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Claire Young (Thornbury and Yate) (LD)
I beg to move,
That this House has considered consumer-led flexibility for a just transition.
It is a pleasure to serve under your chairship, Mr Vickers. We have a problem in this country—one that is hitting all our constituents in the pocket, while wasting electricity and pushing up carbon emissions. At the root of the problem is a mismatch between supply and demand. The places where it is cheapest to generate clean electricity are not the areas that consume the most, and our current grid does not have the capacity to move the electricity from one place to the other when demand is high. It was built to transmit power being produced by a limited number of large power stations, not the dispersed renewable energy that provides so much of our electricity today.
As we make ever greater demands on the grid, as we electrify transport and move away from gas for heating, the problem grows, and those demands are not felt evenly throughout the day. In particular, there is a big peak in the evening as people return home from work and school, cook their evening meal, plug in their cars and turn on the heating. Those peak demand periods do not necessarily match the peak supply periods of intermittent weather-dependent forms of generation.
Something has to be done to balance the grid, so how do we deal with the problem currently? We have the farcical situation whereby we all pay producers to turn off wind turbines in Scotland and pay others to turn on gas-powered fire stations in south-east England. Those constraint payments have already cost us nearly £1.3 billion this year, and it is predicted that that could rise to a massive £8 billion by 2030. All of us are paying those costs through our electricity bills. Paying producers to turn off clean power while paying others to burn fossil fuels sounds like madness, but it is the reality.
What can we do to solve the problem? We could fix it by upgrading the grid infrastructure, which needs to happen, but that takes time, and time is not on our side. We could fix it by building new power generation capacity in the areas that need it most, but that cannot be done quickly either, and do we really want to locate renewable energy capacity in suboptimal locations simply to meet local demand?
Fortunately there is an alternative: consumer-led flexibility—a way for households and businesses to flatten the demand, help to stabilise the grid, increase our nation’s energy security and cut everyone’s bills. Unlocking just 10 GW of consumer-led flexibility by 2030 would be the equivalent of a third of the UK’s entire gas power station capacity. It is more sophisticated than the old Economy 7 time-based approach. Smart technology can respond to signals from the grid and to users’ needs.
Imagine someone arriving home from work in their electric car—they do not need to use it again until the next morning, but it is easiest to plug it in when they get home so they do not forget to charge it. Unfortunately, it is the peak period, so they are adding to the peak demand, but with electricity costing the home consumer the same throughout the day, where is the incentive to do otherwise?
With a smart charger and tariff, and a car that can do vehicle to grid—giving power back to the grid from its battery—things could be different. Importantly, from the consumer’s point of view, little changes—they plug in when they get home as usual, and next morning, their car is charged and ready to go. But instead of charging straight away, a smart charger recognises that the car could give back some power now. That helps to boost supply at the time of peak demand, and that supply is being provided right where it is needed, not hundreds of miles away at the other end of an inadequate grid. Then the car is recharged later, when demand is lower.
There are many other, similar scenarios involving battery storage, smart appliances, heat pumps and thermal storage in homes and workplaces, which are all ways to intelligently shift energy use to times when it is cheap, clean and abundant. The upsides are huge, not least because, by cutting constraint payments and reducing the investment needed in new and upgraded energy infrastructure, the potential is there to cut bills for everyone, not just those who can participate.
The MCS Foundation estimates that consumer-led flexibility could cut £375 from the average household electricity bill by 2040. It can be deployed more quickly than building new infrastructure. It can reduce carbon emissions by reducing the need for gas. It can increase grid resilience, enhancing our energy security, and it can create jobs and growth, with UK companies exporting their know-how abroad.
James Naish (Rushcliffe) (Lab)
I declare an interest: I worked on RIIO-ED2 for the Northern Powergrid and on its business plan for the current price period. The hon. Lady mentioned the pace and speed of flexibility, and the whole concept behind that plan was flexibility-first. Flexibility has been talked about for a long time in the industry. Does she agree that what we need now is real urgency to make it happen?
Claire Young
I absolutely agree, and I am coming to those points.
The Government have set out a clean flexibility road map, and E.ON has found that 84% of people want more control over energy, so what is the catch? It might be said that this is all well and good for affluent consumers, who can afford the smart technology—the electric cars, battery storage and heat pumps, and the washing machines and dishwashers with timers so that they do not have to get up in the middle of the night to switch them on. It is all right for those who are digitally literate and for those who have heard of smart tariffs—let alone got their head around how they work. What about those who do not fit into those privileged categories? How does consumer-led flexibility fit with a just transition?
A report by the MCS Foundation in August found that 78% of people are unaware of schemes that reward households for reducing energy use at certain times and 41% are unlikely to switch to tariffs offering cheaper electricity outside peak times. If only a privileged few can access flexibility, will it deliver the potential benefits or simply place more of a burden on those already struggling to pay? It has the potential to lower all bills—as previously mentioned—by driving costs out of the system. That benefits even those who cannot participate. But we need to do more. To achieve the scale of change necessary, we need more action from the Government.
About three in 10 homes still do not even have smart meters, and the Government concede that, in those that do, one in 10 is faulty, while others put the figure even higher. That does not bode well for the roll-out of more advanced smart technology. What about the digitally excluded? The Government should oblige energy suppliers to engage with digitally excluded groups and those on low incomes on the benefits of flexibility. Does it not make comparing tariffs more complicated? Potentially it does, so why not support a “try it and see” approach by requiring energy suppliers to offer risk-free trial periods for time-of-use tariffs?
We have all seen, in other periods of rapid technological change, that some projects fail, so Ofgem needs to strengthen consumer protection, with clear redress powers if that happens. The Government’s own clean power action plan says that to reach clean power 2030, we need 12 GW of consumer-led flexibility—more than nuclear, hydrogen and carbon capture combined. But flexibility gets none of the coverage that those technologies do. It is all very well having a road map. What are Ministers actually doing to change the fact that nearly four in five people do not even know that they can be rewarded for changing when they use electricity?
The markets have been designed for the traditional fossil fuel generators, not for individuals and businesses that generate their own power or can offer storage. We need a presumption of openness in energy market design and rules to support them. If a rule from a market maker prevents a family with a battery, or a business with thermal storage, from participating in the market, it should be forced to justify why. The way that the network costs and final consumption levies work means that consumers cannot currently be paid to use excess renewable power when electricity prices go negative. That needs urgent reform. Imagine how much easier it would be to make the case for the clean energy transition if people could be paid for using clean, free power.
If flexibility is to be delivered, there needs to be clear accountability, without room for buck passing between the Department for Energy Security and Net Zero, Ofgem and the National Energy System Operator. The new flexibility commissioner needs to be given teeth, the ability to demand transparency and accountability from everybody involved, and the authority to call out failure. Have Ministers looked closely at the industry progress board that has been set up, and can the commissioner work with it?
It is time to give people the chance to take control and be active participants in our energy system, rather than being at its mercy. The road map, the commissioner and the technology are all in place, and we know that the public want more control over their energy and their bills. Will the Government take the extra steps needed to make this happen, or will they allow the dinosaurs of the old system to stand in the way? Let us move beyond the map to make this a reality and slash bills for everyone.
Martin Vickers (in the Chair)
I remind Members that they should bob if they wish to be called during the debate.
Mrs Sharon Hodgson (Washington and Gateshead South) (Lab)
It is an honour to serve under your chairmanship, Mr Vickers. I thank the hon. Member for Thornbury and Yate (Claire Young) for securing this debate.
As we know, the Government have declared a clean power 2030 mission, which aims to achieve a target of 12 GW in consumer-led flexibility. Earlier this year, the Government also published their landmark “Clean Flexibility Roadmap”, which I fully support and which formally recognises consumer-led flexibility as essential for energy security and will lower bills for more than 4,000 households in fuel poverty in my constituency. I have campaigned extensively, over my whole parliamentary career, on fuel poverty. I cannot beat the Minister, who comes from Scotland, but the north-east tends to be one of the colder parts of the UK, so that issue is very important. Consumer-led flexibility is essential for a just transition. Unlocking just 10 GW of consumer-led flexibility by 2030 is equal to a third of the UK’s entire gas power station capacity.
I will start by highlighting some of the impressive developments taking place in my constituency of Washington and Gateshead South. Nissan is leading the way by developing electric vehicles, while AESC is currently building a second battery plant in my constituency, supported by a Government-backed £1 billion funding plan, which will be the UK’s largest gigafactory. Those are proud additions to the north-east’s already impressive manufacturing history. EVs are an example of the smart technology we need to shift energy use intelligently to times when it is cheap, clean and abundant, as the hon. Member for Thornbury and Yate mentioned.
Nissan has also boldly embraced wind power to supplement its power supply. Across the UK, however, we are not using that energy efficiently. Octopus Energy has found that we are currently wasting more than £1.2 billion a year paying wind farms to turn off and gas plants to turn on. More broadly in the north-east, we are pioneering solar energy through companies such as Power Roll, while former coalfield communities such as mine are exploring mine-water heating as a potential heat and energy source of the future, rooted in our past.
The award-winning Gateshead district energy scheme in the town centre supplies 24 buildings with heat and/or power, as well as more than 600 homes. That includes 4 MW of power capacity, forming part of the UK’s capacity market, and 5 MW of solar PV farms on urban brownfield sites. It also operates the UK’s largest mine-water heat pump, extracting renewable heat from flooded mines beneath Gateshead. Furthermore, Labour plans to ensure that clean energy jobs are always good jobs, by ensuring that companies receiving public grants and contracts must create jobs with decent pay, access to trade unions and strong rights at work.
The clean energy economy is currently growing three times faster than the wider economy. Labour’s analysis shows that employment in clean energy jobs is expected to double to 860,000 by 2030. Our energy transition must not just be driven by the technologies we know; the Government must also keep an eye on emerging technology. I am impressed by the widespread uptake of heat pumps and happy to see that heat batteries are one the latest technologies added to the boiler upgrade scheme.
Alex Sobel (Leeds Central and Headingley) (Lab/Co-op)
My hon. Friend is making an excellent speech, talking about different types of emerging technology. We have had solar panels on domestic roofs for more than 30 years, yet our electricity grid is not ready for new types of technology. Does she agree we should have started flexibility earlier, with the emergence of the solar revolution? Consumer flexibility will create those jobs and give people a stake in the electricity market.
Mrs Hodgson
My hon. Friend makes a good point. Sadly, we could only start once we came into government. We can see that more should have been done over the past 14 years. At least we are now in government and heading in the right direction.
As a leading alternative for homes where heat pumps are not yet viable, heat batteries support consumer flexibility by storing energy at cheaper, off-peak hours and releasing it on demand. Consumers should also be rewarded when renewables are plentiful, which is an increasing proportion of the time. Perhaps the Government should investigate the final consumption levies and network costs to allow consumers to be paid for using power. That would be a tangible benefit of the green transition that they could feel in their pockets, which is very important to our constituents.
I warmly welcome the Government’s appointment of the UK’s first flexibility commissioner, following campaigning by organisations such as the Association for Decentralised Energy with its ADE: Demand initiative. The commissioner’s role will be to champion this agenda across government, Ofgem and NESO, providing the accountability and leadership that have been missing. There is more work to be done, but I welcome the positive steps the Government are taking and their recognition that consumer-led flexibility is essential for both energy security and a just transition.
Jim Shannon (Strangford) (DUP)
It is always a pleasure to serve under your chairship, Mr Vickers. I thank the hon. Member for Thornbury and Yate (Claire Young) for leading this debate and for setting the scene incredibly well. It is always a pleasure to see the Minister in his place; I look forward to the helpful and positive remarks he always makes. It certainly gives a lift when he answers the questions, and I am quite sure he will do likewise today.
Jim Shannon
No, no—upwards! Everything upwards. It is also a pleasure to see the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), in his place and I look forward to his contribution as well.
Consumer-led flexibility is so important. It refers to ordinary households and small businesses adjusting their energy use to support a cleaner and more resilient energy system. Who does not want that? It is about how we make it happen, however, and whether there is a cost factor to it. Can people make the changeover—the transition, so to speak—in a way that achieves the goals but does not inhibit their pocket financially in the way it sometimes might?
The cost of energy has been such a huge issue nationwide. I know from my constituents that it is a real problem. The two things that affect them more than anything else are the price of foodstuffs and the cost of energy. Especially as we head into winter, the cost of energy becomes a critical factor. It is about balancing one’s income at the end of the month to ensure that all those things are covered. For my constituents, that is a real problem with increasing costs and consumption, so it is good to have an opportunity to represent them in this Chamber today.
I always add a Northern Ireland perspective to the debate, and I know that the Minister always endeavours to reply to us in Northern Ireland on how Westminster can help, so it is important to put that on the record. For a just transition in Northern Ireland, any move to low-carbon energy systems must be fair, affordable and supportive of communities reliant on older heating fuels.
Mr Gregory Campbell (East Londonderry) (DUP)
My hon. Friend has just touched on affordability. Would he agree that, by and large, people across communities—whether in Northern Ireland or across the UK—want to embrace green energy and be environmentally friendly, but they do not want to pay a massive premium to attain a goal that is unrealistic in the timeframe? The important thing is reconciling those two things to bring the community with us.
Jim Shannon
I thank my hon. Friend for that; it was my next point. He is right: I have not met anybody who does not want to improve the environment or support the net zero targets, but they want to do so in a way that does not disadvantage them inadvertently. It is very important that we try to achieve that.
Back home in Northern Ireland, this is crucial, because of the point that my hon. Friend referred to. We have a very specific issue in that 68%—two thirds—of Northern Ireland homes use oil heating, which is more than anywhere else in the UK. Fuel poverty rates are also historically high, I suspect, as a result. I have oil in my house, as do all the farmhouses in the countryside, and there is very little access to gas except on specific estates in Newtownards and perhaps a bit in Ballynahinch and Saintfield as well.
Furthermore, according to the 2023 update from housing statistics, only about 39% of dwellings have a rating of band C or higher, especially in rural areas, which is a very large section of my Strangford constituency. Few homes have access to gas in Northern Ireland and there are no alternative decarbonisation pathways, so we have to be realistic about trying to achieve the goals in a way that does not bring people down to not only fuel poverty but poverty overall.
I welcome the Government’s commitment to try to address some of those things, but perhaps the Minister can give us some ideas on how we can help our constituents in Northern Ireland—both mine and those of my hon. Friend the Member for East Londonderry (Mr Campbell).
James Naish
The hon. Gentleman is outlining a range of issues that make it difficult for people to reduce their bills. Does that not highlight the benefit of flexibility, because it would give people greater control, empower them and give them information, so that they can control their bill as best as possible? That is why we have to lead with a flexibility-first approach.
Jim Shannon
The reality is that, although people subscribe to the idea and wish to develop the net zero targets, it is about how that sits in their pockets. That is the ultimate goal that people reflect on. I am no better than anybody else, and my constituents are telling me—as I am sure they are telling every other MP in here—that Christmas is coming. I stay across the river at the Park Plaza hotel, and I asked a guy last night, “Are youse busy today?”, and he said, “No. It’s much quieter than it’s been for a long, long time.” He surmised that it was because it is Christmas and people are cutting back. It is the same back home. As I said before, I have not met anybody who does not want to achieve the net zero goal, but it is about how the Government help them to reach it.
There are income inequalities and geographic inequalities in Northern Ireland, and they interact strongly with affordability—it is a key issue. There is also poor uptake of smart meters in Northern Ireland, so many people end up paying way more as a result of estimates. That is another critical factor. The Minister travels to Northern Ireland regularly, so that might be an opportunity to get his thoughts across to the relevant Minister back home on how we can achieve some of these goals.
When we talk about consumer-led flexibility, the conversation must be about giving households the ability to shift their energy use to cheaper, cleaner times of the day. There are things that can be done, and things that the Government are helping people with, which I know the Northern Ireland Assembly are also trying to take advantage of, but when it comes to smart technologies and fairer tariffs, and generating or storing energy locally, how can they be achieved? That vision will work only if ordinary people can access and afford the technology and infrastructure required, but too many households are being left behind. Rural households face higher charges and costs, and the up-front expense is simply too much. I know that this is a critical issue, but we can never move away from thinking about affordability, as my constituents tell me.
Consumer-led flexibility should be not something that happens to communities, but something that communities shape, benefit from and own. To respond to the hon. Member for Rushcliffe (James Naish), if consumers can see it as part of what they want to achieve and the Government can help them in that transition, it is a win-win for everyone. Northern Ireland and the rest of the UK have enormous potential: world-leading renewable resources, strong communities and a desire for a cleaner and more secure energy future. Let us build an energy system that works for everyone in the United Kingdom of Great Britain and Northern Ireland—not just for today, but for my children, my grandchildren and generations to come.
Martin Wrigley (Newton Abbot) (LD)
It is a pleasure to serve under your chairmanship, Mr Vickers. My hon. Friend the Member for Thornbury and Yate (Claire Young) has made the case extremely well. I think I have heard unanimous opinion around the Chamber that we should not only do this, but do it now with some urgency. Flexibility first is the way to go. I will go one level further than the hon. Member for Strangford (Jim Shannon), who called this a “win-win”: I would call this a win-win-win. We can shave £1.3 billion off infrastructure costs through actions like this, which will be reflected in every single person’s bill. That is a massive win. It is also a win for producers because it is easier to balance production and consumption, and it is a win for individual consumers who will reduce their individual prices. It is three wins in one. Why would we not want to do that?
I absolutely agree with the hon. Member for Leeds Central and Headingley (Alex Sobel)—we should have done this yesterday. The best time to plant a tree was 10 years ago; the second best time is now. We are at the point of the second best time, but let us use this time and make sure that it happens. I join my hon. Friend the Member for Thornbury and Yate in pushing the Government to take action urgently.
When preparing for this debate, I remembered a geography school trip I went on where we looked at last-century solutions for balancing the grid. We went to visit Dinorwig, which is a pumped storage system—or was; I am not sure it is still going—in the hills in Wales. During the night, it pumps the water from the lake at the bottom of the hill up into a corrie at the top—aptly, as it turns out. As was quoted in the ad break in the middle of “Coronation Street”, when people switched on their kettles and created a power surge, that system could switch on in 30 seconds and provide significant amounts of power into the grid. It was a very good solution, but it is last century’s solution. What we need is an information-based solution, an individually empowering solution, such as we are talking about here, with consumer flexibility coming first.
Ms Julie Minns (Carlisle) (Lab)
The hon. Member makes a point about a modern solution. I have felt for some time that our supermarkets, with the installation of bi-directional chargers, could offer consumers the opportunity to bring their mobile energy source—their EV—as a power supply during peak times for supermarkets; in return, consumers could be offered a discount on their shopping for that hour. When the Minister makes his comments, I would welcome his thoughts on whether we need to go further with bi-directional chargers in supermarkets.
Martin Wrigley
That had not occurred to me, but it is an amazing idea; people taking their mobile power source with them—fantastic.
That brings me on to other solutions that we should be looking at, particularly community energy generation, community networks and community power consortia, as well as business inclusion—businesses that can generate more electricity during the day than they are using. We should be encouraging those things to happen, moving away from the centralised model of the past and towards the distributed and inclusive model of the future.
While flexibility is an excellent step, it will obviously not solve all the issues. We still need to fundamentally change energy generation contracts to de-link the cost of electricity from the price of gas. That will need to be done as well, but all these things are largely contractual issues, not technical ones. We do not need to reinvent something humongously different; we simply need to get the contracts right and change the energy market. I say “simply”—I understand that these changes have their complexities, but they are achievable. We know what we need to do.
The other massive energy issue is home insulation, which must not be forgotten. It is the single most important thing we need to do to reduce our fuel usage. The district council that I led demonstrated that very well—I draw hon. Members attention to my entry in the Register of Members’ Financial Interests, which notes that I am still a councillor on Teignbridge district council—when it started building council houses for the first time in 30 years. The first pair of semi-detached houses that we built are well insulated, with solar panels on the roof and air source heat pumps. At the height of the gas price crisis, the power bill for that home was just £500. We can do that with modern insulation and modern efficiencies.
Flexibility is one extra piece that we need to further reduce the cost. It is all part of a journey, and we are going in the right direction. I urge the Government to take faster action and to do everything they can to make it happen. As we have heard, industry is already looking for it. Let us make it happen.
Greg Smith (Mid Buckinghamshire) (Con)
As ever, Mr Vickers, it is a pleasure to serve under your chairmanship. The Opposition have a deep and growing concern about the direction in which Ministers of this Government are taking our energy system. It is a direction that depends increasingly on the weather, and I do not believe that anyone in this House should pretend that such dependence makes our country more secure. I have battled with this in my own constituency of Mid Buckinghamshire, where large-scale solar development projects threaten to consume vast areas of productive farmland and countryside while adding yet more intermittent generation to an already fragile system.
Expanding weather-dependent capacity without addressing firm power needs not only strains local communities, but further undermines the resilience of our national grid. We are also moving towards a system in which electricity supply must follow the wind rather than meeting the needs of households and businesses. This is being presented as modern, progressive and resilient. In truth, it is none of those things. It is a system built on hope rather than reliability, which is not what this country needs.
The National Energy System Operator has already set out that the future system will require a very large amount of what it calls flexible demand to prevent power shortages and to keep the lights on. “Flexible demand” is a polite phrase. What it means is encouraging or requiring people to use electricity at times when they might not want to use it. It means shifting everyday life around the weather to accommodate low output from wind power. That is not energy security; it is energy insecurity by design.
As the economist Sir Dieter Helm has put it, such arrangements amount to voluntary power cuts, because they rely on people reducing their demand whenever renewable output falls. Sir Dieter has also warned that wind and solar do not provide firm power and that without enough firm capacity, the system simply cannot function reliably.
The facts support Sir Dieter. A recent study of wind patterns found that extended periods of very low wind are surprisingly common and can last a week or more. These wind lulls occur at times, and for durations that exceed the capability of storage and interconnectors to compensate. In those conditions, families, hospitals and industry cannot simply wait for the breeze to return, yet that is exactly what the current strategy risks requiring them to do.
Consumers are already paying the price for an energy system that prioritises intermittency over reliability. According to the Nuclear Industry Association, balancing costs, which are the payments needed to bring dispatchable power online when renewable output is too low, reached £2.1 billion between January and September this year. That represents a 25% increase on the previous year. These costs add nothing to the strength of the system; they simply mask its weakness and push bills upwards.
NESO’s winter outlook for 2025-26 forecasts an operational margin of 6.1 GW. Although this is the highest margin since 2019, the operator warns that there will still be tighter periods, when further interventions may be needed. In other words, even now, with relatively healthy margins, the system is fragile. As more dispatchable plants retire and more intermittent generation comes online, that fragility will only deepen. That point leads me to the most pressing issue underpinning this debate.
At the end of this decade, the United Kingdom faces a firm capacity crunch. Older baseload and dispatchable plants are closing, and they are not being replaced at the required scale. Nuclear projects are delayed, investment in new gas capacity has slowed, and Government strategy appears to assume that flexibility and good fortune will fill the gap. My right hon. Friend the Member for East Surrey (Claire Coutinho) has called for greater private investment in gas power stations to provide the security of supply that only firm capacity can deliver, yet the Government persist in placing their hopes in demand shifting and in a growing share of intermittent power. That is not a credible energy strategy for a modern industrial economy. Other major economies are not taking this gamble; they are investing in firm, reliable power generation, because they understand that energy security is the foundation of economic strength and national resilience.
I ask all Members to consider what this would mean in a time of national emergency or war. In such circumstances, our productive capacity would need to run at full speed, continuously and without interruption. A system that is built around weather-dependent electricity and consumer demand shifting simply could not meet that requirement. We should not resign ourselves to an energy future in which households are constantly asked to postpone cooking, heating or charging appliances during peak times purely to compensate for low wind output, nor should business be expected to halt operations because the breeze has dropped. Innovations that give consumers the option to save money or lower bills are welcome. Where demand flexibility is voluntary and genuinely benefits consumers it should be encouraged, but it must never become the cornerstone of our national energy strategy. Flexibility should support the system, not prop up its structural weakness.
Our ambition as a country should be far higher. We should aim for an energy system that provides cheap, reliable and abundant electricity at all times of day and in all seasons; a system that does not depend on weather patterns and does not require consumers to become the balancing mechanism; a system with enough firm capacity built in that the lights remain on, even in the stillest winter week.
Martin Wrigley
May I draw to the hon. Member’s attention the analogy with off-peak train tickets? That is a similar way of using flexibility and offering consumers cheaper tickets when the trains are empty. He would have us believe that that is not a good thing, but it is exactly the same with offering flexibility in electricity consumption.
Greg Smith
I am grateful for the hon. Gentleman’s intervention, but the trains will continue to run 24/7, whereas we are talking about a system in which if renewable sources drop and the wind does not blow or the sun does not shine, the electricity is not there. I am not sure that his analogy is necessarily a helpful one, but I hear the point that he makes.
Ministers are creating a system that depends on the weather, while claiming that it makes us more secure. It simply does not. It papers over a capacity crisis that is approaching fast, and it risks burdening families and businesses with the consequences of that miscalculation. True energy security requires firm power, serious planning, serious investment and, above all, a willingness to confront reality rather than wishing it away. I urge the Government to rethink their approach and pursue a strategy based on reliability first and flexibility second. The country deserves nothing less.
The Minister for Energy (Michael Shanks)
It is a pleasure to serve under you today, Mr Vickers. I am frequently told that consumer-led flexibility does not get enough time, but I now have almost an hour to talk about the Government’s plans on it. I intend to use every moment I have.
Michael Shanks
No, I don’t intend to—do not worry, colleagues.
This is an important debate, however, and I thank the hon. Member for Thornbury and Yate (Claire Young) for securing it. She made a point that those in the industry make regularly to me: that this is too often a footnote in the discussion about achieving our future energy security. It should not be. It should be much further up the agenda. It is not for want of trying; I often talk about it, but it is regularly the bit that gets cut out of interviews before they are broadcast. The Government are certainly talking about these issues.
The hon. Lady outlined perfectly the problem of how we get cheaper, more secure power to homes and businesses, and the three fixes: building more grid, strategically planning where energy is built in the first place, and utilising flexibility. The truth is that we need to do all three at a pace never before seen in this country. I will come back to those points, but I welcome her recognition of them.
My hon. Friend the Member for Washington and Gateshead South (Mrs Hodgson) made a fantastic speech, as always. She is a fantastic champion for the north-east and a long-standing campaigner on the issue of how we can reduce fuel poverty. She made the point that we risk losing the opportunity of getting cheaper power to people’s homes and bringing down their bills, and she mentioned the fantastic innovations out there already. I have had the pleasure of seeing a number of them. When I visited the Mining Remediation Authority recently, I had the genuine pleasure of hearing about the mine water heating scheme. That is a fantastic example of how we can utilise something that we used decades ago to power the country. There is also a social justice argument, as those communities who still have deep scars from that period can benefit from cheaper bills in the long run.
I also want to recognise the point the hon. Member for Thornbury and Yate made about the equality aspect and how we will bring everyone with us on this transition. I will return to that point, but first I want to return to first principles and say why the Government are committed to delivering clean power by 2030. At the heart of that mission is an energy system that delivers flexibility for consumers: not forcing consumers to make choices, but giving them the opportunity to make choices that bring their bills down, and to use technology for the betterment of their lives in a way they choose.
The clean power action plan outlined 10 GW to 12 GW of consumer-led flexibility. I think that in the months ahead we will be talking much more about that part of the action plan. The Government have had to move very quickly in the first 16 months to deliver on the auctions in offshore and onshore wind, to lift the ban on onshore wind and to deliver much more solar than we have ever seen, but flexibility has been hugely important in the background, and we will say much more in public about it in the coming months.
Let me respond briefly to the core argument that the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), made about the clean power mission:
“The UK is a world leader in renewable energy…and we must go further. Energy security means national security. We must replace imported fossil fuels with cheaper, cleaner, domestic sources of energy. That is how we will ensure that the UK never again suffers the rising prices caused by Putin’s weaponisation of energy following his invasion of Ukraine.”—[Official Report, 22 November 2023; Vol. 741, c. 21WS.]
Those are not my words, but the words of the shadow Secretary of State, the right hon. Member for East Surrey (Claire Coutinho), in November 2023. I am not quite sure what has happened to the Conservative party in two years, but the Conservatives seem to have completely changed not just their position, but their understanding of the facts and science behind what they were saying then. The right hon. Member, who was Secretary of State at the time, made my argument just as well as I could ever seek to. I will leave it at that.
A just transition has the power to unlock enormous benefits for people right across the country. It is why we have pledged to deliver clean power, because we know it is cheaper and it removes the volatility of which all our constituents are still facing the cost. It will shield consumers from the volatility in global gas prices, over which we have absolutely no control, but it will also create new jobs in industries right across the country. It is the economic opportunity of the 21st century.
The role of storage will be important. The hon. Member for Newton Abbot (Martin Wrigley) talked about a school trip to Dinorwig; in Scotland, I think every single school child went to Cruachan, the hollow mountain, which is another pumped hydro power station. Although pumped hydro may be a technology from the last century, it is critical in this century as well. Indeed, the Government have launched the first new long-duration energy storage in 40 years. It is a critical way of dispatching clean power and storing it for when we absolutely need it, so it still plays an important role.
Consumer-led flexibility will play an important role in getting renewable energy to people’s homes. It will help us to balance the grid and ensure that we have supply when we need it. It enables us to take advantage of low-carbon energy and reduce periods of peak demand and the associated infrastructure needs. It also involves financial rewards for those who choose to shift their electricity use to times when supply is more abundant, cheaper and cleaner. Smart meters are a key part of that. As we all know from our constituencies, we would all have liked to see a more efficient roll-out of the smart meter programme over the years, but 70% of meters across Great Britain are now smart or advanced meters, with more than 40 million homes and businesses having them installed.
We will continue to monitor the roll-out in Government very closely. Indeed, I chair a working group that is looking at how we can deliver market-wide half-hourly settlements much faster. That is really important so that consumers and businesses benefit directly from having a smart meter and new technology.
Jim Shannon
I thank the Minister for the positivity of his answers. The take-up of smart meters in Northern Ireland has not been good at all—nowhere near expectations. In his discussions with the relevant Minister in Northern Ireland, what can be done to help us to do better back home?
Michael Shanks
I will come to the hon. Gentleman’s point. I always appreciate the kindness of his contributions, although he needs to lower his expectations of mine. He rightly mentioned the statistic that 68% of households in Northern Ireland have oil heating, which he raised with me in a previous debate. That figure surprised me, and it is a reminder of the complexity of the different circumstances across the United Kingdom of Great Britain and Northern Ireland. I work closely on this issue with Northern Ireland Executive colleagues in the Department for the Economy, and we share much of our good practice to make sure that everybody comes with us on this journey. I will shortly say more on the hon. Gentleman’s point about gas.
We are already seeing consumers benefiting from flexibility. Last year, the demand flexibility service saw over 2 million households and businesses save money by flexing their demand. We are committed to ensuring that all consumers have the option to participate, not just those who can afford certain technologies. The Government have committed £1.5 billion through the warm homes plan, which will help to upgrade low-income households. The Government will also work to ensure that flexibility is simplified and accessible for all consumers who want to take part, not just the tech savvy and those who are already able to. We have to remember that flexibility brings down the price for everyone, even those who are not participating, because of the benefits it brings to the overall system.
As we shift away from gas, consumer-led flexibility will become even more vital for managing an electrified system. Crucially, it will bring down bills for all consumers, not just those who actively participate. The Liberal Democrat spokesperson, the hon. Member for Newton Abbot, gave a figure on the direct benefit from consumer-led flex, and a more flexible system is estimated to save up to £10 billion a year overall because of that efficiency. It is hugely important.
The hon. Member for Strangford (Jim Shannon) asked about the transition. Obviously, connecting to the gas network is difficult in Northern Ireland, and this is a huge opportunity for many households to jump a step—from oil heating to heat pumps and other technologies. There is a real opportunity for those households to benefit, perhaps even more than some other households, if we get the transition to consumer-led flex correct. I look forward to more conversations with the hon. Gentleman on that issue.
The other point I want to make is about the role of technology. Consumer-led flexibility is becoming increasingly automated, which means that consumers can benefit from these opportunities with little or no intrusion in their daily lives. Indeed, I have seen examples where consumers have set up technology and let it run for months at a time. For example, an EV owner can plug their car into a smart charger, which will optimise charging so that it happens at the most cost-effective times of the day, while still meeting the battery charge they need the next morning, saving a significant amount of money.
I recently had a great opportunity to visit Flexitricity in Edinburgh, which is a fantastic business—not least because it has a fantastic view of Edinburgh castle, although that was not my reason for visiting. My visit brought home two things: first, the cutting-edge technology and innovation that we already have in this space; and secondly, how this is an opportunity to create high-paid, skilled jobs across the country. I met a number of apprentices and people who had changed career to be part of that innovation—the business is a fantastic example. I thank the Association for Decentralised Energy, some of whom I see in the Public Gallery today, for joining me on that visit and for the work they do.
We recently published the flexibility road map, which sets out specific, measurable actions for DESNZ, Ofgem and NESO to deliver the flexibility we need. The road map sets out a strategy and clear actions to make sure we can deliver on this. It acknowledges that the Government, in partnership with Ofgem and NESO, will need to take a leading role in making sure this is a priority for those organisations. The publication puts consumers at the heart of what we want to achieve.
The road map is a first step. To deliver it, we know we have to sustain that momentum. As many hon. Members have said, agreeing that this is the right thing to do is not enough; we have to get on with delivery. This debate is perfectly timed, because this afternoon I will attend the first clean flexibility road map quarterly forum to make sure we are driving progress on this. That was already in the diary, but this debate is perfect timing.
I thank the ADE for all its engagement and expertise on this matter, and I thank all the organisations working in this space for raising innovative and creative ideas for how we can make this happen faster. This is an area where the Government do not always know best, and the innovation from the private sector and communities across the country will help us to deliver this transition. It is crucial that the Government continue to hear that, and that we continue to be challenged to move further and faster.
We have seen good progress on leadership, which goes hand in hand with our work on the road map and on the appointment of a flexibility commissioner. We will be able to announce who we are appointing very soon, and they can then get on with driving this work forward as part of the clean power mission. Leadership is important more generally in this space. As politics moves away from a fact-based, rational discussion of the challenges this country faces, it is ever more important that we have these debates on the detail of how we deliver such important policies.
We must also recognise that we are making progress. There is sometimes a tendency to think that nothing is happening, but a huge amount is happening: the migration of consumers to half-hourly settlement has begun and is making great progress; NESO is about to consult on the next iteration of the demand flexibility service; Ofgem is assessing how to recover costs through bills in a way that is fair and efficient; and we have consulted on our smart secure electricity systems programme, including how we can make it easier for electricity consumers to participate. All that work going on in the background will start to have a real impact on people’s lives in the coming months.
I thank everyone for their contributions to this debate. The Government are committed to delivering a clean power system, because that is the only way to bring down people’s bills in the long run, to remove the volatility of fossil fuels, for which we are paying the fossil fuel penalty, and to deliver energy security in an increasingly uncertain world. Flexibility is at the heart of this, and for us to have a genuinely just transition—one that brings people with us—we have to do what is challenging. This is a new way of working. It is different, and it will require people to think differently about their energy use and about how we deliver the change as a country, but opportunity is right at the heart of this—we should never forget that opportunity is the prize if we achieve this.
We will continue to work across Government and across the energy sector so that people can take advantage of the benefits of consumer-led flexibility and so that, ultimately, we end up with a 21st-century energy system that recognises that all our lives have changed in the last few years in how we consume electricity. Every single projection suggests consumption will increase over the coming years, so it is hugely important that we take these steps now so that the people of this country benefit from the energy transition that is under way.
I thank everyone again, and I thank the hon. Member for Thornbury and Yate for securing this important debate.
Martin Vickers (in the Chair)
I thank the Minister for not taking the full 50 minutes available, which leaves more than the usual two minutes for Claire Young to wind up.
Claire Young
I will not test everyone’s patience either. I thank everyone for their contributions. Between us, we have highlighted not just the potential for lowering bills but, as the hon. Member for Washington and Gateshead South (Mrs Hodgson) explained, the benefits for local economies through the generation of good, clean energy jobs. The hon. Member for Strangford (Jim Shannon) highlighted the benefits for those in rural, off-gas areas, which many of my constituents will appreciate, and the importance of making the technology affordable.
I hope the shadow Minister, the hon. Member for Mid Buckinghamshire (Greg Smith), does not really want our constituents to continue paying for excessive fossil fuel generation when there is an alternative. It is important that consumer-led flexibility is about empowering our constituents, not forcing them to do things. It is also important that we support everyone who wants to participate, not just those for whom it is easiest. I thank the Minister for his response, which gives me some hope, but I will be keeping a close eye on this transition as it progresses.
Question put and agreed to.
Resolved,
That this House has considered consumer-led flexibility for a just transition.