Long-duration Energy Storage (Science and Technology Committee Report)

Lord Lilley Excerpts

Thursday 9th January 2025 Lords Chamber

[Lord Lilley (Con)]

My Lords, I must begin by declaring that I do not have any relevant interests to declare. Noble Lords might think this is somewhat superfluous, but I do so because the BBC’s “Today” programme, on the rare occasions it reports my remarks on climate policy, prefaces them with a health warning that “Lord Lilley has interests in the oil and gas industry”—as it did after my recent debate on the costs of climate policy. I presume it does so to discredit my views. There is one small problem. Sadly, I have no interests in any energy company. I have had no financial interest in any energy company for over a decade. I have never had any interests in any energy company which would benefit from the policies I advocate in your Lordships’ House.

In the light of my experience, I was concerned that the noble Baroness, Lady Brown, who opened this debate, was asking for trouble in not recusing herself from chairing the committee during this report. I make it absolutely clear that I am not impugning the integrity of the noble Baroness. Her views on net zero are well known. I am certain she does not hold those views because of her financial interests. On the contrary, she holds those interests because they align with and inform her beliefs.

In my case, the BBC had to invent interests that I do not have. In the noble Baroness’s case, the newspapers have already pointed out the interests she properly declared. Ceres Power Holdings, which aims to become the world’s biggest source of green hydrogen, pays her £74,000 per year. Ørsted, which stands to benefit if its surplus wind is used to generate hydrogen, pays her £40,000 per year. I have no problem with that. The House benefits from noble Lords who have active interests in business and industry—not least the very distinguished record of the noble Baroness, Lady Brown of Cambridge.

However, I wonder how the House would treat a critic of climate policy who declared that they received over £100,000 from fossil fuel companies when they chaired a report advocating policies which would benefit fossil fuel companies. All I ask is that those on both sides of the debate accept the good faith of their critics and, in particular, do not traduce the motives of those such as me who want to apply a cost-benefit analysis to these issues as being paid shills or climate deniers.

Let us get on to the report itself. It can be described as an almost priceless report in the sense that there are almost no prices attached to any of its recommendations. My only objective in this and the other debates on net-zero policy is to establish the costs and benefits of the options being presented to us. If the option proposed is cheaper than relying on fossil fuels, that is great; the sooner the better. If it is more expensive, let us compare that extra cost with the social cost of the carbon emitted before we decide to go ahead. I get very suspicious when we are told that we must, as the title of the report puts it, “get on with it”, when we do not know what “it” will cost. Dieter Helm, in his report for the previous Government on their climate policy, said that premature investment in immature technologies has wasted up to £100 billion of British taxpayers’ money. Let us not repeat that folly.

I said that the report was almost priceless. But hidden in box 3 on page 17, it quotes the Royal Society report, which claims that, if we rely on renewables and hydrogen storage, the price of electricity in 2050 will be £60 per megawatt hour, which it says is “comparable to the average” price over the decade from 2010 to 2019. Normally we are told that it is going to be cheaper, but this time it is only comparable—so presumably it will be a bit more expensive. That is rather hard to explain because the most recent auction price for offshore wind was £82 per megawatt hour, indexed against future inflation. That does not include the cost of tackling intermittency and, for example, the cost of hydrogen storage.

The same box says that hydrogen storage will add an extra cost of £100 billion. Strengthening and enlarging the grid will cost another £100 billion. This almost equals the £210 billion the Royal Society says will be required to invest directly in wind and solar generation. Given that the main cost of wind is capital investment, how can almost doubling the capital costs required for a system that is driven purely by intermittent energy and therefore has to have so much expensive back-up result in a fall in the price?

I understand that the Royal Society and the committee are relying on barely credible reductions in costs in all aspects of the process. Sadly, the committee did not consider the benefit of relying for a bit longer on natural gas as a back-up while these cost reductions materialise. The cost of energy is crucial. We cannot overstate the impact high costs have on economic performance. We should not rush ahead and get on with something—the cost of which we do not know—when for a bit longer, and with comparatively minor extra emissions of natural gas, we can avoid those problems.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, since I am speaking after the noble Lord, Lord Lilley, and having listened to his contribution, I feel I must defend the BBC’s intention to contextualise his words. I note an article on the LSE’s website, dated October last year, headed “Misinformation in the UK’s House of Lords”, which focuses on statements made in the House by the noble Lord on the climate emergency, and speaks about

“the promotion of misinformation about climate change”.

The BBC is surely taking on board such analysis.

[Lord Lilley (Con)]

Is the noble Baroness saying that it is right for the BBC to say an untruth because she does not agree with what I say?

[Baroness Bennett of Manor Castle (GP)]

I am saying that the BBC is trying to—

[Lord Lilley (Con)]

Will she condemn the BBC for saying that I have interests in an oil and gas company when I do not, and have not for more than 10 years?

[Baroness Bennett of Manor Castle (GP)]

I have no awareness of the details of the noble Lord’s financial position, but I understand the BBC’s intention to try to make sure that it contextualises the information that is being presented to listeners.

I welcome the Minister to the House and to her position, and thank the noble Baroness, Lady Brown, and the committee for an excellent report and the entirely expected comprehensive and detailed introduction to it. It is a reminder that your Lordships’ House needs more people with a science and technology background, particularly those who are able to look at technological claims critically and, where necessary, sceptically.

I begin with paragraph 12 of the report, which talks about the global energy crisis as being an object lesson in our vulnerability to fossil fuel prices. Those who question the net-zero and 2030 electricity decarbonisation targets really need to focus on that paragraph. We need homegrown or regionally linked solutions, as well as sustainable ones. I pick up the points made by the noble Baroness, Lady Neville-Jones, about the evident state of our climate emergency now, and offer my sympathy to the 130,000 people forced to evacuate Los Angeles. I urge those who doubt the need for climate action to look at those images and question why they still have doubts.

The report covers the fact that the Climate Change Committee forecast that electricity demand will increase by 50% by 2035 and double by 2050 in its balanced pathway scenario. I want to go back further than the committee report does: can we afford that increase in electricity demand, economically or environmentally? Can we make other choices about the way our society works? We think of it in terms of bulk demand for electricity, but we can also think about it in terms of balancing the grid from moment to moment. How can we reduce demand and make sure that that is part of our story, as well as saying that we have got to have the storage?

Paragraph 129 of the report says that long and medium-duration storage is critical,

“but it will not always be the cheapest option”.

The committee stresses that energy efficiency, which I want to focus on, is often a cheaper option. The cleanest, greenest energy you can possibly have is the energy that you do not need to use. I fear that sometimes, when we reach out for technological solutions and think about growth as a mantra or religion, we fail to think about the fact that the cheapest, cleanest, best possible energy is the energy that we do not need to use.

In that context, your Lordships frequently hear expressions of excitement from the Government about the possibilities of so-called AI or large language learning models. One study suggests that a generative AI system uses around 33 times more energy than a machine running task-specific software—33 times more energy to get the same outcome. In 2022, the world’s data centres gobbled up 460 terawatt hours of electricity and the International Energy Agency expects this to double in just four years. Data centres could be using 1,000 terawatt hours annually by 2026.

It is interesting that Dublin, for example, has just put a moratorium on the construction of new data centres. Nearly one-fifth of Ireland’s electricity is currently used by data centres, and that figure is expected to grow significantly. Ireland is starting to ask the question: can and—importantly—do we want to do this?

Finally, perhaps we could do with a little bit of light relief. I suspect that a new word for your Lordships’ House, at least used in this context, is so-called AI slop, which is junk, nonsense material being created at enormous scale by AI-generating machines. There has apparently been a huge explosion of images of Jesus made out of shrimps. Do we want to create energy storage so that AI systems can do that?