Great British Energy Bill

Viscount Trenchard Excerpts

Committee stage
Monday 13th January 2025 Lords Chamber

[Viscount Trenchard (Con)]

My Lords, I declare my nuclear power-related interests, as stated in the register. I support my noble friend Lord Offord of Garvel, who has moved Amendment 59 which, together with other amendments in this group, seeks to align the objectives of GBE with claims made by the Government before the general election as to what GBE would achieve for consumers.

I think it is fair to say that the pledge to cut consumers’ bills by £300 per household was a specific promise, and it was repeated often. I understand that the £300 pledge was made on the back of a report by the energy think tank Ember, but that it was based on the energy price cap that applied in 2023. Is it not also based on the less ambitious plan for transition to net zero, to which the previous Government had committed? However, the previous Government had not planned on setting up GBE. Will the Minister please explain where the savings figure of £300 came from, and whether the Government still support it? In that case, is it not right that it should be made a specific objective of GBE?

Will the Minister also tell the Committee whether my noble friend Lord Frost was correct in his warning, in his debate on 14 November, that NESO’s figures predicting the cost of electricity generated from offshore wind were rather optimistic at £44 per megawatt hour? My noble friend told your Lordships that recent payments to offshore wind farms under contracts for difference suggest that the real cost may be three times as much, at some £150 per megawatt hour. If that is so, NESO’s report on the Government’s plan to decarbonise the grid by 2030 may need some adjustment.

I still do not understand why the Government choose to subsidise only wind and solar schemes rather than nuclear. If consumers are required to subsidise only intermittent sources of energy, it follows that the total energy mix will be disproportionately dependent on intermittent sources. We need much more nuclear, which should not be seen as an add-on, to ensure that we can keep the lights on when the wind does not blow and the sun does not shine. It should be seen as a core and important part of our firm baseload energy system.

Indeed, we were once global leaders in nuclear power, but we now have a severe shortage of skilled workers with experience in the sector. Those we have are relatively old, and we need to train many more younger workers in nuclear technologies, and rebuild the supply chain. I am talking not just of gigawatt scale large plants like Hinkley Point C and Sizewell C, but small SMRs and AMRs which are flexible and very cost effective. That is why I have added my name to Amendment 61, also in the name of my noble friend Lord Offord. We must ensure that we benefit from the so-called clean energy transition, which is particularly relevant in the case of nuclear technologies. It is right that GBE, as a publicly owned company, should report annually to the Secretary of State on progress in re-establishing supply chains as a strategic priority.

There is not much about nuclear in the Government’s new publication Clean Power 2030 Action Plan, published on 13 December. It refers to GBE’s founding statement published in July. That document explains GBE’s five functions, of which building supply chains in “every corner of the UK” is listed fourth out of five, in two short paragraphs. “Working with GBN” is listed last, in a short single paragraph.

I have also added my name in support of Amendment 63. It is essential that GBE must understand what fulfilling its strategic priorities will cost—otherwise, how can the Secretary of State exercise his powers of direction in a responsible manner? Similarly, Amendment 65 would ensure that GBE must not waste money by investing in schemes that are too far from a grid connection or have no cost-effective access to the grid and no realistic prospect of acquiring one in a timely manner.

I have also added my name to Amendments 69 and 70 in the name of my noble friend, who has eloquently explained to your Lordships the purposes of these amendments: namely, to require GBE to consider carbon emissions from each investment and to do the same in respect of its whole investment portfolio, reporting to Parliament annually. We may not agree on the absolute prioritisation, regardless of cost and damage to our industrial base, of the elimination of all fossil fuels from our energy generation system, but we can all agree that it is a good thing that public money should be spent in such a way that increases clean power at the expense of less clean power—that is, as long as the benefits gained justify the cost. The Committee will have a chance to debate this matter in the next group.

Among the investments that GBE will make, I very much hope there will be some investments in nuclear power schemes, particularly in SMR and AMR technologies. As the Minister told your Lordships in his briefing before Second Reading, he does not expect GBE to make investments in nuclear, at least initially. I think this is because the Government think that it is not possible to deploy any of these new technologies before the 2030 target for clean power. The 13-page press release accompanying the release of the Clean Power 2030 Action Plan contains “nuclear” only once, explaining that the Government’s clean power mission is the solution to this crisis,

“by sprinting to clean, homegrown energy, including renewables and nuclear”.

But the action plan’s sparse references to nuclear comprise only a single reference to the GBN-led SMR programme, and a reference to the extension to the life of the four existing AGR reactors as a stopgap measure. I cannot find any evidence that the authors of the action plan see nuclear as playing much of a role in sprinting to clean energy.

I have also put my name to Amendment 72, which requires an annual report by GBE of its impact on the amount of imported energy. In preparing for this debate on Saturday morning, I took a look at the National Grid’s energy dashboard, which revealed at 10.15 am that we were drawing 14.7% of our electricity from imports, which is too high. Indeed, the name of the Minister’s own department emphasises the importance of energy security. The winter sun was shining brightly, but solar contributed only 4.3% and wind a mere 8.8%, less than the 11.4% generated by our existing, ageing nuclear power stations. Noble Lords will appreciate that the electricity grid accounts for around 20% of total energy consumption, which means that wind power on Saturday morning was supplying around 1.76% of the country’s total energy requirement, and solar less than 1%, even on a sunny day. Overreliance on intermittent energy sources does not help energy security—quite the reverse.

I have added my name to Amendment 80, tabled by my noble friend Lord Petitgas. Of course, it must be right that GBE should be required to produce quarterly accounts and audited accounts annually. As far as the requirements for reports on carbon emissions are concerned, the amendment duplicates Amendments 69 and 70. If the Minister can assure the Committee that the Government will bring their own amendments to satisfy these requirements, I am sure that such duplication can be avoided.

Lastly, I support Amendment 85A in the name of my noble friend Lord Hamilton, which seeks to achieve substantially the same result. Amendment 80 is also necessary to ensure proper scrutiny of GBE’s decision-making process with regard to its investments. Will the Minister explain his view on GBE’s role as a potential investor in joint public and private partnerships?

[Lord Berkeley (Lab)]

My Lords, Amendment 74 in this group is in my name. It seeks to ensure, in the creation of GB Energy and the delivery of its objectives, a specific consideration of decarbonisation challenges faced by the 1.7 million households in the UK that are not connected to the gas grid—I declare an interest in that I am one. An awful lot of other people—including many noble Lords opposite, I am sure—are not connected to gas and will have to use electric. The amendment provides for direction to be given to GB Energy to review the decarbonisation challenges that these households face but also, importantly, to consider the solutions that exist to help them do so practically and affordably. They include the value of adopting renewable liquid fuels.

Taking into account the recommendations of GB Energy, the amendment would also require the Secretary of State to implement existing measures within the Energy Act 2023 that would help off-grid households—namely, to hold a consultation on the benefits of introducing a renewable liquid heating fuel obligation or RLHFO. This measure secured all-party support in the last Parliament but has not yet been implemented. I hope that my noble friend will look at this again.

To go into a bit more detail, the challenges facing off-grid households, which are mostly in the countryside, are their existing energy efficiency, location, age and construction. As many noble Lords will understand, this means that these households will face substantial challenges to decarbonise using technology based on electrification. The research undertaken by the department and the Scottish Government shows that installing a heat pump in such a house, including full retrospective costs and the cost of servicing, will cost off-grid homes on average over £21,000, which is unaffordable for many.

I am concerned that there will also be an impact on the local grid. We tend to forget about the local grid. If everything is to be heated by electricity, placing unmanageable pressures on the grid, we need to have a good grid. In the National Grid’s Future Energy Scenarios report, the scenario “Leading the Way” has estimated that to achieve clean power by 2030, 1 million properties in the UK will require a solution other than electric heating, due to the high cost of local networks.

There are probably several solutions, but the one I want to describe briefly is that renewable liquid fuel can make decarbonisation affordable and practical for off-grid consumers, significantly reducing emissions and delivering on the carbon budget. It will help deliver clean power by 2030 and the commitment that no one who does not want to will be forced to remove a boiler.

In Cornwall, where I live, a fuel distributor has successfully created the country’s first renewable liquid fuel village, in the coastal village of Kehelland, converting homes, businesses and the local church and schools to a fuel called HVO. It has been a fantastic success in helping residents to reduce their carbon emissions and allowing them to play their part.

I appreciate that my noble friend’s ministerial colleague in the other place gave evidence on this issue the other week, but she referred to issues of supply and cost to consumers. I was concerned to hear that the department may be delaying the Energy Act consultation. I hope that is not the case, because this consultation needs to go ahead. I know that the industries that support off-grid households found that she said something rather surprising, given that there is clear evidence that should reassure my noble friend and his colleagues.

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[Lord Offord of Garvel (Con)]

My Lords, I rise to move Amendment 62 and to speak to my Amendments 64, 68, 71 and 75. Aside from the promises to cut consumer energy bills and create 650,000 new jobs made by the Government throughout the election campaign, the British public were assured that GBE would turn a profit for the taxpayer. Yet there is nothing in the Bill that elucidates an investment profile or targeted rate of return. Why not? The British taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of public money.

With that said, Amendment 64 requires GBE to provide an annual report to Parliament on its annual rate of return on investment and a projection of the following year’s expected rate of return on investment. That point was picked by my noble friend Lord Petitgas in the previous group. The company intends to invest in and de-risk projects in new clean energy technologies and it would be useful to see the return on investment of these projects. The point was well made in the last group and this amendment continues to hammer that point home.

During the last election, the Government made countless promises on bills and energy costs—again, a point we heard in the last group—that were rehearsed, debated and put out by the Prime Minister, Chancellor and various Cabinet Ministers, who gave the figure of £300. Once again, it is only fair that we have amendments that hold the Government to account on these promises made to the British people. It is widely understood that the cost of electricity is a matter of serious concern and, again, as has been indicated, it is now the major part of any household’s weekly costs. Therefore, it is deeply worrying that the Government are voting against enshrining these promises in law when they made them so directly to the British public.

The Government have said that GBE is part of their plans to ramp up renewables, which they say will result in cheaper energy. But, again, we do not have the background and analysis. The only analysis we have had so far, from Cornwall Insight, found that in the last contracts for difference, the Secretary of State, on these assumptions, will potentially increase people’s energy bills by £5. So, again, we have conflicting reports from different experts in this space. The Office for Budget Responsibility has forecast that removal taxes will increase by 23% by 2030, again highlighting the cost of this transition to the ordinary consumer. It is with that in mind that I bring forward Amendment 71, which requires GBE to produce and report

“a cost benefit analysis of the price of electricity produced from renewable energy technologies compared to that produced from gas”,

which plays a critical role in energy generation.

I return again to the Government’s promises of 650,000 jobs with no detail as to how that will be deployed, other than the fact that we know there may be 100 or so in the Aberdeen headquarters. I believe that the Government’s punitive attack on the North Sea oil and gas industry will actually cost jobs, as the noble Lord, Lord Bruce, already mentioned in the last group—some 200,000 highly paid, highly technical jobs in the North Sea, which are critical to the transition to the new green energy world for which we all wish.

Finally, Amendment 75 would require GBE to carry out an environmental impact assessment on each investment it makes. The Secretary of State and GBE should give due regard to their role in maintaining the protection of our environment while ensuring that they deliver healthy returns on investment.

I am pleased to speak to this group. I look forward to the corresponding debate. The function of GBE as a type of investment body is central to its operation as a company. It is therefore essential that the Bill makes provision to report on the success and impact of each investment it makes, backed by £8.3 billion of taxpayers’ money. I beg to move.

[Viscount Trenchard (Con)]

My Lords, I congratulate my noble friend on his clear and well-argued introduction of his amendments in this group, to most of which I have added my name. As he said, the taxpayer must be able to see what the Secretary of State is doing with £8.3 billion of his money. State-owned companies do not have a great track record in realising a strong, positive return on their invested assets.

Unless GBE does that, it is likely to have a negative, rather than a positive, effect on wholesale electricity prices. Amendment 62 will ensure transparency on that. GBE intends to invest in and de-risk projects involving new clean energy technologies. It is clearly necessary to have full transparency as to the rate of return on each of the investments that GBE achieves. The amendment would require GBE to consider every single investment it makes in terms of the impact that it will have on electricity prices in the future. Does the Minister not agree that this would be a good discipline for GBE? Amendment 64 would ensure that we have such transparency on the whole portfolio of GBE’s investments across the board.

Amendment 71 contains a requirement for a cost-benefit analysis of the price of electricity generated by each of its investments compared with that of electricity generated by gas. We certainly need to know that. Many of us think that we are already saddling the consumer and industry with unnecessarily expensive electricity. The grid is always bound to draw electricity from renewable sources when they are available, in priority to gas. This means that gas power stations are constantly being fired up and down, and are seldom operated at full capacity. This distorts the price of gas, which in turn distorts the price of electricity because gas power stations produce much cheaper electricity when operated consistently at or near full capacity than they do under the current modus operandi. The price of gas used in the cost-benefit analysis required by this amendment ought to be the price achievable from constant operation rather than the distorted price resulting from prioritisation of renewable sources.

I also refer briefly to Amendment 75. It is clear that the main purpose of GBE’s collaboration with the Crown Estate is to build a large number of offshore wind farms in coastal waters. This amendment will require GBE to consider carefully the environmental impact of its activities on marine life and inshore fisheries, among others.

The Government have made much of their determination to cut energy bills. Their refusal to accept Amendment 71 and other amendments would show that they are less than certain that their plans will result in lower energy prices. I look forward to hearing the Minister’s response.

[Lord Hamilton of Epsom (Con)]

My Lords, I was speaking to the noble Lord, Lord Mandelson, the other day. This was when he was chasing around after the chancellorship of Oxford University. I said to him that I thought he would serve his country much better in Washington than in Oxford. I congratulate him on becoming our ambassador in Washington. I think he will do a very good job.

I mention the noble Lord, Lord Mandelson, because a quote attributed to him is that, “When politicians try to pick winners, the losers invariably find the politicians”. People should recognise that the track record of politicians in trying to pick winners is absolutely abysmal. Invariably, political considerations and jobs come into it; profitability is the last thing that is ever considered.

Therefore, it is essential that we support these amendments. They are asking for some degree of accountability for Great British Energy, which will have billions of taxpayers’ money. If we are not very careful, it will go to all the projects that have been rejected by the private sector as not being viable and will invariably lose money. That should be of great concern to us all because it discredits government and wastes taxpayers’ money.

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[Viscount Trenchard (Con)]

My Lords, I rise first to propose my Amendment 86A as an amendment to Amendment 86, to which the noble Lord, Lord Cameron of Dillington, has just spoken. The purpose of my amendment is similar to that of Amendment 56A, which was debated in an earlier group. I agree with the noble Lord that the Secretary of State’s considerable powers to give directions to GBE should be subject to oversight. The Bill already requires any directions to be published and laid before Parliament, and it requires him to consult GBE and any other person he considers appropriate before giving any direction. The noble Lord, Lord Cameron, rightly proposes that NESO, the Climate Change Committee and the Gas and Electricity Markets Authority should also be consulted. He rightly did not add Natural England and the Environment Agency to the list—I guess because they are not qualified to have authority over the Secretary of State’s directions on energy projects to GBE.

However, both Great British Nuclear—GBN—and the National Wealth Fund should be consulted, because their objectives are associated specifically with the delivery of new energy schemes. In particular, it would have made more sense to have created GBE as a body incorporating GBN from the beginning, which would have provided for more joined-up thinking. It is seriously distortive to the market that GBE is well capitalised, with £8.3 billion of taxpayers’ money, and GBN has no such funding. That is why we do not have anywhere near enough UK-based nuclear companies and consortia going through the GDA process at present. At the very least, GBE should be required to work closely with GBN. The Minister should surely accept that GBN should be able to propose nuclear schemes, which may compete well with renewable schemes. A requirement to consult would make it more likely that that would happen.

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[The Earl of Effingham (Con)]

My Lords, I rise to speak in support of the amendments I have tabled to Clause 6 of this Bill, along with the contributions from the noble Viscount, Lord Trenchard. These amendments reflect three core principles of fiscal restraint, operational transparency and the safeguarding of national interests.

Amendment 83 seeks to limit the number of Great British Energy representatives attending conferences of the parties to the United Nations Convention on Biological Diversity to no more than five. I greatly understand the importance of international collaboration on biodiversity, but we absolutely must be realistic about the need for cost control and proportional representation. These international summits are indeed vital, but we have to recognise also that very significant amounts of taxpayers’ money are spent on travel and accommodation. It is simply not appropriate for Great British Energy, funded by the public purse, to send unnecessarily large delegations. By limiting attendance, this amendment ensures that taxpayers’ money is spent wisely, without detracting from the company’s core mission, which can be accomplished with a lean and laser-focused task force.

Amendment 84 would require Great British Energy to publish its principles, policies and criteria for evaluating prospective investments. One of the most persistent criticisms of government-led initiatives is the opacity with which decisions are often made. Entrepreneurs, innovators, universities and companies across the country deserve clarity when applying for backing from Great British Energy. For example, what metrics will Great British Energy use and what constitutes a worthwhile investment? By requiring the publication of this information, we will not only promote transparency, which should be encouraged, but foster a more competitive and accessible process for any prospective partners. This is good governance in action.

Finally, Amendment 85, tabled jointly with the noble Viscount, Lord Trenchard, addresses the critical issue of national security and economic prudence. It would require that Great British Energy does not co-invest with Chinese state-owned companies without prior notice to the International Trade Committee of the other place. The risks associated with Chinese state-owned companies are well documented. Co-investment with such entities could compromise the integrity of Great British Energy and pose long-term risks to our national security. Furthermore, it would expose the UK to significant economic and political vulnerabilities. To be clear, this amendment does not propose an outright prohibition, but it does mandate a right and proper process of scrutiny. Requiring advanced notice to the International Trade Committee will introduce a layer of accountability which will ensure that such decisions are not made in haste or without proper oversight.

Together, these amendments reflect a responsible approach to managing Great British Energy. They ensure that the company operates in a manner that is transparent, cost-effective and aligned with the UK’s strategic interests. I urge all noble Lords to support these amendments and help guide Great British Energy to be an entity that truly serves the British people both efficiently and prudently.

[Viscount Trenchard (Con)]

My Lords, I rise to support my noble friend Lord Effingham in his Amendment 85, to which I have added my name. Certainly, there are good reasons to be very cautious in selecting international partners with whom we will co-invest in the energy sector. Chinese state-owned companies are managed under rather different governance systems from those which the London Stock Exchange would consider appropriate for its listed companies. I agree with my noble friend that the Secretary of State should consult the International Trade Committee of another place before considering such co-investment.

Among other amendments in this group, I also support my noble friend Lady Bloomfield of Hinton Waldrist in her Amendment 78, which would ensure that GBE will reinvest all profits into the company. I agree with what she said in her speech, especially as GBE, as a publicly owned company, will not be subject to the disciplines of the marketplace, and its shareholder will be more concerned with achieving policy objectives through GBE than with maximising its return on investments and contributing to long-term growth.

[Lord Teverson (LD)]

My Lords, I will make a few comments on this. I am rather attracted to the amendment from the noble Baroness, Lady Bloomfield—one worries that, if this were a successful organisation, all profits would disappear back into the Treasury, which would be very unfortunate. I think that is an excellent bonus, but I suspect I probably would not put it in as an amendment to the Bill.

In terms of investment committees, I cannot believe that this organisation will not have a proper professional investment committee, which, I hope will probably have some external members as well. But this misses one of the key points—which I also would not put in the Bill, so I have not put down an amendment—which is the discipline with which the great Green Purposes Company, of which I am a trustee, keeps the feet of the Green Investment Group part of Macquarie to the fire. It is around checking and making sure through proper systems that the investments that are made are truly green and add to low carbon, rather than otherwise. There needs to be a check on that side so that the organisation itself also avoids greenwashing, which is one of the big issues that would undermine the reputation of Great British Energy if it should ever happen. Obviously, we hope that it would not, and I am sure the Secretary of State would not want it to, but there needs to be something within the organisation—an external audit would be good—that includes the impact on greenhouse gas emissions and biodiversity as part of its performance.

In terms of foreign companies, again, I would not honestly see this as being part of the legislation, but I would absolutely say that Great British Energy should be involved in joint venture companies with foreign businesses. That is one of the key areas where we should be able to bring intellectual property back into this country and work together with other nations, as well as strong UK companies. Those joint ventures would be extremely important in terms of the performance of this company.

Lastly, why are we discriminating against the UN convention on biodiversity? It is an organisation that is struggling. I am not disagreeing on how many people we should or should not send to it, but why that and not the United Nations climate change committee or the COPs? I do not get that. It would be very negative for that organisation, for which we are struggling to get international consensus to tackle the real and huge biodiversity problems that we have on this planet, if it was mentioned in a Bill of the UK Parliament. That would be absolutely negative for our international reputation.

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Moved by

[Viscount Trenchard]

85B: Clause 6, page 3, line 38, at end insert—
“(1A) The Secretary of State must give a specific direction to Great British Energy that it must consult with Great British Nuclear prior to investing in the production, storage and supply of nuclear energy.”Member’s explanatory statement
This would require GB Energy to consult with Great British Nuclear before it invests in nuclear energy.

[Viscount Trenchard (Con)]

My Lords, although I have already spoken extensively about the need for GBE to pay much more attention to nuclear power, I am glad that we now have a separate nuclear group of amendments. My Amendment 85B requires GBE to consult with GBN prior to investing in nuclear energy projects. A reader of the Bill and of the Explanatory Notes would probably take the view that it is not the Government’s intention that GBE should have any involvement with nuclear power. The word “nuclear” does not occur in the Bill and occurs only once in the Explanatory Notes, which inform the reader that the Secretary of State’s powers to give directions to GBE are consistent with the powers the Government have to direct comparable institutions such as GBN. Does the Minister agree that it is a bit of a stretch to argue that GBE and GBN are comparable institutions?

We have been told that GBE will be capitalised with £8.2 billion for the purposes of making investments in green energy. As I pointed out at Second Reading, a look at GBN’s accounts shows that it had only £342 million on its balance sheet at 31 March 2023. How can these two bodies be regarded as comparable?

On 17 December, the Minister told the Committee that

“we also need nuclear as an essential baseload for our energy generation, and gas as the flexible energy generation which you can turn on and off”.—[Official Report, 17/12/24; col. 177.]

I will make two observations on the Minister’s statement. First, to use gas power stations only as a balancing item for renewable energy is a very expensive way of using them, because they are constantly being fired up or down. Gas’s role in electricity pricing also distorts the price upwards, in a manner most damaging to the consumer’s interests.

I will not comment on CCUS, except to say that if only the Government would consider a funding commitment for nuclear of even one-tenth of that which they have made for CCUS—£21.7 billion—it would make an enormous difference to the prospects of British nuclear energy projects becoming viable and attracting funding from the private sector.

I was happy to hear the Minister confirm that we need nuclear as an essential baseload for our energy generation, but he has not convinced me that he recognises the urgent need to prioritise new nuclear projects now. He also said:

“Great British Energy and Great British Nuclear are already talking very closely together, and he can be assured that this will continue”.—[Official Report, 17/12/24; col. 209.]


This may be true, but the Government’s intention seems to be for GBE to concentrate initially on its clean energy superpower mission. The statement after the first energy mission board did not even mention nuclear at all. The Minister said at the Peers’ drop-in session before Second Reading that he did not expect GBE to invest in nuclear projects in its early years, and, as I mentioned in an earlier debate, he did not answer the noble Baroness, Lady Winterton, clearly when she asked him whether GBE might invest in an SMR project in South Yorkshire.

It is hard to escape the impression that, besides the two gigawatt projects at Hinkley Point C and Sizewell C, the Government see other nuclear as something that comes later—first SMRs and then later, AMRs—ignoring the important fact that some AMR technologies are more advanced than some SMR technologies. Can the Minister tell the Committee why GBN is prioritising SMRs over AMRs, which is surely an illogical approach, as some AMR technologies are more advanced than SMR technologies? Those that are ready now for commercialisation are being artificially held back.

I blame the Government for continuing the approach of the last Government in failing to recognise the potential of supporting a much quicker move to market for some AMR technologies, which are being sidelined by the limited scope and budget, and the slow pace, of the Government’s AMR research, development and demonstration programme, whose aims are merely to demonstrate high-temperature gas reactor technology by the early 2030s, in time for potential commercial AMRs to support net zero by 2050.

My Amendment 85B would ensure that GBE recognises that nuclear projects must form a part of its early investments. Amendment 85C would require GBE to monitor the impact of its nuclear investments on its ability to attract investment from the private sector in nuclear energy projects. I believe the latter could be substantial. Why does the Minister think that two important gigawatt projects initiated by Japanese companies—Toshiba’s NuGen project and Hitachi’s Horizon project—failed? Does the Minister not recognise how much better our energy security would be if either or both those projects had proceeded to successful deployment?

I have also tabled Amendment 118C, which adds a reporting requirement for GBE to undertake a review of the impact of this Act on the competitiveness of the UK nuclear industry compared to other countries. If GBE working with GBN acts as a catalyst in the adoption of new nuclear energy projects, their competitiveness will progressively increase compared with other countries. In September 2024, the International Atomic Energy Agency revised upwards its annual projections for the expansion of nuclear power for a fourth successive year. World nuclear capacity is now projected to increase by 2.5 times the current capacity by 2050, in the IAEA’s high-case scenario, including a significant contribution from small modular reactors.

The website Global Petrol Prices shows some interesting statistics. The price of electricity for businesses in the fourth quarter of 2024 in the UK was 51.7 cents per kilowatt hour, double that in Germany, where it was 23.5 cents per kilowatt hour, and three times that in France, where it was 17.4 cents per kilowatt hour. RTE, the electricity transmission network of France, showed that last Saturday nuclear accounted for 73% of French electricity generation, hydroelectric power for 12%, solar power for 7%, and wind power a mere 3%. It is very clear that the enormous cost of electricity for British businesses is now massively reducing their competitiveness compared with their French competitors. The more nuclear power we have, the more competitive it will become, and as the cost of electricity falls, the more competitive our businesses will become.

Does the Minister not agree that the economic growth that we all need so urgently can only be achieved by a radical adjustment to our energy policy? We need rapidly to commission more nuclear capacity—large, medium and small. I am not sure that all these amendments are perfect, but if he does not like my amendments as drafted, can he come back with some better ones to ensure that GBE, working with GBN, will ensure that much greater support will be given to nuclear projects so that nuclear can play its proper part—a much larger part—in our energy sector in the decades ahead? I beg to move.

[Lord Hamilton of Epsom (Con)]

My Lords, it seems quite extraordinary that no reference is made in this Bill to nuclear because, let us face it, if you want to have clean energy generation, nuclear is the only thing that is available at the moment. My noble friend Lord Trenchard must be right when he says that we should be much more seriously considering both small modular reactors and large ones for our energy supply in future, because that is going to be the only way we really get clean energy. I find it quite extraordinary that this has all been parked somewhere separately when it all should be integrated. We should certainly be looking at the potential for nuclear, because that is where the future lies.

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[Lord Hunt of Kings Heath (Lab)]

My Lords, it is always good to have a discussion about nuclear energy. The noble Viscount, Lord Trenchard, is ever consistent in putting forward his views. I assure him and the Committee that the Government see nuclear power as having a vital and important part in our energy mix.

I say to the noble Lord, Lord Hamilton, that the fact is that no technology is mentioned in the Bill, and that is quite deliberate—so the absence of nuclear in the Bill should not be taken as an indication that we do not think that it has an important role to play. I say to the noble Lord, Lord Offord, on Labour’s record on nuclear, it was in fact a Labour Government, in 2008, who took the decision that we would go back to new nuclear. Shortly afterwards, I was appointed a Minister of State at the Department for Energy and Climate Change, and I took part in many discussions at that point about how we got the sites, developed the supply chain and attracted investment. The fact is that we were succeeded by a coalition Government, followed by a Conservative Government, and it was not until, I think, 2017 that a final investment decision was made in relation to Hinkley Point C.

I am very proud of the nuclear sector. For all the challenges that Hinkley Point C has had, the fact is that a UK supply chain has been developed. The point about replication at Sizewell C is that that supply chain can then continue to service Sizewell C. We then want to see small modular reactors and AMRs developed, because we see them as having great potential. I say to the noble Viscount, Lord Trenchard, that he has not responded to the points raised by his colleague, the noble Lord, Lord Howell, in relation to Sizewell C. I am sure he will agree with me that, if we were to pull the plug on Sizewell C at this point, it would have a devastating impact on the confidence of the nuclear sector, in this country and globally. Actually—although he is not here—the point about replication is about the derisking of Sizewell C, building on what happened at Hinkley Point C, including the design changes and all the other issues, such as the time it took to develop the supply chain and the productivity issues. The case for Sizewell C is very strong indeed, and we look forward to moving towards a final investment decision over the next few months.

On the relationship between GBN and GBE, we have decided that GBN will remain a separate legal entity. That is important, because it makes sure that we have a body that can focus completely on nuclear energy, but working very strongly together with Great British Energy. The two chairs have met and have, I believe, built a very strong relationship already. I expect them to be able to work in strong partnership in future. I do not think it is necessary to put onerous requirements in the Bill. Certainly, Clause 6 is not the way in which to do it.

The noble Viscount, Lord Trenchard, is concerned about the approach that GBN is taking to the SMR technology selection process. It was instituted by his own party in government, and I think he was critical of his own Government. Well, I am not. I think the SMR technology assessment was absolutely the right thing to do. In September 2024 it concluded the initial tender phase of the process and downselected four companies. We hope for further progress over the next few months.

I recognise the huge potential that AMRs bring, and we will respond to the alternative routes to market consultation. We are obviously very keen to do what we can to attract nuclear company developers in this country.

On the impact of competitiveness, I really do not think the Bill is an appropriate vehicle for those considerations, and nor do I see that being part of Great British Energy’s role. But of course I want there to be a thriving nuclear industry in this country. I want to see us build on the supply chain that has been built around Hinkley Point C and then on to Sizewell C, as I have said.

In conclusion, I hope the noble Viscount will recognise that while he may disagree with elements of the Government’s policy on nuclear, he should be under no misapprehension: we believe that nuclear provides an essential baseload. We will continue to support the industry in the future.

[Viscount Trenchard (Con)]

My Lords, I thank the Minister very much for his reply, and I thank my noble friend for his intervention. To some extent I am heartened by the Minister’s words, although I remain a little unconvinced by his assertion that he sees nuclear as being so important. There is a fundamental difference between GBE and GBN, in that GBE has £8.2 billion of capital and GBN has only a few hundred million. The two vehicles are completely different, so I would be rather more relieved if the Minister had explained that the capital made available to GBE would equally be available to nuclear projects that GBN might recommend for investment.

[Lord Hunt of Kings Heath (Lab)]

Can I just respond? Nothing precludes GBE from investing in a nuclear development.

[Viscount Trenchard (Con)]

I thank the Minister again for his reply. Nevertheless, GBN does not have any money for investment, so GBN is by definition a very different kind of vehicle compared with GBE. In light of the Minister’s reply, I would like to withdraw my amendment for now.

Amendment 85B withdrawn.

--- Later in debate ---

[Lord Fuller (Con)]

My Lords, I will speak to Amendments 85G and 85H in my name.

In this week of all weeks, when temperatures have dropped to minus 20 in parts of our nation and we are down to less than a week’s-worth of gas, it is time for the rhetoric on renewables to collide with the reality of what it takes to power our economy and protect the comfort and well-being of our citizens. There could not be a better moment to have this debate, with Mother Nature dialling a wake-up call to us all.

We need to be more realistic about the practicality of heating and lighting our homes, grounded in the world as it is rather than how we want it to be. The purpose of these amendments is to ensure that GB Energy takes a structured and quantitative approach to investing in energy production from renewable and wind energy assets. These investment plans would be evidence on an annualised basis, but broken down into monthly segments to reflect the seasonality that we all experience, with mandatory monitoring on a monthly basis. At its heart, my amendment seeks to force GB Energy to use a data-driven approach to address the structural energy gap we get every winter and, inter alia, to use that data to prioritise investments in energy assets that give energy security above the desirability of decarbonisation.

Energy security and decarbonisation are not necessarily mutually exclusive, but when the UK’s energy balance is published monthly, as these amendments would require, it will act as an obvious spur on investments to keep the lights on every month as a first and primary duty. These amendments do not dilute the ambition of GB Energy or abandon the obvious desirability of reducing our reliance on fossil fuels. However, requiring GBE to publish its plans for renewables and to address the predictable gaps that come each year will bring some reality to the rhetoric.

This country is bumping on empty this week—it is a serious matter. We are too reliant on the kindness of strangers to heat our homes. As the noble Baroness, Lady Brown of Cambridge, head of your Lordships’ Science and Technology Committee says, the crux of the matter is the robustness of our plans for

“the doldrums of winter when the sun doesn’t shine and the wind doesn’t blow”.

I am not rubbishing renewables but we need to be less starry-eyed about their ability to make the contribution some have thought they can, especially in winter. The amendments would therefore require GB Energy to be specific about how its investments in renewable and wind energy assets, and the planned additional investments over its existing ones, will contribute to the aggregate energy demand in monthly slices. There is a purpose to this, which is to ensure that when we flick the switch, the light comes on; when we press the button, the motor whirrs into action; and when you open the bill, you should not have to fall over in shock.

I am not interested in adding bureaucracy; NESO has a responsibility to produce these aggregate demands and I do not intend to interfere with those. But we know that there are seasonal variations in sunshine, and as with solar, also with wind; we all know the wind tends to blow harder in the winter as storms barrel across the Atlantic. My amendment will require GBE to take this predictable seasonality into account in its investment plans, to ensure that those investments in renewables can realistically contribute to meeting the energy requirement on a monthly basis, especially in winter. It is also about holding GBE accountable for the hard-nosed business of addressing these predictable structural energy gaps in the way that the noble Baroness, Lady Brown, highlighted, working hand in glove with NESO to address the market failure.

It sounds obvious that this should be the case, but my sense is that the Government are primarily focused on decarbonisation, even if it just ramps up surpluses in the summer that require these constraint payments to pay wind turbines to be switched off. If we are chasing carbon alone, we are missing the point. We need to balance renewables and wind investments in a way that also balances energy markets every month so that we do not run out of juice when it is cold.

This is important, because the total amount of standby generation capacity that we need is scaled by the months with the greatest deficit. It is on not an annual basis but a monthly basis. Because we have these predictable gaps, we pay standby gas power stations millions to keep ticking over, ready to jump into action when needed. Control rooms up and down the country are staffed by people playing patience and waiting for that call. That is expensive. It also underpins the entire speculative subculture in energy markets, in a process that the Daily Telegraph last week called the “gasino”, whereby speculators make a fortune while householders pick up the tab.

My colleagues have noted that the Guardian reported this week that two gas-fired power stations were paid £12 million for just three hours of electricity. We should not be surprised. Running a power station is expensive—there are staff, there is capital and maintenance, with people sitting around waiting for that call—and it is expensive to provide this insurance. The truth is that we are having to pay twice for much of our electricity, once for the renewable capacity, which we hope will boil that kettle, then again to have non-renewables on standby, ready to leap into action so that we can ensure that we can boil that kettle when the mercury falls. The consequence is that we are paying for some of the most expensive electricity in the world. Our costs rose 124% in five years, according to government figures. The UK’s energy price per kilowatt hour was 25.85p per kilowatt hour in 2023—significantly higher than in Germany, France and the US. We are becoming structurally uncompetitive as a result.

If enacted, my proposals would mean that the company’s objectives and functions would be forced by the market and public opinion to rank energy security above the decarbonisation function. That way, our £8 billion investment in GBE will keep the lights on. That is how we get best value from those investments, and we have energy markets that work more efficiently and at lower costs, which is a good thing. I expect the Minister to say, “Well, this is all rather burdensome”, and give ifs and buts and ask why would we need to publish this stuff. However, nobody questions when the OBR on a monthly basis publishes the forecast for the Bank of England. I do not see why, if it is good enough for the Bank of England, the GBE should not be forced to publish its investments as well.

I mentioned in the earlier debate how GB Energy is a private company, but it is established for public benefit. Publicising its plans and monitoring them is for the benefit of the public. It should not be entitled to cloak its activities in secrecy, as a private company established under the Companies Act 2006 would normally be expected to do. Mandating a monthly look at the markets, with a view to reducing the amount of back-up generation that we need, would avoid the perverse incentive to invest in renewables that make the surplus even greater. We do not want to overprovide standby back-up, so we end up paying excessive compensation payments, and we pay people more than is necessary to play solitaire in those control rooms. We do not want to underprovide, so that speculators hold us over a barrel in the short squeeze.

It follows that the requirement to publish the plan, to invest with the purpose of reducing the monthly or the predictable energy gaps, ensures that it brings a dose of reality to the complicated job of not only calculating the gap but doing something about it. That is where GB Energy can have a good, effective and ambitious role. Success looks like GBE publishing the plans and data so that we can see how effective it has been in needing fewer people in the control rooms by minding that gap, seeing fewer people falling over when they open their bill and a realistic, data-driven, balanced energy market that is not held hostage by ideology so much, so that we can move our economy forward—to keep the lights on and keep those motors whirring.

[Viscount Trenchard (Con)]

My Lords, I support Amendment 85F, tabled by my noble friend Lord Murray and Amendments 85G and 85H tabled by my noble friend Lord Fuller. As I explained in an earlier group, it is very clear that the price of electricity is presently adversely affected by the pricing mechanism applied by NESO, which is the price being determined by the last price of gas as used. If you are using gas only as a balancing item—that is, when the wind is not blowing and the sun is not shining, you fire up a gas power station to make sure the lights do not go out—it is much more expensive. The electricity generated by that last switch on of a gas power station determines the price of electricity, and that has a huge negative effect on the consumer, obviously. That is why these amendments are so necessary.

I would like to ask the Minister if he thinks that it is right that the electricity price is determined by the last firing up of a gas power station, which is being used simply as a balancing item when the wind does not blow and the sun does not shine. As we have seen over the last few days, there have been many days when the proportion of our electricity generated from wind is under 10% and that generated by gas goes above 50%, which means that power stations that are used only occasionally are being fired up, and that is very expensive.

[Lord Ashcombe (Con)]

My Lords, it is worth stating what is going on out there on the national grid right now. Gas and wind are supplying between 42% and 43% each; therefore, it is the gas price that is driving the price for everything. We are in the unusual position right now where we are exporting electricity to the continent because they need it more than we do. To have 42% driven by gas, with the price at over £100 a megawatt hour at the moment, seems worrying, and what we can do to curtail that must be important; but gas is not going away any time soon, and we have to be careful about how we moderate the reduction in it.