Energy in Wales

Ben Lake Excerpts

Thursday 14th September 2017 Westminster Hall

[Albert Owen]

I will come to price mechanisms in a moment, but my hon. Friend is absolutely right that we need certainty. Investors need to know what the price will be and what return they will get in the long term. I think that everyone accepts that economies of scale enable lower-cost energy production, and that should be reflected in subsidies. The governance framework needs to be a little tighter. The contract for difference, which I will come to, is a good principle. Many people do not appreciate that with a strike price, if prices fluctuate, big developers do not get the money; it comes back and stays with the Government, so we get certainty about how much the Government spend. That is good.

Major energy policies are reserved. I appreciate that the Wales Act 2017 devolved control over projects up to 350 MW, which reflects the larger scale of projects, but we require a partnership between local communities, local businesses, devolved Administrations and the UK Government, within—remember that we are still in the European Union—the European framework.

I acknowledge that whoever won the 2010 general election would have had to reform the electricity market. I sat on the Committee that discussed the relevant legislation before it went through. I did not agree with everything in it, but I did agree with the principle of reforming the electricity market to ensure certainty for investors and value for money for the consumer. Energy Ministers have changed frequently—that has been a problem with both Labour and Conservative Governments —so we have perhaps not given energy the attention it deserves. I support the contract for difference principle and the need for a capacity market mechanism, but during the period of populism I referred to, the oil price and energy prices went up, and that became a big political issue. We were significantly reliant on oil and gas prices, because we were not developing the renewable, new nuclear and low-carbon technologies we should have been.

Wales is still heavily reliant on oil and gas as part of our mix, so we need to move forward. It is ironic that Wales and Scotland are huge producers of energy, yet household and business bills are higher in those areas than in the rest of the United Kingdom. It is totally unfair that a consumer in Wales pays extra for their energy. They might be close to a power station that generates energy for the grid but, because of the transmission and distribution mechanisms, they end up paying more for it. I would not say that the energy market is completely broken, but it is fractured and those issues need to be addressed. Wales is still reliant on gas and coal, and it needs to wean itself off them. I am disappointed that combined storage schemes for coal and for oil have not progressed in the past five to six years. We could have retrofitted many of our power stations so that we had clean coal and oil production as we transitioned to renewables, but we did not do so.

Let me turn to some of the technologies. I will start with marine technology, which is important. We have a history in Wales of small hydro schemes. The Dinorwig pumping station in many ways revolutionised storage. We need to consider storage, and here is a scheme that was developed in Wales many years ago that pumps electricity up at night, when energy prices are low, and stores it.

[Ben Lake (Ceredigion) (PC)]

I echo the hon. Gentleman’s comments about the potential in Wales for hydro schemes. Dinorwig is a fantastic example of a larger hydro scheme. Does he agree that smaller hydro schemes—the potential of which we perhaps have not fully realised—are just as important for our energy mix in Wales? He also talks about the UK and Welsh Governments working in partnership. We desperately need to look at the revaluation of business rates, which is affecting many hydro energy schemes, particularly community energy schemes. Does he agree that we have an opportunity to fully realise the potential of hydro in Wales by addressing that revaluation?

[Ian Paisley (in the Chair)]

Order. I remind Members to keep their interventions as short as possible.

--- Later in debate ---

[Chris Ruane]

He says I cannot, but I am going to ask it anyway. Will he declare his love for the lagoon? There is a local campaign called “Love the Lagoon”—it involves Conservative councillors, Conservative politicians and Conservative Members who are keen to expand that because they can see the benefit for their community. Does he love the lagoon—if that is not a personal question?

Let us look at some of the arguments that the Government have put or may put forward for weakening their support for tidal lagoons. Will they be saying that prices for wind power have dropped so much that it will make lagoons unviable? The success of wind energy is down to early political and financial support, and we want the financial support that we offered then to be replicated now by the Conservative Government to make sure that these proposals go ahead.

The Swansea lagoon, like North Hoyle, was a test bed—a pilot project to test the effectiveness of lagoons and to learn from that experience. The cost of funding the Swansea lagoon—the pathfinder—is equivalent to the cost of a pint of milk a day for every household in the UK. That is a sound investment, as far as I am concerned. If it works, we can expand it to Cardiff bay, Liverpool bay, Colwyn Bay and England, to make sure that we stay at the forefront of this great, new, green technology.

The Welsh Government have given their full support to tidal lagoons. Senior Cabinet Ministers from many Departments have met Charles Hendry and fully engaged with him. The Welsh Government have invested in the skills demand and supply report for the proposed Swansea bay lagoon development, and have provided a £1.25 million commercial loan to the tidal lagoon company.

[Ben Lake]

I acknowledge the support that the Welsh Government have provided for the tidal lagoon. The National Assembly also declared by resolution its support for it, cross-party.

[Chris Ruane]

Absolutely, there was cross-party support. I think that there are even Conservatives who support it down there. In the meantime, we have prevarication and procrastination by the UK Government on the matter of lagoons. Welsh Government Ministers wrote to their UK counterparts in April and June of this year, and I believe that the June letters have still not been responded to. Will the Minister look into that?

Tidal lagoons also have an added benefit in that they will protect the coastlines where they are located from flooding. Both Denbighshire and Conwy have suffered terrible floods. The Minister will remember the floods in the early ’90s in Sir Anthony Meyer’s old seat, Clwyd North West, in Conwy county. Five thousand homes flooded. We had floods as recently as two years ago in my constituency. There has been coastal flooding from waves and the sea. That would be prevented if we were able to establish these tidal lagoons off the coast of Wales.