Energy Bill

Debate between Albert Owen and Dan Byles

Wednesday 19th December 2012 Commons Chamber

[Dan Byles (North Warwickshire) (Con)]

It is hard to overstate the importance of the Bill, but sometimes we need to pause and get back to basics, and remind ourselves what drives the tensions at the heart of strategic UK energy policy.

Traditionally, DECC has had two priorities: to keep the lights on and to do so at an affordable price. In recent years, a third priority has been shoehorned into the mix—decarbonising the sector. It is fair to say that at times the decarbonisation agenda butts up against the energy security and affordability issue. Much of the current debate is about how we manage that conflict. I am of the view that decarbonisation is vital, but that it cannot be considered in isolation. We cannot say at any point that there will be decarbonisation at any price. Indeed, when the Secretary of State came to the Select Committee last week he conceded that point.

Another problem in the UK is investment, which has already been mentioned by various Members. A fifth of our capacity will be gone by 2020; 12 GW of oil and old coal generation will be offline by 2015, and most of the remaining coal and older gas plant that stays online after 2015 will not be able to run at full capacity for various reasons. Nuclear power plants are coming offline without life extension; all bar one will be gone by 2023. I am pleased to see those life extensions coming forward, but the long and short of it is that we have an oft-quoted £110 billion investment challenge by 2020. That is a huge investment challenge.

Ofgem threw a hand-grenade into the debate in October, when it reported that we face a very real risk of power shortages in just four years’ time, when our capacity—our overhead—goes from 14% to 4%. My hon. Friend the Member for Selby and Ainsty (Nigel Adams) put that in context by saying that 4% is just Eggborough power station coming offline, which I find quite frightening. That is why the Bill is vital, and that is why it needs to be passed, and passed quickly. I am disappointed that the Opposition, who apparently support the Bill, have managed to word their reasoned amendment in such a way that they could end up voting against Second Reading.

[Albert Owen]

Reasonable.

[Dan Byles]

A reasonable amendment, is it?

There are investors out there who want to invest in the UK. Members of the Energy and Climate Change Committee have spoken to them. I have personally spoken to numerous private equity companies and pension funds. There are billions of pounds sitting, burning holes in investors’ pockets, but they are holding back because they need to see the detail in the Bill. There are a number of issues that we kicked around in pre-legislative scrutiny on the Select Committee, around the counterparty and the detail of the contracts for difference. I am very pleased that DECC has moved considerably on the counterparty, and I think has taken on board many of industry’s concerns, but some still remain about exactly how the contracts for difference will work, where in the investment cycle those contracts will be awarded and the route to market for small generators.