Electricity (Risk-Preparedness) (Amendment etc.) (EU Exit) Regulations 2020

Baroness Bloomfield of Hinton Waldrist Excerpts

Tuesday 3rd November 2020 Grand Committee

Moved by

[Baroness Bloomfield of Hinton Waldrist]

That the Grand Committee do consider the Electricity (Risk-Preparedness) (Amendment etc.) (EU Exit) Regulations 2020.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, on 31 December 2020, when the transition period ends, direct EU legislation such as this, which forms part of the legal framework governing our energy markets, will be incorporated into domestic law by the European Union (Withdrawal) Act 2018. This statutory instrument will ensure that Great Britain’s energy legislation continues to work effectively after the end of the transition period. It forms part of the department’s wider package of work to ensure the continued smooth functioning of the UK’s energy system after the transition period.

Great Britain has a reliable energy system, and maintaining a safe and secure energy supply is a key priority for this Government. The UK’s exit from the EU will not affect this. This statutory instrument applies to Great Britain and makes amendments and revocations to Regulation (EU) 2019/941 on risk preparedness in the electricity sector, amending existing rules to ensure they operate effectively in domestic law, while revoking provisions no longer relevant after the transition period. The risk-preparedness regulation came into force in June 2019 and creates an EU framework for preventing, preparing for and managing electricity crises. The regulation requires, among other things, that member states identify all possible electricity crisis scenarios at national and regional levels and then prepare risk-preparedness plans based on those scenarios.

The changes made by this statutory instrument reflect our intention to continue to develop measures for robust risk-preparedness management in the electricity sector, especially as we work to further decarbonise Britain’s energy system. Specifically, this statutory instrument amends provisions relating to the development of electricity crisis scenarios and a risk-preparedness plan to ensure they operate properly after the transition period. By retaining these functions, we will ensure that our understanding of the risks continues to improve and that we have robust mitigations in place to maintain our secure and reliable electricity system.

BEIS is the lead government department for electricity emergencies and works closely with industry partners, including National Grid and Ofgem, to consider risks to supply and ways to manage these risks effectively. This SI will build on and supplement existing arrangements and plans, ensuring there is a clear framework for the identification of risks to the electricity system and setting out measures to mitigate these risks within a risk-preparedness plan. This plan will complement existing documents that require industry consultation and development, including the regularly updated national emergency plan for downstream gas and electricity.

The Secretary of State for Business, Energy and Industrial Strategy will work with these GB bodies and market participants—for example, the transmission system operators—to fulfil the obligations to develop crisis scenarios and risk-preparedness plans by specified dates. This provides clarity on roles and functions after the transition period for electricity crisis planning and management in Great Britain. This includes consultation with the transmission system operator, the regulatory authority, Ofgem, distribution network operators and other relevant parties to identify the most relevant electricity crisis scenarios that may impact the electricity system.

After the transition period, the UK will make independent decisions on our energy policies. This statutory instrument therefore revokes certain obligations within the regulation, such as the obligation to submit risk-preparedness plans to EU bodies and institutions. It also corrects deficient references to EU bodies and institutions—for example, by removing references to the European Network of Transmission System Operators for Electricity, and the European Commission. It also replaces the term “member state” with references to “the Secretary of State” where necessary to ensure continued operability.

The revocations made by this SI are proportionate and necessary to ensure the continued functioning of the regulation in domestic law after the end of the transition period. Overall, this statutory instrument will ensure the operability and integrity of GB energy legislation, providing certainty for market participants and safeguarding the resilience of the electricity system by ensuring the continued functioning of risk-preparedness planning provisions.

These regulations are an appropriate use of the powers of the withdrawal Act and will maximise continuity in our energy regulation, provide certainty to market participants and support a well-functioning, competitive and resilient energy system for consumers. I beg to move.

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[Baroness Bloomfield of Hinton Waldrist (Con)]

I thank noble Lords who have contributed to this debate, which has widened out considerably—as indeed it should—from the rather dry statutory instrument that we are faced with.

The noble Lord, Lord Stephen, raised an important point about the transformation of our energy system. As we transition towards net zero, maintaining energy resilience will continue to be a priority for the Government. The electricity system operator has a plan in place to transform the operation of Great Britain’s electricity system and put in place the innovative systems products and services to ensure that the network is ready to handle 100% zero-carbon by 2025. I hope that this provides some reassurance to the noble Lord, Lord Oates, that this is our goal that we are working towards. This statutory instrument will ensure the continued security and resilience of the electricity system by identifying and mitigating new risks to the system.

The noble Lord, Lord Campbell-Savours, raised the issue of additional interconnector arrangements, and in particular the proposed Icelandic interconnector. Although I cannot comment on specific projects, I can assure the noble Lord that interconnectors will continue to play an important part in our energy system. There are currently six interconnectors between the GB electricity market and near neighbours, with a total capacity of 6 gigawatts. In 2019 net imports accounted for 6.1% of total supply. There are further plans for the delivery of a large number of electricity interconnectors, adding 11.9 gigawatts to the existing operational 6 gigawatts by 2023. These interconnectors provide significant benefits, including lower consumer bills as well as security of energy supply and, after the end of the transition period, our energy system will still be physically linked to the EU. Further interconnection is in the mutual interest of the UK and the EU, and we have continued to see new interconnector projects progress.

Going back to the Iceland interconnector, I agree entirely with the noble Lord, Lord Campbell-Savours, that it sounds like an appealing project until you get into the weeds of it. While you can build a 1,500-kilometre interconnector for up to 1.2 gigawatts between Iceland and the UK, there are a number of barriers under the water, thrown up by the seabed survey, which, while not showstoppers, would make it extremely difficult to do. From what I remember of the project, the main stumbling block was that most of the energy—geothermally and hydro-generated—comes from the south-west corner of the country, yet the best place to build an interconnector is the north-east. Getting over that terrain, much of which is bedrock, would have meant that the interconnector itself could not be buried. The effect on the environment of pylons or overland HVDC cables would have been enormous. Björk is the least of the issues there, I think; the entire environmental lobby would be very exercised by the prospect. Given that tourism is such a huge part of Iceland’s economy—and has been until the pandemic—I wish the project well, but there are a lot of difficult problems to overcome.

The Government are committed to achieving a smooth end to the transition period for our energy system. We have brought forward a package of legislation to ensure that retained EU law is workable and free of deficiencies by the end of the transition period. This draft instrument falls within this category of legislation. The Government retain their obligation to produce these resilience plans on the same basis as before; this statutory instrument merely removes our obligation to circulate these plans among the EU, but it remains very much in our interest to carry out these studies—in fact, it is now set in law that we should do so. The failure to address the deficiencies of the SI would have caused uncertainty and inefficiency in the operation of Great Britain’s market regulation, the role and functions of domestic and EU bodies in the markets, and requirements on market participants.

I must stress that this draft instrument and the UK’s departure from the EU as a whole do not, and will not, alter the fact that our energy system is resilient and secure. In Great Britain, the Government have been working closely with the electricity system operator, the national grid, and the regulatory body, the Office of Gas and Electricity Markets, to ensure that measures are in place to deliver continuity of supply and confidence in the regulatory framework in all scenarios. The Government are therefore confident that the UK’s electricity system is able to respond to any challenges, whether these are as a result of leaving the EU or other challenges facing the UK, such as the coronavirus pandemic.

Our energy system will still be linked to the EU after the end of the transition period through these interconnectors. The UK, as a result, has one of the most secure energy systems in the world and the industry has well-placed contingency plans to keep energy flowing and to ensure that our energy supplies are safe. This draft instrument will support this by ensuring that the sector is well prepared for a variety of risks that could impact the system. The noble Lord, Lord Grantchester, referred to the plans that were published previously, and asked whether these will be published in the future, and to which parties. We will publish the risk preparedness plans in 2022.

This draft instrument will help maintain a robust framework for electricity risk management, with continuity for the market and certainty for market participants. It will do this by retaining relevant functions to ensure the electricity risk preparedness regulations work properly and, where necessary, revoking provisions that will no longer be relevant after the transition period.

The noble Lord, Lord Grantchester, also asked how the SI affects risk preparedness planning with Ireland. We are working very closely with Northern Irish colleagues to determine what is in the scope of the Northern Ireland protocol, and how they will comply with their obligations under the risk preparedness regulation after the end of the transition period, which they will be obligated to continue by virtue of the Northern Ireland protocol. For example, this includes the reporting function to the EU and the more difficult issue of nominating a competent authority that would feed into the EU processes.

In conclusion, this draft instrument is required to ensure continuity for our energy system, and certainty for both market participants and consumers. In doing so, it will form an important part of the GB framework for preparing, preventing, and managing electricity crises. The noble Lord, Lord Oates, raised some very important points. Apart from the broader points he raised about the investments we are making in new forms of energy and, indeed, in battery technology, I was very interested to hear of the reports of new types of energy he mentioned, and I will look at Hansard. I will write to him on the other specific points he raised on the SI, so that his detailed questions receive the detailed answers they need.

On the emergency response, BEIS is the lead department for electricity emergencies, working closely with industry partners to consider risks to the supply and ways to effectively manage these risks. BEIS leads the emergency response, working closely with industry, with plans clearly set out in the National Emergency Plan: Downstream Gas and Electricity.

I commend these draft regulations to the Committee.

Motion agreed.