Great British Energy Bill (Second sitting)

Pippa Heylings Excerpts

Committee stage
Tuesday 8th October 2024 Public Bill Committees

[Uma Kumaran]

Merci.

Alistair McGirr: If I may add to that, there is the question of the role of the state. Not everything has to be through GB Energy or the national wealth fund. In terms of the GB Energy policy framework, the creation of the National Energy System Operator can help to drive a lot of economic value through the transition here in GB by taking a much more strategic approach to how infrastructure is going to be deployed. GB Energy is one element of that, but I think the wider value can be brought together by a more strategic approach through the policy framework.

[Pippa Heylings (South Cambridgeshire) (LD)]

Q You talked about the objects within the scope of the law, about facilitating and encouraging, and about frontier innovation in technology and energy generation, but you also talked about de-risking. You did not mention onshore wind, so I am wondering whether that would lead also to onshore wind. There are also tidal programmes, such as the reef from Aberthaw to Minehead, that are stalled. Do you see these as part of helping to facilitate and de-risk within the scope of GB Energy, too?

Tristan Zipfel: For sure, yes, they could be part of the scope. Choices will need to be made, of course, on where those investments are directed, and I think it is important to direct the investments where they will have the maximum impact. When it comes to onshore wind, for instance, perhaps it could be a case not of investing where the private sector is already doing a good job on its own, but of looking at areas where there is a need to develop infrastructure to unlock these onshore wind opportunities, or of looking at Government-owned land that could be used to develop new projects. As you said, Alistair, it is going to be complementary to what the private sector is doing, but there will be pockets of opportunities for GB Energy to really make a difference, even in an area like onshore wind, I think—100%.

Alistair McGirr: I agree with that answer. The question would then be: where is the biggest bang for the buck? Is it building large onshore wind projects that actually have developers in that space and have a route to market? That is probably the question for GB Energy: is that the best use of taxpayers’ money, rather than other things that can be done in terms of investment in frontier technologies?

You mentioned tidal. There is the question there of an absence of a business model. If there was this supported business model, there might be an opportunity for private investors to come into that space. There is the issue that just because the private sector is not doing it does not mean that the public sector should do it, because ultimately, if it is a bad deal for private shareholders, it is probably a bad deal for taxpayers as well. I think this is about making sure that the technologies that are useful are brought forward with business models that provide a return for whoever the investor is.

[Torcuil Crichton (Na h-Eileanan an Iar) (Lab)]

Q Welcome, gentlemen. In relation to clause 3(2)(a) and

“the production, distribution, storage and supply of clean energy”,

you have welcomed state intervention and the role of GB Energy in that. How would you feel about communities taking a direct stake in your onshore and offshore developments—say, 20%, as they do in Denmark?

Tristan Zipfel: On our side—I am sure SSE does the same—we are definitely looking at that. We are trying to develop some schemes that go exactly along those lines. We have not done it so far. The link and the reward to communities have been through the community benefits fund linked to our projects. I live in Teesside: we have an offshore wind farm there, and I can tell you that the community benefit fund, over the last 10 years of operation, has helped dozens of local projects and initiatives. You are absolutely right to think the next frontier is to have more local ownership of wind farms. That could be through GB Energy, but it could also be through direct ownership schemes. We are looking at those options at the moment.

Alistair McGirr: As I mentioned at the start, we partner with a number of different organisations; I mentioned Equinor, which is a state-owned entity. We are open to working with any kind of party on a commercial basis, be it a community or another developer. In that sense, the communities taking a stake in some of the projects is something that could be done. The question is: what are the terms of that arrangement? There is the critical point that any community ownership should be focused on co-investment. It should not just be the case that 20% of a project is passed on to a community, because that will be value that is basically taken out of the project, which then inflates the cost of the project. So the co-investment piece is very important. Whether it involves another developer, another state-owned entity, GB Energy or a community, I think that is a useful way of bringing capital into the UK’s low-carbon infrastructure.

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[Catherine Fookes]

Q Thank you, Chair; I will try to stay in scope. I was really pleased to read about the £2-million tidal energy project at Morlais off the coast of Ynys Môn. Clause 3(2)(d) talks about GB Energy improving the security of our energy supply here in the UK. Is that the kind of project that you see benefiting from and being supported by GB Energy?

Dan Labbad: Yes. Both the Crown Estate and GB Energy moving forward will support that type of thing. It is an example of a local community energy project, and I think there needs to be more of that, as I said in my answer to the earlier question. Where we can build community support for renewable projects, we should. The Crown Estate and GB Energy will be looking to that as part of our core mandate moving forward. I am very excited about that type of thing because it benefits everybody, so it is fundamental to what we do moving forward.

[Pippa Heylings]

Q We have heard how, working together with the Crown Estate, we could be accelerating GB Energy’s investments, particularly through accelerating the consenting process. It was reassuring to hear you say that there are multiple values and that you have a multiple delivery group, with environmental values being part of that, and how critical it is to have consultations around the environmental requirements.

Within the scope of the Bill, under clause 3, we also heard in evidence this morning the request that we seek a duty towards nature and nature recovery and the achievement of the Environment Act 2021. Would that provide the reassurance that while we are dealing with the climate emergency, we are not disregarding the nature emergency and the environmental value of the seabed and the sea?

Dan Labbad: While I cannot comment specifically on the Bill, I would say that the Crown Estate already has a responsibility to protect the environment and look at nature recovery. In fact, this week we launched our nature commitments, which have undergone significant consultation. You can find those live on our website. We are obligated under our Act to do that. That obligation maintains in the partnership, so we will be doing that as part of what we bring to the GB Energy partnership.

[The Chair]

This will be the final question.

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[Perran Moon]

Q My question is along similar lines. Thinking about attracting that capital investment, we are currently in a scenario where, in relation to clause 4, there is a need to de-risk some UK energy projects to unlock additional capital investment. Can you describe how you see the specific role of GB Energy in unlocking some of that capital investment?

Josh Buckland: I have looked through the project life cycle, and clause 4 gives a lot of flexibility around it. There is the early-stage development capital, which is quite difficult at this stage to develop at the scale required. Developing large-scale energy projects costs not just tens of millions, but potentially hundreds of millions through the development phase, so there is a role there that GB Energy could play in the deployment of development capital.

Potentially more important in a development phase is the ability to help projects to de-risk other things that they cannot control, such as their ability to access a grid connection, to get planning approval and to access the right supply chain domestically, to go back to the point about unlocking economic potential here. That could potentially be a significant role for GB Energy. That comes back to the governance question of where Government draw the line between a role for Great British Energy and the Government, because a lot of those issues are effectively for the Government to deal with, but that is an interesting dynamic to watch.

If we move through to the construction phase, there is slightly less of a role, in truth, because the level of capital required in building out projects once they have got over the initial financing barrier is potentially lower. I know the Government have talked a lot about that separately from the Bill. The exception is local and community energy projects, where clearly the barrier to unlocking investment is higher, and there is potentially a role there for Great British Energy that the Government have talked about.

The final piece is whether, once an asset has been built out and is operational, Great British Energy should have a role there. Again, that is potentially more a question about how you want the capital to be deployed. The Government could take a stake in a project, or invest to then seek a return, and utilise that money either to reduce energy bills or to reinvest. That is a question around prioritisation of public spending, because that might be a sensible thing to do, but there is a range of other things you could invest in that might look beyond the energy transition. Hopefully that gives you a bit of a feel. The role will definitely change depending on where you are in the asset life cycle.

[Pippa Heylings]

Q Given your history as a civil servant and in government over the last years, one of the issues around governance under clause 5 was the level of scope and power given to the Secretary of State, without a review, being able to review, reverse or replace the statement. Given that in the past we have had the rolling back of commitments and that we are trying to create certainty for investment, do you have any reflections on whether there should be any kind of review before the Secretary of State can do anything? We are being asked to support this Bill’s being so broad and flexible that any change would be quite substantive. Is there any learning from the past where you would change the way that is described in the Bill?

Josh Buckland: There is a question around consultative processes, I suppose. One thing we have seen, or that I have experienced, especially on the planning side, is that when the Government set out statements of intent—for example, through the planning regime and national policy statements—it is important to consult on those extensively in advance so that there is certainty around what they mean. Then they have to wait as institutions respond. There may be a question about what level of external input is given before the statement of strategic priorities is set out, or whether it is just a Government statement that is then passed through. There is an interesting question about consultation in advance.

Once it is established, those acting and investing alongside Great British Energy will be more interested in how it as an institution interprets that statement. If it has to set out a strategic business plan as set out under subsection (8), that is the area that companies will be more interested in, because—assuming it is operationally independent—that is the thing that they will take more seriously.

The other dynamic in terms of updates is the risk that regular updates to the strategic plan create uncertainty. That might go back to the question of timeline and expectations of when the statement is reviewed, when it is republished and at what stage, and what needs to change externally to make that a reality. That is probably an important dynamic. Whether that is a matter for the Bill I will leave to others to guide on, but obviously it is an area that will be of interest externally in understanding how Great British Energy operates in practice.

[Andrew Pakes (Peterborough) (Lab)]

Q Most of my professional background has been in workforce development in supply chains, ensuring that we can deliver. Even though we have had the conversation about the flexibility and the broadness of the objectives, I think this is still an ambitious piece of legislation that the Government are putting forward. I am interested in your reflections on the objectives and the financial assistance, and whether you think that in the country we currently have the supply chain or the skills to deliver on this ambition, or whether the Bill itself in containing these powers will be a catalyst to deliver on that ambition.

Josh Buckland: Ultimately, the question of supply chain is broader than this Bill. Great British Energy could absolutely play a role, especially if it is doing place-based investments or is particularly investing in certain projects. but there is a fundamental question for the Government, as they look to build out the supply chain, around what they are doing at a skills-based level, what they are doing at a technology development level and how they are giving greater clarity on the pipeline of projects over time, some of which might be invested in by Great British Energy and some of which might not. For me, supply chain and skills deployment is a matter of broader Government policy, which Great British Energy can support.

As we stand here today, we do not necessarily have the right level of skilled capacity in the country to deliver all the ambitions that have been set out across infrastructure. It is important not just to look at the energy sector; a lot of the changes will require changes in the transport sector, the water sector and others, but that does not mean that we cannot have those skills if there is a broader framework to develop them, to train and to invest at scale in the supply chain. Great British Energy could play some role in that, but the broader policy framework and the Government’s ambitions more widely will dictate that to a greater degree.

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[The Chair]

Ms Dawes and Mr Norquoy, have you anything to add?

Myrtle Dawes: I am glad to get the clarification. We also invest in CCUS; it is really important technology for industrial decarbonisation. As an engineer, I will tell you that there is risk involved in that, because we are used to steady state, and we will want to stop and start things. It is a refrigerant, so it will not like it.

There is quite a lot to do to reduce costs. The monitoring and verification of the stores is super-important. If we can turn a waste stream going to store into a product stream that is being utilised, that will be fantastic. That has to be the way we need to go. There is lots of technology to look at, both on the capture of emissions—direct air capture has its role, especially if we are going to look at some kinds of synthetic fuel—and on some of the emerging technologies around capturing carbon dioxide from seawater. Apart from the fact that we might also be able to mine some minerals from doing that, these are things that we should be looking at. It is all about getting the security of doing these things closer to home.

[Pippa Heylings]

Q Mr Norquoy, you said in your opening remarks that businesses would like a little more assurance, which would perhaps come in the Secretary of State’s statement on the strategic priorities. You mentioned the objects. Part of the Committee’s debate at the moment is about how wide we make the objects. If there were any objects included, because it seemed to be indicated that that might be beneficial, what would they be?

Jack Norquoy: I am happy to clarify that. We are content with the Bill; we understand the need to enable flexibility so that it can evolve over time. We certainly want GB Energy to be durable at a time that we are building a new energy system. There are various mechanisms, which I highlighted at the start. This is an opportune time to enable that durability. I think the scope is right; yes, it is wide, but that is important for longevity. We would want to see clarity within the business plan and as part of the statements that come following the Bill.

I think industry is very keen. We are operating at pace, so we want some clarity around the architecture in which this will sit, to give assurance to businesses that are ready to engage and want to work closely with the Government and GB Energy. As has been highlighted to the Committee today, we want a sense of the role of GB Energy, where it will end when it comes to the national wealth fund and where those can complement each other. We also want clarity on the established array of institutions at a UK level, primarily the UK Infrastructure Bank. That is compounded when you come to Scotland, where we have the good work of the Scottish National Investment Bank and Scottish Enterprise. I do not think that this detail is needed in the Bill, but clarity on some of that architecture would be very welcome shortly thereafter.

[The Chair]

As nobody else on the panel wishes to respond, and there are no further questions, may I thank you for your evidence? We are very grateful to you for coming in.

Examination of Witness

David Whitehouse gave evidence.

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[Uma Kumaran]

Q It is good to see the UK as a global leader once more, being the first in the G7 to end coal and in ensuring, as you have said, that the transition has been a just one. This is an increasingly perilous time globally to rely on foreign countries for our energy and energy security, and that remains a concern. I am looking at the object in clause 3(2)(d), on

“measures for ensuring the security of the supply of energy”.

For our constituents watching at home, which I choose to believe they are, what does the Bill actually mean for energy security? What does it mean for our constituents in the years ahead?

Michael Shanks: Our constituents and the wider population are watching every moment of this sitting, I have no doubt.

That is an important question. Security of supply is one of the critical questions that we have to answer. We have this challenge at the moment of how we bring down bills; how we move towards our climate targets for clean power, which is essential; and how we ensure security of supply. The only way—the only long-term solution—is for us to move to cheaper renewable energy at pace. Every single year that we are dependent on volatile fossil fuel markets, we open ourselves to the kind of exposure that people have still been paying the price for in the past few years. That cannot continue.

We will not be able to flick a switch overnight. We have come in after 14 years of chaos, frankly, in so much of government, and we are doing as much as we can to move at pace, but this is the journey that we need to be on. As I have said, 2030 is ambitious, but it is absolutely achievable. I was heartened when every single one of our witnesses today confirmed that although this is an ambitious programme, they see GB Energy as a critical part—not a silver bullet; of course it is not, and we never said that it is—in moving us toward energy security, cheaper bills and the climate leadership that the public want.

[Pippa Heylings]

Q I would like to understand whether you see this as the missing limb in clause 3, on the objects. I heard you mention in the Chamber that the fifth objective of GB Energy is community energy, so we are missing the fifth objective in clause 3 around community energy. We heard from all the witnesses about how crucial this community piece is, both to de-risking and to reducing the delay. I wonder whether you would be open to an amendment and would consider putting it in here. I do not think that this would make it more difficult to hold the flexible, wide-ranging framework that we have had, so I want to see if you are open to that.

Michael Shanks: There are two separate things here: the objects in the Bill, which are around the restrictions placed on Great British Energy, and the five key functions, which are outlined in the founding statement. I was referring to the five key functions, one of which is the local power plan, which is how we think we will deliver a lot more community-owned energy.

The important thing about the Bill is that we do not want inadvertently to create a list of things that we think are good to have—I do not disagree with you at all about the importance of that—but that actually end up restricting it in ways that we do not expect. There is that danger with Bills like this; it was the same with Great British Nuclear and the UK Infrastructure Bank, where they have a clear, focused remit. There is nothing in the objects that prevents community energy projects—in fact, they are intrinsic to several of them—but we think that adding more and more detail, including the amendment that you propose, is not the right way to go. But it is clear in the founding statement, in the evidence from Juergen Maier and in numerous answers from the Secretary of State and me that this is something to which we are absolutely committed.

[Torcuil Crichton]

Q Thank you, Minister, for your assurances on the Bill’s commitment and your own commitment to investing in community energy schemes and municipal schemes. We have heard from industry witnesses today about communities taking a stake in their own projects and about not having an industrial strategy that is agnostic. That obviously means giving priority to communities and to getting community projects on to grid connections, and making sure that they get all the help they can get to bring their projects to fruition. Can you clarify how GB Energy might help with that?

Michael Shanks: That is really important. There are two strands to this. The capacity building point, to which you allude, is critical. A lot of communities absolutely have the possibility, the option and the potential for some of these projects, but just do not have the capacity to deliver them. We see that as a critical role that GB Energy could have, as a sort of one-stop shop of experts to provide that support, help with the essential pre-planning work and help to navigate the connections issues.

The second point around connections is really important, and it is something I am focusing a lot of time on within my wider remit as Minister: how do we clear the connections queue, while also prioritising the projects that we want to get connected much faster? Some of that will require us simply to build more network infrastructure to alleviate the pressures; some of it is building on the work that the previous Government did around prioritising the queue.

There are difficult trade-offs. Far be it from me to give credit to the former Minister again, but there are trade-offs because it is important for us not to say that one project is more valuable than the other. There might be, for example, mechanisms around saying that one is more likely to be connected faster, or is further through its delivery phase and should therefore get priority over something else. There are also a lot of projects still in the queue that just should not be there at all, because they are nowhere near ready to be delivered. It is important that we work on both those things, but GB Energy can be a real catalyst for communities to unleash the potential that they have. I am really excited about the opportunities that are there.

In closing, may I thank Committee members for their forbearance today? Can I also say that it is the first time since 2010 that a Minister has given evidence in a Bill Committee? I am glad that this Labour Government have brought back the practice of Government Ministers being responsible to Parliament and answering these questions. I look forward to doing more of that in future.

Ordered, That further consideration be now adjourned. —(Anna Turley.)