a calamity has narrowly been averted in the energy markets, we are experiencing a developing crisis in the financial markets. It has become apparent to market participants that the Government’s high-tax, high-borrowing Budget has markedly reduced any chance of growth. With the cost of borrowing rising dramatically, the Government’s spending plans are spreading alarm among investors, including the blank cheque written in respect of their uncosted ideological pursuit of net zero.
With expenditure on renewable subsidies now amounting to £11 billion a year, with an additional £2.5 billion for grid balancing and another £1 billion per year for the capacity market, the UK’s industrial and consumer electricity prices have become among the most expensive in the world. This will only get worse with the Government’s commitment of over £110 billion to connect remote wind farms to the grid.
Given the current economic and financial climate, it is more imperative than ever that the Government produce a report and come clean on the costs involved for the taxpayer of their plans for long-duration energy storage. We need an energy policy in which we can have confidence, and that means that, as an absolute minimum, we need more information, clarity and realism.
Lord Offord of Garvel (Con)
My Lords, I will speak in support of the amendments of my noble friend Lord Lilley. It goes without saying that long-duration energy storage is essential if the Government are to achieve the clean energy targets that will ensure that fossil fuels are phased out. To replace fossil fuel-derived energy, the Government are ramping up renewables—an entirely unreliable source. It is therefore critical that we use long-duration energy storage if we are to maintain the electricity supply.
As has been referenced by my noble friends Lord Lilley and Lord Reay, the Royal Society has estimated that a substantial volume of long-duration energy storage—enough to supply roughly a third of current annual UK generation—could ultimately be needed. It found that a strategic reserve of long-duration storage will be particularly important to address supply shortfalls from renewables in periods of low wind and rain. If the Government are to achieve a fully decarbonised electricity system by 2030, they must make provisions for substantial energy storage to manage the gaps between increased supply and demand. While Britain has just 2.8 gigawatts of long-duration energy storage capacity from four pumped hydro-plants in Scotland and Wales, it is believed that terawatt hours of long-duration electricity storage will be needed to decarbonise the grid in the whole of the UK.
The storage of power increases the flexibility of the grid and minimises likelihood of wasted renewables in cases of excess supply. Therefore, if GB Energy contributes to a large-scale rollout of long-duration energy storage, it would increase the availability of renewable power and may even lower consumer energy bills. The previous Government consulted on policy mechanisms to support low-carbon storage and introduced a target in the British Energy Security Strategy to deploy enough to balance the electricity system. We also moved to reform energy systems, establishing the future system operator, and consulted on a long-duration energy storage business. Finally, the previous Government addressed the challenging economics of long-duration energy storage projects and activity, and they consulted on introducing a cap and floor mechanism to implement additional financial support mechanisms.
Clause 3 states that GB Energy’s objects include facilitating and participating in the storage of clean energy. I therefore ask the Minister to confirm exactly how GB Energy will be involved in the storage of electricity generated from these renewable sources. It is critical as it prioritises the storage of energy to avoid the risk of blackouts, price fluctuations and our reliance on energy imported from foreign states. We cannot afford to compromise our energy security even more by failing to do so.
In conclusion, the development of long-term energy storage technology must occur alongside that of the national grid. We cannot increase our energy storage if we have no means to transmit and distribute the electricity. We face an immense but urgent challenge in scaling up our clean energy infrastructure, whether that be storage or distribution. I look to the Minister to clarify what proportion of the allocated £8.3 billion of taxpayers’ money will be invested in long-term energy storage solutions.