Electricity System Resilience (S&T Committee Report)

Lord Teverson Excerpts

Tuesday 3rd November 2015 Lords Chamber

[Lord Teverson (LD)]

My Lords, I am not a member of the committee but I am pleased to take part in the debate about this important subject. I would say one thing about the logic of the noble Viscount, Lord Ridley, on wind-power renewables not reducing carbon. He said that it was because there has to be an equal amount of back-up, but that logic does not work. Even if you need that amount of back-up, if it is not operating then it is not producing carbon. I do not understand the logic there. With the existing regime, even without renewables, the utilisation of generating capacity is, on average, about 50%. It is estimated by National Grid—these are not my figures—that intermittency with renewables becomes a real problem only when they are at about 20% of total generation, so I am not sure whether all that really adds up. However, I agree with the noble Viscount that we should absolutely be taking out coal. I am glad that he agrees with these Benches on that. We should also be getting on and substituting gas in the short term. He was absolutely right about that, too.

I want to concentrate on a couple of things in an excellent report, which is a good reference and has a number of important issues in it. I particularly like the space it gives to the demand side. As the noble Earl said so well, energy efficiency effectively solves the energy trilemma. It helps security, brings down bill costs—even if not necessarily the unit price—and decarbonises the economy. There has always been frustration for all Governments in how to turn that benefit and make that leap, without causing all sorts of unaffordably large public expenditure. Unfortunately, the Green Deal was not very successful in the coalition Government period. It is unfortunate that it seems to have disappeared altogether rather than being improved, which is what was needed. I hope we can move forward in some way in that area.

Demand reduction is key and the UK economy has been quite good at that in recent years, increasing energy efficiency by some 2% or 3% per annum, but the other part of demand is demand-side management. Again, the report tackles that subject, which has been very unfashionable. It has often been forgotten about and is only starting to be considered. In that context, the report specifically mentions capacity payments, which are particularly important. What has effectively happened is that the aggregation of demand-side management, which should really be competing with generation under the capacity payment, has been discriminated against. I remember from the coalition Government years that there were all sorts of issues in DECC about getting the two to compete properly that were legally quite difficult. I do not know but it certainly seems that it should be a priority of government to make sure that demand-side aggregation and management plays an equal part to that of capacity in the capacity mechanism.

The noble Earl was also right to say that most of the existing capacity mechanism has brought in fossil fuels, which is unfortunate. But demand-side management aggregation on the capacity mechanism would make absolutely sure that we do not build extra capacity. We actually need less and should solve it in that way, by taking out the peaks.

I also wanted specifically to mention interconnectors, which is an important area but has been relatively sleepy over the past few years. DECC may have got involved in this again in the last couple of years, so we now have interconnectors with Ireland, the Netherlands and France. We have opportunities, perhaps, for geothermal to come in from Iceland; that may be rather a big ask but I know we have a memorandum of understanding with the Icelandic Government. I would be interested to hear from the Minister where interconnector policy is going. That would not only seem to take out the peaks but has export potential for us as well. We should very much welcome it.

My last point on this excellent report concerns storage. As renewables grow and intermittency becomes a problem, energy storage will be part of the solution. There seems to be a frustratingly slow evolution of efficiency in energy storage. We have run out of capacity in dams and water, and all that side of energy storage. The Tesla corporation seems to be making good progress in the commercial field but I would be interested to hear from the Minister what investment the Government are stimulating in R&D at present. There is clearly a worldwide demand for this, especially in the UK. I commend the report fully and look forward to the Minister’s reply.

[Lord Hennessy of Nympsfield (CB)]

My Lords, I declare my membership of your Lordships’ Science and Technology Committee and thank our chairman, the noble Earl, Lord Selborne, for his skill in guiding us over some complicated and, for some of us non-scientists, rather stretching terrain.

Among the gifts that we like to think we possess as a people, there is a special cluster on which we pride ourselves: strategic thinking, horizon-scanning and forward planning. The subject before us, I regret to say, does not sit easily within this pleasing self-image for when it comes to the divine spark of electricity, we all too often believe “It’ll Be Alright on the Night”. We are an all-right-on-the-night nation in so many areas, including this one. Our optimism is sometimes burnished by our belief that just over the horizon lies a technological and scientific breakthrough that will match cheapness with abundance, leading to a bright, well-lit future that takes care of itself for generation upon generation, while avoiding harming the planet as a bonus. I am of course talking about nuclear fusion, which I remember reading about as a boy in the late 1950s.

In January 1958, science and energy journalists were invited to Harwell to be briefed on Project ZETA, the Atomic Energy Authority’s nuclear fusion experiment. They were enthused—they really were—and news of it fired up the national newspapers and straddled the globe. The Prime Minister, Mr Harold Macmillan, was on a Commonwealth tour at the time and when he reached New Zealand its prime minister, Walter Nash, asked Macmillan how ZETA worked—a testing question for a classical scholar. As the British high commissioner, Sir George Mallaby, recorded:

“‘Well’, said Mr McMillan, looking vaguely about him, ‘You just take sea water and turn it into power’”.

He paused for effect before adding:

“We are pretty good at sea water”.

We are still waiting for the promise of fusion to be fulfilled. Some experts think it might now be a mere decade away; others reckon that another 40 years should do it. All the rest of us can do is live in hope that the shining hour will come.

This evening I should like to concentrate, first, on the need for a consensual, long-term strategy for electricity supply, as outlined so well by our chairman. I am pleased that this will be central to the work of the new National Infrastructure Commission, for which I generally have high hopes. Secondly, I should like to anticipate briefly the array of threats that we may face as an advanced society, ever-more dependent on an uninterrupted supply of electricity.

There are certain thresholds that a country cannot afford to reach, let alone to cross. Electricity supply is one of them. As the committee’s report notes, last winter:

“National Grid procured extra capacity to raise the capacity margin from 4.1% to 6.1%”,

to,

“guard against a potential shortage of electricity”.

The committee stressed that it was,

“a matter for concern … that this extra capacity was put in place at short notice, at considerable cost, and in a way which conflicts with the decarbonisation agenda”.

The report goes on:

“This should not be allowed to happen again; it is not acceptable for an advanced economy, hugely dependent on electricity, to sail so close to the wind”.

As the noble Earl, Lord Selborne, emphasised, the committee also noted that but for the economic slowdown which followed the financial crash of 2008,

“capacity margins would have been much tighter”.

I must confess that it is a mystery to me why this question has lacked the bite it deserves in the Cabinet and across Cabinet Committee rooms over several Governments. In political terms, there are few surer or swifter sappers of public confidence in a Government than serious interruptions to electricity supply, as those of us who lived through the 1970s winters of discontent remember all too vividly.

In its own way, security of power supply is a first-order element in the defence of the realm. Indeed, given our justified anxieties about the nature and scope of future cyberattacks, it will rise higher still up the hierarchy in the risk register. Already, we are facing between 150 and 200 serious cyberattacks on government and business every month. Those wishing us serious, widespread and swift harm in the future will go for the electricity grid first. Our ever-greater reliance on the internet and on the coming internet of things will no doubt bring great and accumulating economic advantage, and improve personal consumption and comfort, but the risks will rise too.

I am a natural consensualist but not, I hope, an indiscriminate one. I am convinced that a sure and safe electricity supply is an area where consensus is justifiable and desirable. By all means let us have our arguments about the ingredients of our energy mix, and the respective roles of the state and private suppliers, but the evidence presented to the committee during its inquiry demonstrated a near-universal belief that electricity supply is, and must remain, a managed market in the United Kingdom. Muddling through, however smartly, is not enough. The problem we are dealing with today requires an enduring national effort, ranging from sustained political attention to large-scale investment, energetic R&D on the possibilities of electricity storage, the development of interconnectors with our neighbours, as other noble Lords have mentioned, and as many cyberdefences as our scientists and technologists can provide.

Short of a devastating solar event—which we considered, for reasons of completeness, I am sure—about which we could do very little, remedies are very much in our own hands. Let us seize them and avoid our becoming an outage society. If in future we go into the dark, our people will be unforgiving, and they will be right to be so.

[Lord Teverson]

My Lords, just before the right reverend Prelate speaks, I want to apologise to the House. I think I referred to “the noble Earl” when I meant the noble Viscount, Lord Ridley, when I addressed the House. I apologise for getting my titles wrong.