Andrew Percy
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Andrew Percy (Brigg and Goole) (Con)
I congratulate my hon. Friend on securing this debate. I know of her close interest in this issue. Those of us who are members of the all-party parliamentary group on biomass have continued to push the fact that biomass is the cheapest form of renewable energy in this country, but under the contracts for difference scheme it is currently outside of future bidding. Does she agree that it makes sense to go for the cheapest source of renewable energy? We get biomass from secure sources in the US and Canada, and biomass will secure jobs in this country in a way that some other technologies that have been deployed do not.
Amanda Milling
My hon. Friend will not be surprised to learn that I agree. We need to create a level playing field to allow us to compare biomass with other renewable sources, such as solar and wind. Unfortunately, as regards creating a level playing field, I fear that this debate comes too late for Rugeley B.
On a positive note, where there were once mines and Rugeley A, there are new homes, business parks and logistics centres, which have created thousands of new jobs. The change in the industrial landscape demonstrates the area’s resilience in adapting to the challenges it faces. The chairman of the Stoke-on-Trent and Staffordshire local enterprise partnership referred to the area’s resilience in a recent letter to me, citing the changes over the past few decades since the closure of the pits. Over recent years, under a Conservative-led Government, Cannock Chase has been doing well. Unemployment has fallen, with the claimant rate falling by 75% since March 2010. Apprenticeships are on the up, and new business start-ups are increasing. However, despite the local success story over the past few years, the news that Rugeley B may close this summer is a blow to all of us who live in Rugeley.
Michael Fabricant
I have been busy on my iPhone, but for good parliamentary reasons: I have just been looking up on Google Maps the exact location of the site, not that I have never been there; I have obviously made many visits to the power station. I see that, as my hon. Friend says, the site is right alongside the River Trent. As a keen narrow-boater, I suggest that she adds to her list of possibilities that of the site being a very good tourism destination for narrow-boaters in the area. As the president of the Lichfield and Hatherton Canals Restoration Trust—
Michael Fabricant
Absolutely. As the president of the trust, I know that narrow-boating is becoming an important form of leisure.
Nigel Adams
That is a whole different debate. It is timely that we are discussing this issue today. Members may have seen the news earlier this week that Aberthaw power station, Wales’ largest coal-fired power station, will reduce its operating hours from 1 April next year. That is just the latest in a long line of announcements from power stations up and down the country that have decided either to downgrade their operations significantly or to close their gates completely. Such announcements inevitably have severe and wide-ranging consequences.
We often refer to the trilemma when discussing the pros and cons of UK energy policy, but the widespread closure of our coal-fired power stations presents its own trilemma. The first challenge is the clear impact the closures have on the communities in which the power stations are based. My hon. Friend the Member for Cannock Chase outlined that. She speaks passionately about the uncertainty facing her constituents who work at Rugeley and the distress that uncertainty inevitably causes locally and regionally.
Unfortunately, I have witnessed similar scenes in my constituency. Eggborough power station, which employs almost 300 people, was on the brink of closure earlier this year—it had announced a consultation on plans to close—until its new owner, the Czech group EPH, managed to secure a contract with the grid to provide extra capacity this winter. But it is just a year’s contract. It is a stay of execution; we cannot ignore the fact that a cloud still hangs over Eggborough’s future.
By contrast, Ferrybridge power station, which is right on the border of my constituency—I know it well—was not so lucky. It was forced to close earlier this year, to the detriment of the hundreds of workers based there. If that is added into the mix with the closure of Britain’s last deep coal mine at Kellingley colliery, which is also in my constituency and which closed last year, these are unquestionably very challenging times in my part of north Yorkshire.
As well as the socioeconomic impact of the closures, we need to consider the consequences for the nation’s energy security, which is the second element of the coal trilemma. At least 2.5 GW of coal closures have been announced in recent months, in addition to the 4.9 GW announced last year. That power would otherwise be supplied to millions of homes throughout the country. By losing those units, we are diminishing the resilience of our grid and its ability to absorb unforeseen risks.
Our margin of capacity, particularly when it is cold in winter, is already worryingly low. We are also significantly reducing the number of power stations that can provide ancillary services, such as system balancing, frequency response and black start, which allows us to turn the lights back on in the event of grid paralysis or partial shutdown. In the absence of coal-fired power stations, how will we procure such essential, often under-appreciated, services in future?
Because of the technical nature of this subject, I find there is a lack of understanding of the comparative capabilities of different types of power generation. Intermittent renewables, along with nuclear, are simply technologically incapable of delivering the services I have described. The lack of nuance in consideration is leading us blindly to risk our energy security.
The third element of the coal trilemma is cost. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), has rightly said on many occasions that securing electricity at the least cost to consumers is an absolute priority. We totally buy into that—it is a commitment the Conservative party made in our general election manifesto and it is one we should keep.
If we are to pursue an orderly transition away from coal, as the Government intend, it is only right that we do so in the most affordable way possible. That is why it is so important that, when we consider which technologies to promote to fill the gap left by coal, we do so on a whole-system cost basis. Such an approach more accurately reflects the costs that intermittent generators pass on to the system because they are not available all the time.
I understand that during yesterday’s meeting of the Energy and Climate Change Committee my hon. Friend the Minister of State noted that the latest analysis her Department has commissioned on whole-system costs is currently being peer reviewed and is nearing completion. I congratulate my right hon. Friend the Secretary of State for Energy and Climate Change on pushing ahead with that and urge her to make the findings available as soon as is practically possible, so that they can inform the growing debate on this incredibly important issue.
We face three key challenges associated with coal coming off the grid: the socioeconomic impact, the security of supply impact, and the cost of filling the gap. On the face of it, it seems a particularly daunting task, but I am pleased to say that it is not insurmountable. Nowhere is that more vividly illustrated than at the Drax power station in my constituency—if you think you have cooling towers in your neck of the woods, Ms Ryan, there are certainly plenty more in my part of north Yorkshire.
Many Members present will be familiar with Drax. It is the largest power station in the UK and generates approximately 8% of all the UK’s electricity. Over recent years it has gone through an incredible transformation by converting and upgrading some of its generating units to use sustainably sourced compressed wood pellets instead of coal. In doing so, it has addressed the three core issues I mentioned earlier.
On socioeconomic impact, switching from coal to biomass has helped Drax to protect and secure the 850 employees who are based at the power station. It has also created new employment opportunities across the biomass supply chain, which has attracted hundreds of millions of pounds of private investment.
On security of supply, thanks to the conversion it has already undertaken, Drax has become the UK’s single largest source of renewable electricity. Around 12% of the UK’s renewable power came from Drax in 2014. Crucially, this power is not only renewable but flexible and dispatchable, like coal or gas. It is available as and when we need it and can be ramped up or down to respond to the requirements of the grid at a moment’s notice.
On costs, as I have stated often in Westminster Hall and many times in the main Chamber, on a whole-system costs basis biomass is the cheapest and most affordable renewable technology available to us today.
Nigel Adams
I am happy to give way to my hon. Friend and neighbour, who also has the benefit of looking at the cooling towers at Drax.
Andrew Percy
I declare an interest: I live opposite the Drax power station and a small wind farm. People are taxed by the wind farm, which does not create any jobs, and very supportive of the power station, which does.
Does my hon. Friend agree that biomass makes sense, not only on a cost basis, but because the industry supports jobs in the UK in a way that some of the alternatives do not? He mentioned the many power station workers, but the whole supply chain goes all the way through our region, including to the ports, which have taken a big hit in the Humber because of the loss of coal imports. Support for biomass makes sense on so many different levels. We need Ministers to work cross-departmentally to get a proper assessment of the industry’s true value to the whole UK.
Nigel Adams
My hon. Friend is absolutely right. The regional impact on supply chain jobs is huge, not just for the ports, which are hugely important, but for rail as well. The wagons that Drax has commissioned to transport biomass—I had the great honour of launching them at the National Railway Museum—were built by a British company.
With respect to costs, we have to remember that it was the taxpayer who built these power stations right across the country under the Central Electricity Generating Board. We have already paid for these stations, so it makes absolute sense that we should—to use an unpopular phrase—sweat these assets as long as possible to ensure that we get the best possible value out of them for the taxpayer.
Reusing the existing infrastructure at a power station essentially eliminates the substantial grid connection costs and upgrade work that are associated with new builds, and that might have contributed to so few new stations being built. It also reflects the value that dispatchable power adds to the energy grid by balancing the system while the wind is not blowing and the sun is not shining—we all remember the problem with the grid last November.
Going from being western Europe’s largest coal-fired power station to being its biggest de-carbonisation project in less than three years has made Drax an incredible success story. The question is, then, how can we build on that success and, where possible, replicate it at other sites around the UK? It may be too late for Rugeley, but other stations could certainly benefit from conversion.
A sensible and practical solution would be to allow coal power stations to compete for Government support to convert to biomass in upcoming contract for difference auctions. The auctions could operate on a whole-system basis to allow the stations to compete on a level playing field against other renewable technologies. The biomass industry—I declare an interest as the chair of the all-party parliamentary group on biomass—is not looking for any special treatment; it just wants the opportunity to bid on a level playing field along with other technologies.
Alternatively, funding could simply be provided through the dedicated biomass pot that already exists to support biomass conversions. That pot does not currently allow bids from those who are looking to convert, only from new station builds, which are very costly. That does not seem to make a lot of sense when we already have the infrastructure with coal power stations.
I recognise that the Minister has previously indicated that £730 million has been committed to supporting less-established technologies in the CfD process through to 2020. However, research recently completed by NERA Economic Consulting and Imperial College London has shown that DECC could save consumers up to £2.2 billion by supporting biomass alongside offshore wind as part of a more cost-effective renewable energy mix.
In conclusion, I urge the Minister to work closely with his colleagues at DECC to consider how further biomass conversions could also be facilitated in the near future in the light of the significant benefits that I and my hon. Friends have outlined here today. Biomass is simply the quickest and most cost-effective way to get coal off the grid. As a nation we should look to promote its deployment further through additional station conversions while we still have a window of opportunity to do so.