Energy Costs for Businesses

Lord Teverson Excerpts

Tuesday 17th December 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, we are putting some resources into the fusion programme. The years that I have in mind are the 2040s, which are a little less than 20 years away. This reflects our belief that there is very much potential now, and that the UK is in a very strong leadership position on it.

[Lord Teverson (LD)]

My Lords, one of the ways that large businesses reduce their energy costs is by signing up to power purchase agreements, or PPAs. That is only possible for large businesses. Is there a way that Government could make sure that those benefits of more competitive pricing could come down to medium or small businesses, maybe by clustering or some other method, so they can get the advantage as well?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am very happy to give that consideration. The noble Lord will have noted that we are looking at whether we should introduce a regulatory regime for the third-party intermediaries, because some businesses are affected both by mis-selling and other problems with the current system. The other point I would make is that the Energy Ombudsman’s remit is being extended to small businesses within the next few days, and I hope that will also be of advantage to those companies that he mentioned.

Great British Energy Bill

Lord Teverson Excerpts

Committee stage
Tuesday 17th December 2024 Lords Chamber

[Lord Hamilton of Epsom (Con)]

My Lords, I first apologise to the House. On the first day in Committee, I extolled the virtues of small modular reactors and said that Rolls-Royce were in a very good position to supply these, because I knew about what they had done on nuclear powered submarines. I then remembered afterwards that I am a shareholder of Rolls-Royce, although not a big enough one to bother the Registrar of Lords’ Interests. I hope that I can now apologise unequivocally to the House that I did not mention this earlier, and that noble Lords will forgive me for not having raised it at the time.

I will pick up the remarks of the noble Baroness, Lady Boycott, who said how popular net zero was. I would slightly caveat that, because at the end of the day, the whole concept of net zero is extremely popular until people have to start paying for it. It was certainly a big problem when it became apparent that people were going to have to pay £15,000 for a heat exchanger to replace their gas boilers. I know that this proposal has now been withdrawn, but that was just an example of the problems caused by careering very fast towards a very near date of net zero, because the bills start rising all the more markedly.

One could argue that people are already paying some of the highest prices in the G7 for energy, and that is largely to do with our drive towards net zero, which has not produced cheaper energy now. We just have to hope that it does in the future, but there is no evidence of that actually happening, and I am not sure there is much in this Bill, either, to encourage one that we are going to see a great era of cheap energy.

It is quite interesting that the newspapers today said that we had reached 70% of energy being produced by renewable sources—wind, solar and so forth. What they did not mention was that the week earlier, we had gone through a period when the whole country was covered in cloud and there was no wind whatsoever, so we had a combination of neither solar panels nor wind turbines working. At that stage, 70% of our energy was coming from natural gas. It veers from one extreme to another. The problem with most forms of renewable energy is that they do not work all the time. If they did, it might be possible to get the price down to something slightly more reasonable. We need to be very wary.

The noble Lord, Lord Whitty, raised the problem of training enough people to carry out all the tasks that we are envisaging. There seem to be a number of things that are checking the process and involve the spending of money of one sort or another. I am far from sure that we are going to see all this forthcoming in the timescale to hit these very near targets for when we want to reach net zero in this country. We must be wary of being too optimistic that somehow GB Energy is going to solve all these problems. I do not think there is any evidence whatsoever that it will do so.

[Lord Teverson (LD)]

My Lords, I want to reassure the noble Lord, Lord Hamilton, that there is a form of renewable energy that can be on all the time, and that is geothermal. We are developing that quite rapidly in Cornwall and it has been proven worldwide. Recent reports have said that, if we were to roll it out, costs could reduce by something like 80%.

[Lord Hamilton of Epsom (Con)]

At one stage, I was involved in geothermal energy in Cornwall. We had a problem in that, when we pumped cold water down into very hot rocks, there were small earthquakes, which rather upset people locally.

[Lord Teverson (LD)]

There were a number of issues previously about that. Of course, geothermal originally required a certain degree of fracking, but that is no longer necessary. Since the development of United Downs, there have been no such earthquake tremors, all of which were very low indeed. But it is an issue for the public and one that needs to be recognised.

Coming back to what the noble Baroness, Lady McIntosh of Pickering, said, I want to thank her for bringing out some of the issues that we looked at in the sub-committee, and I congratulate her on being the champion of fishers that I know she is. On the issue of solar energy and the take of land, I do not think that we should in any way be questioning or pessimistic; indeed, solar should not be on high-grade agricultural land, but we should look at dual use of these areas. Even where there is solar on grade 3 or grade 4 agricultural land, it is not inevitable that this should be its only use. I would like to see the equivalent of a Section 106 agreement in the planning regime to say that there needs to be allied agricultural use on that land such as harvesting the grass, grazing or biodiversity objectives, which are absolutely possible.

However, I really wanted to intervene on community energy and re-echo what the noble Baroness, Lady Boycott, said. The great thing about community energy is not just the transition but the involvement of people in making that transition happen. It makes them part of the great process that we have to go through, and that is why it is essential that achieving this is part of Great British Energy’s remit.

[Lord Grantchester (Lab)]

My Lords, while the Committee considers the amendments in this group drawing attention to immediate overriding priority objectives, I would like to provide a wider context that includes consumers and demand-side aspects. Perhaps it could be summed up by adding to Amendment 46 “assist in the management of consumer demand”, but it would apply equally to many of the other amendments.

The Minister may recall that, in my Second Reading remarks, I drew attention to digital infrastructure and smart metering. Recently, the department has made statements on the Clean Power 2030 Action Plan, which builds on NESO’s plans, and on the capacity market to incentivise investment in demand-side response mechanisms. The amendment in the name of my noble friend Lady Young mentions improvements to energy efficiency and community ownership. In this regard, consumer-led flexibility can play a vital role in shifting their electricity use through smart technology such as smart-charging EVs and heat pumps.

The smart meter network is a critical national asset that is uniquely placed to enable the transition to a modern energy system. The DCC and Vodafone have signed a deal to bring 4G connectivity to Britain’s smart metering network beyond 2033, and Vodafone’s 4G has 99% coverage in the UK. The Government have committed to invest £6.6 billion to upgrade 5 million homes and cut bills for families as part of their warm homes plan. The smart meter network can be used completely securely to identify energy-inefficient housing stock, as well as damp and insulation issues.

NESO’s plans include offering a demand flexibility service to help consumers save money by reducing their usage during peak times, thereby helping to balance the grid. This DFS, powered by smart meters, should be a key part to facilitate Amendment 46 and the Government’s plans. In the Government’s Clean Power 2030 Action Plan, will the DFS be brought forward and be applicable to all housing at all times of the year, and will it target support to retrofit energy-inefficient housing? Have any costings been considered by the Government and savings identified? That is the subject of the next group of amendments.

[Lord Teverson (LD)]

My Lords, I apologise. In my excitement to contribute in Committee, I forgot to apologise for not being able to come to previous sessions. I also forgot to declare that I am a director of Aldustria Ltd, a battery storage company, and that I chair the Cornwall & Isles of Scilly Local Nature Partnership, which is involved in biodiversity issues.

[Earl Russell (LD)]

My Lords, I will speak to my Amendment 50 and signal my support, and that of our Benches, for Amendments 46, 46A, 49 and 51A.

My Amendment 50 seeks to add a statement to the strategic priorities, including a specific priority for the advancement and production of clean energy from schemes owned, or part-owned, by community organisations. This amendment seeks simply to have community energy added to the strategic priorities for Great British Energy. I apologise for talking about community energy again, as my Amendments 11 and 15 were about the objects of the Great British Energy company; these amendments work alongside those, and, combined, we want to see community energy in the Bill, both in the objects of the company and in the strategic priorities.

Labour has looked to Europe for its inspiration—for want of a better word—for Great British Energy. In Europe, community energy is being embedded in local power networks at an ever-increasing level. Europe is doing that because it knows that it is good for energy security, continuity of supply and local communities and that it brings local benefits. Here at home, we have seen the end of the feed-in tariff, but since that time there has been very little development, with still only 0.5% of our electricity being generated from community-based energy schemes. Reports have indicated that there is a possibility for that to grow exponentially up to some possible 8 gigawatts of local community energy by working with local energy plans, provided that the investment and policy are put in place to make that happen.

I thank Power for People, which has helped me with these amendments and provided your Lordships with briefings. It believes that up to 2.2 million homes could be powered by community energy, that it could save some 2.5 million tonnes of carbon dioxide and that it could help to create some 30,000 jobs in the UK.

Community energy is good not just for us but for our communities. Without going through all the arguments I made the other day, our position is that there is no Great British Energy without a Great British community energy. Our vision is for an end-to-end community energy scheme, so that our local communities can contact one person and get an end-to-end system to help them to get the investment, planning and ideas to turn their wishes to help contribute and be part of this transition into reality.

The point is that the big players will not do this; they are not operating in this field. This simply will not happen if GB Energy does not take it on and make it part of its core strategic priorities—it just will not happen. There is no other realistic option for this. This is good for us and for our communities, and we want to see communities benefitting from the energy infra- structure that they host or run. I apologise, but there will be a third bite of the cherry, as my Amendment 118A, in group 14, argues specifically for this point.

--- Later in debate ---

[Lord Hamilton of Epsom (Con)]

My Lords, I too support the amendment of the noble Lord, Lord Vaux. It strikes me that the real problem with the Bill is that if nothing happens with GB Energy, the Secretary of State intervenes. On the whole, politicians intervening in investment decisions does not have a very good history, and an awful lot of taxpayers’ money has been wasted. Therefore, it would be a very good idea if there was a system of reporting back to Parliament.

The real problem with the whole energy scene in this country is that the private sector is well in there already. I am not sure how committed these people are to energy, but they are certainly very good at crunching the numbers. Of course, with any project, they establish that the supply of, say, wind, is reasonably constant in a certain area. Then, the key thing is the feed-in tariff that they negotiate. That gives them a guaranteed cashflow. Among other things, with wind turbines they even managed to negotiate that they get paid when the wind is blowing and nobody wants the energy. So, if you can do that, it seems to be relatively easy to make money on these things.

If you want to put up wind turbines, there is no problem getting private finance. It is the more vexed areas of energy where you will find people with DeLoreans appearing, saying, “I’ve got a wonderful scheme all organised for carbon capture”, or something that is incredibly difficult in technological terms—or indeed nuclear fusion, come to that, which is another very hard nut to crack. It would be wonderful if we could have nuclear fusion power stations pumping out energy, but we are still a very long way from getting there. What guarantees do we have that taxpayers’ money will not be ploughed into these things and an awful lot of money completely wasted?

I would like to pick up some remarks from my noble friend Lady McIntosh of Pickering. She was concerned that GB Energy would have great problems raising finance. That is not quite the way it works. You actually get tiered finance when it comes to some of these projects, and I can tell noble Lords what the tiers will be: a whole lot of outside investors will get their money back almost whatever happens, and all the high-risk capital will be produced by GB Energy. GB Energy will be the one that will lose absolutely everything if it goes wrong and make a minimal amount of money if it goes right.

We need to be very wary about all this, which is why I support these amendments. It is important that Parliament has some check on all this and is able to say whether it thinks it is a good idea or a bad one. That discipline on the Secretary of State will be very important. Otherwise, I see politicians wheeling off, backing all sorts of incredibly speculative ventures and losing taxpayers’ money as a result. I am not sure that anybody in this House wants to see that happen.

[Lord Teverson (LD)]

My Lords, perhaps I could come back into the real world. I agree with the amendments and their purpose but let us be clear: there is a duopoly in this Parliament that stops negative or fatal resolutions ever being passed in either House. We may say that we agree that an affirmative or negative resolution is needed on something equivalent to secondary legislation. In this Parliament, the practical effect—in relation to what is already in the Bill—is zero because the Labour and Conservative Parties have a duopoly agreement that they will not vote fatally on secondary legislation Motions. To the outside world, all the rhetoric in this debate looks great but, even if it went into the Bill, the effect would be zero. I wanted to make that point because I believe that if you look at this with a democratic point of view from outside this building, the workings of secondary legislation in this Parliament would be seen as completely fatuous.

[Baroness Noakes (Con)]

May I just say to the noble Lord that what was proposed in my amendment was not secondary legislation? It was the simple possibility of a Motion to disapprove of something. It did not fall within the category of secondary legislation, therefore the convention does not apply.

[Lord Teverson (LD)]

I accept that point entirely, except I cannot see this Parliament rejecting such a strategy under any circumstances, however it is dressed up. But I fully respect the intentions of the amendments in the names of the noble Lord and the noble Baroness.

[The Earl of Effingham (Con)]

My Lords, I shall speak to Amendment 57 in my name. It addresses an essential aspect of transparency and accountability in the development of Great British Energy, as outlined in Clause 5.

This amendment ensures that all consultations conducted under Clause 5(4) to (6), which are critical for the development and implementation of Great British Energy, are not only carried out but made fully accessible to the public and—more importantly—to Parliament.

In the modern world, transparency in governance is not just a nice to have: it is an absolute must-have. It is essential that both public and Parliament have access to the results of consultations that influence decisions on policies with such far-reaching consequences.

The energy sector is at the heart of the challenges we face today—whether it be securing a sustainable, affordable and clean energy supply for generations to come or meeting the ambitious carbon reduction goals that are integral to our environmental commitments. The implications of these decisions extend to every household and business and, indeed, to the global environment and climate. Too often, decisions are made by Administrations around the world which are disconnected from the lived realities of those who will be most affected. It is crucial that we bridge this gap. This amendment ensures that the voices of all stakeholders are heard.

Can we consider the important role of the devolved nations of Wales, Scotland and Northern Ireland? As your Lordships are aware, energy policy intersects deeply with our devolved Administrations. Each nation has its own priorities, challenges and opportunities, and the decisions made here and in the other place must reflect the needs and perspectives of all four nations that make up the United Kingdom.

Amendment 57 achieves precisely that. It ensures that the devolved nations are not sidelined in the policy- making process. Wales has made remarkable progress in renewable energy, with a strong focus on wind, solar and tidal power. The Welsh Government have set ambitious decarbonisation targets and are actively working to ensure that local communities reap the benefits of this transition.

Private Low-carbon Investment: Green Finance Institute Report

Lord Teverson Excerpts

Monday 9th December 2024 Lords Chamber

Asked by

[Lord Teverson]

To ask His Majesty’s Government what plans they have to respond to the Green Finance Institute’s report A Greenprint for Property Linked Finance in the UK, published in November, to accelerate private low-carbon investment into existing homes.

[The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)]

My Lords, we recognise the important role that private finance can play in helping us to achieve our decarbonisation ambitions. My officials have met the Green Finance Institute several times to discuss the potential for property-linked finance in a UK context. We will continue to work with industry stakeholders to explore options for working with the private sector, including banks and building societies, to scale up private finance to accelerate efforts in this area.

[Lord Teverson (LD)]

My Lords, I very much welcome those conversations that the Minister has had. As he knows, the way to bring down energy bills for families is to insulate their homes. Indeed, homes account for almost a quarter of carbon emissions. Perhaps the Minister could be a little more precise. These discussions can take a long time. The £6 billion, which I welcome, in the Government’s warm homes plan is just a small amount of the money that is needed to refurbish UK buildings. Given that legislation is often required to implement these schemes, can he give some sort of timetable of when bringing such private finance into this sector will happen?

[Lord Hunt of Kings Heath (Lab)]

My Lords, the noble Lord is absolutely right that this is an important area of policy. We reckon that buildings account for 31% of total UK emissions, and heating is 75% of that proportion of emissions, so I very much take his point that there is an urgent need to make progress. I cannot give him an exact time. Looking at international experience of these kinds of schemes, it is not altogether positive. In the US experience, for instance, it may have worked for multi-occupational commercial properties but, for individuals, it does not seem to have made much progress.

COP 29

Lord Teverson Excerpts

Thursday 28th November 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always interesting to have the noble Lord’s perspective, given his long-standing interest in energy. He enjoyed being Energy Secretary, and it is good that we have a department focused very much on energy issues. I think the target is consistent: 2030 is the aim for clean power; the 2035 goal we have agreed on the reduction in greenhouse gases is the UK offer that we have made. The actual target we have set is an 81% reduction in emissions by 2035, against a 1990 baseline. I am clear that this is consistent with 2030—in other words, the 2030 target takes us on to the 2035 target we have now agreed. The noble Lord asked that question on Monday, and we are clear that we are being consistent; and obviously, we are taking the advice of the Committee on Climate Change on this.

[Lord Teverson (LD)]

My Lords, one of the things that has improved hugely is satellite monitoring of emissions, particularly of methane. According to a recent report, some 1,000 major methane escapes have been identified and notified to the nations which caused them, but there has been very little reaction or implementation of measures. The UK has shown leadership here as part of the global methane pledge. How can we much better ensure that we implement the solution to emissions of this most concentrated of greenhouse gases, as doing so is really important?

[Lord Hunt of Kings Heath (Lab)]

I am grateful to the noble Lord, who raises a very important issue. In fact, during or around the time of the COP 29 discussions, we announced £5 million to help developing countries tackle methane emissions from their fossil fuels. This is supporting delivery of the global methane pledge launched at COP 26. However, I am very happy to take a further look at this and to respond to the noble Lord in some detail about what further actions we might take on this important matter.

Drax Power Limited: Ofgem Investigation

Lord Teverson Excerpts

Monday 11th November 2024 Lords Chamber

[Lord Hunt of Kings Heath (Lab)]

My Lords, I am grateful to the noble Lord. I have seen the media reports, but I have to say to the House that it is the responsibility of Ofgem to make judgments as to whether a company is applying the sustainability criteria. The issue before us today is data information. Clearly, Ofgem found that Drax was not complying with the requirements—hence the redress payment. However, it did not find that Drax was not complying with sustainability criteria.

[Lord Teverson (LD)]

My Lords, given the amount of private money that has been spent in this area, is it not important for Ofgem to be rather more ahead of the curve on these issues? I notice in the report that Drax is now going to have external audit. Why did it not have this before? More importantly, why does not Ofgem get off its backside and go to the United States and Canada to check these items out for itself? Is it about to do that?

[Lord Hunt of Kings Heath (Lab)]

My Lords, first, it is not for Ministers to tell Ofgem how to regulate; we have to rely on its rigorous approach. Secondly, in the US and Canada, we depend on the rigorousness of the regulators locally. Ofgem’s job is to ensure that, as a whole, sustainability criteria are correct. I do not believe that it would be fair to say that Ofgem is not doing a thorough job. That is not my experience.

Prepayment Meters

Lord Teverson Excerpts

Tuesday 14th May 2024 Lords Chamber

[Lord Callanan (Con)]

Of course, if the customer is not in debt, it is their choice whether to have a prepayment meter. There are circumstances in which prepayment meters are fitted involuntarily—the consequences of the scandal that we saw last year are being closely monitored—but, in most cases where a customer is in credit and not in debt, it is their choice whether to accept a prepayment meter or, indeed, a smart meter.

[Lord Teverson (LD)]

My Lords, one of Ofgem’s new conditions for energy suppliers, now that they can start forcing prepayment meters again, is that they carry out internal audits to make sure they are complying with Ofgem’s new rules—that is, marking their own homework. Given the trauma to households of forced entry and the bad behaviour of the sector in the past, should Ofgem not get off its backside and instigate its own external audits?

[Lord Callanan (Con)]

My Lords, energy suppliers are not marking their own homework. Ofgem very closely monitors them. Not all suppliers have been given permission to restart involuntary installations. They have to put in place a strict code of conduct and make at least 10 attempts to contact the relevant customer. They have to put in place relevant prepayment plans and credit payment plans, if necessary, taking into account the customer’s ability to pay, and some prepayment forcible installs are banned completely in the case of vulnerable customers.

Home Insulation

Lord Teverson Excerpts

Tuesday 14th May 2024 Lords Chamber

[Lord Callanan (Con)]

Installing a heat pump where you need an outside condenser unit is difficult in flats, but it is certainly not impossible. I am certainly not aware of any prohibition from installers on installing them in flats. If you have the available outside space, if it does not disturb your neighbours too much, and if planning requirements are specified, it is perfectly possible to install heat pumps in flats.

[Lord Teverson (LD)]

My Lords, in 2015, George Osborne, as Chancellor of the Exchequer, cancelled the zero carbon homes regulations that were supposed to come into force the next year. Since then, several hundred thousand houses have been built that are substandard in terms of insulation. Would it not have been a much better decision to have implemented the 2016 regulation, which would have stopped all this expenditure now on retrofitting?

[Lord Callanan (Con)]

The noble Lord is asking me to speculate on past Governments, some of which the Liberal Democrats were part of. I agree with the noble Lord that the future homes standard should be implemented as quickly as possible, and DLUHC assures me that the consultation is live at the moment and will be implemented next year.

Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

Lord Teverson Excerpts

Monday 18th December 2023 Grand Committee

[Lord Naseby (Con)]

My Lords, I very much welcome this statutory instrument and congratulate His Majesty’s Government on bringing it forward so speedily. I just wonder whether my noble friend has any idea of how many potential clients there are in the United Kingdom. That would be interesting in itself.

Regulation 2(4), on page 2, defining an

“eligible low carbon hydrogen producer”,

is very sensible and has thankfully been included. Of course, because of the publicity for the domestic trial in the north-east of England, hydrogen is getting a bit of an unfortunate image. I am not sure whether any incentive can be produced to help the local communities—which I would say are getting difficult, but let us say they are being very careful—to do those trials. If there is not, there is not, but this is a negative reaction and not one I welcome.

Finally, it is usual for most statutory instruments, certainly the ones on which I comment, to have a sunset clause for review. I do not see one, unless I have missed it, but that would have helped.

[Lord Teverson (LD)]

My Lords, as always, I thank the Minister for his excellent explanation of this secondary legislation and welcome how we are now moving forward at some pace on the hydrogen front. I also welcome the Government’s announcement that they are moving ahead with the carbon border adjustment mechanism, even though it is one year after the EU has done so. I do not know what has happened in the middle, as far as SME exports and that side is concerned. Their commitment to energy efficiency after the election perhaps raises some questions, but at least there is some intended movement there.

I also welcome the Government finally giving up on the hydrogen villages in England. This was clearly never going to happen or be real, and I am sure the Minister was at the forefront of those talking sense to his Secretary of State on that area, which is excellent.

As background, I read through the hydrogen standard. As it is Christmas, I was going to ask the Minister to explain the formula in there, because I could not understand it either. There is a training video on how to understand it, which I will watch on Boxing Day rather than before.

--- Later in debate ---

[Baroness Blake of Leeds (Lab)]

My goodness. I was not expecting that announcement and have not been party to that information. I am sorry: I was not clear from the noble Lord’s comments whether he meant the end of this year. Perhaps he has secret information about when this Parliament might come to an end.

[Lord Teverson (LD)]

I meant this year.

Climate Change: Phasing Out Fossil Fuels

Lord Teverson Excerpts

Wednesday 6th December 2023 Lords Chamber

[Lord Callanan (Con)]

It is our policy to phase out the unabated use of fossil fuels. On the second question, even with the granting of any new licences, UK oil and gas production will continue to decline at a faster rate than most other productive fields in the world.

[Lord Teverson (LD)]

My Lords, I very much welcome that the Government have sent a number of Ministers to COP 28. I am sorry that the noble Lord the Minister is not there to put the UK’s views forward. Does he realise that the good will we are building up there was undermined by the many announcements on climate change made a couple of months ago? They take away from our international leadership. When will Downing Street understand that its announcements on climate change made domestically for political purposes are heard internationally and undermine that reputation, not least with the industrial investors we need for the future?

Electricity Network Connection Action Plan

Lord Teverson Excerpts

Wednesday 22nd November 2023 Lords Chamber

[Lord Callanan (Con)]

Indeed, we are working with both the Scottish and Welsh Governments. There is tremendous public support for offshore wind; it has been our biggest expansion mechanism. But of course it requires a lot of onshore infrastructure as well, which is unpopular in the communities affected. There is a well-established planning process, looking at all these impacts, and we will continue to work with the devolved Administrations.

[Lord Teverson (LD)]

My Lords, since the Government have just dabbled with changing the planning conditions for onshore wind in England, there has been no action whatever from the industry, in that it still sees the planning restrictions as a major barrier. When does the Minister expect the next connection into the grid by onshore wind in England so that households can benefit from the cheapest form of energy we can produce in this country?