Oral Answers to Questions
Debate between Kelvin Hopkins and Andrea Leadsom
Kelvin Hopkins (Luton North) (Lab)
4. What plans she has to support the development of electricity storage.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
Energy storage was identified in 2012 as one of the eight great technologies where the UK can lead the world, and I can tell the hon. Gentleman that I am a very keen supporter. More than £80 million of public sector support has been committed to UK energy storage research and development since 2012. We now are looking at what more we can do to improve the incentives for electricity storage in particular. We will be publishing a call for evidence soon. I do hope he will put his thoughts into that call for evidence.
Kelvin Hopkins
I thank the Minister for her answer, but may I be a bit more specific? As a spin-off from developing battery-driven cars, domestic battery storage is now becoming practicable and commercially viable, and indeed in America it is now taking off. What are the Government specifically doing to promote the adoption of domestic battery storage in homes?
Andrea Leadsom
As I say, we will shortly issue a call for evidence on energy storage at grid level—at battery generation level—to try to ensure that we give as much scope and capacity to energy storage in the system. At domestic level, people are starting to look at those systems and, as part of the improvement of house-building performance, builders are required to look at other opportunities such as battery storage, solar panels and the like. There will be more work on that, but, as the hon. Gentleman will appreciate, it is still at a fairly early stage as things stand.
Energy Market Design
Debate between Kelvin Hopkins and Andrea Leadsom(10 years, 2 months ago)
General CommitteesRead Full debate Read Hansard Text
Andrea Leadsom
The hon. Gentleman is exactly right that storage will play a huge part in future. I certainly feel that not enough has been done at a time when power generation from renewables has been rising rapidly not only in the UK but throughout Europe and the world. Of course, that renewable generation has added stresses to the system because of its natural intermittency, so finding a way to bring down the costs of storage and exploring the different storage technologies is important for all of us throughout the world who aspire to decarbonise our energy systems.A particular advantage of greater focus on the electricity market design across Europe is that we will be able to share with our European neighbours the costs of the technology and of research and development. We will be able to co-operate and find the best and most cost-effective solution for all our consumers.
Kelvin Hopkins
Following on from the question from the hon. Member for Coatbridge, Chryston and Bellshill, storage comes in two forms: for the grid, there are things such as the scheme at Dinorwig—we need many Dinorwigs, in my view—but there is also domestic battery storage, which apparently is now available in America. Will the Minister tell us how the Government propose to approach storage at both those levels and what plans there are for the future?
Andrea Leadsom
The hon. Gentleman might be aware that significant investment has already been made into research at both grid and domestic-level storage in the UK. My Department has invested significantly in trying to bring design ideas to fruition. We are at the cusp of a big change, with storage costs coming down. He is right that some of the household battery designs in the States are becoming significantly cheaper. We are seeing those costs fall, supported by co-operation not only at EU level but elsewhere. Last week I was at the International Energy Agency, which is also very keen to focus on research and development into new storage technology to ensure that costs come down for us all.
The hon. Gentleman is exactly right that at both system and domestic level, storage and the whole demand-side response to enable people to reduce their own demand on the system are extremely valuable, not only to keep down costs for consumers but to help to support our energy security.
Andrea Leadsom
The advantage of interconnectors in the round is quite significant for UK consumers. They improve access to cheaper and, quite often, low-carbon sources of additional electricity, and indeed gas, as he will know. We have therefore encouraged more interconnection and we have a number of projects that are under way and under consideration, under our cap and floor regime, which does not leave the consumer completely at risk on the costs payable to the producer.
There is always a balance to be struck, of course. Because of the way that the price determines the flow—the interconnector will send gas or electricity this way, should it pay to do that—prices here will need to be higher for the power to flow this way. However, in aggregate, we anticipate that more interconnection would have a supressing impact on wholesale prices in the UK, but not to such a great extent that that would unbalance the system in the UK. My hon. Friend raises an important point, and we take very seriously the issue of balancing the system in the UK—having the right balance between energy security, keeping costs down and keeping the lights on—and we must keep that under constant review.
Kelvin Hopkins
A decade or so ago, Germany had 300 times more installed solar capacity than Britain. In terms of renewables, we were second worst in the European Union after Malta, which is obviously a warmer country. Now, although we have been making progress in catching up, and solar has been coming on stream a lot more, the Government have chosen to reduce feed-in tariffs, which will be a disincentive to installing solar. Why have they done that? Can they not see that we still have a long way to go on solar? We must have better feed-in tariffs if it is going to be successful.
Andrea Leadsom
I am sure the hon. Gentleman knows that the absolutely overriding issue with the feed-in tariffs, and with the levy control framework more generally, is that the costs were expected significantly to overrun the budget for 2020. When the Government came into office, we discovered that the deployment rate of wind, solar and other renewables had exceeded the expected levels, and we are in fact running well ahead of the deployment levels we thought we would see by now. If things had stayed as they were, the expected deployment levels by 2020 would significantly exceed the likely target, and the cost associated with them would represent a significant overspend.
The hon. Gentleman will be aware that the levy control framework budgeted for a £7.6 billion per annum cost to consumers by 2020, and the Office for Budget Responsibility forecast that it would have reached £9.1 billion by 2020. We have therefore had to take measures to keep the costs of bills to consumers down. That is an incredibly important point with so many still living in fuel poverty and the need to address energy bills. We do not consider that there is concern over electricity generation. We are ahead of our targets in terms of renewables electricity generation. We are where we expect to be, even with these measures to cut the cost to consumers. However, keeping the bills down is absolutely vital.
Andrea Leadsom
That is not something to which I have given a great deal of thought. The key thing, from an energy policy perspective, is for the market to come forward with ideas. We do not go out and seek bids directly from the Crown dependencies, the islands, other member states and so on. We are looking for ideas to come forward. They can be generated by developers who have a good idea or by Governments in other countries that feel there is an opportunity. I understand that, in the Channel Islands, there is the potential for a tidal project in Alderney, but we are looking to developers or other Governments to come forward with those suggestions.
Kelvin Hopkins
The Minister is understandably concerned about prices for consumers, but there seems to be no concern about the extraordinary prices that will be accorded to nuclear. Nuclear will have a rigged strike price, which will put a massive burden on consumers, without considering the decommissioning costs, the clean-up costs and so on. Of course, the nuclear power stations that we are planning have been shown not to be working well in other parts of the world. They are miles behind time and over budget. How can the Minister justify going ahead with nuclear while restraining other forms of energy provision?
Andrea Leadsom
I am very disappointed with the hon. Gentleman; I thought he would take a pragmatic view. Hinkley Point offers excellent value to the UK consumer. It provides baseload, it is as low carbon as offshore wind, the consumer pays nothing until such time as it is producing electricity and private investors will be making the investment. The decommissioning price is included in the strike price of the CFD and the funded decommissioning programme has to be agreed up front, so it is simply not true that the decommissioning has not been considered. Hinkley Point will contribute enormously to our energy security at a time when we want low-carbon sources.
Every day of the week, we receive about 19% of our electricity from ancient nuclear power plants that will be shut down some time during the 2020s. We have to replace them either with something that is higher carbon or with new nuclear. France benefits from a relatively older, but not too old, nuclear fleet that reliably provides it with low-carbon energy day in, day out. That is what we want for Britain, which is why we are so committed to new nuclear.
In the UK, we have a huge opportunity to design our own small modular reactors. All the amazing R and D that is going on in the UK right now gives us the opportunity to be part of that. As the hon. Gentleman no doubt knows, Hinkley Point C offers about 25,000 jobs in the Somerset area, and 60% of the £24 billion being spent on it will be spent in the UK. It is a great news story for economic growth, jobs and security of supply, and it will keep the bills down.
Andrea Leadsom
I do not agree at all that the Secretary of State’s speech suggested centralised energy systems. The UK is facing the most superb and exciting revolution in power generation. One of our biggest challenges in managing the system is the diverse range of power generators coming on to the system, putting stresses on the system and leaving us with the risk of projects being delayed due to the inability of getting a grid connection, for example. Those are the sorts of challenges that we are trying to address right now. Far from being centralised, our energy policy is very decentralised. The Secretary of State was trying to make it clear that the transition away from coal towards gas, which is the greenest, cleanest fossil fuel, and a renewable future is the right way for the UK to go, and I think she is absolutely right.
Kelvin Hopkins
I have high regard for the Minister, but we disagree about nuclear, although I do not want to debate that now. Another component of energy is insulation. We have very inefficient buildings across the country, and progress towards insulating all our buildings is slow, yet we can save the output of many power stations simply by properly insulating every building in the country. What does she have to say to that?
Andrea Leadsom
I completely agree with the hon. Gentleman on that, and I am glad that we are back on the same page. I agree with him on many things, and I am happy that this is one of them. From a policy perspective, we are keen to see a continued programme of insulating homes. I struggle to recall the figure, but there have been in the region of 780,000 measures to insulate and promote energy efficiency in homes. We are keen to do much more. Obviously, we will soon hear from the Chancellor what the spending envelope will be, but we want to refocus our spending measures for fuel poverty and fuel efficiency on those in greatest need. Of course, insulation and other energy efficiency measures are a core part of that.
Andrea Leadsom
I can agree that it is vital that we maximise the economic recovery from the North sea. The hon. Gentleman will be aware of all the measures we have taken, including on the fiscal regime, the setting up of the new Oil and Gas Authority, and our seismic studies to help businesses that want to consider the under-explored parts of the North sea basin. I certainly agree that the industry is vital to the whole UK.
The hon. Member for Luton North said that he thought that we are behind the pace in tidal. We are keen to consider such projects but, notwithstanding our desire to bring on new technologies, the projects need to offer value for money to bill payers if they are to be deployable. He also talked about nationalising energy businesses, and I am sure he will recognise that I do not agree with him on that. The UK has always been open to foreign investment but that does not mean usurers’ profits going overseas, nor does it threaten our energy security. Foreign investment in UK energy projects benefits the UK consumer, bringing in the competition that keeps the costs down.
Kelvin Hopkins
There is a problem for Britain at the moment. We have a gigantic trade deficit and it is effectively being paid for by inflows of money buying up assets and companies in Britain. That cannot go on forever. In the end we become completely owned by foreign institutions and people and have no control over our own capital in our own country. That is not a sensible way forward.
Andrea Leadsom
I do not agree. Now is probably not the time to debate capitalist philosophy, but I will give the hon. Gentleman just one example. I understand that the biggest Siemens project anywhere in the world at the moment is the turbine factory Siemens is building in Hull—a fantastic development—on an old part of the virtually derelict docks. It is creating up to 1,000 jobs in the local area and I have met young apprentices who are getting involved. It offers enormous potential, jobs and an exportable project that will be used for offshore wind turbines right across the world. It is a fantastic investment for UK energy security, as well as for jobs and growth.
Kelvin Hopkins
We are talking about net investment. If we had similar investment overseas and the net investment flowed outward rather than inward we would be making income from abroad, but the balance is wrong and we are selling off assets. So much of our industry is now foreign-owned that there will come a point when we own nothing of our own and the income from all our industries flows overseas.
Andrea Leadsom
The UK is a trading nation. We invest overseas. We allow foreign investors to invest in the UK. I still strongly argue that foreign investment in UK energy has benefited consumers by keeping bills down, and energy security by keeping the lights on.
Finally, the hon. Member for Coatbridge, Chryston and Bellshill discussed his concern about the lack of energy security. I point him to the capacity mechanism that ensures that we provide capacity for the future, to ensure that we have the security on which we all depend. He will be aware of the demand-side response. We enter into agreements with companies that wish to be paid either to reduce their demands on the system or go off-grid and generate their own power at times when that is needed. That response is a vital contribution to energy security, as is the capacity mechanism, and the hon. Gentleman should rest assured that my Department’s absolutely non-negotiable core focus is ensuring energy security.