Environment and Climate Change Committee
Tuesday 3rd November 2026
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10:03
Baroness Sheehan
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Baroness Sheehan
Good morning and welcome to the Lords Environment and Climate Change Committee. Today is the final session of our inquiry into Duncan Slaughter weather events and the challenges they present to the government's ambition to deliver the Clean Power Action Plan by 2030. And I'd like to warmly welcome the Right Honourable Michael Shanks MP, the Minister for energy, together with his colleague in designers, Bill Jones, deputy director for Future Energy Security. Thank you very much for making the time to be with us today. And before we start, may I remind everyone that the session is webcast live on Parliament TV and that a transcript will be taken and made public.
Witnesses will have an opportunity to review the script and, if necessary, make very minor amendments. Members are reminded that they should declare any relevant interests the first time they speak. And I'll take the opportunity here to say that I am a director of peers for the planet. So I think we're a little bit late starting, so we will move straight to the first question. So, Minister, in written evidence from Disney's, we are told that the and I quote, majority of capacity procured through the capacity market can be expected to generate or manage demand throughout a shorter period in combination with other non capacity market eligible capacity.
So in that statement, we can infer that the government has some idea of how they are defining a dunk or flatter period. Could you share that definition with us.
Witnesses will have an opportunity to review the script and, if necessary, make very minor amendments. Members are reminded that they should declare any relevant interests the first time they speak. And I'll take the opportunity here to say that I am a director of peers for the planet. So I think we're a little bit late starting, so we will move straight to the first question. So, Minister, in written evidence from Disney's, we are told that the and I quote, majority of capacity procured through the capacity market can be expected to generate or manage demand throughout a shorter period in combination with other non capacity market eligible capacity.
So in that statement, we can infer that the government has some idea of how they are defining a dunk or flatter period. Could you share that definition with us.
10:05
Speaker 1
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Speaker 1
Well good morning. It's good to be on this end of the building. Thank you for inviting me along. I think you've had some very detailed evidence. I read the session you had with the Met Office, for example, on scientific definitions. And there is a real mixed picture of exactly how you would define it. We characterize it as a period of low wind and low sun, usually correlating with a winter period where there might be an increased expectation of demand. But in truth, it's just one of a number of both weather and climate events that the National Energy system operator has to consider in its planning for the system.
So although we recognise it as an event that requires thinking and how the system will run, it's part of a long list of other things in which the capacity market exists, to make sure we're constantly able to meet the demand the system needs.
So although we recognise it as an event that requires thinking and how the system will run, it's part of a long list of other things in which the capacity market exists, to make sure we're constantly able to meet the demand the system needs.
10:06
10:06
Baroness Sheehan
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Baroness Sheehan
Let's just talk about these high risk periods of water. And we really want to try and understand. You know, what, what level of capacity do you think we need? I mean, you seem to say here that you understand fully that you can meet those risks, but yet we don't understand what those risks are. It would help. We've heard lots of evidence to suggest that this uncertainty is not helpful to people trying to make decisions in mitigating that risk.
10:07
Speaker 1
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Speaker 1
Well, I think it's one of a number of challenges. The system operates on a kind of business as usual way when weather events are as predicted. But in any given day, the weather can change and gas terminals could be offline for any particular reason. There are a whole series of things that mean the system operates in different ways every single day. The capacity market exists to make sure we have the capacity that we can deploy. Whenever there are differences in generation or indeed peaks in demand, that perhaps aren't the normal demand that the system would come under.
So although I completely understand why, and especially in an inquiry focused on that, you would want clear definitions of that. In truth, I don't think anyone has an absolutely clear definition, and it's just one of many things that the system has to be able to respond to in any given day.
So although I completely understand why, and especially in an inquiry focused on that, you would want clear definitions of that. In truth, I don't think anyone has an absolutely clear definition, and it's just one of many things that the system has to be able to respond to in any given day.
10:07
10:08
Speaker 1
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Speaker 1
Look, the system is set up to meet any strains that are put on it at any point in time. That's why we have redundancies built into it. I think there are a lot of different definitions in terms of how long a period of conflict could last, what the impact would be in other parts of Europe in terms of the impact on interconnectors and how other parts of the generation fleet can respond to it, because, of course, we're not wholly reliant on renewables, so it isn't entirely affected in that way. There is also, I think, though, a greater understanding of what the impact of climate change might be on conflict in the future.
There's more research being done on that at the moment, but in truth, at the moment, the way the system and the government considers it is that it is one of many things that we have to consider in terms of the strain put on the system, and the system's got to be able to respond to that. But equally, it has to respond to other periods of outages. If we think of the summer that we've just had significant heat waves put pressure on the system as well.
There's a whole range of things we consider.
There's more research being done on that at the moment, but in truth, at the moment, the way the system and the government considers it is that it is one of many things that we have to consider in terms of the strain put on the system, and the system's got to be able to respond to that. But equally, it has to respond to other periods of outages. If we think of the summer that we've just had significant heat waves put pressure on the system as well.
There's a whole range of things we consider.
10:09
Baroness Sheehan
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Baroness Sheehan
10:09
Speaker 1
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Speaker 1
We have an interest in it. And so you've had evidence from, I know has said that they have an interest in further research, but this is work that's been taken on by by academics and others looking into the the longer term trends in this. It's not work. The government is is directly looking at. But we you know, we remain in close contact with the Met Office and with others to try and understand this part of the modelling that Nizo uses. And I know you had the chief engineer here to give evidence to you, is looking backwards at all of the evidence of weather patterns and others that can help build the models for the future.
But the system is also built in with redundancies , so that if there are unexpected periods of donkey flutter or other weather events, it can respond to that in real time.
But the system is also built in with redundancies , so that if there are unexpected periods of donkey flutter or other weather events, it can respond to that in real time.
10:10
Baroness Sheehan
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Baroness Sheehan
Okay. What the government is trying to achieve with the Clean Power Action Plan and to deliver the the the volume of renewables that that will entail by 2030 is extremely, extremely ambitious. And it's risky. Some of those risks are magnified by weather events such as this. We want to be absolutely certain that the government recognises those extreme risks and is really putting their shoulder to the wheel to make sure that the lights don't go out. Can we be absolutely certain that the government is fully cognizant of the risks and that the lights will stay on?
10:11
Speaker 1
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Speaker 1
Well, let me say, first of all, we have one of the most resilient energy systems anywhere in the world, and we have had renewables on our system for decades now, and that resilience has not changed. I would say I would challenge the idea that there is an extreme risk of deploying renewables. There are many countries around the world that have relied on renewables as a core part of their energy mix for a long time.
10:11
10:11
10:11
10:11
Speaker 1
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Speaker 1
Well, I'm grateful for that. I think what I would just say is that there is a mix of technologies. We were very clear the decarbonisation of the power system by 2030, which is a hugely stretching ambition, was not just about deploying renewables, it was about building new nuclear far faster as a country than we have been able to build in the past, but also about bringing forward storage, which we've not not kept up pace with. We've just announced the first long duration energy storage in 40 years. We should have been building that alongside the renewables that we've been building, so we can store more of it.
And it's also about how we use the system much more smartly. So we've got flexibility built into it as well. So in terms of the risk point, though, to come to your question, this is not saying that one single technology should ever make up our energy mix. We don't hold that view at all. Gas will continue to play a role in a strategic capacity on it, and there is resilience into the plans for clean power.
And it's also about how we use the system much more smartly. So we've got flexibility built into it as well. So in terms of the risk point, though, to come to your question, this is not saying that one single technology should ever make up our energy mix. We don't hold that view at all. Gas will continue to play a role in a strategic capacity on it, and there is resilience into the plans for clean power.
10:12
10:12
10:12
Lord Krebs
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Lord Krebs
Thank you, Lord chair, and thank you very much, Minister, for coming to see us. We did have a session with Ofgem and Niso last week, and although this is an inquiry about keeping the lights on, I'm afraid Ofgem and Niso rather left us in the dark in the sense that they. Although they said that the government is due to make a decision on a pathway for the Strategic Energy Plan by the end of the year, Niso and Ofgem were not able to shed any light on what things would look like. They weren't able to tell us which technology will be in the in the plan, what scale it will be by, when it'll be ready and how, where it's going to be situated, whatever infrastructure is required.
So I'm hoping that you might be able to tell us a little bit more about this strategic spatial energy plan in terms of the technologies and the investment that will required to deliver it.
So I'm hoping that you might be able to tell us a little bit more about this strategic spatial energy plan in terms of the technologies and the investment that will required to deliver it.
10:14
Speaker 1
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Speaker 1
Well, I can give some context to why we're going through the process of a strategic spatial energy plan and outline the process going forward. The pathway that will be chosen will be consulted on, and the alternative pathways that have been presented to the government will form part of the environmental assessment that will be published as well. So there will be transparency in what those pathway options are. We co-commissioned alongside the Scottish and Welsh Governments, the first ever strategic plan for the country, recognising that while the renewables that we have built on the system are hugely welcome, we should have been building it more coherently and we should have done that 20 years ago, or any of the intervening years since, so that we're not paying huge costs to connect those projects after the fact.
That is the purpose of of the plan. It is about a range of technologies. And I think some of the discussion on the strategic spatial energy plan has come to the view will make black and white choices about offshore wind or SMRs. That's not how how we're going to reach a conclusion on this, but it is about saying that there is a pathway which involves either a significant amount of onshore solar and wind, or a significant amount of offshore, or a balance of the two and other technologies built into that mix as well. And the decision will be made on the basis of the cost of the pathway first and foremost, but also ensuring that we've got the industrial advantage that comes from some of those opportunities and that it strategically makes sense in terms of land use across the country as well.
Every single one of the pathways I hope would be taken as as a given conforms to our security of supply standards. So every single one will meet all the supply needs of the country and meet the legally binding carbon budgets of the country. So all six follow that pathway. The choices are individually within that what the mix of technologies will be.
That is the purpose of of the plan. It is about a range of technologies. And I think some of the discussion on the strategic spatial energy plan has come to the view will make black and white choices about offshore wind or SMRs. That's not how how we're going to reach a conclusion on this, but it is about saying that there is a pathway which involves either a significant amount of onshore solar and wind, or a significant amount of offshore, or a balance of the two and other technologies built into that mix as well. And the decision will be made on the basis of the cost of the pathway first and foremost, but also ensuring that we've got the industrial advantage that comes from some of those opportunities and that it strategically makes sense in terms of land use across the country as well.
Every single one of the pathways I hope would be taken as as a given conforms to our security of supply standards. So every single one will meet all the supply needs of the country and meet the legally binding carbon budgets of the country. So all six follow that pathway. The choices are individually within that what the mix of technologies will be.
10:15
Lord Krebs
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Lord Krebs
Thank you for that. Is there an urgency in your mind about this? Because there needs to be some long term investment by the private sector and possibly by the government as well. And while there's uncertainty, people are not going to invest in particular technologies. So what's your comment about the urgency to get this resolved so people can get actually get on with delivering the infrastructure that's needed?
10:16
Speaker 1
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Speaker 1
I think it's a hugely important point, partly why we announced the Clean Power Action Plan two and a half years ago, was to give that confidence to industry that after a failed offshore wind auction under the last government, we were committed to this so there could be confidence in that investment that has happened. So we've seen more than £110 billion of private investment in clean power since we came into government. The long term future, I understand, is really important, not least because we want to build the supply chains here, and that requires that pipeline of projects to work.
We do it at the same time, though. Want to make sure we get this right, because the danger to date, I think, has been quite an ad hoc approach to building renewables across the country. I'm obviously a Scottish member of Parliament. I live next to two of Europe's biggest onshore wind farms, and they are fantastic pieces of infrastructure. But if we were designing a system, we may not have placed quite so many wind farms quite so far away from centres of demand. And the whole point of this plan is to more coherently look at the opportunity across the country.
So the pace point is absolutely crucial, but equally it is making sure we get it right for this first plan, and then it will be an iterative process. Although this takes us to 2050 in broad terms, it is not a one plan in 2027 that we never revise. It clearly will be revised regularly, but it gives us some indication to allow us to then do the centralised strategic network plan. The SNP has always acronyms in this business, which is how we try to bring down the cost of building network infrastructure so it's more coherently built to meet the future pathways of our energy system.
We do it at the same time, though. Want to make sure we get this right, because the danger to date, I think, has been quite an ad hoc approach to building renewables across the country. I'm obviously a Scottish member of Parliament. I live next to two of Europe's biggest onshore wind farms, and they are fantastic pieces of infrastructure. But if we were designing a system, we may not have placed quite so many wind farms quite so far away from centres of demand. And the whole point of this plan is to more coherently look at the opportunity across the country.
So the pace point is absolutely crucial, but equally it is making sure we get it right for this first plan, and then it will be an iterative process. Although this takes us to 2050 in broad terms, it is not a one plan in 2027 that we never revise. It clearly will be revised regularly, but it gives us some indication to allow us to then do the centralised strategic network plan. The SNP has always acronyms in this business, which is how we try to bring down the cost of building network infrastructure so it's more coherently built to meet the future pathways of our energy system.
10:17
10:17
Speaker 1
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Speaker 1
Well, in terms of the timeline for the SSP, the Secretary of State will make a decision in the coming months, and it will be consulted on early in 2027. And we want to do that in partnership with the Scottish and Welsh governments, who we we we co-convened this with. That process will take us to at some point in 2027, and the final decision will be at the end of 2027. But in the intervening time, we are continuing to do everything we can around individual technologies. The energy system is not going to stop for for a year.
So on long duration energy storage, I think gas is probably what you're referencing. In that specific example, we have said we will respond to the consultation on security of supply for gas early next year to give some confidence to to the gas storage question . And for example, on long duration electricity storage, Ofgem will soon announce their final decisions on the, I think, almost seven gigawatts of long duration storage. So all of that will continue. This is about the longer term future pathways for for energy in the country.
So on long duration energy storage, I think gas is probably what you're referencing. In that specific example, we have said we will respond to the consultation on security of supply for gas early next year to give some confidence to to the gas storage question . And for example, on long duration electricity storage, Ofgem will soon announce their final decisions on the, I think, almost seven gigawatts of long duration storage. So all of that will continue. This is about the longer term future pathways for for energy in the country.
10:18
Baroness Sheehan
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Baroness Sheehan
Thank you. I just wonder if I can just press on the evidence that we heard from Ofgem and the. So last week there were unable to confirm which technologies would be in the CEP. However, John Leslie from the ESO did mention that it was an iterative plan, which would be updated every three years to account for technical innovation. Now, this would suggest that there may be an emphasis on proven technologies in the first instance. And. And that's really the question I want to put to you is, will that be the case? Is it that the proven technologies such as grid scale batteries, pumped storage, hydro interconnectors have greater certainty already?
10:19
Speaker 1
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Speaker 1
I think, yes, in some ways, but we also are supportive of technologies that are coming forward and that need additional support. If we think of floating offshore wind, for example, there will be a choice to be made about the amount of floating offshore wind we think will be in a future pathway. But there's no doubt as a country, we want to see some floating offshore wind. And so we'll we'll work on a way to support the industrial opportunity around that. But established technologies are clearly crucial for to make sure that we can have confidence things will be built, but also that the cost curve is is at the lower end because affordability is the government's number one priority in terms of storage.
The pathways will make an overall choice around how much long duration storage we need. They they won't go into the detail of the technologies because that is the process. Ofgem is running in the cap and floor scheme.
The pathways will make an overall choice around how much long duration storage we need. They they won't go into the detail of the technologies because that is the process. Ofgem is running in the cap and floor scheme.
10:21
Baroness Sheehan
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Baroness Sheehan
Long duration is different from ultra long duration. Now the. The. So the plan would be updated every three years. So is that is it will it be the case that technologies such as hydrogen storage and carbon capture, carbon capture storage, compressed air energy storage, will they be having to wait three three year periods so that.
10:22
Speaker 1
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Speaker 1
No. And I think this is where I just want to, to, to, to sort of add a bit of clarification about the strategic spatial energy plan. I think this is a reflection on the past two years. This work has been under way. The sense has been given that it is going to be an extremely definitive, you know, plan to 2050 written in black and white. That never changes and that nothing that's not on it will be delivered. That's not how the SNP will work. It is to give us a broad design for what the future system looks like, so that we can build the grid that is most relevant to meet that demand.
Projects will come forward, not least if we think of nuclear. We're really interested in advanced nuclear projects from the private sector. It's not for government to decide whether or not there's private investment interested in those projects. It's our job to judge the safety and the planning and then allow them to carry on. So whether or not those are in the SNP, we will continue to support them. And likewise, emerging technologies that come out in in long duration storage and ultra long duration storage, which is a hugely interesting area that if we can crack the the science and the development behind them, we should be deploying as much as we can.
Projects will come forward, not least if we think of nuclear. We're really interested in advanced nuclear projects from the private sector. It's not for government to decide whether or not there's private investment interested in those projects. It's our job to judge the safety and the planning and then allow them to carry on. So whether or not those are in the SNP, we will continue to support them. And likewise, emerging technologies that come out in in long duration storage and ultra long duration storage, which is a hugely interesting area that if we can crack the the science and the development behind them, we should be deploying as much as we can.
10:24
Baroness Sheehan
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Baroness Sheehan
Just one final question before I hand over to Lord Redwood. Now, you say that you've received the final pathway pathways options report from the ESO and you're going to you're in the process of selecting one of the pathways. How many pathways are there? What's the methodology behind them and what assumptions lie behind them?
10:25
Speaker 1
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Speaker 1
There's six pathways that have been presented to the department. The methodology document is publicly available, including all of the detail in the consultation exercises that Niso has gone through. And there's a significant amount of of information within all of that. The what Niso has presented to us is their view as the system operator of a variety of pathways. The cost calculations of those. The impacts on land use. For example, it is for government to then take that information and decide the wider impact. So there are questions about how much land use we want for onshore solar, for example, versus offshore wind.
That's a political choice, actually. And there are questions about supply chain benefits that might come from offshore wind versus solar that could be built in the UK with jobs and and economic opportunity. And there's a question about cost. How much are we willing to pay versus all the other trade offs. Those are all political choices. And so rightly, the Prime Minister has emphasised this point recently. Government is in charge of energy policy in the country. Niso and Ofgem's role is to advise and to regulate. But government will decide what the future system looks like in the UK.
That's a political choice, actually. And there are questions about supply chain benefits that might come from offshore wind versus solar that could be built in the UK with jobs and and economic opportunity. And there's a question about cost. How much are we willing to pay versus all the other trade offs. Those are all political choices. And so rightly, the Prime Minister has emphasised this point recently. Government is in charge of energy policy in the country. Niso and Ofgem's role is to advise and to regulate. But government will decide what the future system looks like in the UK.
10:27
Baroness Sheehan
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Baroness Sheehan
When will we have greater clarity? On what the SSEP you know at the moment? What the all the evidence we've heard says nobody really. Everyone's operating in the dark, as Lord Krebs has said. When will we have greater clarity? When will the SSEP is it you know, is we our investors, our stakeholders expected to wait until the end of next year?
10:28
Speaker 1
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Speaker 1
No. So everyone publicly will see the plan that we the pathway that the Secretary of State has chosen early next year. I think the expectation is in the first quarter of next year and also in the environmental assessment that goes with that, the other pathways will become clear as well. So there will be transparency and in the alternative options as well. And it's for Niso to do that consultation. But the government will have an explanation that goes alongside that of why we've chosen that pathway. Importantly, there is then the opportunity for industry and the public to to, to add their views onto this.
And then we'll come to a final decision next year. But I would just reiterate the point for investors , because I think it's so important. This isn't a binary choice that we're making. We have to build an energy system with a mix of technologies. We're open to investment in a whole range of areas, and we continue to work right across industry to make those projects happen.
And then we'll come to a final decision next year. But I would just reiterate the point for investors , because I think it's so important. This isn't a binary choice that we're making. We have to build an energy system with a mix of technologies. We're open to investment in a whole range of areas, and we continue to work right across industry to make those projects happen.
10:30
10:30
Lord Redwood
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Lord Redwood
Minister, I welcome the Chancellor's recent statement that it makes no sense to keep adding renewables if the grid capacity is not there to deliver it to customers. And I welcome your hint today that we already have an imbalance problem with an excess of wind power in Scotland, with cost and supply difficulties resulting. So I wondered if you could just give us background on where you and the department are at solving that, that grid blockage problem, and how much delay and extra cost is going to be entailed in putting in synchronous condensers and grid forming inverters, for example, and the mega link needed to Scotland with with pylon and cable capacity.
10:32
Speaker 1
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Speaker 1
It's a really important question, and I would say it is the most pressing thing in my entry as a minister at the moment. The grid is hugely resilient, but it is not where it should be. And if we're honest, decades ago we should have woken up to the fact that the grid was not being invested in at the scale it should have been. That's not just because we're moving to renewables. There are hugely important economic growth opportunities on the demand side that can't connect, that are given dates a decade in advance, which is an absolute nightmare for any investor confidence in the UK.
And increasingly, it is becoming complex to manage the grid because we're trying to upgrade grid. That was largely built in the 50s and 60s alongside connecting much more things into it. So it is a collective failure of governments for decades to build what I think is probably the most important national asset we have as a country. The grid is a phenomenal piece of engineering, but it has been largely ignored for decades. And and that is a failure. What we're trying to grip now is two things that I think are crucial. One is the connections reform process, which has been painful but really important.
When we came into government, more than 700GW was waiting to connect to the national grid, an absurd amount of projects that had just been allowed to grow and grow. We've reformed that queue and cleared out 300GW. That allows projects that are ready and strategically, strategically aligned to connect. That's part of the the solution. But the bigger thing is upgrading the grid itself, which will be a huge piece of investment. And we've been really open with people. If we think back to the budget last year, we took £150 of costs away from bills into the Treasury.
People didn't see £150 come off their bills because we had to invest in the grid, and that was a politically difficult thing to do, frankly, when we would have liked to bring down people's bills. But if we don't fix the grid now, we will end up a decade from now or more in an even worse position than we are now, losing out on economic opportunities. But crucially, spending billions of pounds on constraining wind and turning up gas, which is a disgraceful way for us to be operating a system. So we do need to build the grid, we need to invest now.
We recognise that comes with a cost. But there is, as with all of this, an even greater cost if we don't act now.
And increasingly, it is becoming complex to manage the grid because we're trying to upgrade grid. That was largely built in the 50s and 60s alongside connecting much more things into it. So it is a collective failure of governments for decades to build what I think is probably the most important national asset we have as a country. The grid is a phenomenal piece of engineering, but it has been largely ignored for decades. And and that is a failure. What we're trying to grip now is two things that I think are crucial. One is the connections reform process, which has been painful but really important.
When we came into government, more than 700GW was waiting to connect to the national grid, an absurd amount of projects that had just been allowed to grow and grow. We've reformed that queue and cleared out 300GW. That allows projects that are ready and strategically, strategically aligned to connect. That's part of the the solution. But the bigger thing is upgrading the grid itself, which will be a huge piece of investment. And we've been really open with people. If we think back to the budget last year, we took £150 of costs away from bills into the Treasury.
People didn't see £150 come off their bills because we had to invest in the grid, and that was a politically difficult thing to do, frankly, when we would have liked to bring down people's bills. But if we don't fix the grid now, we will end up a decade from now or more in an even worse position than we are now, losing out on economic opportunities. But crucially, spending billions of pounds on constraining wind and turning up gas, which is a disgraceful way for us to be operating a system. So we do need to build the grid, we need to invest now.
We recognise that comes with a cost. But there is, as with all of this, an even greater cost if we don't act now.
10:36
10:37
Speaker 1
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Speaker 1
I can't give you an exact figure to 2030. Ofgem will be able to give you their modelling. The reason that it is a balancing act here is that there is an investment cost to build the grid. But for example, if we build Sea Link and Norwich to Tilbury, it will come at a significant cost to consumers. But the cost benefit will actually outweigh the investment cost in building it because of the constraints that will reduce to bring cleaner, cheaper power to people's homes. So there is a trade off with short term investment in order to get to reduction in constraint costs to bring down people's bills.
10:38
10:38
Baroness Whitaker
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Baroness Whitaker
Good morning, and thank you for coming in. Minister, you referred to the capacity market. We have heard that it doesn't adequately recognise or reward duration and availability of assets to deal with Dunkel Felter looking at your Clean Power 2030 action plan, you are clearly contemplating reforms. So will they take account of the security of supply benefits that ultra long duration storage and low carbon dispatchable power could deliver, and also enable innovation in that connection? Could you tell us what's happening with the Marine Energy Task Force? What do they think should happen to the market?
10:40
Speaker 1
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Speaker 1
Great. Well, lots of really good questions in that I might pass to Bill in a moment. Who is Mr. Capacity market in the in the department. And I think we'll speak specifically about that point. Just just firstly, we absolutely want to try and get to a place where the capacity market is using low carbon options as much as possible. But the critical thing about the capacity market is dispatchability. So security of supply will always be the number one aim. We said even in the clean power scenario, gas would continue to play a role as a strategic capacity on the system because we recognise its inherent ability to be dispatchable.
But the gas fleet is is ageing and so we want to see other technologies come forward. So long duration storage is a really critical part of that, but we haven't been building it for a very long time. So some of the battery projects that are coming forward are now long duration. They may have quicker build times. We're also keen to build more pumped hydro storage, but that's not going to happen overnight. And I'll pass to Bill in a second on the capacity. But just on the last point, I set up the Marine Energy Task Force because I felt from industry that they weren't getting a fair hearing from government over many years.
It's a technology that has been proven in many other countries, but it is extremely expensive to build. And so I wanted to try and get the evidence together to justify tidal or wave technologies that are more expensive as a capital outlay. But if we look at countries around the world that have them, they're often 70, 80 years on the system continuing to generate day after day. And, you know, I visited a number of hydro projects in the Scottish Highlands that are still generating with much the same technology as they were built with when we electrified the Highlands.
So I'm interested in the technology, but I've been really open with industry that the cost is prohibitive at the moment. And so although we've supported some tidal projects to get to scale, we're going to have to work on how we bring down the the cost of the capital outlay to begin with. And I'm open to working with industry on that.
But the gas fleet is is ageing and so we want to see other technologies come forward. So long duration storage is a really critical part of that, but we haven't been building it for a very long time. So some of the battery projects that are coming forward are now long duration. They may have quicker build times. We're also keen to build more pumped hydro storage, but that's not going to happen overnight. And I'll pass to Bill in a second on the capacity. But just on the last point, I set up the Marine Energy Task Force because I felt from industry that they weren't getting a fair hearing from government over many years.
It's a technology that has been proven in many other countries, but it is extremely expensive to build. And so I wanted to try and get the evidence together to justify tidal or wave technologies that are more expensive as a capital outlay. But if we look at countries around the world that have them, they're often 70, 80 years on the system continuing to generate day after day. And, you know, I visited a number of hydro projects in the Scottish Highlands that are still generating with much the same technology as they were built with when we electrified the Highlands.
So I'm interested in the technology, but I've been really open with industry that the cost is prohibitive at the moment. And so although we've supported some tidal projects to get to scale, we're going to have to work on how we bring down the the cost of the capital outlay to begin with. And I'm open to working with industry on that.
10:44
10:44
Speaker 1
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Speaker 1
I will. I mean, I know of a particular project in France, for example, that has been given as the example that I think has been running for almost 80 years. We are supporting the Emec Centre in Orkney, for example. It's doing a lot of work on wave generation. But you're right, the scale up point is the challenge, the technology is there an innovation level. We know that it works as a, as a, as a way of generating electricity, but scaling it up is a challenge. And tidal energy does come with issues around, although it is obviously a constant source of energy, it doesn't necessarily correlate with peak demand.
So you still need storage attached to it. So there are trade offs. But I'm very interested in looking at it as a technology. I don't know if Bill wants to add anything on the capacity market.
So you still need storage attached to it. So there are trade offs. But I'm very interested in looking at it as a technology. I don't know if Bill wants to add anything on the capacity market.
10:46
10:46
10:47
Speaker 2
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Speaker 2
So so when it comes to the capacity market, the thing to I mean, it's the it's GBS primary mechanism for ensuring security supply. It runs on a technology neutral basis where it seeks to buy the capacity we need, whatever technology that might be to ensure security of supply according to metrics that Niso as the system operator develop. So it is not the job of the capacity market to bring through new technology, more low carbon technology, things like that. It is about ensuring security supply. So the sorts of things that the minister was talking about, that's where you bring forward new technologies.
It's bespoke support mechanisms to develop a technology or to help it overcome barriers.
It's bespoke support mechanisms to develop a technology or to help it overcome barriers.
10:48
Speaker 2
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Speaker 2
That could be one mechanism. For example, that's what's used in in the context of offshore wind. It could be things like business models to support hydrogen to power. There are a number of different ways that different technologies are. We address there. There needs to try and bring forward it as a sort of a competitive technology in a in an auction process, which is how the capacity market runs. So capacity market does not decide which technology gets agreements under the capacity market. It's about who bids in, who's able to offer capacity, which they can deliver to when required to meet a system stress event.
So , and there's a quite a detailed, complicated process that we go through in terms of annual auctions to make sure that we have enough capacity on the system to meet those requirements. Now, in the context of water, we are thinking about whether or not the capacity market actually delivers the types of. I'm going to say, types of technology, but actually it's a who can respond to that sort of long duration event rather than as it has traditionally been set up to meet peak requirement. This. This device was set up in 2014. We had basically a coal and gas system, so we didn't have to worry about water because the technologies that came through were able to do both meet peak demand, but also meet the water challenge.
Now with a more renewables based system, where maybe we either are facing a bigger challenge in the context of water, we're going to have to think about whether the capacity market actually brings forward the right sort of technology that can respond to those sorts of events. We are thinking about that, contemplating how we might reform the capacity market to be able to meet those challenges.
So , and there's a quite a detailed, complicated process that we go through in terms of annual auctions to make sure that we have enough capacity on the system to meet those requirements. Now, in the context of water, we are thinking about whether or not the capacity market actually delivers the types of. I'm going to say, types of technology, but actually it's a who can respond to that sort of long duration event rather than as it has traditionally been set up to meet peak requirement. This. This device was set up in 2014. We had basically a coal and gas system, so we didn't have to worry about water because the technologies that came through were able to do both meet peak demand, but also meet the water challenge.
Now with a more renewables based system, where maybe we either are facing a bigger challenge in the context of water, we're going to have to think about whether the capacity market actually brings forward the right sort of technology that can respond to those sorts of events. We are thinking about that, contemplating how we might reform the capacity market to be able to meet those challenges.
10:52
10:52
Speaker 2
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Speaker 2
So we're actively thinking about it now. I mean, the nature of the capacity market process requires quite a lot of consultation. We need to get the views of industry, who can contribute , all that sort of stuff. So it isn't a quick fix, but we are actively thinking about it. We'll be thinking about bringing forward proposals for reform next year, and that might be a process that takes a couple of years to to develop. And the other thing to remember is that it then takes 3 to 4 years before you actually see those new technologies come through, because the auctions for capacity are looking that far ahead.
10:54
10:54
Speaker 2
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Speaker 2
Well, Duncan flour is already part of what miso buys against. So it isn't like it's a new challenge. It's one that we can see becoming more of a challenge because of the nature of the system. But it isn't new. And the the way Nizo projects its challenge in terms of how much capacity it thinks it needs to secure the system. They've been doing that for many years. It's a constant iterative process. So each year they think about, okay, what are the new challenges? How do we weigh what what technologies can contribute, but also what challenges we face in terms of Duncan flour rather than peak demand.
So it's an ongoing process.
So it's an ongoing process.
10:55
10:56
10:56
Speaker 1
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Speaker 1
If I if I give from a policy point of view what they help us do, there's two different options. One auction for years ahead, which allows us to give that longer term procurement, and then one that comes a year ahead of when we expect the demand to come on, or when it should be available. It's a well used process within if we think of the CFD auctions, for example, to try and identify the projects that come forward, but at a price that is good for consumers and ultimately to qualify for the capacity market, you have to meet all of the requirements for the system.
So everyone that participates is suitable for for our needs. It then comes down to the cost that we can procure at. And the auction we found is a is an effective way of doing that, not least because the generators bidding into it don't have any idea what the alternative pricing structures are for others. So it allows some competition within that. And for us to, to be able to identify the cheapest price possible for consumers. But it's something that we keep the rules of the auction under review. We made some changes last year to the capacity market.
We continue to do that to make sure it works for for consumers and crucially, more than any other part of the energy system. The capacity market is about, as always, being able to meet our the needs of the system.
So everyone that participates is suitable for for our needs. It then comes down to the cost that we can procure at. And the auction we found is a is an effective way of doing that, not least because the generators bidding into it don't have any idea what the alternative pricing structures are for others. So it allows some competition within that. And for us to, to be able to identify the cheapest price possible for consumers. But it's something that we keep the rules of the auction under review. We made some changes last year to the capacity market.
We continue to do that to make sure it works for for consumers and crucially, more than any other part of the energy system. The capacity market is about, as always, being able to meet our the needs of the system.
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11:00
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11:01
Speaker 1
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Speaker 1
Reflect ultra long duration storage realities? Bill might want to come in in detail, but I think this is one of the areas where, as technology develops, we absolutely want to look at how we might change the parameters of of the auction and the capacity market generally, but we have to see the evidence of those technologies operating. If we take, for example, the the the recent Ofgem minded two decision on long duration storage. There are some really innovative battery projects within that. But we need to we need to see that not just they have the duration, but that they operate .
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11:02
Speaker 1
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Speaker 1
Build the reforms. Well, I mean, I think Bill made the point earlier, the capacity markets technology agnostic. So if technology can be. proven to meet what we need from the capacity market, in other words, it's availability on the system when we need it, then you know, we are open to that being included. But .
11:03
Speaker 4
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Speaker 4
We have to have absolute confidence in its ability to do that. So when it comes to something like ultra long duration storage, we would need to change the parameters of the capacity market to recognise what that. technology brought. At the moment, this thing doesn't exist. It's not operating at a level where actually it makes any difference. So until we have a. technology ready to deploy, that's when the capacity market has to decide, okay, how do we value this technology? What do we think it brings? And that will lead us to. identifying a generating class, things like that, which leads to, okay, how do we value this particular technology?
And certainly we are thinking already about have we got. And we do this actually every year. Do we have the derating factors, right, that values technologies for how long they can generate or supply electricity, for example, amongst a lot of other things. So it's a it's a well-established system, but we haven't yet had to respond to. Okay, so what does ultra long duration storage add? How do you value it? Until we actually have a project ready to, we want to enter the capacity market.
And certainly we are thinking already about have we got. And we do this actually every year. Do we have the derating factors, right, that values technologies for how long they can generate or supply electricity, for example, amongst a lot of other things. So it's a it's a well-established system, but we haven't yet had to respond to. Okay, so what does ultra long duration storage add? How do you value it? Until we actually have a project ready to, we want to enter the capacity market.
11:05
11:06
11:06
Lord Lennie
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Lord Lennie
Yeah. Welcome. And I think it's more Bill than, than, than the minister. But, you know, feel free to chip in on the ultra long duration energy storage delivering over 100 hours. We'll say that's the definition. Given that these were not. competitive in the most recent cap and floor scheme, what what are the.
11:07
11:07
Speaker 4
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Speaker 4
Technologies, future technologies to, to the market? So I actually think this is more a question. However, you the we have a range of mechanisms that help develop technologies, new technologies. So whether that's carbon capture and storage, hydrogen to power nuclear, there's lots of different ways of trying to address barriers that are holding the development back for technology. I think ultra long duration storage is newer than a lot of the ones I've been talking about. So I don't honestly know what the right mechanisms would be to help that. I do know that we are looking at research.
programmes to help support the development of these.
programmes to help support the development of these.
11:08
11:09
Speaker 4
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Speaker 4
And as it develops, I think then it will become clearer. Okay, this is what we need to address to enable these things to come forward. Capacity market is the right at the end of that chain in terms of, as I discussed, it's it's when your technology is ready to deploy, can we make sure that we have the .
11:09
11:09
Speaker 1
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Speaker 1
Towards capacity market starting to fall off well or other mechanisms. So if we think of the cap and floor scheme is designed to. provide the minimum level of support to allow the capital investment to go ahead. And most of battery projects in the UK are on a merchant basis. There's no subsidy scheme for batteries more generally in the system, we have announced Ukri has has announced. £28 million of of an innovation challenge to support ultra long duration storage so that we can see that develop here in the UK, but we have not seen any projects deployed anywhere at that scale.
And the point I was making to to the chair earlier is it's one thing to have the. technology in theory or the technology even built, but we then need the system to be able to use the the long duration storage in the way that it's designed for and not, not find ourselves using ultra long duration storage as just a regular go to for short duration use on the system. So it's partly the maturity of the construction of the technology. But then how does the system use it? How does it recharge efficiently? How do consumers not end up paying twice for some of that, that energy and discharge from it?
So but we're open to all of that and partly why we announced window one, but said very openly there would be a second window of the Ofgem cap and floor as to say, while we've procured more than.
And the point I was making to to the chair earlier is it's one thing to have the. technology in theory or the technology even built, but we then need the system to be able to use the the long duration storage in the way that it's designed for and not, not find ourselves using ultra long duration storage as just a regular go to for short duration use on the system. So it's partly the maturity of the construction of the technology. But then how does the system use it? How does it recharge efficiently? How do consumers not end up paying twice for some of that, that energy and discharge from it?
So but we're open to all of that and partly why we announced window one, but said very openly there would be a second window of the Ofgem cap and floor as to say, while we've procured more than.
11:12
11:12
11:12
11:12
Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
So I have Lord Ashton. Good morning and thank you for coming. I was interested last night as I was sitting in the chamber, I did, I have to say, look at my phone to see what what our energy mix was. And we were actually up almost at. 43% of gas, which is probably more than any of us want to see being being used. And what also interested me was that we were actually exporting to France, and we were getting.
11:13
11:13
Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
Give or take, coming in from interconnectors. So we're obviously in a in a weather window at the moment, which is not hugely profligate in wind or sun, as we can see. I mean, there is I'm sure there's some solar being generated from this at the moment, but not a lot. So at the other end of the spectrum, we're spilling wind power as as you've described earlier. So what are we going to do about potentially.
11:15
11:15
Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
Which obviously could use that spilt power. What are we doing about gas , carbon capture and technology? Because from everything we've heard so far, this is all long term. I mean, long term in happening not long. I mean, it's long. It certainly works for long term dispatchable power. But everything is taking ten years. So what are we doing .
11:15
11:15
Speaker 1
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Speaker 1
To actually ensure progress in this area? Well, firstly, I'm glad I'm not the only person that sits looking at the generation mix on my phone constantly to see where we're at as a country. It's good to have a friend in that. And you're right to say the mix of technologies is important. And you know, we've said throughout the Clean Power Action plan, this isn't just about renewables. Although we want to deploy more renewables in the system. It's partly around that mix of thinking about how we might use hydrogen. And we've we've put some funding into initial hydrogen projects.
We are we are supportive of hydrogen, but equally, we recognise there is a cost implication from that. And in terms of generating on the one hand, then turning it into hydrogen, then turning it potentially back into something. So we want to be really clear around how that works, but we are really supportive of of that as a storage technology apart from anything else, and how we soak up that excess that we are. generating a huge amount of the time on the system. We're really positive about more interconnection with Europe. We'd like to see more of that in terms of hybrid assets.
So connecting offshore wind in the North Sea into different countries. And the Hamburg. Declaration announced. 100GW of that shared capacity across Europe. And we really want to to work towards deploying that. And then storage itself is critical because I think what we've done over the past probably 20 years is move away from, first of all, coal, which was a huge achievement of multiple governments to achieve but then build renewables, but without the. backup in the storage or the flexibility of the system for us to get the best use of them. So I go back to the point I made to Lord Redwood around grid would have allowed us to use much more of the wind that is being generated in Scotland right now, but we can't get to where it's needed, but also flexibility in the system.
So how do we get. consumers to use electricity more flexibly? We see where that is deployed at the moment. People are very willing to use time of use tariffs to charge their car at times where there's excess cheap power in the system to do their washing. You know, there are real opportunities for consumers to save money and for the system to shift this traditional sense of peak demand to smooth that out over a longer period of time. And of course, we're really supportive of building new nuclear. And we should have been making decisions on nuclear a long time ago so that we don't have so .
We are we are supportive of hydrogen, but equally, we recognise there is a cost implication from that. And in terms of generating on the one hand, then turning it into hydrogen, then turning it potentially back into something. So we want to be really clear around how that works, but we are really supportive of of that as a storage technology apart from anything else, and how we soak up that excess that we are. generating a huge amount of the time on the system. We're really positive about more interconnection with Europe. We'd like to see more of that in terms of hybrid assets.
So connecting offshore wind in the North Sea into different countries. And the Hamburg. Declaration announced. 100GW of that shared capacity across Europe. And we really want to to work towards deploying that. And then storage itself is critical because I think what we've done over the past probably 20 years is move away from, first of all, coal, which was a huge achievement of multiple governments to achieve but then build renewables, but without the. backup in the storage or the flexibility of the system for us to get the best use of them. So I go back to the point I made to Lord Redwood around grid would have allowed us to use much more of the wind that is being generated in Scotland right now, but we can't get to where it's needed, but also flexibility in the system.
So how do we get. consumers to use electricity more flexibly? We see where that is deployed at the moment. People are very willing to use time of use tariffs to charge their car at times where there's excess cheap power in the system to do their washing. You know, there are real opportunities for consumers to save money and for the system to shift this traditional sense of peak demand to smooth that out over a longer period of time. And of course, we're really supportive of building new nuclear. And we should have been making decisions on nuclear a long time ago so that we don't have so .
11:20
Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
Much retirement of the existing fleet before the new fleet comes along. Coming back to hydrogen and and indeed, carbon, carbon. sequestration on on gas plants. There's quite a lot of infrastructure that will need to be built for this, which doesn't just fly out of the air, unfortunately. And none of us have any money to do it. So how do we. encourage that to come forward? Because certainly the geology is not perfect where we have our current gas plants to, to put carbon capture equipment on it. So some of those may end up getting scrapped and building somewhere else.
But again, they're. 500 to $1 billion a pop. And I should declare that I work in insurance. And we .
But again, they're. 500 to $1 billion a pop. And I should declare that I work in insurance. And we .
11:22
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11:23
Speaker 1
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Speaker 1
Otherwise we wouldn't have any plastics and so on. There's a range of really good points there that I could I could explore in a whole session, I think because you're right to raise it. And the truth of CCUs and hydrogen is that it's difficult to get them directly to from. market to. investability and into building. But we need to try and do everything we can to nurture the first few projects that come out of that.
And Net zero Teesside, for.
And Net zero Teesside, for.
11:24
11:24
11:24
11:24
Speaker 1
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Speaker 1
But but with carbon capture technology so allows us to have that. dispatchability and a new gas plant when we've got a lot of the gas fleet retiring. So we are seeing projects coming through it. And we've looked at dispatchable power agreements to make sure that there is a long term investment vehicle there for where there is private investment, that you can make sure you have an off taker for that. But I'm not going to pretend any of this is easy. And of course, the government had to make some difficult decisions as part of the defence investment plan around where funding would go.
And some of that has fallen on carbon capture and hydrogen. But we want to try and support what is not a nascent technology, but in terms of deployment in the UK is still very nascent. To get those first projects over, prove the model and then look at how we can expand in the future. And the final point I'd just make, which is which is definitely not a short term fix, but I'm really interested in looking at how we. repurpose the gas network as much as. possible to be able to do some of these things with hydrogen for industry, for example, gas network, unlike the electricity network, actually has been really significantly invested and upgraded in past decades.
It's extremely.
And some of that has fallen on carbon capture and hydrogen. But we want to try and support what is not a nascent technology, but in terms of deployment in the UK is still very nascent. To get those first projects over, prove the model and then look at how we can expand in the future. And the final point I'd just make, which is which is definitely not a short term fix, but I'm really interested in looking at how we. repurpose the gas network as much as. possible to be able to do some of these things with hydrogen for industry, for example, gas network, unlike the electricity network, actually has been really significantly invested and upgraded in past decades.
It's extremely.
11:27
11:27
Speaker 1
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Speaker 1
But we will start to see the use of the gas network decline quite significantly. It would be a great shame to lose optionality in how we might use that network in the future. But all of this comes back to what is deliverable and at what cost. And unfortunately, the government, you know, we do have to be quite .
11:27
Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
Ruthless about what we can afford in order to keep bills as low as possible. And I agree with that last statement. I think you did mention that a lot of the gas plants are going to possibly come to end of life. So there's going to be a balance between how much are you going to upscale revamp them because that industry spends its .
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11:28
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11:29
Speaker 1
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Speaker 1
The hydrogen strategy is in mean in well. Well, yes, hopefully in the budget, we made very clear that we were although we made some difficult decisions about the overall funding, we were releasing the Ha two invitation to offer, and the hydrogen strategy will be as part of that. And just to say very briefly, the hydrogen strategy, the previous government had a very clear commitment. I think it was. 15GW of hydrogen deployment. My sense from even industry is that that's not a realistic figure. And so what we've tried to do in the hydrogen strategy is be.
realistic about.
realistic about.
11:30
11:31
11:31
Baroness Sheehan
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Baroness Sheehan
Ambition that we don't think is achievable. Thank you. We look forward to it. Thank you. Thank you very much. We will be exploring gas in more detail before we move on, I just want to ask about the contracts for difference and how that could help with this. particular issue. In it was Andy McNeill, I believe, for from the Energy Storage.
11:31
11:32
11:32
Baroness Sheehan
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Baroness Sheehan
Linking it to storage would be to ask them. So before I before I say that, let me just say that what currently happens is the developer simply generates whatever it generates, and the system operators try to work out how to balance it. I think that's correct. If we can get to a place where we start shaping some of that at the point of.
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11:35
Speaker 1
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Speaker 1
It seems to me that this is a sensible suggestion. It sounds like a sensible suggestion. Two, two things I think I would say very briefly. First of all, there is debate about whether storage actually has to be next to the generation in order for it to be useful. So, for example, if we think of pumped hydro storage, it's almost certainly all going to be in the highlands of Scotland that continues to have extremely useful system benefits, even if it is far away from where the generation is happening. So the storage doesn't have to be directly linked, but we are seeing more, for example, solar farms in particular that are looking at batteries alongside solar and so that it can be released into the grid at a more localised level to meet peak demand.
So we're really interested in that. And we're looking at things like how we can incentivise community batteries so that smaller areas can take advantage of, of, of a smart system locally rather than dispatching it nationally. The CFD process itself has been incredibly useful to give investors certainty to build new projects where we've got a high upfront.
So we're really interested in that. And we're looking at things like how we can incentivise community batteries so that smaller areas can take advantage of, of, of a smart system locally rather than dispatching it nationally. The CFD process itself has been incredibly useful to give investors certainty to build new projects where we've got a high upfront.
11:38
11:38
Speaker 1
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Speaker 1
But then a virtually free fuel source and a very marginal cost and an on going basis. The cost is the upfront cost of building it. CFD scheme has been mirrored now across the world as the model, partly because the two sided nature of it means there's investor certainty and revenues. But we also, as consumers, benefit if the wholesale price goes beyond that. So we think it is a useful model at the moment. But we have said R seven and R eight ran in broadly the same terms as previous auction rounds. We do now want to pause before r nine and look at whether we need some more significant changes to the .
11:39
Baroness Sheehan
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Baroness Sheehan
Difference scheme, to make sure they work for the consumers of the country. Thank you. It does seem to me I will pass on to Brian Rafferty very shortly, but it just does seem to me that, you know, we pay economic. curtailment payments to wind. generators to switch off generation. I mean, surely some of that billion pounds that we pay to them to switch off could be they could be. incentivized to come up with solutions .
11:41
11:41
11:41
Speaker 1
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Speaker 1
Other than not generate that energy. I think it's definitely true to say if we had more storage, we wouldn't be curtailing as much. But I would just say, far be it for me to defend the developers themselves. It's not their fault that the generation isn't getting to where it needs to get to. That's the fault of the grids and actually the the majority, the vast majority of the constraint costs are to switch on gas to to meet the gap in demand, because we've had to curtail the wind. So the answer is to fix the issue with the grid so that we can deploy that.
generation exactly when we need it. But I think storage alongside that is absolutely critical.
generation exactly when we need it. But I think storage alongside that is absolutely critical.
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11:43
Speaker 1
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Speaker 1
Look, we are, you know, for a number of reasons. We think biomethane is important, not least because it's a low carbon gas that we can inject directly into the the existing system at the moment. So it helps us get to where we want to get to. But with a lower carbon source. It's also helpful in terms of utilizing waste and other things in a more productive way. So from various parts of our environmental policy, it is helpful. We have the Green Gas Support Scheme, which helps incentivise this, and we'll continue to support that. I think what we have seen, though, is that it is very small scale and the market doesn't appear to be significantly greater than it is at the moment.
Even if there was a different. revenue stream available from government. So we're really supportive. But it is I think biomethane generally is a finite resource, and it has a number of different draws on it. And at the moment we don't see it playing a much more significant role in the .
Even if there was a different. revenue stream available from government. So we're really supportive. But it is I think biomethane generally is a finite resource, and it has a number of different draws on it. And at the moment we don't see it playing a much more significant role in the .
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11:46
Speaker 1
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Speaker 1
I think there's a huge space. around green gases generally to look at much more at what is possible, both in the in the use of the gas, but actually in how we more sustainably use the, the product that is the feedstock that is going into it. I think that helps us solve a number of issues as a country, I should say. We have there is going to be, you know, further deployments through the Green Gas Support Scheme. And just just to give some sense of scale, we expect there'll be 37 new biomethane plants through the Green Gas support scheme.
They're very, very small in scale, but they are important and they play a really crucial role across the system. So we remain supportive of it. The fact that it doesn't there doesn't need to be anything additional to allow it to be injected into the gas grid, gives it real, gives us real opportunity. And I think anything further we can do .
They're very, very small in scale, but they are important and they play a really crucial role across the system. So we remain supportive of it. The fact that it doesn't there doesn't need to be anything additional to allow it to be injected into the gas grid, gives it real, gives us real opportunity. And I think anything further we can do .
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Lord Trees
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Lord Trees
Thank you. Thank you very much, Lord trees. Could I follow that on the bio methane? We've heard from previous witnesses quite a lot of. positivity about biomethane. And we've heard figures from some people that ultimately it could provide something like. 120 terawatt hours per year, which is a very.
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Speaker 1
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Speaker 1
Recognising it as zero carbon? I would have to come back to the committee on the specific question. I'm sorry, I'm not I'm not the minister that deals with biomethane. And I will come back to you on the exact classification I wasn't aware of, of exactly how that is reached. I do think just in terms of scale of the.
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Speaker 1
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Speaker 1
By 2050. And that, as I understand it, that would allow us to reach our net zero commitments. So in terms of going above that, it would be additional to to what we need to reach the carbon budgets in any event. So but I think this is one of many areas where we're seeing further innovation development all the time. And it may be that by in the coming years, we'll .
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Speaker 1
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Speaker 1
Rather than elsewhere? Is that the case? No, I think I was referring to pumped hydro storage. So just given given Hydro's capacity, it's likely to be in in the north of Scotland, perhaps in Wales in terms of hydrogen. I mean, look, we're open to looking at the role that hydrogen storage could play. It's likely to be offshore storage more than onshore storage utilising some of the space we have offshore. I think with all of it the test for us will be does it. actually add additionality to the system and does it affect bills in a positive way.
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Speaker 1
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Speaker 1
You know, it's it's not the job of government to. theoretically support technologies for the sake of supporting them. They have to play a purpose on the system and they have to, in our number one priority, tackle affordability. That's not to say that we think hydrogen could have a key role, and in particular with industry, although we see much of industry moving towards. electrification as its. decarbonisation route, some will not be able to do that. They will continue to need gas and hydrogen may be the the route to. decarbonisation rather than electrification. So we're really open to it, but we want to try and make sure, particularly on storage, that it does, it does meet those requirements.
I think the final thing I'd say is, I think you're right about public perception of some of these new technologies. We see this, for example, with carbon capture and storage, where I think industry and government has to do more to. explain the role this technology plays and the safety actions. Truth is, we all probably live on top of or not far away from significant gas pipes, and we don't think about it at all. And we have been that way since we changed from town gas to natural gas many, many decades ago. And yet, you're right to say hydrogen does have an increased public awareness.
And actually carbon capture and storage does as well, even though it's a well-tested technology in other parts of the world. So we do need to continue to do all we can to say projects are safe and they're contributing. positively .
I think the final thing I'd say is, I think you're right about public perception of some of these new technologies. We see this, for example, with carbon capture and storage, where I think industry and government has to do more to. explain the role this technology plays and the safety actions. Truth is, we all probably live on top of or not far away from significant gas pipes, and we don't think about it at all. And we have been that way since we changed from town gas to natural gas many, many decades ago. And yet, you're right to say hydrogen does have an increased public awareness.
And actually carbon capture and storage does as well, even though it's a well-tested technology in other parts of the world. So we do need to continue to do all we can to say projects are safe and they're contributing. positively .
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Lord Rooker
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Lord Rooker
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Lord Rooker
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Lord Rooker
Low carbon alternatives are available. Now , it's quite clear we keep telling the public that we're going to need gas for a long time, decades. In fact, we've we've said that. But does the government. intend to displace the unabated gas. Do you do you have a plan for. displacing the unabated gas for doing those events? And is there a time frame to that or not? Or.
I got the impression from your previous answers, there's still a lot of work to do in that area, and will be with .
I got the impression from your previous answers, there's still a lot of work to do in that area, and will be with .
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Speaker 1
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Speaker 1
Probably longer than what we've thought about. Look, just firstly, I've often been. accused in this job of not talking about gas enough. What about. Look, just. Firstly, I've often been. accused in this job of not talking about gas enough. Often the reason that I don't is because what I said earlier on the gas network works incredibly well and is incredibly resilient. The electricity network needs more of my focus, so that's why I don't talk about it so much.
But that shouldn't be taken at all to mean that we don't absolutely.
But that shouldn't be taken at all to mean that we don't absolutely.
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Speaker 1
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Speaker 1
Of gas at the moment is the most important factor of why we will continue to need unabated gas. Clearly, we want to wherever we can. introduce CCUs onto that so that we have power generated with carbon capture. technology that is expensive and and there are a number of projects moving forward, but we're supportive of that. And then trying to bring forward other dispatchable. technologies and storage to allow us to displace it. But we do still have a view that unabated gas will be. important and will continue to be a key part of how we meet our security of supply standards.
We have to deal with the fact, though, that the gas fleet is ageing. We estimate that around. 15GW of the. 35GW that's currently installed will have reached 30 years old by the mid 2030s. And so when people often make this crude comparison of the cost of renewables and the cost of gas, they ignore the fact that the gas fleet also has to be rebuilt and comes with significant capital costs as well.
Gas isn't isn't a cheap alternative to renewables. So we see it as important. But we .
We have to deal with the fact, though, that the gas fleet is ageing. We estimate that around. 15GW of the. 35GW that's currently installed will have reached 30 years old by the mid 2030s. And so when people often make this crude comparison of the cost of renewables and the cost of gas, they ignore the fact that the gas fleet also has to be rebuilt and comes with significant capital costs as well.
Gas isn't isn't a cheap alternative to renewables. So we see it as important. But we .
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Speaker 1
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Speaker 1
On a number of options and we've been quite open. Unlike many consultations government does where we consult on the intended outcome. We've been really open in the questions because in truth, we want ideas about how we might manage the gas fleet differently, including the possibility that actually the government just owns the the very last bit of the gas that we need to generate at that dispatchable moment. And instead of having a gas fleet on the.
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Speaker 1
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Speaker 1
In a general sense, we deploy it only when we absolutely need it. That's an option. There are a number of other options before we get to that stage as well. You're right about inevitability. These plants take a significant amount of time to build, and a lot of their capital intensive. The refurbishment is a constant process as well, so the capacity market has supported that refurbishment. We'll continue to do that while we look at what the long term future is of the gas fleet and how we how we get to a place where we are only using it when we .
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Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
Absolutely need it on the system. Thank you very much. Bill, I think the only thing I'd add on that is there's a distinction between using gas and having gas available. So gas is about. 35GW on the system in terms of capacity. But the load factors, the running hours is constantly going down. So that creates an economic challenge in terms of making these viable. But it also demonstrates that we're trying to make sure that we rely on it only when we absolutely have to, rather than see it as part of the normal sort of. generating mix.
Dealing with that is quite challenging, especially when we're trying to or having to. refurbish a lot of old plant. If this is going to stay on the system,
Dealing with that is quite challenging, especially when we're trying to or having to. refurbish a lot of old plant. If this is going to stay on the system,
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Lord Rooker
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Lord Rooker
We're going to need the gas that we've got. And there'll come a time when the government has to tell the public. Parliament has to the public now. We've now got. everything's okay for. intermittency and these periods where we need it, now we can cope. And we'll now switch off that. non-use of any more gas.
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Speaker 1
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Speaker 1
But we're a long way from that time. We're a very long way from that. And, and I would say in my lifetime we will we will not reach the point where we have we don't need gas in any way whatsoever. We obviously have an aim to get to net zero by 2050, but that does not mean zero gas by 2050. But we do want to try and do everything we can to reduce its role in the system. We think of electricity generation. For example, a few years ago it was setting the price of electricity. 90% of the time it's now 60%.
It's potentially lower than that. Now, I haven't seen the most recent figures. So as Bill says, the role that's playing in the system is becoming more and more strategic. Only at those moments. We need the dispatchable power. We want that to.
It's potentially lower than that. Now, I haven't seen the most recent figures. So as Bill says, the role that's playing in the system is becoming more and more strategic. Only at those moments. We need the dispatchable power. We want that to.
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Lord Rooker
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Lord Rooker
We have to get away from that as quickly as we can, it's not going to happen overnight. I declare I bought a new gas boiler last year, so did I. Because I've got a home that's impossible to fit a heat pump. And I like the idea of your support for the gas. network because it is fairly unique across Europe, and it's a pity that we can't use it better.
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Speaker 1
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Speaker 1
You know, in terms of hydrogen with the network, I understand that's all that we want to keep. We want to keep optionality open for that. I would just make a plug for the Warm Homes loans, which were launched last week, which give. households interest free investment in order to to get not just heat pumps, but solar panels and .
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Lord Jay of Ewelme
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Lord Jay of Ewelme
Yourself at once. Lord Jay has finished his questioning. Thank you very much. Thank you very much for being with us. Minister, I should declare an interest, as I'm a former member of the Board of Main board of EDF in Paris. I'm well aware of the difficulties of getting nuclear on time, but I wanted to give you a further chance now to say a little bit more about gas. It's really just an extension of the question, the answer which you've just given to Lord Rooker. Can you say a little bit more about the the cost of.
extending the life of the existing gas fleet and what effect that will have on or may have on consumer bills, both now and in the.
extending the life of the existing gas fleet and what effect that will have on or may have on consumer bills, both now and in the.
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Speaker 1
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Speaker 1
Over time. It's a very important question. And if I separate out two parts from it first. First of all, just on the gas fleet itself, these are private assets that individual owners will make decisions about investments in. But partly what the capacity market exists for is to make sure that there is a route to that investment. We buy the power, but part of that includes the recognition of the cost of refurbishing and and other costs. And Bill might want to say more about that in a moment if we're building new plants. Again, the government directly isn't going to going to build and finance those, but we will put in place the market.
mechanisms to make sure there is that investor certainty to justify the the capital outlay to begin with. When we look at side by side, though, I do want to just say the costs of the system that doesn't involve gas running as often as it does now are all. significantly lower. That's not to say we will not continue to pay for gas as part of that system. It's just about we want to reduce the role it plays, and particularly make sure it's not the marginal price setter as often as it is at the moment, which is the costs that consumers end up paying as a result.
But it will remain important. All the scenarios we look at, and this is partly goes back to the strategic spatial energy plan around long term. How do we come off gas involve a mix of renewables, nuclear and storage. They come at different costs in order to do that, but they are all lower cost overall to run the system than it would be on gas. And that's partly a calculation of rebuilding the gas fleet comes at a cost. So it's not just the cost of gas, but it's also recognition that in the last five years we've gone through two price spikes, where right now gas is at the highest price it has been since.
2022 across Europe. And if we had a power system that continues to be reliant on that gas price, that's what consumers will pay. The last two price caps have been driven entirely by the war in the Middle East. We have to come away from that as quickly as possible so that we. control our energy here in the UK, and we don't have that volatility on the system. But until we displace gas completely, and this is why the Prime Minister has talked a lot about.
mechanisms to make sure there is that investor certainty to justify the the capital outlay to begin with. When we look at side by side, though, I do want to just say the costs of the system that doesn't involve gas running as often as it does now are all. significantly lower. That's not to say we will not continue to pay for gas as part of that system. It's just about we want to reduce the role it plays, and particularly make sure it's not the marginal price setter as often as it is at the moment, which is the costs that consumers end up paying as a result.
But it will remain important. All the scenarios we look at, and this is partly goes back to the strategic spatial energy plan around long term. How do we come off gas involve a mix of renewables, nuclear and storage. They come at different costs in order to do that, but they are all lower cost overall to run the system than it would be on gas. And that's partly a calculation of rebuilding the gas fleet comes at a cost. So it's not just the cost of gas, but it's also recognition that in the last five years we've gone through two price spikes, where right now gas is at the highest price it has been since.
2022 across Europe. And if we had a power system that continues to be reliant on that gas price, that's what consumers will pay. The last two price caps have been driven entirely by the war in the Middle East. We have to come away from that as quickly as possible so that we. control our energy here in the UK, and we don't have that volatility on the system. But until we displace gas completely, and this is why the Prime Minister has talked a lot about.
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Speaker 1
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Speaker 1
Amount of gas and to increase renewables? I think it reminds us why we're on this path to begin with. I mean, we sat in. opposition and watched Russia's invasion of Ukraine and the. government rightly spending. £40 billion bringing down people's energy bills. But we can't think that that is an acceptable way for government to just paper over the symptoms of a system. Every single time something goes wrong, somewhere in the world that drives up bills and we can't, we're still paying back in significant amounts of in our public debt, the cost of doing that. We're now four years on in another fossil fuel shock that had nothing to do with the UK.
But we remain at the mercy of international markets and we're all paying more in our energy bills again. So it is a reminder, if ever we needed one, that we have to get away from, from this volatility as quickly as we possibly can. And that means a clean power system that is nuclear, that is.
But we remain at the mercy of international markets and we're all paying more in our energy bills again. So it is a reminder, if ever we needed one, that we have to get away from, from this volatility as quickly as we possibly can. And that means a clean power system that is nuclear, that is.
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Speaker 1
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Speaker 1
That is controlled here in the UK, that has a capital cost to build. And I recognise there's some political jeopardy in saying we're going to spend money on people's bills now when affordability is a crisis. But if we don't make these decisions now, we will end up even more exposed in the future. And we'll keep going through these. cycles where it's the British public that pay the price for it. So if we ever needed a shot in the arm to say, let's get .
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Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
A really difficult question. That's why I was going to take it. And it it is. So it is not only technology dependent, it's also. individual plant dependent. So for example, in the gas space, you can generalize about how much it costs to build a new plant or to refurbish a plant. But it all depends on the individual plant. We, we. expect to be able to bring through the. refurbishment of the existing fleet with the existing framework, with the capacity market as it is more or less dealing with new build, I think is an order of magnitude beyond that.
And we're having to think about, okay, what are the what is the best way of bringing forward new build to the extent that we need it? And the .
And we're having to think about, okay, what are the what is the best way of bringing forward new build to the extent that we need it? And the .
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Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
We're always having to try and predict where we're going to be four, five, six years ahead to decide how much more gas capacity we actually might need. Now, step might give us some indicators about what that looks like, but also it depends how. technologies develop over time, what happens to demand over time. That's Niko's job to try and bring all this stuff together to work out, okay, we think we need this amount of capacity, and that will then give us an indicator about how much.
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Earl Russell
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Earl Russell
Thank you. Thank you very much. Earl Russell, you have us. Thank you Minister. Thank you, Deputy Director. I guess I'm following directly on from Lord Jay's really interesting questions. I mean, these are some of the most technical and challenging problems we face. So this conversation is really fascinating. I completely agree with you about the need to transition away from gas. And some of that we will need to. refurbish gas. We will need some new gas as well. So I guess the first question for me is about time frames for those decisions. Because actually with the increasing wait times, particularly for purchasing new gas, those decisions are coming.
immediately at us. Down the line against that is, is a need to get value for money for in terms of a set out in the budget. So could I ask you just a really a general question about the lack of time available for making these really, really important decisions?
immediately at us. Down the line against that is, is a need to get value for money for in terms of a set out in the budget. So could I ask you just a really a general question about the lack of time available for making these really, really important decisions?
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Earl Russell
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Earl Russell
And how you balance that with the need to provide value for bill payers over time. And what more can the government do to kind of communicate these really complicated decisions they're taking so that the public can begin to get a slightly better understanding of of this? Sorry, that's a big question,
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Speaker 1
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Speaker 1
But it's I think it's quite an interesting space. Sorry. Apologies. Not at all. I think it's really important on a number of fronts on on on the gas point. I mean supply chains we think is a real challenge but also a real opportunity right across the energy transition. So we've heard from a number of of people in the gas system that we could be waiting six years or more for gas turbines. And that's not just a British issue. That's because there's infrastructure being built right across Europe and across the world. So, you know, gas isn't a quick fix either to to some of these things.
So that's why we do want to try and give long term certainty. Now it's also why as, as Bill's outlined.
So that's why we do want to try and give long term certainty. Now it's also why as, as Bill's outlined.
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Speaker 1
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Speaker 1
As much as possible is, is important. It's also cost effective for us. And so we'll work through all of those things. What we're trying to do in a more broader sense across the energy system is work. collaboratively to build the supply chain. maps here in the UK so that we can give industry in Britain the line of sight across the whole system. So networks, nuclear gas.
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Speaker 1
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Speaker 1
To actually be able to fulfill more of those orders in Britain instead of as. constantly doing procurement outside of the UK. That's critical for our industrial strategy. But actually, more and more, it's becoming clear that it's critical for our energy security because actually we are competing across the world for the the same finite pieces of kit. So if we don't build it in Britain, we lose the economic opportunity, but actually we lose the capacity to. control some of this ourselves as well. So we do need to invest in that as much as possible. And then the last point, which I think gets to the heart of some of the debate we're having at the moment with the public around energy security, around the energy.
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Speaker 1
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Speaker 1
We we need to articulate an argument that says we live in an uncertain world. And regardless of of what your political view might be on, on the climate or any other issues, our energy security here at home should mean having much, much more of our energy generation in Britain controlled by by us in, in this country. But climate change is also a really clear and present risk to the country. We've lived through the hottest summer on record. It's likely to be one of the coldest summers we will live through. And so this is an increasing.
problem that the public, more than I think they have done for some time now, feels and feels the impact of it. Government has a responsibility to act on that, but so too do we have to act on affordability. And so the energy trilemma that we talked about on day one, coming into government, around.
problem that the public, more than I think they have done for some time now, feels and feels the impact of it. Government has a responsibility to act on that, but so too do we have to act on affordability. And so the energy trilemma that we talked about on day one, coming into government, around.
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Speaker 1
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Speaker 1
Is front and centre in people's minds more than ever before. And it's incumbent on us to make the case for why clean power, as we've talked about, isn't just about climate and isn't just about security in an uncertain world. It's also the route to bringing down bills. That is not easy, because people see their bills going up at the same time as we're deploying renewables. And so. explaining the the link back to the gas price and why we remain exposed to that is, is crucial. But the last thing I'd just say on this, because there's been a lot of commentary, the transition to a clean power system should rightly be the subject of political debate about whether it's the right thing to do or not.
But I do worry some of the rhetoric on this is coming down to increasing the sense that there is risk on day to day security of.
But I do worry some of the rhetoric on this is coming down to increasing the sense that there is risk on day to day security of.
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Speaker 1
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Speaker 1
That every single day nicely balances those risks. It is not right that we have what what I think is an element of scaremongering around the threat of blackouts and other things by a system that is remains hugely resilient, remains. secure and will help deliver cheaper bills. We've got to make that argument more strongly, but I .
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Baroness Coffey
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Baroness Coffey
Thank you. Thank you, Baroness Coffey. We're still with Gas Minister and Mr. Jones. I've been asked to it may feel like we've covered some of this ground talking about backup supply and strategic reserve. So we're in a situation where you'll be aware that the EU on average has 88 days of storage. France over.
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Baroness Coffey
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Baroness Coffey
Including strategic gas storage, is required and will publish a full response in due course. I know as a minister that normally means never or it's on the shelf, but. recognising that you've. The government's already said the cost of a strategic reserve would likely be in the billions of pounds across the 25 year timeline. We've already discussed. extensively the. The capacity market. There are a number of things coming through about written evidence we received, for example, in storing CCS and gas plants that are used rarely being incredibly expensive, inefficient option one energy firm says which of the plants are actually going to be needed in the future?
How long and how best to fund them? Meanwhile, other energy companies are basically saying,
How long and how best to fund them? Meanwhile, other energy companies are basically saying,
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Speaker 1
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Speaker 1
I will just say that due course does not mean never, certainly with this government, and we will respond to it because it is a really important piece of work. And we issued an interim response to give some sense of where the thinking was. But the the responses we got were really substantial. And we do want to work through the policy development and that. And in truth, it's complicated because there isn't an easy answer. Your question, I think, I think quite rightly summarises how some of this is complex. We want to maintain the. optionality of a strategic reserve of gas, but at the same time.
recognise we don't use gas storage in the same way as the rest of Europe. We are about 5% of our gas supply comes from storage. We have a diverse range coming in every day, not least the UK continental shelf, which still makes up around 40%. And and our pipeline from Norway and then LNG imports. So storage doesn't play the same role in our system. But we still.
recognise we don't use gas storage in the same way as the rest of Europe. We are about 5% of our gas supply comes from storage. We have a diverse range coming in every day, not least the UK continental shelf, which still makes up around 40%. And and our pipeline from Norway and then LNG imports. So storage doesn't play the same role in our system. But we still.
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Speaker 1
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Speaker 1
Gas is volatile around the world at the moment. Having a supply of it is clearly crucial. So we want to give that long term. confidence to developers and investors to, to, to, to make their decisions about particular storage sites in the future. But we need to trade that against cost. And I think this comes back to this point about resilience. We clearly want to build the most resilient system we possibly can, but we can't at the same time spend public money on the most extreme forms of avoiding risks that are very, very minimal. And that's always a trade off across government.
If you if you imagine a town that's subjected to flooding, you don't build a flood defence for a 1 in 1000 year flood, you build it for a one in a 50 year flood or a 1 in 100 year flood. There are there are elements of risk management we have to make here, and we want to explore all of that in in detail on the wider point around where we make decisions around what to invest in, I am frequently told that I shouldn't be the energy minister because I don't have a background in energy policy.
And I, I come back to the point that the challenge with this sector is I could have a meeting with ten people from the energy world and come away with 20 different. absolutely certain ways that we must build energy in Britain. There is no consensus. And that's totally understandable because people come from their own technological point of view. We've got to pick our way through that. And in all honesty, we'll support some technologies because they play a really strategic role and are worth the investment. And others, even though we we might want to see them, we're going to have to be quite strict on the fact that if it adds money to bills, we might just not be able to support them.
And I think that's partly why the strategic spatial energy plan is important, because it gives. investors a real sense of where we're going to focus the majority of our support in the long term design of the system. But as I said earlier, I don't want people to think that means that if you come along with a good idea in Britain and the investment to make it happen, the government's going to say no because it doesn't fit this plan. That's not how we're going to build the system in the future. So we need a bit of both.
And I'm sorry, that doesn't. specifically answer the question, because I just think, in truth, this is a really complicated patchwork of different technologies that will be deployed for different purposes. And we need all of it. And even when we achieve the clean power objectives we've set out, it still is based on a real .
If you if you imagine a town that's subjected to flooding, you don't build a flood defence for a 1 in 1000 year flood, you build it for a one in a 50 year flood or a 1 in 100 year flood. There are there are elements of risk management we have to make here, and we want to explore all of that in in detail on the wider point around where we make decisions around what to invest in, I am frequently told that I shouldn't be the energy minister because I don't have a background in energy policy.
And I, I come back to the point that the challenge with this sector is I could have a meeting with ten people from the energy world and come away with 20 different. absolutely certain ways that we must build energy in Britain. There is no consensus. And that's totally understandable because people come from their own technological point of view. We've got to pick our way through that. And in all honesty, we'll support some technologies because they play a really strategic role and are worth the investment. And others, even though we we might want to see them, we're going to have to be quite strict on the fact that if it adds money to bills, we might just not be able to support them.
And I think that's partly why the strategic spatial energy plan is important, because it gives. investors a real sense of where we're going to focus the majority of our support in the long term design of the system. But as I said earlier, I don't want people to think that means that if you come along with a good idea in Britain and the investment to make it happen, the government's going to say no because it doesn't fit this plan. That's not how we're going to build the system in the future. So we need a bit of both.
And I'm sorry, that doesn't. specifically answer the question, because I just think, in truth, this is a really complicated patchwork of different technologies that will be deployed for different purposes. And we need all of it. And even when we achieve the clean power objectives we've set out, it still is based on a real .
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Baroness Coffey
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Baroness Coffey
Will agree with the minister. Could you perhaps give us a bit more sense of what you might be looking at? To give you an example, the you mentioned how I think the the volatility of the gas price is lower than it has been. But recognising that other countries with a lot more storage are even have even lower.
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Baroness McIntosh of Pickering
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Baroness McIntosh of Pickering
As the minister did say. Actually, the UK has a variety of sources for bringing in gas. And the fact that we still have the UK continental shelf effectively, that's a storage facility for us. So 40% of our gas need is already in storage in the UK's space. So I just think that we do have a very different. geographic environment compared to a lot of our. continental neighbours. So I don't know what the right answer is in terms of, okay, what is how much additional storage capacity should we be using? I honestly don't know what the answer is to that.
What I can point to is the fact that there is going to be a strategy coming out next year. I think about UK's energy. resilience and energy security .
What I can point to is the fact that there is going to be a strategy coming out next year. I think about UK's energy. resilience and energy security .
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Speaker 1
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Speaker 1
How we're going to approach these things. So okay, so hopefully just on the storage point across Europe, I think it's worth just saying that while we I think, all hoped the conflict in the Middle East would be much shorter term injections into European storage were at elevated prices as well. And that hasn't provided that shock absorber from from cost. And of course, we're now going into a winter with those elevated prices, the highest prices we've seen since. 2022 will come out of that winter with storage at a lower level. And there is no indication that this situation in the Strait of Hormuz will have cleared any time soon.
So whilst storage does play a really important role, I think it's worth saying it's not the safeguard against price spikes that people think it might be. The ultimately, the answer for us as a country is to get off the. The need for gas as much as we can, and then to get it from a diverse range of sources. And you've pointed to the decision we made on jackdaw, which was about maintaining our energy .
So whilst storage does play a really important role, I think it's worth saying it's not the safeguard against price spikes that people think it might be. The ultimately, the answer for us as a country is to get off the. The need for gas as much as we can, and then to get it from a diverse range of sources. And you've pointed to the decision we made on jackdaw, which was about maintaining our energy .
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Lord Lennie
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Lord Lennie
If you're okay for time. Thank you very much, Lord Ashcombe. Thank you very much. And thank you, Minister, for staying a little over. I've listened to we've had a long discussion about where we generate, what we generate, how we generate. We still have the problem that the grid is not fit for purpose in our current situation because of the way that we're. generating the power. particularly as you described, coming from Scotland and everything else.
How are we going to square that circle and how long is it going to take? Because everything is heavily. interlinked .
How are we going to square that circle and how long is it going to take? Because everything is heavily. interlinked .
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Speaker 1
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Speaker 1
Here and the grid is fundamental. I'm really glad we're closing on the grid. It's I think it is. absolutely foundational to everything else we're trying to do in the electricity system. It's 100 years this year since the Electricity Act passed through this place, which. created which laid the groundwork for the first grid in this country. It was upgraded a few decades after that into the supergrid. And and that's basically the bones of what we continue to exist on today. And it's been added to over, over, over many years. I want to just caveat what I'm about to say by saying the grid remains hugely.
resilient in its current.
resilient in its current.
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Speaker 1
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Speaker 1
But it is not able to add the optionality that we want to see both on on demand projects that are really important for for the country's economic growth and the mix of generation. So people shouldn't think that the grid isn't resilient. But every single day we switch lights on and plug phones in and everything else and expect the grid to do what we need it to do. It does that, but under significant strain. And if we're honest, decades ago we should have recognised that the way we manage the grid in this country hasn't worked for investing in the future of it.
It's allowed investment to make sure individual assets are resilient, but it hasn't it hasn't allowed the investment to build going forward. That's partly, I think, an issue with the way we've set up the system in this country. And that's why the Prime Minister announced Great British Grid to give some public control into it . Again, because 40 years of privatisation, I think, has not left us with better systems in this country. It has left us more vulnerable, in fact. So we have to change that. But we also fundamentally have to spend more money on it. And governments of all kinds, including my party when we were in government and started the significant roll out of.
renewables and then 14 years of the previous government, who I give great credit to for continuing to build renewables, although I think they don't give themselves credit for it anymore. That was the right thing to do. But we didn't build the grids and that is just a mistake we should all own up to and now try to do everything we can to fix. And that's why we're investing. significantly in building it. But it is a really complex.
It's allowed investment to make sure individual assets are resilient, but it hasn't it hasn't allowed the investment to build going forward. That's partly, I think, an issue with the way we've set up the system in this country. And that's why the Prime Minister announced Great British Grid to give some public control into it . Again, because 40 years of privatisation, I think, has not left us with better systems in this country. It has left us more vulnerable, in fact. So we have to change that. But we also fundamentally have to spend more money on it. And governments of all kinds, including my party when we were in government and started the significant roll out of.
renewables and then 14 years of the previous government, who I give great credit to for continuing to build renewables, although I think they don't give themselves credit for it anymore. That was the right thing to do. But we didn't build the grids and that is just a mistake we should all own up to and now try to do everything we can to fix. And that's why we're investing. significantly in building it. But it is a really complex.
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Speaker 1
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Speaker 1
To see where they are in the system, to see where the connection challenges are. Because even if we build the grid, it is such a. complex piece of infrastructure now will have to look at system access to allow outages , to allow things to connect in. That comes with trade offs. The construction of these projects is huge. I mean, we see link got its DCO just this week, but there are a number of other significant infrastructure projects. So we've got to build faster as a country. We've got to be more innovative in how we use the grid we've got at the moment.
So getting much more out of the system we have right now, not just always building more. And then we've got to fix the mistake we made of building. generation without a strategic plan for how we connect it that can't carry on anymore as a country. So all of those things need to happen. It's it's fiendishly complicated. And I don't I don't point fingers of blame at anyone, but collectively, the energy. system and government has not done its job properly for decades. And we're left now picking up the pieces from that. But if we don't invest in this, we don't unlock the opportunities in the future.
So it is the most .
So getting much more out of the system we have right now, not just always building more. And then we've got to fix the mistake we made of building. generation without a strategic plan for how we connect it that can't carry on anymore as a country. So all of those things need to happen. It's it's fiendishly complicated. And I don't I don't point fingers of blame at anyone, but collectively, the energy. system and government has not done its job properly for decades. And we're left now picking up the pieces from that. But if we don't invest in this, we don't unlock the opportunities in the future.
So it is the most .
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Baroness Sheehan
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Baroness Sheehan
Thing in all of the conversations that we've had today. Thank you. Yeah. Excellent. Thank you Minister. Thank you, Bill Jones. Also, you've been very. patient in answering our questions and. and we really appreciate the frankness with which you've addressed the issues that we've raised. And with that, I call the public .
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