Electricity Generation

Lord Tombs Excerpts

Wednesday 7th November 2012 Lords Chamber

Asked By

[Lord Tombs]

To ask Her Majesty’s Government what steps they are taking in response to the recent projection by Ofgem of a fall in the generating plant margin from 14% at present to 4% in the next four years.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)]

My Lords, Ofgem’s capacity assessment emphasises the importance of action to ensure that we continue to enjoy electricity security in the medium and long term. That is why the Government are taking decisive steps to secure our supplies, including reforming the electricity market to drive the investment that we need and consulting later this year on options to reduce demand for electricity. Recent announcements on investment in a new gas power station at Carrington and from Hitachi on nuclear investment demonstrate that the Government’s approach to securing investment is having real impacts.

[Lord Tombs]

My Lords, as the Minister will expect, I found that Answer wholly unsatisfactory. We are in the early stages of a major crisis. At present, a lot of our supply comes from nuclear and coal stations, which provide about 40% of our national demand, with the rest coming from gas. Much of this plant is 40 years old and quite a lot of it is 50 years old—well beyond the date by which one would have expected it to have been retired. The task of replacing it is enormous and will take a long time. We ought not to feel complacent at all, because estimating the date of the necessary retirement of this plant is not easy. Can she assure me that the dates and programmes for the retirement of 40 or 50 year-old plant are clearly specified, together with plans for replacing it?

[Baroness Verma]

My Lords, I should like first to reassure the noble Lord that this Government are not being complacent. That is why we are taking action to ensure that the UK economy continues to enjoy high levels of security of electricity supply. Our comprehensive proposals for electricity market reform will drive investment, ensuring that we have a diverse mix of energy sources. This includes legislating for the capacity market, which I am sure the noble Lord will be pleased to hear. We have sufficient reliable capacity in the system for the long term, but we need to build a stronger framework, which we are doing. We are investing in renewables and maximising the recovery of oil and gas from the UK continental shelf. There is a lot to do—I agree with the noble Lord—and we are doing it.