Energy BILL [ Lords ] (Fifth sitting)

Debate between Simon Hoare and Matthew Pennycook

Tuesday 2nd February 2016 Public Bill Committees

[Simon Hoare]

I am just coming to a close, if the hon. Gentleman will forgive me.

Rather than jiggery-pokery such as applying for two turbines in a 22-acre field to establish the principle and then coming back for more through variations to consent, which the amendments from the hon. Member for Coatbridge, Chryston and Bellshill sought to protect, we may well find that local communities and their planning authorities will see the whole picture at the start of the planning process rather than planning by salami-slicing, having established the principle.

The Government are absolutely right in their approach to the subsidy. My hon. Friend the Member for Daventry spoke wisely about the civil war. I must say that I would probably have found myself more of a cavalier than a roundhead, but there we are. However, there is an important point to make. If the civil war was about the proportionate balance between Crown and Parliament, the clauses inserted in the other place are, without over-egging this particular pudding, potentially as significant. If the Salisbury convention is to mean anything, something that passed the survey of the general election and a policy that commanded strong public support should not be challenged by the other place. I hope that we do not get involved in an overly long game of ping-pong with their lordships, because the view of the democratically elected House, certainly on this matter, must prevail.

[Matthew Pennycook]

When I drafted my notes for this speech earlier today, I did not comprehend that it was quite on an English civil war-type level of debate, but I will do my best.

Before I move on to my substantive comments, I will refer to the very interesting debate we had earlier about variability and balancing. It is worth returning to because—like so much of the debate on this issue, and not only in Committee and on Second Reading—we hear less about the costs of particular subsidies or how onshore wind forms part of our energy mix and more about the politics of onshore wind, which is really not what we are discussing when we consider what is the contentious part of the Bill.

Earlier, the hon. Member for Daventry raised the issue of intermittency, but I agree with my hon. Friend the Member for Stalybridge and Hyde that he did so in a way that did not shed much light on the subject, because the notification of inadequate system margin event that he talked about—I believe that it was a NISM event in November, and incidentally it does not mean that the lights are about to go out, but merely that the National Grid would like to see a larger safety cushion of spare generating capacity being brought on to the grid, which is not an unusual practice for the industry—was not caused just by an extended period of low wind, although that was part of it. It was also caused by unexpected plant faults and losses, so it was not just the fault of wind. When one drills down into the costs of that NISM event, one finds that it was in the hundreds of thousands, and not the calamitous figures that we got in the press.

Similarly, I am sure that we can have an extended debate about base load and about whether the idea of large coal-fired or nuclear power stations for base load is outdated, as Steve Holliday, the CEO of National Grid, has himself argued.

However, what cannot be denied is that onshore wind is a flexible technology that helps National Grid to balance the network quickly, by ramping output up and down at times of constraint or system imbalance and, as the Royal Academy of Engineering has estimated, it requires no specific extra back-up until we hit 50 GW of onshore wind, which is five times the current level on the system.

When it comes to the costs of balancing to account for the increased variability, which is a product of moving towards a more decarbonised and flexible energy system, gas is far, far more expensive than wind. For 2014-15, 7% of the costs of balancing the grid were due to payment to wind. In the equivalent year, the balancing costs associated with gas amounted to £240 million, which is five times as much as the costs associated with wind. So we need to bring some sense to the debate about what these technologies do and, in a sense, approach it—as I hope the Government still do—in a technology-neutral manner.

By bringing the Committee’s attention to this point, I am only drawing attention to what I believe is actually the driving force behind the early closure of the RO and the Government’s insistence on reinserting these clauses, which is not a hard-headed calculation of what is required to balance the energy trilemma, or to meet the costs of controlling the levy framework; it is about the politics of the windy caucus and the understandable anger of constituents in parts of the country who have had onshore wind projects foisted on them when they do not support such projects.

As we have heard, onshore wind has been a success story. It is proven; it is mature; and its costs are coming down. That is precisely because of the conducive framework for investment that was provided by 10 to 15 years of energy policy consistency and a large degree of consensus about that policy. It is that consistency and the investor confidence that comes with it that the Government have played fast and loose with since May 2015.

The hon. Member for Daventry said that this whole debate turns on this point, and in a sense he is right to say so. However, to label it dancing on the head of a pin does him a disservice, given the number of people who have invested substantial amounts of money over long periods of time, because—as we heard from hon. Members before—the lead-in times for these projects go back years. Those people invested in those projects in good faith and they did not invest to see them close early.

I am very clear about the manifesto commitment. We are not talking about the localist aspect; there is no dispute about that. The manifesto is very clear that local people will have the final say. On the nebulous wording

“we will end any new public subsidy”,

it is clear that the renewables obligation is not a new public subsidy. It is an existing subsidy that was legislated for by the coalition Government in 2013, and investors were right to think that it would continue. As recently as 13 October 2014, the then Minister—now the Secretary of State—said that

“the RO will be closed to new capacity from 1st April 2017”,

and there have been other similar statements.