Electricity: Cost-competitiveness

Lord Frost Excerpts

Thursday 16th May 2024 Lords Chamber

Asked by

[Lord Frost]

To ask His Majesty’s Government what assessment they have made of the overall cost-competitiveness of electricity generated from recently commissioned offshore wind farms compared to electricity generated from recently commissioned gas-fired power stations at current gas prices.

[Lord Frost (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and I draw attention to my relevant unpaid interests in the register.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, offshore wind is one of the cheapest generating technologies in the UK and is comparable to or cheaper in cost than fossil-fuel based alternatives. It is a vital technology that will allow us to decarbonise the power sector by 2035 and enhance the UK’s energy independence. The department publishes its cost estimates in the generation costs report.

[Lord Frost (Con)]

My Lords, I thank the Minister for that response, but I gently suggest that perhaps he needs to look more carefully at the plausibility of the assessment he has just given. If renewables were as cheap as he asserts, it is hard to understand why bill payers and taxpayers are having to pay about £12 billion per year in subsidy, which is £600 for every family in the country. If offshore wind can be produced for £50 per megawatt hour, as his department asserts, it is hard to understand why the Government have had to offer twice that this year to get anyone to take up a contract. Would the Minister agree that it is better to be honest and that pushing out these fantasy figures just makes it easier for the proponents of net zero and the party opposite to indulge in fantasy politics that the whole energy sector can be decarbonised in just six years?

[Lord Callanan (Con)]

I certainly agree that the Opposition’s policy is fantasy politics. However, I will give the noble Lord the costs in the latest published analysis, which show that electricity from offshore wind is 60% cheaper to build and operate than gas-fired power. The levelised costs are £44 per megawatt hour for offshore wind, versus £114 per megawatt hour for closed-cycle gas turbines. The other key point is energy security. As the noble Lord is well aware, the amount of gas coming from the North Sea is declining year on year, and therefore we have to import increasing amounts of gas. It makes no sense to make us dependent on imported gas for the years to come. We can see the effects of the Russian invasion of Ukraine on gas prices. With the current turmoil in the Middle East, it makes even less sense.

Net Zero (Economic Affairs Committee Report)

Lord Frost Excerpts

Monday 16th October 2023 Lords Chamber

[Lord Frost (Con)]

My Lords, I am grateful for the opportunity to debate this report. I declare my interest as an unpaid trustee of the Global Warming Policy Foundation, a charity.

The committee’s report, as has been said, is now over a year old and therefore, unfortunately, rather out of date. It reflects a world where the policy goal of net zero was undisputed and its economic and financial underpinnings unquestioned. As we know, during 2023, as the real-world costs of the net-zero transition have become more apparent across western economies, we are beginning to see thinking change. Our own Government’s very welcome, though still minimalist, decisions to delay the deadlines for compulsory transition to EVs and gas boilers recognise the reality that the current course to net zero is likely to prove impossibly costly and politically and economically unworkable.

I certainly agree with the committee’s scepticism, though perhaps not from the same direction, about the relationship between the Government’s net-zero plans and hard reality. Nowhere is that scepticism more justified than in one area: wind power. Given the short time available, that is the issue I want to concentrate on today. One often hears it said that wind power is both a cheap form of energy and one that enhances energy security. I am afraid that both those points are fundamentally mistaken. Given the time constraints, I want to make just two broad points.

The first of these is the obvious one: wind power is intermittent and therefore requires back-up. We get wind power only when the wind blows, so widespread use of it means that we must maintain a back-up source of dispatchable power, currently gas. It is argued that the back-up to wind power in the future will be electricity storage. Unfortunately, this is implausible. Doing so through battery power will be fabulously expensive—several times the annual GDP of this country—if it is even possible at all. Hydrogen might be a little cheaper, though still well beyond what can plausibly be paid for. I am afraid that last month’s Royal Society report about hydrogen storage, which purported to show its feasibility, is based on rather implausible assumptions. At least, I hope they are implausible. For example, there is a belief that total UK electricity demand in 2050 will be half what it is now. We face a rather bleak future as a country if that is so.

The truth, which wind power proponents shy away from, is that the more wind power you have, the more gas you need as well. The resultant rickety generation system then makes the overall grid less reliable, while balancing it becomes ever more complex and costly—last year it was nearly £4 billion for this alone. This stressed renewables grid cannot be relied on by a modern economy.

Secondly, as a result of these things, wind power is expensive. It is obvious that running wind plus back-up will always be more expensive than just back-up. Moreover, running that back-up gas network at partial efficiency brings extra costs and deters the investment that we want to see. It is widely believed that wind power costs are coming down fast, but this really does not seem to be the case. The estimates produced by the department are a little disconnected from this reality.

If, as the department claims, an offshore wind farm can deliver power at £44 per megawatt hour, or £55 in current money, why did no wind farm developer take up the offer last month of contracts for difference at £65 per megawatt hour? Why did Vattenfall cancel its plans for the Norfolk Boreas wind farm in July, rather than deliver energy at the price it was contracted to—prices, by the way, that ignore the costs of back-up or strain on the grid? It is obvious from examining the published accounts of companies that costs have not fallen to any great extent, onshore or offshore. A policy based on the assumption that they have therefore makes no sense.

The truth is that the whole wind power project risks being a huge waste of effort and resources. It is going to deliver us, at fabulous cost, an electricity grid that is more unreliable, less secure and more expensive than the one we have now. The correct way forward to reach any serious target to reduce carbon emissions has to be a gas to nuclear programme, first by more modern CCGT generation at existing sites and restarting fracking, following that with a revived nuclear programme. We will obviously be able to do that only if we can eliminate the market distortions and the massive subsidies and consumer costs that come with the current wind power programme.

I do not have much expectation that this is going to happen, given the investment that this Government and their predecessors have made in wind power. I still hope that my noble friend the Minister and his department will look at these issues with a fresh eye and perhaps at least put in place a proper red team review of the wind power programme, before it is too late.

Retained EU Law (Revocation and Reform) Bill

Lord Frost Excerpts

Report stage
Wednesday 17th May 2023 Lords Chamber

[Baroness Lawlor (Con)]

I have added my name to my noble friend Lady Noakes’s Amendment 51A, and I would like to follow on from what she has said. It is important that the legislative momentum for sunsetting, removing or revoking EU legislation be kept up. The reporting requirement on the Government will, as she said, keep up the momentum and help the Government and indeed Parliament to keep track of what has gone, what is yet to go and how further regulations, if any, will be modified.

There is a very good reason for doing this, and it relates to cost. Ultimately, it is people who bear the costs, either through what they pay for goods and services or through their taxes for government compliance costs in dealing, as now, with two systems of law: EU retained law and our own common law.

I hope the reporting requirement will enable us all to know where we are going and help us keep track of getting rid of that which the Government have pledged to get rid of or modify where necessary. That is very important in the interests of efficiency, for everyone, not just businesses. It is also important for transparency. Not only does regular reporting help the momentum; it will make for fairness so that we are all clear about the rules. I hope it will mean greater prosperity, which we need to encourage. In my view, we need to move back more thoroughly to our common-law system, and that is something on which I hope to touch when we consider the next group of amendments.

[Lord Frost (Con)]

My Lords, I support Amendment 51A, to which I have added my name. There is perhaps little to add to what has been said in support of the amendment, other than to recall that the corpus of retained EU law that will be covered by it remains a corpus of law—however normalised, we must hope, by the Bill—that was brought on to the UK statute book in a distinct and different way that did not always enjoy full discussion in this Parliament, as we have said many times. It is logical and reasonable to keep that corpus of law under particular review under this distinct process, so that it can be kept in view of this House and of Parliament. The original purpose of the Bill as introduced by the Government—to review, reform, perhaps revoke and perhaps continue with the legislation—can be kept fully in mind and implemented. To me, that is the logic behind the amendment, and I hope the Government will be able to take that on board.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I support this amendment, whose intention is well thought through, whatever the lawyers say. I shall say why.

When consideration was being given to what had driven the changes that the Government themselves brought in with the removal of the sunset provision in Clause 1, some credence was given to the words of Jacob Rees-Mogg, who had originally introduced the Bill, and who stated that this was an admission of administrative failure and the inability of Whitehall to do the necessary work. I am no fan of blaming “the blob” for everything. The reason why I support this amendment is that it allows the general public, let alone Parliament, to see what work is being done when and where. That is why transparency matters: so that you cannot just blame things going on behind the scenes.

The Secretary of State for Business, Kemi Badenoch, suggested that the previous demands on the Bill, with its cliff-edge, had caused so much concern that civil servants were choosing to reduce legal risk by preserving EU laws, rather than prioritising meaningful reform. Now that the Government have changed this, we need to be aware that we are having meaningful reform and, again, to see it. Otherwise, I worry that we will have simply put off making decisions about how to deal with this situation.

My final reason is that in this House on many occasions noble Lords have, in good faith, worried that the whole removal of retained EU law was a plot to undermine workers’ rights, women’s rights and everyone’s rights. I have never been as cynical about it as that and have always believed that those rights were fought for domestically and we do not need to be concerned. But I hope that everybody in the House might support this amendment because it should reassure. It gives us now the opportunity to say what is retained, what is removed and what is reformed—rather than, as it were, gossiping behind the scenes with almost a conspiratorial atmosphere of what is really going on—and that we simply are enacting now what was voted for in 2016 and everyone can see what is happening. Reporting it in full will be very helpful.

Retained EU Law (Revocation and Reform) Bill

Lord Frost Excerpts

Committee stage
Thursday 23rd February 2023 Lords Chamber

[Lord Frost (Con)]

My Lords, I fear we are in for quite a repetitive afternoon as we work through proposals to exclude one law after another from this Bill.

I want to make a couple of broader points. First, we must remember what the Bill does. It defines a corpus of law inherited from the European Union and says that it needs to be reviewed by the end of the year. As a result of that review, laws will be dropped, retained or restated. There is an attempt being made to suggest that the only option is the first one—that all these laws that are an important part of our regulatory framework will somehow disappear and that people should be very frightened about that prospect. That is obviously not going to happen. This is a fiction.

[Noble Lords]

Oh!

[Lord Frost (Con)]

It is not in any way the Government’s intention to—

[Lord Clement-Jones (LD)]

How do you know?

[Lord Frost (Con)]

We know because the way that companies and employment rights are regulated cannot be changed overnight. I have no doubt that when the Minister comes the Dispatch Box he will make it perfectly clear that our intention is to maintain high standards in this area, and that is the approach that will be taken through this process. That is what is necessary.

Secondly, as many people know, before I came into this House I was a diplomat and a civil servant, and did other things. Under a Labour Government I ran the campaign against the working time directive, out of the Foreign Office. The then Labour Government did not like the working time directive and mounted what the then head of the TUC said was the most effective campaign against a piece of employment legislation ever. The Labour Government did it again on the agency workers directive.

Therefore, forgive me if I take with a pinch of salt the suggestion that the laws that we are debating, and each suggestion for an exclusion, are somehow a perfect emanation of the wonderful European law-making process. They are not, and the behaviour of the party opposite in the past on some of these specific pieces of legislation demonstrates that. The correct way forward is for the Government to review these laws en bloc in accordance with the provisions set out in the Bill and to come to a reasonable and appropriate assessment of them, not to give any of them quasi-constitutional status by excluding them from this review process. I am sure that is what the Minister will say, and we look forward to it.

[Lord Carlile of Berriew (CB)]

When the noble Lord made his transfer from diplomacy to contentious politics, did he expect that he would be coming to this House and suggesting that the practices that he had followed throughout his very distinguished career in the public services would involve excluding Parliament from a vast swathe of legislation when, as my noble friend Lady Meacher and the noble Lord, Lord Whitty, made clear a few moments ago, there are ways of doing this which do not exclude Parliament?

--- Later in debate ---

[Lord Frost (Con)]

Well, I had sat down. Nevertheless, of course, most of the time that I was a diplomat and civil servant, this Parliament was excluded on most of those provisions. Once the working time directive or agency work directive or whatever had been agreed at EU level, this Parliament was excluded. What we are doing is now giving the Government—and Parliament, let us not forget, through secondary legislation—the power to take a view on these things, and that is quite right.

[Baroness Andrews (Lab)]

My Lords, it is quite extraordinary that the noble Lord says that Parliament has been given power. We have been given no power. He has been in this House long enough to know that we are excluded from changing or even challenging secondary legislation. We have no purchase on this Bill, other than by the process we are going through now.