Great British Energy Bill

Lord Wigley Excerpts

Committee stage
Tuesday 3rd December 2024 Lords Chamber

[Lord Wigley (PC)]

My Lords, I apologise for coming in late. I am here at the behest of the noble Baroness, Lady Finlay, who apologises to the Committee that she cannot be here to speak in support of Amendment 91, proposed by the noble Lord, Lord Alton. I very much support the points that he made.

The noble Baroness has asked me to make a brief contribution to the debate. I wholeheartedly agree with the points she has asked me to raise. These relate mainly to the importance of tidal power in both its devices, which we heard analysed a moment ago. Tidal range is one part of the possibility of creating tidal power; tidal stream is the other. Tidal stream has not yet been well developed and that could be something for the future, but tidal range most certainly has been. There is a predictability about it which gives it a tremendous advantage.

Tidal range devices use water height. The differential between high and low levels in the Severn, for example, is an enormously important factor. Using the same principles, there are locations suitable for lagoons as well—certainly around the coastline of Wales, in Swansea Bay and up around Anglesey. I understand that the Marine Energy Council recommends reaching a gigawatt of tidal stream capacity by 2035. This would be an enormous contribution.

The noble Lord, Lord Alton, spoke about the possibility that 7% of the UK’s electricity needs could come from the Severn Barrage. That would have the advantage of providing very important construction work, which could make a massive contribution to the south-east Wales economy. Given what has happened recently to the steelworks in Port Talbot, those jobs are very much needed. I hope that the Government will look seriously at this.

The case for this type of electricity generation is overwhelming. I hope the Government will give it the attention it deserves.

[Baroness Hayman (CB)]

My Lords, I rise very briefly, first to declare my interest and secondly to comment on some of the amendments in this group.

I have sat in the Minister’s chair, so I understand that he will not want to add a long list of exclusions or inclusions to the objects of the Bill. Even with that in mind, I hope that he will have listened carefully to the issues that have been raised. They are important and there is a theme to them.

I support the comments of the noble Baroness, Lady Boycott. Two issues have come out of the debate for me. The case for energy efficiency, insulation and heat pumps was made very powerfully by the noble Baroness, Lady Grender, and the noble Earl, Lord Russell. It is important that GB Energy looks to how it can provide a long-term, consistent environment for the policies that each Government pick up and put down. Industry, which has to be a key partner, finds this so frustrating and retrenches from investing in the skills training and expansion that are needed if we are effectively to retrofit the millions of homes in this country.

As we said in the debate on a Question earlier today, this is important not only for carbon reduction. We saw what happened from 2014: emissions from buildings fell by two-thirds after the change in policy. It is therefore really important that someone is boosting this and making sure that it is there for the long term to provide that stable environment. GBE will be in a position to do that, particularly if it is tied in with what we discussed in the Question earlier about the planning framework, again providing a clear and consistent road map for those who will need to invest in this.

The other thing that came out of the debate was that we have to be innovative, look to our strengths and be open-minded about sources of renewable energy. We have to understand that some of those sums that we had in our heads 20 years ago, about the cost of wave power, tidal power or whatever, have changed. They have changed financially but also in other dimensions, such as energy security and our priorities in energy. It is important that GBE is in there supporting those things.

I absolutely support Amendment 17. It may not be for the Bill but, as part of the innovative thinking we need from GBE, we need to look at such things as financial instruments. When we know that solar panels or heat pumps will pay off over the years but people are not going forward with them simply because they cannot afford the capital expenditure, it is important that we look not only at upping the government grant—helpful though that is in some instances. Houses can have mortgages on them for 10, 20 or 30 years. The costs of that investment can be spread in other and innovative ways, so I hope that the Minister can respond supportively to that amendment.

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[Lord Ravensdale (CB)]

My Lords, I declare my energy interests in the register. I will speak to my Amendment 19 and I thank the noble Baroness, Lady Noakes, for her support of that amendment. This amendment is very straightforward and we have had some discussion already in the second group around cost and the importance of cost and reflecting that, but I will put a bit of a different slant on that.

Noble Lords will be very familiar with the energy trilemma and balancing the competing demands of cost, sustainability and security. Any public organisation that has energy system responsibilities should be focusing on and balancing these objects. We look at NESO, for example. This was set up in the Energy Act 2023 with a cost, sustainability and security duty. Likewise, Ofgem has cost and security considered in its consumer duty and a sustainability duty was added as part of that 2023 Act as well.

However, when I reviewed the objects—I was very grateful for the education provided by the noble Lord, Lord Vaux, on the difference between objects and objectives and that is certainly something we need to come back to—cost was conspicuous by its absence. My first point is that we really should be considering system alignments and consistency across all those UK energy system organisations in terms of their objects and duties. Cost, sustainability and security should be running as a golden thread through all of them so that all those organisations are aiming at the same thing. Great British Energy is a central player in the energy system. It will be making significant investments of public money and aiming to crowd in private investment. Through these investments it will presumably be aiming to lower the cost of energy, which is a key government objective, as well as decarbonisation and security objectives.

My second point is on the importance of cost. We have already heard about the UK having the highest industrial electricity prices in the developed world. They are now four times those in the US. This not only has the obvious impact on bills but is a real brake on growth. I have spoken to a number of industrial companies recently which want to set up in the UK but cannot make the numbers stack up in their business cases because of our high electricity prices so are taking their business elsewhere. For the Government to achieve their number one mission of economic growth, they need to have a laser focus on reducing electricity prices and I know the Minister and the Government are very focused on this area. I hope the Minister can consider this small change and come back with a government amendment on Report which would really help align GBE with the critical priorities of the Government.

My Amendment 34 seeks to clarify the definition of security of supply. I look at Clause 3 and can see clear definitions for “clean energy”, “distribution”, “fossil fuel” and “greenhouse gas” but cannot see a definition for “security of supply”. Noble Lords have made the point in earlier debates about the importance of energy security. It is important to clarify this term: first, because the definition can be very broad; and, secondly, because it can mean different things to different people.

I have some personal experience here in that I recently chaired an energy security task force for the Midlands region and we spent a fair bit of time debating what we really meant by energy security. It is not as straightforward as it first appears. Many when considering this term would jump straight to fuel security and having sovereign energy so that we are not dependent on foreign states and can avoid the energy price spikes that we saw following the invasion of Ukraine. Of course, there is also price predictability: we could have fuel security but volatile prices remain. System reliability is also key so that people can access energy when they need it. Cybersecurity and physical security are other important aspects.

It is very important that in the primary legislation we are clear on what is meant by terms and help guide stakeholders, including business and industry, on how GBE will undertake its duties. I would welcome some further engagement with the Minister on how the Government would define this term and I again hope that he can consider this and come back with a government amendment on Report.

Finally, my Amendment 20 relates to local area energy planning. Great British Energy could play a really important role in energy system governance and I have been encouraged to hear from the Government the renewed focus on local planning, with a potential role for GBE in local power plans and local area energy plans which could bring in the focus on community energy, spoken to earlier by the noble Earl, Lord Russell, and the noble Lord, Lord Vaux.

Given the role of GBE, the Government have an opportunity with the Bill to set out in more detail how energy system governance will work at a local level. The story of net zero so far has been a top-down one—in essence, central planning from the Government, which needs to be done—but that transition will not succeed unless this is matched by a bottom-up governance approach from local areas to regions to the national level. So much of the knowledge rests in those local areas; for example, the condition of housing stock relating to energy efficiency measures, and local energy infrastructure.

Local area energy plans could be the foundation of how energy system governance is planned and undertaken at a local level. The issue we have seen over recent years with local area energy plans is their patchwork nature. We have many in place but with varying levels of quality and robustness in how they are set out within local authorities. I note that only 31% of local authorities are covered by local area energy plans. These plans need to be delivered to a consistent standard, with robust data and analysis, and consideration should also be given to how this can be aligned to meet the input requirements necessary for regional energy strategic planning to undertake that flow-up of governance.

Three things are needed: guidance from government on what a local area energy plan is, as has already been set out in Wales; funding for stretched local authorities to develop these plans; and an oversight function to co-ordinate and ensure that those local plans are joined up. There is a really good opportunity here. If GBE is the organisation that is going to take on all or some of those roles, setting that out in the Bill would be an excellent step forward in firming up that crucial local governance function to stakeholders, and unlock local planning of energy. I would be grateful if the Minister could perhaps give us more detail on the role of Great British Energy in this area.

[Lord Wigley (PC)]

My Lords, I will just intervene very briefly indeed in support of the noble Lord, Lord Ravensdale, with regard to Amendment 34 and the question of system reliability. In my previous incarnation I represented a constituency that had the Dinorwig pumped storage scheme. That scheme was brilliant in terms of being able to help guarantee the availability of electricity when it was needed. Half-time in the cup final was a traditional way of interpreting that, when there was a surge of demand. It had the capability of going from zero to full output in eight seconds.

The economic benefit of that is obvious in having a system that does not need to match the total maximum demand. The peaks of that graph are cut off and equalised in a way that makes a lower capacity, and therefore lower total capital investment, a viable proposition. The point I put to the Minister is this: a number of pumped storage schemes are being developed at the moment. There is a significant number in Scotland, including some of the larger ones, but they are also in Wales. They have been waiting for years to get the necessary information on which to base investment decisions. There is one using an old slate quarry hole in Talysarn in my former constituency. It is raring to go but, until it gets the details of the prices that will apply, it obviously cannot make an investment decision. We are talking about tens of millions of pounds, possibly hundreds of millions, and a benefit to the overall system.

In responding, can the Minister give any comfort by way of the timescale by when the framework for such decisions can be made? We really need to get on with it. I am quite sure that those in charge of Great British Energy will also need this information.

[Lord Hamilton of Epsom (Con)]

My Lords, I have always been a great supporter of small nuclear reactors, because it strikes me that they have the enormous advantage of supplying a locality and not getting involved, as the noble Earl, Lord Russell, said, with massive transmission costs. That would be all cut down, which has enormous advantage. Of course, Rolls-Royce is making small nuclear reactors to go into submarines, so we are probably better on the technology than most other people might be.

I have always had a worry that local people would react adversely to a planning application for a small nuclear reactor, because they would see it as devaluing their houses. Despite all-party support in Parliament, this will not stop local concerns raising their heads. I refer back to what the noble Earl, Lord Russell, said on that. I thought the answer was quite simply to offer people in the locality free electricity, and so immediately they would have an advantage. But from what the noble Lord, Lord Vaux, said when speaking to his amendment, that would not actually work. That is why I want to be absolutely clear about this. He seemed to say that wiring up all the local houses to the nuclear reactor—oh, he is shaking his head. Now I am confused. Could the noble Lord intervene and explain what he meant?

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[Lord Hunt of Kings Heath (Lab)]

I very much take that point. Clearly, my department is cognisant of costs. Much of our discussion with His Majesty’s Treasury on the resources made available obviously takes in those constraints. The point I made earlier is simply that we believe—and we are supported by NESO, the Committee on Climate Change and the OBR—that the best way to secure stable prices in the future is to charge on to clean power net zero.

[Lord Wigley (PC)]

Could the Minister give some comfort to those waiting to invest in pumped storage schemes about the timescale on which information will be available to enable them to do so?

[Lord Hunt of Kings Heath (Lab)]

My Lords, I cannot give the noble Lord chapter and verse today but will certainly write to him with what we can say in public.