Oral Answers to Questions

Michael Shanks Excerpts

Tuesday 12th November 2024 Commons Chamber

[Joe Morris (Hexham) (Lab)]

20. What progress he has made on achieving clean power by 2030.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

In just four short months, we have made rapid progress on achieving our mission for clean power by 2030. We have set up Great British Energy and announced its headquarters in Aberdeen, secured a record-breaking 131 renewables projects, and consented to record amounts of solar. We are getting on with delivering lower bills, energy security, good jobs and climate action.

[Catherine Atkinson (Derby North) (Lab)]

Rolls-Royce in Derby is an international leader in research on and the development of small modular reactors, and it is fantastic that the Government have acknowledged the role that SMRs will play in clean power generation, energy security and green jobs. In the Budget, we heard that the final decision on Great British Nuclear’s SMR competition will conclude next spring. Does the Minister agree that it is important for this opportunity to be seized as soon as possible?

[Michael Shanks]

I agree with my hon. Friend that nuclear will play a central role in our clean power mission, and will continue to be a critical part of our energy mix as we progress towards 2030 and far beyond. Great British Nuclear is continuing to drive forward the competition on small modular reactors, with bids currently being evaluated by the Department, and I look forward to having more to say about this in due course.

[Mr Speaker]

I call the Chair of the Energy Security and Net Zero Committee.

[Bill Esterson]

The last Government held a consultation on electricity market arrangements, but despite having said that that was their flagship policy in this area, they did not publish the results of that consultation. Does my hon. Friend agree that electricity and, indeed, energy market reform is crucial to achieving the Government’s stated 2030 clean energy targets and to reducing bills, and can he say whether this Government will publish the results of the last Government’s consultation and if so, when?

[Michael Shanks]

I congratulate my hon. Friend again on his appointment as Chair of the Select Committee—he brings a huge amount of knowledge and experience to the role—and I agree with him about the importance of reviewing electricity market arrangements. We are building on the last Government’s consultation, and we will have more to say in the months ahead. This is a crucial element of how we achieve clean power by 2030 and ensure that our energy system of the future is fit for what will be a different way of managing energy throughout the country. We will have more to say about that in the months ahead.

[Baggy Shanker]

Last week a report published by the National Energy System Operator noted that although the programme to roll out new small modular reactors was being developed for the mid-2030s, a 2030 roll-out date would in fact be possible. Given that SMR technologies hold exciting and significant potential for investment in jobs and infrastructure in constituencies such as mine, has the Minister considered the value of bringing the roll-out forward to 2030?

[Michael Shanks]

My hon. Friend is right to say that nuclear will play a vital role, and that it not only delivers on our energy security but creates good, well-paid jobs. Unlike the last Government, who in 14 years did not deliver a single nuclear project—there were many consultations and processes, but not a single nuclear power station was built—this Government are getting on with delivering a nuclear future.

[Joe Morris]

Last week’s report from the National Energy System Operator showed that not only is clean power by 2030 achievable, but it can lead to lower bills and more secure systems. Does the Minister agree that the only way to protect bill payers permanently is to go as far and as fast as possible towards our clean power mission by 2030?

[Michael Shanks]

My hon. Friend is absolutely right. The report published by the independent National Energy System Operator laid out not only that reaching our clean power mission is entirely achievable, but that it will bring down bills. The importance of the report is that it set the course for how that is possible. The reality, which the Conservative party refuses to accept, is that the only way to get us off the rollercoaster of high bills is to deliver at pace the clean energy that we know will deliver energy security and climate leadership, and bring down bills for people right across the country.

[Tom Tugendhat (Tonbridge) (Con)]

I am delighted that the Minister is setting out that the report promises an extra £40 billion of investment a year in the energy sector and, presumably, the taxes to go with it, which will of course come from the businesses that are paying for everything else in the Budget that has just gone by. Is there anything at all in his proposals that will actually bring down the cost of energy and not be replaced by taxpayer funding? It appears at the moment that there is nothing, and energy prices are already going up.

[Michael Shanks]

I would encourage the right hon. Gentleman to read the NESO report, because it sets out in great detail not only that clean power is achievable by 2030, but that it will lead to lower bills. What he says about investment misses the point: in the last few weeks, we have announced billions of pounds of private sector investment in these projects; indeed, Scottish Power has announced today that it will provide £1 billion. Companies are choosing to invest in this country, whereas they did not under the Conservative party. The reality is that once upon a time, the Conservatives recognised that the drive to net zero was important. They have abandoned that commitment now.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

I thank the Minister for agreeing to meet the OffSET—offshore electricity grid taskforce—group of MPs later today; we are very much looking forward to the meeting. Does he recognise that achieving the 2030 deadline set out in the NESO report requires an acceleration of the process, which, in turn, is dependent on much higher levels of public consent?

[Michael Shanks]

I recognise the hon. Gentleman’s point, and I am looking forward to meeting him and his colleagues this afternoon to discuss the particular issues in his area. We need to build more network infrastructure across the UK to make this endeavour a reality, but he is right: we want to bring communities with us on this journey. That is why we have said that we are looking again at what community benefits will look like, building on some of the work that the previous Government did in consulting on this issue. Crucially, however, if want to bring down bills and deliver energy security, we will have to build the infrastructure, and that is what this Government are committed to doing.

[Wera Hobhouse (Bath) (LD)]

The Minister knows well the Liberal Democrats’ commitment to community energy. Will the Government establish a clean community energy scheme, look at the barriers that currently face community energy projects and look at supporting the National Grid to deliver community energy?

[Michael Shanks]

The hon. Lady and I have had a number of conversations, and I recognise her commitment on this issue. We have committed in the local power plan to delivering investment in community energy across the country. Importantly, we want not only to invest in schemes, but to deliver across Government the mechanisms needed to make it more possible for communities to deliver such schemes. That will build capacity in communities so that we can see more community energy.

[Sir Desmond Swayne (New Forest West) (Con)]

What is the beef behind the Government’s reluctance to embrace with enthusiasm locally generated community energy? Why did they vote against the amendment tabled to the Great British Energy Bill by the hon. Member for Bath (Wera Hobhouse)?

[Michael Shanks]

I think the right hon. Gentleman thinks that was a “gotcha” question, but, of course, the Conservative party did not vote for the Bill at all. Amendment or not, I do not think he can really speak about what Great British Energy might deliver, because, despite it being one of the most popular policies at the last election, the Conservatives failed to bother to vote for it.

[Mr Speaker]

I call the shadow Secretary of State.

[Claire Coutinho (East Surrey) (Con)]

Last week, the National Energy System Operator published a full systems cost analysis of the Secretary of State’s flagship project to carbonise the grid by 2030. This morning, the Secretary of State said on several media outlets that the report shows that his plans will lower bills. I remind the House that the report assumes that gas prices are 40% higher than the Department’s own estimates, that the price of carbon price is at least double what it is now, that the Government can commission more offshore wind in the next two years than in the last six combined without moving prices, and that they can build the grid at a pace we have never seen before in this country, without any delays. Even if all that is achieved, page 78 of the report shows that the cost of the system will be higher. For clarity, would the Minister like to repeat at the Dispatch Box the Secretary of State’s claim that the NESO report shows that Labour’s system will lead to a lower cost of electricity?

[Michael Shanks]

What the shadow Secretary of State has just outlined quite coherently is that the Conservatives have no ambition in this space whatsoever, but we do. I am very happy for the right hon. Lady to outline where our ambition is. We will build faster than the previous Government, although I have to say that that would not be difficult. The shadow Minister sitting next to her, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), said quite clearly at their conference that the previous Government had built infrastructure far too slowly, and their former Energy Minister, the right hon. Member for Beverley and Holderness (Graham Stuart), said that their onshore wind ban was “always mad”. We are quite happy to pick up where they left off and deliver the clean power that this country needs.

[Claire Coutinho]

This is the ministerial team who told the electorate they were going to cut their bills by £300, without doing any homework to find out how those plans would work. They voted against our amendment to hold them to account on their own pledge just two weeks ago, and now they are trying to claim that the NESO report shows that their approach will lower bills when in fact it shows in black and white that the system will be much more expensive. Does the Minister not see that if they follow this plan, we will be a warning, not an example, to the rest of the world and that the British people will be colder and poorer as a result?

[Michael Shanks]

Time and again, the Conservatives run away from their record on this in office. The reason why people right across this country are paying more on their energy bills is that the Conservatives did not get us off the rollercoaster of fossil fuel markets, but we are now moving at pace. The right hon. Lady may want to keep us in the vulnerable state where we are reliant on international gas markets, but we are determined that we will not do that. We will bring down bills and deliver energy security. I am not ashamed to say that we will move with great ambition to deliver what this country needs and to deliver the good jobs that go with it.

[Douglas McAllister (West Dunbartonshire) (Lab)]

4. What steps he is taking to establish Great British Energy.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

We are moving at pace to set up Great British Energy. So far we have appointed the start-up chair, Jürgen Maier, we have announced that the headquarters will be in Aberdeen and we have progressed the Bill through the House of Commons. This builds on the first partnership announced for Great British Energy, with the Crown Estate, and on a recent new deal to collaborate with Scottish public bodies. We are getting on with the job of delivering 21st-century public ownership for the British people.

[Douglas McAllister]

Every family and every business in my constituency paid the price of 14 years of Conservative failure with rocketing energy bills because the last Government failed to invest in clean energy. The Opposition continue to oppose Great British Energy. Does the Minister recognise the absurdity of their argument that they are quite happy with foreign public ownership as long as it is not UK citizens who own our energy?

[Michael Shanks]

My hon. Friend makes a good point. It is important to remember that, despite what the Conservatives might have us believe, Great British Energy is overwhelmingly popular with the British people. That includes the people in Scotland, because of course it was not just the Conservative party who did not vote for Great British Energy; surprisingly, the Scottish National party also failed to vote for a publicly owned champion in our energy space. We are getting on with delivering jobs and growth, delivered with public ownership through Great British Energy.

[Neil O’Brien (Harborough, Oadby and Wigston) (Con)]

Before the election, Labour said that Great British Energy would cut electricity bills by £300. After the election, the Labour Government voted against writing that into law and instead took away people’s winter fuel payments and made their bills more expensive. The Institute for Fiscal Studies has now said that their policies are fundamentally raising prices for consumers to the tune of £120 per household, and we know from the NESO report that this will get worse. Even if they triple the pace of wind roll-out, double the pace of grid connection and make other heroic assumptions, all of this is going to bump up costs further, is it not? We are doing this from the basis of having the high electricity prices in Europe. What assessment has the Minister made of the impact on British industry?

[Michael Shanks]

Question after question from the Conservatives shows that they do not recognise the part they played for 14 years in why we are paying higher bills than ever before. We are the only party with an ambitious plan to get us off the volatile fossil fuel markets. The Conservatives used to believe that, in our drive to net zero, we should build this infrastructure for the long term. They are now opposing it, but they will have to tell their constituents why they want to leave them exposed to rising bills.

[Jo White (Bassetlaw) (Lab)]

5. Whether he plans to support the development of fusion power plants connected to the grid.

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[Dr Andrew Murrison (South West Wiltshire) (Con)]

8. Whether he has had recent discussions with National Grid on diversifying the energy mix of its network.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

The Government regularly meet stakeholders to discuss the development of our energy infrastructure. Last week, the Government received advice from the National Energy System Operator outlining its advice on the pathway towards clean power by 2030. Later this year we will publish our 2030 action plan, which will set out details on the future of our energy mix.

[Dr Murrison]

Offshore wind has been a real positive for our energy security and grid independence, but unfortunately not when the wind does not blow. Given the election of a President who tells us he is going to “drill, baby, drill,” what revision does the Minister anticipate to his timetable towards net zero?

[Michael Shanks]

As I said in my previous answer, later this year we will outline our action plan on how we will deliver on the 2030 target; there is no change to our timetable in that regard. The right hon. Gentleman raises a good point about what happens when the wind does not blow and the sun does not shine, and about ensuring we have a mix in our energy system. That is why we remain supportive of nuclear and why we have recently announced investment in long-duration energy storage, to ensure we can capture energy and use it when we need it.

[Jenny Riddell-Carpenter (Suffolk Coastal) (Lab)]

I was delighted by Ofgem’s announcement this morning that it now recommends that the proposed Nautilus interconnector should be located at the Isle of Grain, not on the Suffolk coast. Since I have been elected, I have made firm representations to the Minister and Ofgem, including via its consultation, that the Suffolk coast should not have been considered and brownfield sites should have been considered first. Will the Minister meet me to discuss other National Grid projects in my constituency?

[Michael Shanks]

Ofgem has announced today decisions on a number of interconnectors. Those are decisions for Ofgem and not for the Government. We have recently announced the launch of a strategic spatial energy plan, to ensure that we plan such projects holistically, across the whole of the United Kingdom, and take into account a number of schemes when planning future energy, such as those my hon. Friend mentions in her constituency. I will continue to have discussions about that with Members from across the country.

[Nick Timothy (West Suffolk) (Con)]

China’s largest offshore floating wind turbine company, Ming Yang Smart Energy, plans to build its first manufacturing plant outside China in Scotland. Ming Yang benefits from huge subsidies in China, but there are serious questions about energy security and national security. The Secretary of State says he wants to end reliance on foreign autocrats, but when he was asked about this on the radio this morning, he had no answer. Will the Minister rule out allowing any turbines that might be controlled by hostile states?

[Michael Shanks]

We are encouraging investment in the UK to build the infrastructure that we need in the future. Just today, we have announced the clean industry bonus that will give as much support as possible to companies to build their supply chains here in this country. We will continue to look at supply chains and, of course, we take seriously the companies, across the range of business projects, that are investing in this country. There is a series of processes already under way across Government. Whenever anybody wants to invest in this country, those processes will be followed in the usual manner.

[Ms Polly Billington (East Thanet) (Lab)]

Mr Speaker, will you and the Minister give the House an opportunity to celebrate the £1 billion of investment announced today in offshore wind in this country? It will provide jobs across the country, as promised by this Government, which the British people are not used to after the past 14 years. Will the Minister meet me to discuss the infrastructure required to connect that clean, secure energy to our homes, in particular the Sea Link project that could have an impact in my constituency?

[Michael Shanks]

My hon. Friend is right to highlight the fantastic announcement today by ScottishPower of £1 billion of investment here in the UK, building the infrastructure that we need, and delivering jobs and skills in this country as well. It is one of a number of announcements that we expect, because we are not agnostic in this Government on delivering the industrial strategy that we need. My hon. Friend the Minister for Industry is working on that at the moment. We will deliver the jobs in this country to build the clean power of the future. We will deliver good, well-paid jobs and the energy security we need.

[Andrew Pakes (Peterborough) (Lab)]

9. What steps she is taking to support job creation in the renewable energy sector.

--- Later in debate ---

[Joani Reid (East Kilbride and Strathaven) (Lab)]

12. What assessment he has made of the potential impact of Great British Energy on job creation.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

The energy transition presents an incredible opportunity for job creation right across the UK, particularly in our industrial and coastal communities. Through Great British Energy, we will build on Scotland’s reputation as a world leader in energy and secure long-term, well-paid jobs in the industries of the future.

[Joani Reid]

I recently had the privilege of opening an extension to the Kype Muir wind farm in my constituency. The extension alone will generate enough power for 53,000 homes for 30 years. My constituency is also home to part of Whitelee, the largest onshore wind farm in Europe. However, not one of those turbines was manufactured in the UK, let alone locally. What steps is the Minister taking to develop UK manufacturing capacity in that area?

[Michael Shanks]

I know well my hon. Friend’s constituency—it is next door to mine—and both wind farms she mentions. She says quite rightly that, for all the expansion in those technologies over recent years, very few of those jobs, particularly in manufacturing, have been in this country. We will do everything we can, through Great British Energy and the clean industry bonus we have announced today, to grow our domestic supply chains, build industry in this country and win jobs for Britain.

[Harriet Cross (Gordon and Buchan) (Con)]

Last week, just days after the Budget, Apache announced that it would exit the North sea by 2029. It said:

“The onerous financial impact of the energy profits levy…makes production…beyond 2029 uneconomic.”

What assessment have the Government made of the impact of those policies on current jobs in north-east Scotland, and how will Great British Energy compensate for the loss of those jobs?

[Michael Shanks]

We are working with industry in the north-east of Scotland to ensure that this is a just and prosperous transition. We have announced our next steps of responding to court judgments, and a consultation is open at the moment. We will have more to say about that in the months ahead. The hon. Lady must recognise that if she wants to see investment from Great British Energy, she might actually have to support its creation in the first place. The Conservatives cannot have it both ways; either they want a public energy company to invest in the jobs of the future—

[Tom Tugendhat (Tonbridge) (Con)]

We don’t.

[Michael Shanks]

Or they do not, as her right hon. Friend has just confirmed from the Back Benches. She cannot have it both ways.

[Christine Jardine (Edinburgh West) (LD)]

T1. If he will make a statement on his departmental responsibilities.

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[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

My hon. Friend is right; there are good projects right across the country that we hope to invest in in the lead-up to delivering in 2030. The NESO report clearly set out that our aim is achievable. The Conservative party wants to continue having the arguments of the past; we are determined, with ambition, to deliver on the arguments of the future.

[Mr Speaker]

I call the shadow Secretary of State.

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[Lee Anderson (Ashfield) (Reform)]

T3. Forests in North America are being chopped down to supply wood to burn at Drax power station, at a cost of £2 million a day in subsidies, while pensioners will perish this winter. Does the Minister agree that it is time to end this net zero madness and admit that fossil fuels are “a gift of the God?”

[Michael Shanks]

It perhaps will not surprise the hon. Gentleman or the House that I am not going to agree with his final point. Net zero is incredibly important to deliver climate leadership, lower bills and the jobs of the future. But on biomass, we rightly expect full compliance with all regulatory obligations on biomass, and consumers rightly recognise the high standard of accountability from generators.

[Lee Pitcher (Doncaster East and the Isle of Axholme) (Lab)]

T6. In my constituency there are nearly 1,500 members of the mineworkers’ pension scheme. I congratulate my hon. Friend the Minister on the superb decision made in the Budget to return the investment of the reserve to them. I understand that this will mean a 32% rise in their weekly pension. Can the Minister confirm that this is correct?

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[Gareth Davies (Grantham and Bourne) (Con)]

Conservative Members will never stop holding the Government to account for their pre-election promise to cut energy bills by £300. Have civil service officials conducted any modelling whatsoever that can legitimise that figure?

[Michael Shanks]

We arrived at the figure through independent analysis. We stand by the reality that the only way to bring down bills is to commit to our 2030 target. The National Energy System Operator backs that, but the Conservative party fails to support that action. The hon. Member therefore must explain what the Conservative plan is for reducing bills for people who are paying more than they have ever paid.

[Tim Roca (Macclesfield) (Lab)]

My constituents understand that tackling the climate crisis and getting lower bills go hand in hand, and they are excited about Great British Energy. Will GBE invest in community energy projects in places such as Macclesfield?

[Michael Shanks]

My hon. Friend is right to make a point about community energy. The local power plan that we are committed to will deliver community energy projects throughout Great Britain. I am sure that Macclesfield has some fantastic projects that Great British Energy will look at. We want to unleash the potential of community energy across the country.

[Greg Smith (Mid Buckinghamshire) (Con)]

National Grid’s rationale for rebuilding East Claydon substation is based on speculative applications, not consented real schemes. Will the Minister therefore meet me to find a way to get National Grid more grounded in reality rather than speculation?

[Michael Shanks]

I am happy to look at specific cases, but the Secretary of State’s role as final decision maker on some planning applications means that I cannot comment on them. However, generally speaking, the hon. Member makes an important point about looking at how we plan projects holistically throughout the country. That is why we have announced the first ever spatial energy plan for the whole of Great Britain.

[Richard Burgon (Leeds East) (Ind)]

The devastating scenes of flooding in Spain remind us all of why urgent investment is needed to deal with the deadly consequences of climate change. Does the Minister agree that that investment should be paid for by the polluting companies that have caused the climate crisis?

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[Alison Bennett (Mid Sussex) (LD)]

Bolney in Twineham parish in my constituency hosts the Rampion windfarm substation, which leads to several battery energy storage solution applications. What reassurance can the Minister give my constituents about the adequacy of the regulatory framework?

[Michael Shanks]

Batteries will play an important role in our energy mix in the short duration storage that we need. We will continue to look at whether the regulatory arrangements are sufficient. Obviously, we want all the applications to be for safe projects. The regulations are in place to ensure that. If we need to do any more work, we will happily look at that.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

We had a very successful all-party group meeting last week on floating offshore wind in the Celtic sea. I know the Minister is supportive and ask him to consider mechanisms such as ringfencing contracts for difference and investment in ports to kickstart the investment in the Celtic sea.

[Michael Shanks]

My hon. Friend is right to raise the important potential of the Celtic sea in our green energy transition. I will be in Wales tomorrow to speak at a green energy conference on exactly that question. There is huge potential in floating offshore wind. We want to bring the manufacturing jobs in the supply chain to this country as well, which is why we launched today our clean industry bonus to bring that investment here to build the factories of the future and deliver the good, clean jobs of the future.

[Alicia Kearns (Rutland and Stamford) (Con)]

The wind industry has rightly agreed a standard compensation package for rural communities with big wind plants. The solar industry, however, is, unsurprisingly, busy whitewashing Uyghur slave labour in its supply chains rather than doing that. If it will not act, will the Government step forward and recognise that they must support rural communities by creating a standardised compensation programme?

[Michael Shanks]

The hon. Lady has pursued this and several other issues to do with the solar industry for a long time. We are currently looking at all the options, particularly around community benefits, to ensure that they are at a scale—following on from the previous Government’s consultation on whether they should be compulsory—that genuinely benefits communities.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

My constituent Konnie Huq, with Arts Council and Lottery funding, has compiled a kids’ climate guide, with Jamie Oliver among the contributors. Will Ministers join forces with her to get it out there, preferably to every school in the country, because we have got to start young?

[Patrick Spencer (Central Suffolk and North Ipswich) (Con)]

I met with National Grid yesterday and communicated my concerns about the Norwich to Tilbury line but we remained constructive and talked about community benefit schemes. Unfortunately, it told me that the Government were dragging their feet on defining community benefit schemes. Can the Minister update the House on when they will bring forward guidance, and can he promise that a community benefit scheme is a real, positive economic benefit for my residents who are impacted by the pylons?

[Michael Shanks]

Clearly I cannot speak for National Grid but I can speak for this Government and in four months we have moved as quickly as possible on what a community benefit scheme will look like for network infrastructure as well as for generation projects. The Conservative party had 14 years to put in place a different scheme and did not; in four months we are moving as quickly as we can.

[Perran Moon (Camborne and Redruth) (Lab)]

As Ministers know, the European powerhouse of critical minerals is Cornwall, including its vast quantities of lithium, essential for our transition away from fossil fuels. Will the Ministers agree with the industry’s call for a target of 50,000 tonnes of lithium?

[Chris Law (Dundee Central) (SNP)]

Ahead of the general election the Labour party was warned that its plans for the North sea in Scotland would lead to up to 100,000 Scottish job losses. Last week this became a reality when the US oil firm Apache said that it would end all its operations in the North sea by the end of 2029, citing this UK Government’s Budget and tax regime. Can the Minister explain why this UK Government sees the jobs and livelihoods of oil and gas workers in the north-east of Scotland as expendable?

[Michael Shanks]

I do not believe that at all. This Government are committed to a just and prosperous transition. The reality is that 100,000 jobs have been lost in the oil and gas industry in the past 10 years. If we do not recognise that there is a transition under way and put in place the measures to produce the jobs of the future, we will have more losses. The party that the hon. Member represents could have done something about that by supporting Great British Energy headquarters in Aberdeen but he failed to show up and vote for it.

[Noah Law (St Austell and Newquay) (Lab)]

I declare an interest as a chair of the all-party parliamentary group for critical minerals. Domestic supplies of copper and, of course, Cornish tin are critical to the UK’s energy security. What consideration has the Minister given to ensuring that copper and tin are recognised as critical minerals?

Energy Infrastructure Planning

Michael Shanks Excerpts

Wednesday 6th November 2024 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

The Minister for Energy Security and Net Zero, my noble Friend Lord Hunt of Kings Heath OBE, has today made the following statement:

This statement concerns an application for development consent made under the Planning Act 2008 by West Burton Solar Project Ltd for the construction, operation, maintenance and decommissioning of a solar photovoltaic array electricity generating station situated in Lincolnshire.

Under section 107(1) of the Planning Act 2008, the Secretary of State (Ed Miliband) must make a decision on an application within three months of the receipt of the examining authority’s report unless exercising the power under section 107(3) of the Act to set a new deadline. Where a new deadline is set, the Secretary of State must make a statement to Parliament to announce it.

The current statutory deadline for the decision on the West Burton Solar Project application is 8 November 2024.

I have decided to allow a short extension and to set a new deadline of 24 January 2025 to allow time for necessary public consultation on potential variations to the application.

The decision to set the new deadline for this application is without prejudice to the decision on whether to grant or refuse development consent.

[HCWS195]

Energy Rebates: Highlands and Islands

Michael Shanks Excerpts

Wednesday 6th November 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I thank the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) for securing this incredibly important debate. He has the pleasure of representing one of the most beautiful parts of Scotland, to which I enjoy going on holiday often. It is great to be discussing this long-standing issue for the highlands and islands of Scotland, which, as he mentioned, was also raised by former Members.

The context of this discussion is important. Energy bills are too high for too many people right across the country, not just in the highlands and islands. This Government have made it clear from the outset that we want to put in place an energy system that delivers lower bills permanently; removes the price spikes that all our constituents, including those in the highlands and islands, have faced over the past few years; and speeds up the transition to home-grown clean energy.

The hon. Gentleman made the point, as have others, that the north of Scotland plays an important role in delivering clean energy at the moment. That brings us back to a conversation that we have had in this place a number of times—indeed, in the previous debate, I recruited the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) to help me with it—on community benefits. We need to do much more for the communities that host this nationally important energy infrastructure and the network infrastructure that goes with it to get power across the country. They should feel benefits from that in their bills and their local communities, and we are looking at that.

The creation of Great British Energy, the first publicly owned energy company in this country for 70 years, is about harnessing clean energy and investing in communities, and of course it will be headquartered in Scotland. I know that the hon. Member for Moray West, Nairn and Strathspey and his SNP colleagues did not support the Great British Energy Bill, but I hope that in time they will see the benefit of Great British Energy delivering a greater quantity of cheaper energy right across the UK, which will bring down bills for everyone, wherever they are.

The hon. Gentleman made an important point about locational pricing. If we were to design an energy system from scratch, we would not design the system we have at the moment, which is the legacy of electricity infrastructure being built in different places, at different times and in different ways across this country for a century. Our ambition is to deliver a lower-cost, renewables-based energy system, so we are considering what reforms to the energy market will look like to enable electricity prices to better reflect local conditions. That could have a significant impact on communities like the one the hon. Gentleman represents, recognising that there should be some relationship between where energy is generated and the price people pay for it.

There are potential reforms on the table. The previous Government started the consultation and we have picked it up. Many hon. Members will be aware of the options. They include the possibility of zonal pricing, but it is important that we balance such options with potential capital investment impacts, so there is detailed work going on before we reach any decisions. Reform of the electricity market does not have to be defined simply by locational pricing; we will look at a number of other reforms to the national pricing model, and we continue to work closely with the regulator, Ofgem, and the new publicly owned National Energy System Operator to look at how they might work.

The hon. Gentleman’s point about transmission and distribution costs comes up in debates inside and outside this place. It is important to recognise the difference between the two. Electricity network charges are paid for connecting to, and using, the electricity network. They are paid by consumers across the country, both industrial and domestic, through the standing charge on their energy bill. Transmission charges are based on the costs that users impose on transmission by connecting in different locations, which means that there are higher charges for those areas that require energy to be transmitted a long distance. However, as we have discussed, transmission costs are generally lower in the highlands and islands than in other parts of Great Britain because Scotland is a net exporter of energy.

As the hon. Gentleman pointed out, the difficulty comes with the distribution cost, which is the cost of supplying households in each area with electricity. It is based on the complexities of how we get electricity to individual households, so places like the highlands and islands face higher distribution costs, for obvious reasons: the mountainous terrain, sparse population, distance between houses and poor weather conditions all contribute to those costs being some of the highest in the UK.

[Graham Leadbitter]

On the point about transmission charges versus distribution charges, transmission is, in effect, distribution to the rest of the UK. Energy is transmitted for people to purchase at the other end. It does not cost any less to do that—in fact, it costs more. Purchasing energy hundreds of miles away from where it is created, but paying less to receive it, seems completely inequitable.

[Michael Shanks]

I think that would be true if transmission charges were higher in Scotland than in other parts of the UK, but that is not the case. Distribution charges might be lower in certain parts of the rest of the UK, but the transmission charges are higher, taking into account exactly that point.

We would like to get the grid into a place where we have much more generation capacity being built next to population centres, as well as the investment in the highlands and islands and the North and Celtic seas, but there is no doubt that the grid we will need to build in the future will be very different from the one where we built a gas or coal power station next to a city. We do have to wrestle with these questions of how we get power to the right place.

We also have to take into account how to build in capacity for when renewables are not generating. Parts of Scotland may well generate more electricity than they can use, but not always—not 24/7, 365 days of the year—so the whole grid has to be part of the answer. As the hon. Member referred to, one solution is the hydro benefit replacement scheme. It provides annual assistance of about £112 million to reduce distribution costs for domestic and non-domestic customers in the region, which works out at around a £60 annual reduction in household bills.

Many hon. Members have raised the really important point of standing charges, which are considerably higher in the highlands and islands than in many other places. The setting of standing charges is a commercial matter—they are not fixed by Government—and is regulated by Ofgem. However, the Government have taken the view, as we made clear during the election and in subsequent weeks, that the burden of standing charges on energy bills is far too high. We have had a number of conversations with Ofgem and others about that, including on the amount of variance between standing charges across the UK.

We are committed to lowering standing charges overall, and we have been working constructively with Ofgem on that. In August, Ofgem published a discussion paper addressing many of the issues on standing charges. It sets out the options for how we can reduce them, including moving some supplier operational costs off the standing charge and on to the unit rate, which would rebalance some of the issues raised by the hon. Member; increasing the variety of tariffs available to consumers in the market; and, in the longer term, reviewing how system costs are allocated. That will affect consumers in many ways, but in the meantime we want to work with Ofgem on any practical steps we can take to reduce standing charges as much as possible.

Before this debate, we had a debate on the wider questions around fuel poverty. I will not go over many of those points again, but I will just make the point that many aspects of fuel poverty are devolved to the Scottish Government, which in the autumn Budget last year received the biggest settlement since devolution. We have also announced £1 billion through the warm home discount, which provides an annual £150 rebate off bills for low-income households. That has a Barnett impact and there is therefore money for the Scottish Government to invest if they wish to do so.

The household support fund is an England-only scheme to provide support for those most in need. Of course, it is for the devolved Governments to decide how they want to allocate the additional funding, and the Scottish Government have not implemented a like-for-like scheme, but they do have a wide range of support for households in response to the cost of living crisis.

As I said, we had a very good debate just before this one on fuel poverty. The Government are committed to tackling it. Policy in this area is devolved in Scotland, but this is one of many questions about how we bring down costs for all consumers right across the UK. In our plan for clean power by 2030, we commit to delivering what will be cheaper energy—that was confirmed by the NESO this week. It will require a huge amount of effort, but as part of that we are committed to looking at the review of energy market arrangements as well.

This is a complex issue with a number of layers to it. I thank the hon. Member for Moray West, Nairn and Strathspey for raising it again. The challenge of how we lower bills for all is part of the energy trilemma that we are facing around how we demonstrate climate leadership, improve our energy security and lower bills in the long term. It is one that we are tackling head on, and we are determined as a Government to ensure that we do what we can to lower bills for all households across the country—in the highlands and islands, and right across the UK.

Question put and agreed to.

Fuel Poverty

Michael Shanks Excerpts

Wednesday 6th November 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I thank all right hon. and hon. Members for participating in the debate. I particularly thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for securing the debate and for his commitment on this issue in debates over many years. I know that it is a considerable issue in his constituency, where I think 31% of households are in fuel poverty, and he is right to raise it in this House. I always appreciate conversations with him, including our recent conversations on many of the topics that have been raised today.

I agree on the importance of this debate on tackling fuel poverty, although I should say at the outset that fuel poverty is devolved across the UK. Certain things that I will speak about relate to the UK Government’s responsibility for fuel poverty, which focuses on England. In the Budget last week, a considerable amount was assigned to the devolved Administrations, including one of the biggest devolved settlements for the Scottish Government in many years. I am sure that the right hon. Gentleman will raise these issues with colleagues in the Scottish Parliament to get much-needed funding to projects in Scotland as well.

On devolution, it is also important to say that we measure fuel poverty in very different ways across the country, with different metrics and targets for how we identify it. In Scotland, the metric for fuel poverty is the same as that used in England to measure energy affordability. It includes deeming a household fuel-poor if it has to spend a certain proportion of its income after housing costs on energy, which is a slightly different figure from the one used in Scotland.

Nevertheless, much of what we have heard today is true across all parts of the UK. Many hon. Members made the point that the choice between heating their home and feeding their family or paying other bills is a stark one for any family. In a country as wealthy as ours, that should not be a choice that families have to make.

I welcome the point made by the shadow Minister and others that we can all work together to move forward on the issue. However, we need to take more action than has been taken in the past 14 years. That is why our manifesto committed to slashing fuel poverty and delivering our warm homes plan. We have already taken the first steps in delivering that. In the Budget last week, the Chancellor committed £1.8 billion to support fuel poverty schemes, helping over 225,000 households to reduce their energy bills by over £200. We have announced that we will consult this year on increasing the minimum energy standards in the domestic private rented sector: 35% of all those in fuel poverty in England are in the private rented sector, so it is vital that we provide as much support as we can.

I will pick up on several points raised during the debate, but the critical point was about trying to bring all the different policies together into a cohesive fuel poverty strategy. That is indeed what the Government have committed to publishing in due course, to ensure not only that we have a clear focus on tackling fuel poverty but that the whole Government are aligned on delivery. That is the approach that the new Government have taken on a range of issues; in my Department that includes clean power by 2030. We making sure that all Ministers, wherever they are—in whichever Department and with whichever responsibility—come together to make the situation better.

I want to provide a little bit of context. I repeat that much of fuel poverty policy is devolved. In 2023, an estimated 13% of households—just over 3 million—were in fuel poverty in England, under the metric that is used here. That remains effectively unchanged since 2022. The Committee on Fuel Poverty, which advises on the effectiveness of policies and scrutinises them in England, stated that progress towards tackling fuel poverty has effectively stalled. In England, the target is to ensure that as many fuel-poor homes as possible achieve the minimum energy efficiency rating of band C by 2030, but 46% of all low-income households in England were still living in a property with a fuel poverty efficiency rating of band D or lower. That shows the sheer amount of work we have to do on the issue.

We are therefore working on a number of policies. In reflecting on the point made by the hon. Member for Mid Dorset and North Poole (Vikki Slade), I accept that there is an urgency to moving forward on all these issues. We have inherited quite a lot of issues that require urgent action. I ask for just a little patience, but I absolutely recognise the point that for someone living in fuel poverty, the impending winter is a crisis. The Government are therefore moving as quickly as possible on the issue.

The warm homes plan, which we announced in our manifesto and on which we are moving forward, is about transforming homes right across the country by making them cheaper and making energy clean to run, rolling out upgrades from new insulation to solar and heat pumps. We will partner with local and combined authorities, and the devolved Governments where possible, to roll out the plan. That was in the Budget speech last week, in which an initial £3.4 billion was announced towards heat decarbonisation and household energy efficiency over the next three years. That includes £1.8 billion to support fuel poverty schemes, which, as I said, will help more than 225,000 homes.

The right hon. Member for Orkney and Shetland raised several points. He rightly notes that the radio teleswitch service situation will be a worry to many people, particularly in rural communities. As he said, a roundtable was held, which was important and brought together the key stakeholders. Ofgem has updated its action plan to make sure that we are pushing forward and in particular that we are putting pressure on the energy companies responsible for delivery, to make sure that the upgrades are made and that targets are in place, including some key milestones that they must meet early next year.

Several hon. Members mentioned community benefits. This is a debate that we have had in this Chamber and across the House before. It is extremely important that if communities are hosting energy infrastructure such as the Viking wind farm in the right hon. Gentleman’s constituency, which I visited not long ago, there should be some benefit. We certainly do not want the communities that host vital energy infrastructure to be those that are most likely to be in fuel poverty. We are therefore doing a lot of work, building on the previous Government’s consultations, on what community benefits might look like. We want to make sure that communities and individuals get a genuine benefit, because some community benefits do not currently deliver quite the change that we would like.

[Mr MacDonald]

Will the Minister allow humble servants such as myself to get involved in that? I have spent several years working with the Highland council and others on community benefits, and I would appreciate a meeting.

[Michael Shanks]

I am always willing to take help from any Member. If the hon. Gentleman can take some of this work off my plate, I will be very happy to work with him. Of course, we will first have to work out the answer to the question of where God comes from, but if we can settle on the fact that it is self-evidently Rutherglen in the central belt, I will be happy to work with the hon. Gentleman. That spoils the joke I was going to make about his comparison of temperatures, which is that seeing him wear a very woolly jumper this morning in London made me wonder what he wears in Skye, but that is for another debate.

Genuinely, though, we want to have an open and collaborative approach, and we want to make this work. The consultation that the previous Government carried out and the feedback we have from a number of partners show that there are really good examples of community benefits working well, along with a lot of examples where they are not working well. If we could build on that approach together, I would very much appreciate it.

While we are discussing the hon. Gentleman, he made a very good point about remembering the different types of fuel that households use, and the real issue for off-grid homes—particularly in the north of Scotland, but right across the UK. Again, fuel poverty is devolved, so some of those questions are for the Scottish Government to answer—I know that the questions will be put to them—but we are aware that in England, for which the Department for Energy Security and Net Zero is responsible, 12% of rural households are in fuel poverty, and those are the ones with the largest fuel poverty gap. Tackling those particular challenges in the rural context is therefore really important.

[Jim Shannon]

rose—

[Michael Shanks]

Ah! I was just going to refer to the hon. Member.

[Jim Shannon]

I am very much listening to the Minister, who was perhaps about to tell us what will happen in Northern Ireland, where 62% of households are dependent on oil. In comparison, the proportion for England—I say this gracefully, Sir Roger—is only 4%. The greater emphasis on Northern Ireland will therefore fall upon us. The Minister says that this is a devolved matter and that money has been set aside by Labour to help, but the differential is massive and cannot be ignored.

[Michael Shanks]

The hon. Gentleman, as always, makes a very good point, although I noticed that he called the shadow Minister his friend but not me. But, over time, I think we will build on that and—

[Andrew Bowie]

Aspire to that.

[Michael Shanks]

I aspire to that—quite. The hon. Member for Strangford (Jim Shannon) made a number of important points, and I have to confess that I was not aware of the statistic that he cited. That puts the difference into stark contrast, so I absolutely take the point.

The hon. Gentleman spoke earlier about engaging with the Northern Irish Executive. I have met both Ministers with responsibility for different parts of the energy policy—most recently, in fact, in the inter-ministerial working group across all the devolved nations. One of the key topics that we discussed was decarbonisation, particularly of such households, so we absolutely are taking that issue forward.

I am conscious of time, Sir Roger, so I will just pick up on a couple of other points that hon. Members raised. The hon. Member for Wokingham (Clive Jones) tempted me to be drawn into Beveridge’s “five giants”. Actually, I think that is an important statement about where this Government have come in, because it feels to me like want, disease, ignorance, squalor and idleness are yet again the five giants that we have to tackle as a country, and we are tackling them all as quickly as we can. I take his point, but it brings into stark contrast the fact that we have come in with some really tough decisions to make. There are pressing needs in the NHS, the education system, housing and energy, and we are doing what we can to improve all those. The Budget last week was about fixing the foundations and investing in our public services again. We can undoubtedly do more, but we are moving forward as quickly as we can.

I want to touch on consumer protection, which a number of Members have raised, and the point of the regulator. The ministerial team in the Department have had a number of meetings with Ofgem over a variety of issues, but there is no doubt—Ofgem shares this view—that suppliers could do much more to protect customers and provide them with a better quality of service. We are therefore looking at how we strengthen the regulator—a consultation is under way—so that it can hold companies to account for wrongdoing, require higher performance standards and ensure that there are much better levels of compensation when providers fail.

Last year, Ofgem introduced much more stringent rules around the involuntary installation of prepayment meters, an issue that I raised in one of my first questions after I was elected to Parliament. That was a shocking situation, but much more stringent requirements are now in place. We continue to monitor the situation to see whether much more is required.

I thank all hon. Members who have participated in the debate. There is agreement across all parties that this issue is extremely important. Progress has stalled in recent years, and we now need to make significant advances. The Government are committed to slashing fuel poverty. We will do that through the fuel poverty strategy for England, and also, we will look across the whole of the UK at what we can do with our energy system to reduce bills and provide more secure energy for everyone, and to improve home standards. We will do that by protecting low-income and vulnerable consumers and by trying to raise households out of poverty across the board. Our strategy on child poverty, the raising of the minimum wage and other factors combine to support households struggling in fuel poverty.

We will no doubt return to this topic again. We do not pretend to have all the answers, so we are open to any ideas from hon. Members right across the House. Together, we can tackle this issue, but it needs concerted effort and investment, and this Government have started that.

Great British Energy Bill

Michael Shanks Excerpts

Report stage
Tuesday 29th October 2024 Commons Chamber

[Michael Shanks (Rutherglen) (Lab)]

Just say it in Gaelic!

[Torcuil Crichton]

I could have said it in Gaelic. [Laughter.] It is not necessary for that to be part of the Bill or the company.

Communities must be at the heart of what GB Energy does, and community energy is at the heart of much of the wind production in my constituency—although there are commercial plans, too. Scotland’s community-owned wind farms provide, on average, 34 times more benefit payments to local communities. I have given the example of just one village with one turbine, so imagine what three estates with nine turbines could do in terms of community benefit. Let us be in no doubt, the transformative move towards wind-farming—onshore and offshore—will be mean an extremely profitable, multibillion-pound industry. Communities that host such infrastructure, or which have serious infrastructure passing through their areas, must benefit as well. People will not mind the pylons going past as long as some of the profit comes to them. That will be a critical part of the contract between GB Energy, developers and communities. Communities settling and making deals should not be left to chance.

--- Later in debate ---

[Madam Deputy Speaker]

I call the Minister.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I thank all Members who have made contributions to the debate, and I am grateful for all the points raised in Committee. I thank the witnesses who gave their time to the Committee, as well as the Clerks, House staff and civil servants, who put so much work into legislation such as this. I apologise to the House in advance both for the speed of my speaking and the speed with which I will have to go through the amendments—there is not a huge amount of time left.

First, I want to highlight the three maiden speeches that we have heard today. My hon. Friend the Member for Bolsover (Natalie Fleet) gave an incredibly emotional speech, and spoke passionately about the importance of the state having an impact on people’s lives. I also pay tribute to my hon. Friend the Member for Erewash (Adam Thompson) for telling us, apart from anything else, how to pronounce his constituency, and to the hon. Member for Dewsbury and Batley (Iqbal Mohamed), who I am sure will at least receive a Blue Peter badge in the post for his speech.

Great British Energy is at the heart of our clean power mission, and the Bill provides the statutory basis for it, enabling the Government to deliver on the ambitions that we set out during the election and that the country voted for so resoundingly just a few months ago. Let me turn to the amendments. New clause 1, in the name of the right hon. Member for East Surrey (Claire Coutinho), would create additional reporting mechanisms for Great British Energy. I agree with her that Great British Energy should be accountable, transparent and open in all its dealings and in how it delivers a return on investment. That is why we have made provision in the Bill to ensure that regular updates are given in the form of annual reports and accounts, which will be laid before Parliament for all Members to review. Of course, as a company, it will undergo external audit in the usual manner. As I outlined in Committee, my view remains that adding additional requirements at such frequent intervals is disproportionate and will stop the company from getting on with delivering its mission.

On amendments 6 and 7 in the name of the right hon. Member for East Surrey, and amendment 1 in the name of the right hon. Member for Aberdeen South (Stephen Flynn), every family and business in this country has paid the price for our dependence on fossil fuels during the cost of living crisis. Speeding up the roll-out of clean energy is the only way to get our country off the rollercoaster of volatile international gas markets and to protect families from future energy shocks. That is the argument that the Conservative party used to support but that it seems increasingly to distance itself from, as it has with so many principled positions.

[Dave Doogan]

Will the Minister give way?

[Michael Shanks]

I do not have time, I am afraid.

We are unapologetic that Great British Energy is a long-term project for this country, as part of a sustainable, long-term plan to protect bill payers for good. I stand by that commitment today. However, I also say, as we have said about so much of the mess that we have to clean up, that we cannot simply flick a switch and turn everything around, which is why these amendments are inappropriate. Conservative Members would never have made such amendments to a Bill when they were in government.

Let me turn to the amendments on jobs and industrial strategy. The Government are clear that clean energy is the economic and industrial opportunity of our time. Around the world, a race for jobs and industries of the future is speeding up, but for too long Britain has opted out and lost out. Great British Energy is at the heart of our plan to change that. It will help to rebuild the UK’s industrial heartlands through its investments across every part of the UK, and locating Great British Energy’s headquarters in Aberdeen will tap into the high-quality talent pool of Aberdeen and Scotland as a whole. We will use every tool at our disposal to win jobs for Britain. We have established the office for clean energy jobs, and are focused on developing the skills of the future, so that we have a workforce that can deliver what we need in future. Crucially, it is why the Government are, as many hon. Members have said, committed to a proper industrial strategy.

The amendments tabled by the hon. Member for South Cambridgeshire (Pippa Heylings) relate to the timeline for establishing Great British Energy, to energy efficiency and to community energy. Although I welcome and, frankly, share the hon. Member’s eagerness to get Great British Energy up and running as quickly as possible, we will not be supporting amendment 3. The Government have already shown themselves to be committed to setting up Great British Energy as quickly as possible, and there will be no further delays in doing so. Indeed, of all the things that my right hon. Friend the Secretary of State could be accused of, not moving quickly is not one of them.

[Dave Doogan]

Will the Minister give way?

[Michael Shanks]

I do not have time—I have a minute in which to finish.

I hope the hon. Member for South Cambridgeshire will recognise that there is really no need to put an amendment such as this one on the face of the Bill. Turning to her amendment on the topic of community energy, she will know, however, that I am passionate about community energy, as are the Government. It will form an integral part of Great British Energy’s local power plan, which will put communities at the heart of the energy transition, giving them a stake in the shift to net zero. As a member of not just the Labour party but the Co-operative party, that is at the heart of my politics and that of many of my hon. Friends. We have been advocating for community energy for decades—this is not a new idea for us—and empowering communities is critical. The hon. Lady and I share that passion and a commitment to community energy.

I can assure the House that the Department is looking to take a cross-government approach—not just through Great British Energy but, crucially, on a number of the points that have been made—to ensuring that community energy projects can be delivered, with all the changes to planning and governance that are required to make that happen. I always want to work with Members across this House, and have done so throughout the passage of the Bill. We continue to engage with the Liberal Democrats and other interested parties on this important issue, exploring options to ensure the Bill has the effects they are seeking. I look forward to further such discussions in the weeks and months ahead. I hope all who have tabled or spoken to amendments today will feel reassured by what I have outlined—albeit considerably more briefly than I was expecting—and will perhaps feel able to withdraw, or not move, their amendments.

This is a truly historic Bill, delivering on the Government’s promise to establish a new national, publicly owned energy champion for our country. It has been a privilege to take it through Committee, and I repeat my sincere thanks to everyone involved in that process. Great British Energy is the right idea for energy security, for bills, for jobs, and for delivering the climate leadership that the people of this country demand of their Government. It is the right idea for our time, hugely supported by the British public, and I urge all Members of the House to support it this evening.

[Madam Deputy Speaker]

I call the shadow Minister.

Contracts for Difference

Michael Shanks Excerpts

Monday 28th October 2024 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I would like to advise the House that today I am laying draft regulations to implement two amendments to the Contract for Difference (CfD) scheme in time for the next allocation round, supporting the Government’s clean energy superpower mission to deliver clean power by 2030 and accelerate to net zero.

The CfD scheme is the Government’s main mechanism for supporting new low-carbon electricity generation projects in Great Britain. Awarded through regular, competitive allocation rounds, it guarantees a set price per megawatt-hour of electricity for 15 years, indexed to inflation. The income stabilisation that it provides for the generator makes projects that have high up-front costs but long lifetimes and low running costs attractive to investors and lenders, reducing the cost of capital and overall project cost. It also protects consumers when electricity prices are high.

The latest allocation round, AR6, was a great success, securing a record-breaking 131 projects and 9.6 GW of renewable electricity capacity. But we must continually evolve the CfD scheme to drive progress towards the 2030 clean power target and ensure that it reflects the global challenges and opportunities faced by the renewables sector.

These amendments to legislation will extend the option to phase projects under the CfD to floating offshore wind and enable repowered onshore wind projects to apply for a CfD, provided they meet certain criteria.

This Government have committed to radically increasing the UK’s offshore wind capacity. Floating offshore wind is an emerging technology that allows us to access wind resource in deeper waters, which tend to be further from shore and have higher, more consistent wind speeds. CfD phasing policy allows offshore wind projects with a maximum capacity of 1,500 MW to be built in up to three stages. Previously this only applied to fixed-bottom offshore wind. The extension of phasing to floating offshore wind will benefit this emerging sector, de-risking the construction process and helping developers and the supply chain to work with more certainty. This, in turn, will reduce investment risk and enable the construction of larger floating windfarms, as investors gain confidence in successful project completion.

The other amendment concerns onshore wind. From the late 2020s onwards, it is likely that a significant proportion of current onshore wind sites will reach the end of their operational life. When a project comes to the end of its operating life, the generator can choose to decommission permanently, extend its life, or repower. Repowering would require decommissioning and recommissioning of the existing site, incurring similarly high up-front capital costs to that of a new build. Allowing projects to apply for a CfD to repower, in contrast to retiring, could make a significant contribution to the 2030 clean power goal. This amendment offers revenue certainty for onshore wind projects that may otherwise struggle to repower. Without it, we may lose the opportunity to retain and increase this renewable capacity and the societal and economic benefits this confers.

This draft legislation laid today is another important step forward in delivering clean power, shielding families from volatile gas prices and establishing the UK as a clean energy superpower.

[HCWS168]

Fusion Energy

Michael Shanks Excerpts

Wednesday 23rd October 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

It is a pleasure to serve in this debate with you in the Chair, Mr Pritchard. I thank my hon. Friend the Member for Bassetlaw (Jo White), for securing today’s important debate, and for the passionate way in which she spoke about both this issue and her constituency. It was genuinely inspiring—particularly what she said not just about the future of her community but about its heritage. I confess that I did not know the role my hon. Friend’s constituency played in the creation of the United States, but, as I used to say to my school pupils, every day is a school day, so I thank her for that.

It would have been quite a striking debate if my hon. Friend the Member for Rushcliffe (James Naish), the chair of the APPG on fusion energy, had spoken about anything other than his support for fusion, but I welcome his invitation to join his group’s visit. I would say to my hon. Friend the Member for Bassetlaw that I think there are other Ministers in the Department who might be slightly frustrated if I cut the ribbon rather than them, but I am happy to do so all the same.

I share my hon. Friends’ genuine excitement for this technology, and it is worth taking a moment to think about what we are talking about. The idea that we could produce an almost inexhaustible supply of low-carbon baseload sounds almost too good to be true—particularly as an Energy Minister trying to get us to where we are going to by 2030. It sounds like a fantastic proposition, but after many, many years of a lot of hard work, it is in fact within our grasp.

Fusion creates nearly 4 million times more energy for every kilogram of fuel than burning coal, oil or gas—some of the statistics are staggering, and worth taking a moment to reflect on. It has a huge potential to bolster our energy security and to create thousands of good jobs at the same time, putting it at the heart of not just one of the Prime Minister’s key missions in Government but two: kick-starting economic growth and making Britain a clean energy superpower. What is even more exciting is that this country genuinely has an opportunity to lead the world on this and to become the global home of fusion energy, with all the considerable short and long-term economic gains that come with it.

I thank hon. Members for being here and for their support for this new technology. It is difficult at times, with technologies that are perhaps not so well understood and are at that nascent stage, to keep the debate on them. It is important to have more contributions and speeches like the one we heard about the importance of this technology.

The UK has been at the forefront of fusion energy research and development for more than 40 years, going back to June 1983—I will not tell hon. Members my age, but at that time I was not quite born—in a quiet corner of Oxfordshire, with the world’s largest operational fusion reactor. The Joint European Torus went on to break records and then break them again, with thousands of experts from across Europe playing their part in those experiments. JET closed its doors last year and we are now focused on building a whole new generation of fusion facilities in the UK.

Domestically, the economic opportunities of fusion are huge. The sector already supports thousands of jobs, and our ambitions will see it deliver many more highly skilled roles in future. As my hon. Friend the Member for Bassetlaw outlined, it can also lead to breakthroughs in other areas, particularly in medicine, supercomputing and other green technologies. That is why it is important to attract private sector investment to this project. Some $7 billion has already been raised by global private fusion companies and that figure grows year on year.

It is clear that the UK’s pro-innovation, proportionate approach to fusion regulation is attracting global interest but we want to go further, developing a national policy statement for fusion facilities that provides even greater certainty, encouraging billions more in private investment, driving further growth and supporting thousands more jobs. We are also investing in unique fusion research facilities at UKAEA sites across the country that UK-based firms can access, making it the natural home for fusion development.

Internationally, fusion energy could be transformational, both as a long-term solution to energy security and, in this most decisive of decades, in tackling the climate crisis. This is a low-carbon, safe and abundant source of energy, which does not require huge amounts of land or natural resources for its production. That makes it the perfect power source for nations have relied on imported fossil fuels, or that do not have the capacity to deploy renewables at the scale many will need. Those are the same countries that are most likely to be affected by climate change. In other words, as global energy demand grows—and we know that it will considerably in the decades ahead—fusion energy could be critical to keeping net zero within reach, as well as ensuring that citizens everywhere have access to power.

Other major economies, including the US and China, have realised that there are huge prizes on offer to be the first to commercialise this technology, including economic growth and global environmental leadership. Estimates of that fusion energy market between 2050 and 2100 put it between £3 trillion and £12 trillion. Without the spending power of the US or China, we must be targeted in how we maintain our leadership in this ever-closer international competition. As my hon. Friend the Member for Bassetlaw outlined, that is where the STEP programme comes in.

Last month, I was privileged to be at Ratcliffe-on-Soar. It might seem odd for a Minister to be privileged to be at the closure of something, but the closure of our last coal-fired power station was a real moment in our energy story—a moment for us to recognise that the transition is well under way. We are now bringing a whole new industry to that part of the world with the creation of the world’s first civil fusion power plant. The aim is for the prototype plant to reach completion by 2040, and that will demonstrate that fusion can be a viable part of our energy mix in the near future. As my hon. Friend the Member for Bassetlaw is aware, it is a hugely exciting opportunity for local people in her constituency, for the wider region and for the whole UK, delivering thousands of jobs directly and in the supply chain.

My hon. Friend rightly referenced the importance of skills development in fusion energy. There is a real opportunity to develop the skills of a next generation of young people working in the energy of the future. STEP will partner with private industry early on in its journey, working closely with engineering and construction companies. The work of identifying those partners is under way at the moment, with an announcement of the shortlisted bidders due in the following weeks. This is about not only maximising our chances of success, but utilising the local skills already in my hon. Friend’s community to breathe new life into an industrial heartland.

At the same time, we will establish a strong fusion skills base and domestic supply chain to support STEP and enable it to compete globally. We are also running an outreach programme to schools in the area to encourage the uptake of fusion-related education, and developing relationships and grants with universities. We want fusion to be a sector that excites and inspires young people, and now is an important moment to unlock that potential.

STEP is a first-of-a-kind programme, and there will, of course, be challenges. My hon. Friend the Member for Bassetlaw mentioned a number of the logistical challenges in the local area—we will work through those things together with the local community, and I know that she was involved in the local council for many years as well—but we have a huge advantage: four decades of research, a thriving financial landscape and a world-leading plan, which means that even before a commercially viable plan is delivered, the programme will have already supported thousands of jobs, skilled development and cutting-edge research. Ultimately, whether STEP or a different design is the precise one used to commercialise fusion technology, its development will already ensure that the UK has a supply chain to provide jobs and the recognition that we are in the lead in this technology.

The Government are unashamedly pro-growth, pro-business and pro-innovation, and fusion is a great example of all three. It is such an important part of our plans because it covers all those points, and is a real opportunity for us to make progress and become the global lead in a genuinely transformative technology. That could ensure our energy security, drive huge growth and combat climate change here and far beyond our shores. STEP could, in short, be the UK’s Apollo moment, and I cannot wait to see where the fusion journey takes us.

My hon. Friend the Member for Bassetlaw is a passionate and enthusiastic representative of the community driving forward this technology, and it is in safe hands. I pay tribute to her commitment both to championing this technology and to her wider community. Together, we can make this one of the most exciting moments in our energy story.

Question put and agreed to.

Large-scale Energy Projects and Food Security

Michael Shanks Excerpts

Tuesday 22nd October 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

It is a pleasure to serve under your chairmanship, Sir Mark. I thank the hon. Member for Ynys Môn (Llinos Medi) for securing this important debate. We have been in a number of debates on topics like this over the past few weeks. It is great that her speech reflected that she is a champion of the renewable sector and the benefits that can bring to her constituency. She said that her constituency is now known as “energy island”, which is a true reflection of the powerhouse it has become in recent years. It has established technologies: solar, as she talked about, but also onshore wind and a number of other projects to come. It is also home to some of our newer technologies: tidal stream projects of around 38 MW are in the contracts for difference rounds, and we will be talking much more about that in the future.

I thank hon. Members for the tone of today’s debate and for their contributions. Our starting point, which the Government have been very clear on from day one, is that we want to deliver clean power by 2030. We want to do that for a number of reasons: to protect people from the wild price spikes that they suffered because of the volatility of global fuel markets, to tackle climate change—a lot of the discussion today on the importance of agriculture misses the importance of tackling climate change, which is currently having an enormous impact on farms right across the country and, if we do not act faster now, will continue to have an even greater impact—and to deliver the energy security the country needs.That will involve a diverse range of projects and technologies

We are not putting one technology forward as the answer to everything—this is about balance, as several hon. Members said today. Yes, ground-mounted solar plays a really important part, but so too does roof solar. We are not picking one or the other. Both are incredibly important, and there are huge opportunities for a rooftop solar revolution, which we will be seeing more about in the months ahead. But ground-mounted solar also has an important role to play. This is a question of balance.

[Adrian Ramsay]

The Minister always engages in a collegiate manner, which I welcome. On rooftop solar, I am sure, despite the disagreements today, that we would all agree that more solar on rooftops is crucial for tackling the climate crisis energy bills. Could he therefore confirm that the future homes standard will require all new homes to include solar panels as standard?

[Michael Shanks]

I thank the hon. Gentleman for his intervention and for the collegiate way in which he engages in these debates. We will be saying more about the future homes standard in due course, so I will not announce that here, but his point has been heard.

I want to come back to the point about balance. It is key in a lot of the contributions made today, and indeed in other debates on this subject over the past few months. We have to find a way to balance the environment and our need to protect nature with supporting local communities to make sure that we can deliver cheaper, more secure energy in the future and tackle our climate change objectives. But new energy infrastructure is important in every single one of those points, so we have to build that infrastructure. The question is how to ensure we get that balance right. That is why we have announced that we will have a land use plan—something the previous Government failed to do. But it is also why we need to plan a lot of that infrastructure much more carefully.

I reflect on the point made by the hon. Member for Mid Buckinghamshire (Greg Smith) about the number of projects in particular areas, because we can take a lot from that about the cumulative impact of projects. That is why, just today, we commissioned the National Energy System Operator to carry out the first strategic spatial energy plan of the whole of Great Britain. Crucially, we recognise that if we plan new energy infrastructure much more strategically, we will avoid some of the questions that he raises. That is a really important point.

Nothing we have said rides roughshod over the planning system. The planning system in this country is extremely robust. People will continue to have opportunities to engage in that process and be consulted on. No matter the size of the energy project in question, it will be subject to a rigorous planning process, and the views and interests of the local community will be taken into account. On that point, I want to reflect on another Westminster Hall debate on community benefits, which are important here as well, and which the hon. Member for Ynys Môn mentioned in her opening speech. We need to do much more on community benefits, and solar is particularly important in that discussion. We have been very clear as a Government that we want to look at whether they should be mandatory rather than voluntary, and whether we should have a much clearer set of objectives for those funds so that there can be real community benefit. Ultimately, we want to do this with communities. Communities will have to host this infrastructure—there is no getting away from that—but it is important that they benefit from it in the process.

Finally, the Government recognise that food security is also national security, and we will champion British farming while protecting our natural environment. That is why we have already said that we will introduce a new deal for farmers to boost rural economic growth and strengthen Britain’s food security.

I want to be clear: I do not believe for a second that the accelerated roll-out of clean energy infrastructure poses a threat to food security. There are, of course, huge competing demands on land use throughout the country, and they have to be balanced. However, taking solar as an example, even under the most ambitious plans in the country, less than 1% of the UK’s agricultural land would be occupied by solar farms. I am afraid that the rhetoric does not meet the reality. That point has been backed up by the National Farmers Union, which believes that every farm is well positioned to deliver small-scale solar, wind or battery storage, which can be used on the farm but also provides benefits for local communities.

Food production is incredibly important, as is energy production. Those two are not mutually exclusive, and we can find a way for them to co-exist. I was interested in the point made by my hon. Friends the Members for York Outer (Mr Charters) and for Reading Central (Matt Rodda). I recently visited Manor Farm solar farm, which is a good example of combining an agricultural strategy with a solar farm. It also contributes to the rewilding of areas and to the managed improvement in nature in the local community, which was not being done by the mismanaged agricultural land before, so we can get real benefits from it as well.

This is an important debate, and the balance is key. We have made no secret of this: we want to see the rapid development of energy infrastructure. It is important because people are paying far too much in their bills and we are exposed to volatile fossil fuel markets. For every year that we remain exposed to those markets, we remain vulnerable to the price spikes that our constituents are facing, so it is important to move at pace. I recognise the point made by the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) about the pace at which we are moving, and I am grateful for his recognition of that.

This is our clean power mission. Together, we can provide energy security, reduce costs to consumers, deliver on our environmental responsibilities and ensure that we have economic growth and responsible use of land right across the country. I will close by thanking all hon. Members for participating in the debate. I hope that we will have many more of these discussions. They are important debates to have, and together we can find the balance and deliver the infrastructure and food security that the country needs.

Renewable Energy Projects: Community Benefits

Michael Shanks Excerpts

Tuesday 15th October 2024 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

It is a pleasure to serve under your chairmanship again today, Dr Huq. It is good to look out and see so many of my colleagues from the Great British Energy Bill Committee here to discuss energy again. I am glad we got the Bill through Committee quickly enough for us to be here—we did not need our afternoon session.

I do not have a huge amount of time, and I want to get to as many hon. Members’ contributions as possible. Of course, I want to leave the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) time to conclude this important debate—I congratulate him on securing it. Hopefully he will see from the enthusiasm and the level of participation how important others find this subject. I know from his maiden speech and other contributions how important it is for him and his constituents.

Just a few weeks ago, I had the real pleasure of visiting the hon. Gentleman’s constituency; I went to the Isle of Eigg to spend a day learning about the community energy project there. Although in some ways that project is unique, it is a very good example of how a whole community can benefit from such projects. The community genuinely has the power in its own hands—it has its own micro-generation grid—and it has received other benefits as people have upskilled themselves so that they can understand how the grid works and manage it.

I thank all right hon. and hon. Members for their contributions. I will try to respond to as many as I can, but I will briefly start with the context. This Government have come to power facing three interlinked challenges—ensuring energy security, displaying climate leadership and bringing down bills for people across the country—to which our response is our clean power by 2030 mission. Clean power is the only way to protect our constituents from the rollercoaster of price spikes that we have faced over the past few years, and to deliver the climate leadership that we need. That is why we introduced the Great British Energy Bill within our first 100 days, and why it is progressing through Parliament as quickly as possible. Great British Energy, which will have its headquarters in Aberdeen, is an important part of our plan to increase the delivery speed of renewables projects and, crucially—I will come back to this point—to ensure that the British people have a stake in that energy future. The Conservative party has for many years accepted the premise of publicly owned energy companies, but it does not support the premise of the British people being part of a publicly owned energy company—just ownership by companies from beyond our shores. Of course, we welcome their investment in this country, but with Great British Energy, we are saying that we would also like the British public to have a part to play.

A number of hon. Members made points about community ownership. Although this debate is about community benefits, I think, as some hon. Members have said, there are links between them. The Great British Energy Bill is about setting up the company, but there is a wider context in the Government’s local power plan, which commits to much more community ownership of energy, and ensuring that communities large and small have the funding and, crucially, the capacity to take forward some of those projects themselves.

Delivering on our clean energy mission, which is undoubtedly ambitious, will require action on a number of fronts. I want to touch on infrastructure, which many hon. Members have mentioned. There is at the heart of the current Conservative party’s rhetoric on that subject a fundamental contradiction. We heard it from the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier), but I also heard almost exactly the same words from the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) on the shadow Front Bench in the Committee earlier today, where on the one hand, there is a recognition that we need significant upgrades to the grid, and yet on the other hand, there is no desire to make a commitment to building any new infrastructure to deliver it. Both those things cannot be true at the same time.

I gently point out to Opposition Members that after 14 years of government, that is not a new problem. The grid did not suddenly fall apart in July 2024, with the Labour Government. That challenge has been facing the country for a long time. Indeed, I would meet Conservative Members halfway and say that even beyond the 14 years they were in government, there has been a challenge on the grid. However, they had 14 years to take action and did not. This Government are now moving forward.

If we want to see the connections issue resolved, and community projects able to connect into the grid, as hon. Members have mentioned, we do need to build some of that infrastructure. That requires communities to host the infrastructure, so I turn to a number of points that were raised about how we work in partnership with communities—using collaboration, not coercion. It is important that the entire mission is a national one—for Government, but also to ensure that every member of the public is part of our achieving clean power by 2030. Key to that will be reforms to planning regulations. To deliver the critical infrastructure that this country needs, nationally significant infrastructure must be built; our planning system is holding that back.

The planning and infrastructure Bill, which we will introduce shortly, will speed up and streamline the planning process. We will also be updating relevant national policy statements within the next year, in order to provide certainty to industry. In Scotland, the current electricity infrastructure consenting regime is from the Electricity Act 1989 and has not been updated in line with other legislation across the UK. The regime is too slow and is holding back investment. I am working closely with my Scottish Government counterparts on how we develop a set of proposals to reform that and speed up the new infrastructure development that we need.

I come back to the point that hon. Members have rightly made—that as much as we need to streamline the planning process because we need to build the infrastructure, communities must be at the heart of it. Public engagement and consultation will continue to be incredibly important, but so also will be a more holistic approach to planning energy infrastructure in the first place. That has been the root cause of many of the challenges that hon. Members have raised today. The lack of strategic planning for some of our energy infrastructure in the past has led to bottlenecks, which we want to avoid in future.

Finally, I turn to the point about communities living near clean energy infrastructure, including the transmission infrastructure that we need to build. Let us be clear: communities, by hosting that infrastructure, are providing a service to the country. It is essential that we build that infrastructure; it must be built somewhere. The challenge I have with some of the discussion on that subject is that we fall into the trap sometimes of saying, “Yes, we agree we need to upgrade the grid, but not anywhere near my constituency, please.” That will not work, unfortunately. We want to ensure that those communities that do host this infrastructure, on behalf of us all as a country, directly benefit from it. Communities are important, not just in terms of hosting infrastructure but in terms of the wider acceptance of the direction of travel that we are taking. We need communities to be with us if we are to achieve the necessary pace. At the moment, as has been raised, such community benefits are voluntary arrangements. They could be monetary or non-monetary schemes; there are a variety of different options across the country, some that work extremely well and others that, as many here know, do not work so well. The voluntary nature of arrangements for delivery of community benefits does lead to these significant variations.

[Jim Shannon]

As I outlined in my submission to this debate, infrastructure is a reserved matter, but back home in Northern Ireland it is a planning matter, which is devolved. The question is how the two combine. It is a very simple question. It might require a much more difficult answer, but I would really appreciate it if the Minister could answer, please.

[Michael Shanks]

That is a very important question and I was going to come to the hon. Gentleman’s specific point in a moment. He is absolutely right. Since I came into post, I have been working with my counterpart Ministers in the Scottish, Welsh and Northern Ireland Governments on how we can work together. Clearly, in Northern Ireland that is slightly different because energy is transferred, so the policy levers are slightly different. However, we do have the same outcomes in mind throughout the UK, which is really important. I will continue to work with Conor Murphy and the wider Executive to bring us together as much as possible, because the hon. Member makes a very important point.

On community benefits in particular, we are continuing—at pace—the work started by the previous Government to review how we can effectively deliver benefits for communities living near this infrastructure. We are looking at examples across Europe—we are not on this journey on our own; there are other countries that have been doing this for a very long time, and we are learning from that—and developing clear guidance on community benefits for both the infrastructure and the transmission networks. We will publish that in due course. Great British Energy’s role will be to build upon existing community energy schemes under way across England, Scotland, Wales and Northern Ireland. It will build on that experience to contribute more where it can.

I shall now respond to a few of the specific points raised by hon. Members. The point on solar projects, raised by the hon. Member for Glastonbury and Somerton (Sarah Dyke)—who is not in her place, but I will write to her on this—is an incredibly important one. Part of the aim of the solar taskforce set up by the previous Government and reconvened by this Government is to set out a very clear pathway for these projects.

Several hon. Members mentioned standing charges. The Government are looking at that issue right now. We accept that far too much of a burden and too much of bills comes from standing charges and we are working with the regulator to do much more about that.

Although I listed 12 other points from hon. Members, I am conscious that I have eight minutes in which to cover them. To allow the hon. Member for Inverness, Skye and West Ross-shire time to wind up the debate, I will close by saying that as a Government we take this issue very seriously. Our ambition is to bring communities with us on this journey. We want to do that through a collaborative approach, with all hon. Members, but also with communities at the heart of this. We will have much more to say on that in the weeks and months ahead.

Strengthening Electricity Security and Supporting Decarbonisation

Michael Shanks Excerpts

Tuesday 15th October 2024 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I am tabling this statement to inform Members of the publication of a policy update, a consultation response, a consultation and a call for evidence on 15 October 2024. This is in support of making Britain a clean energy superpower by 2030 and accelerating progress to net zero.

The Government are committed to delivering clean power by 2030 and accelerating progress towards net zero, while ensuring the security of supply. Making Britain a clean energy superpower by 2030 is one of the Prime Minister’s five missions. To deliver this mission, we will rely even more on renewable power. The Government have set a target to double onshore wind, treble solar and quadruple offshore wind by 2030.

This will result in a wholesale shift in our long-term power system. The variable nature of renewables makes it critical that we have sufficient flexible capacity that can be ramped up quickly when generation from renewable sources is low, such as on dark, still days. The National Energy System Operator (NESO) estimates that Great Britain’s electricity system could require 40 GW to 50 GW of long duration flex capacity in 2030. This will require the accelerated deployment of low-carbon flexible technologies. The Government are already investing in low-carbon technologies to support the transition away from unabated gas.

Since its introduction in 2014, the capacity market has acted to secure sufficient capacity to ensure consistent and reliable electricity generation. The policy update that I am publishing today sets out the remaining proposals to reform the capacity market from the 2023 phase 2 consultation, aimed at aligning with the Government’s 2030 clean power and net zero goals, and improving security of supply. This document sets out policies to remove barriers for low-carbon technology to participate in the capacity market, which should accelerate investment in these technologies. This includes supporting low-carbon projects with longer build times to access support from the capacity market, enabling low-carbon technology with lower capital investment requirements to access longer-term capacity market contracts and reducing admin barriers for low-carbon technologies.

While low-carbon technologies are scaling up, we will continue to need existing flexible capacity, including unabated gas. The running hours of gas generators have already significantly reduced, and we expect that the amount of unabated gas we need will continue to decline as we deploy more low-carbon technologies. Our aim is to move unabated gas into a back-up role, primarily to ensure security of supply.

We intend to ensure that gas plants can decarbonise once low-carbon flexible technologies are available. To support the decarbonisation of unabated gas, I am today publishing a Government response to the decarbonisation readiness consultation, which will soon be followed by an accompanying statutory instrument. This will require that new build and substantially refurbishing unabated gas and other combustion power plants in England be built in such a way that they can readily decarbonise through either conversion to hydrogen-firing or by retrofitting carbon capture technology within the plant’s lifetime.

Finally, I am also publishing a capacity market consultation and a call for evidence on proposals to maintain security of supply and enable flexible capacity to decarbonise. We are seeking views on changes to the capacity market to:

Support the economic case for works to extend the life of ageing plants by lowering the scale of planned works needed to access three-year capacity market agreements;

Provide assurance that all substantially refurbishing or new combustion power plants participating in the 2026 capacity market auction have a credible plan to decarbonise before they become operational, whether through converting to hydrogen firing or carbon capture; and

Introduce exit pathways for unabated gas generators with multi-year capacity market agreements to transfer from the capacity market to bespoke support, enabling the plants to decarbonise.

These reforms will give owners and investors in gas power stations the certainty they need about future operations and their pathway to decarbonise. They come after the Government recently reached commercial agreement on the UK’s first carbon capture and industrial-scale hydrogen plants—technologies that will be critical in helping gas developers decarbonise their assets in future.

The NESO’s modelling was commenced prior to the general election and does not assume the delivery of clean power by 2030. However, these results are still likely to be informative of the level of flexible capacity that the GB system could need at this time.

DESNZ, “Capacity Market 2023: Phase 2 proposals and 10 year review—consultation”, October 2023.

[HCWS134]