National Policy Statements for Nuclear Energy Infrastructure: Review
Michael Shanks Excerpts(1 week, 5 days ago)
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The Minister for Energy (Michael Shanks)
My hon. Friend Lord Vallance of Balham, Minister of State for Science, Innovation, Research and Nuclear, has today made the following statement:
My Lords, the nuclear regulatory review set out a stark challenge for all of us: Government, regulators and industry.
The Government are meeting this challenge by taking forward all 47 recommendations. Delay has a cost, so we have committed to implementing these reforms by the end of 2027.
As part of this we have set out our plan to introduce the nuclear regulation Bill in this parliamentary Session.
We know that simply announcing reforms is not enough. I have chaired the first Nuclear Regulatory Implementation Panel.
This panel will hold industry, regulators and the Government to account for implementing the delivery plans for each recommendation and driving the culture change required to build our nuclear nation.
I am today informing the House of the Government’s intention to review and update the national policy statement for nuclear energy, EN-7, in response to the nuclear regulatory review. This statement is made in accordance with section 6(4A) of the Planning Act 2008, which requires the Secretary of State to lay a statement before Parliament announcing the review.
EN-7, designated in 2025, established the planning policy framework for nuclear energy infrastructure in England and Wales, and introduced a modular approach that enables targeted updates while providing regulatory certainty.
Since its designation, there have been developments in the regulatory and policy landscape, including the nuclear regulatory review, which identified opportunities to clarify and improve the operation of the regulatory and planning framework for nuclear infrastructure.
The Government therefore intend to review EN-7 at pace, making use of its modular structure to ensure that it continues to reflect these developments and remains effective. The Government expect to consult on any proposed updates in due course. Parliamentary scrutiny will take place as required once any amended national policy statement is laid before Parliament.
The Government intend to conclude the review by the end of 2026, with any updates to EN-7 published in 2027, subject to parliamentary scrutiny. The current form of EN-7 will continue to apply while the review is under way.
In parallel, the Government intend to initiate a review of the national policy statement on geological disposal infrastructure, and of the previous national policy statement on nuclear power, EN-6. This approach reflects the Secretary of State’s duty under section 6 of the Planning Act 2008 to keep national policy statements under review, including reviewing all current national policy statements by February 2028.
Only through ambitious reforms and cultural change can we deliver what is needed: less duplication, bureaucracy, and a process that is more appealing for investors.
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Sizewell C: Annual Update
Michael Shanks Excerpts(1 week, 6 days ago)
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The Minister for Energy (Michael Shanks)
My noble Friend Lord Vallance of Balham, Minister of State for Science, Research and Innovation, has today made the following statement:
The final investment decision (FID) for Sizewell C, announced on 22 July 2025 stands as the UK’s most significant public investment in clean, homegrown energy this century. The deal represented the best outcome for consumers and for taxpayers, combining lower-cost Government finance with investment from third parties, each with valuable experience in delivering and managing complex infrastructure projects.
In the summary business case for the project, which is available here: https://www.gov.uk/government/publications/sizewell-c-project-summary-business-case the Department for Energy Security and Net Zero committed to providing Parliament with an annual update on the project’s progress. Alongside this, in line with reporting obligations under Managing Public Money, I am also notifying the House of the publication of Sizewell C Ltd’s annual report and accounts (ARA) for the 2025-26 financial year.
The Government welcome the progress Sizewell C Ltd has made in the last year.
There are now over 2,000 people on the Sizewell C construction site each day. Sizewell C Ltd also reports that the project has spent £4.89 billion with more than 1,000 UK suppliers, including £1.35 billion across the east of England alone, demonstrating the benefits of the project to both national and local economies. The project has also created 120 apprenticeships to date, with 80 of these for people from Suffolk. With plans to create 1,500 apprenticeships across the construction period, the project will be invaluable to ensuring the UK has the skills and capabilities needed to support future projects, as part of the Government’s vision for a new golden age of nuclear power.
Departmental annual update
Since FID and reaching financial close, the Department’s priority has been supporting successful delivery of the project across the Government’s roles as shareholder, policy sponsor and provider of the Government support package (GSP), and debt provider (with the Government’s debt finance to the project managed and administered by the National Wealth Fund).
As shareholder, the Department has been working alongside private sector investors to help ensure the project remains on track while maintaining effective governance and oversight.
As policy sponsor, the Department has supported Sizewell C’s engagement with other Government Departments and bodies, for instance with Defra and the Environment Agency on the launch of a lead environmental regulator pilot programme, which is being tested on a variety of major infrastructure projects including Sizewell C. Encouraging collaboration between developers, regulators and other partners is a key part of delivering the Government’s agenda for growth, by helping to streamline construction and keeping major projects on track.
Looking ahead, following the identification of Sizewell C as a megaproject by the Office for Value for Money, in the coming months the Department will lay a strategy and delivery plan (SDP) for Sizewell C as a Command Paper and publish it on gov.uk.
Sizewell C Ltd annual report and accounts
On 6 July 2026, Sizewell C Ltd published its ARA (which is available here: https://www.sizewellc.com/wp-content/uploads/2026/07/Annual-Report-2025-26.pdf. The ARA provides a comprehensive account of the company’s activities during 2025-26, recording a year of major milestones for the project, including the expansion of construction activity on site, growth in the workforce, and continued development of the project’s delivery arrangements. It also provides updates on the project’s strategic priorities looking ahead, project finances, governance arrangements, and its approach to managing delivery risks and opportunities.
The project has already completed important local road and rail upgrades, and is delivering on its construction milestones, including first aggregate deliveries by train, progress on the beach landing facility, work on the temporary sea defence and cut-off wall to enable bulk excavation for the power station’s foundations.
The Department will continue to publish annual updates on the project in conjunction with Sizewell C Ltd’s annual report and accounts.
[HCWS258]
Peak Cluster Pipeline and Project
Michael Shanks Excerpts(1 week, 6 days ago)
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Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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The Minister for Energy (Michael Shanks)
It is a pleasure to serve under your chairship, Sir Roger, although the debate has probably not been conducted in the best way to discuss this topic. I draw the attention of the right hon. Member for Tatton (Esther McVey) to the recent Adjournment debate secured by her colleague the hon. Member for Chester South and Eddisbury (Aphra Brandreth), which I think she was unable to attend.
Sir Roger Gale (in the Chair)
Order. I assume that the Minister is not suggesting that the debate has been in any way out of order.
Michael Shanks
That is not what I said at all, Sir Roger. The debate has been perfectly in order, but I do not think the public watching will have got much from it. That is my assessment and, I am sure, the assessment of many others watching. As I was saying, I encourage the right hon. Lady, if she did not see the recent debate on this topic, to look at the remarks by her hon. Friend the Member for Chester South and Eddisbury, who rightly raised concerns about local communities, but in a way that was, I think, based slightly more in fact than in rhetoric. I will come to the right hon. Lady’s questions.
Michael Shanks
No, I will not just now, because the right hon. Lady has just given a speech. I will respond to some of her points.
Michael Shanks
Let me respond to the right hon. Lady’s points. She has now accused me twice in this House of being “elusive” and of “obfuscation”. I have answered every single one of her written parliamentary questions. I am not responsible for the fact that she may or may not like the answers I give, but I have answered every single one of her questions, and I responded to her point of order in the main Chamber. I resent the implication that I have not done that, because I take my responsibilities to Parliament very seriously.
First, I will come back a little from the Peak Cluster itself to make some points about why carbon capture is important. I say that partly because carbon capture technology has been around a long time. The previous Government, in which the right hon. Lady served in various ministerial roles, drove forward investment in carbon capture, which we have continued. This is not something that just appeared in July last year; it is a technology that Governments have recognised will play an important part in decarbonising our energy system.
This technology is also important for particular parts of our industry, which are now competing against imports from other parts of Europe that utilise carbon capture, usage and storage. Cement is one example that the Peak Cluster project is looking at, but we are taking forward other important clusters, such as the Viking and Acorn clusters, that the previous Conservative Government supported.
Decarbonising cement might not seem like a particularly important topic to a lot of people, but it is actually critical. Around 40% of UK cement and lime production takes place in Derbyshire and Staffordshire. Cement is one of the foundational heavy industries, and one of our most important substances, to underpin growth in our economy. As a result, the industry was recognised in the industrial strategy as a foundational input for growth. It is also an economically important sector, contributing around £350 million in gross value added and supporting thousands of jobs.
The challenge we have is future-proofing the industry. A number of businesses now want to buy low-carbon cement to construct their projects, but low-carbon cement is produced elsewhere in the world, so it is important to find ways to be competitive in that market. As I said in the Adjournment debate, other technologies for creating low-carbon cement exist, but they are not yet at a stage where they can be deployed at scale. Carbon capture is important, and there is no route to net zero that does not involve this technology.
I want to remind the right hon. Member for Tatton why net zero is important, although I know that not everyone will agree. Given that we are living through climate change on such a scale, we as a country should be taking our responsibility seriously to do everything we can, and this is an important part of how we tackle it. This is also an economic opportunity that not only creates thousands of jobs in carbon capture but protects thousands of jobs in the heavy industry that we do not want to see leaving this country to go elsewhere. It plays a strategically important part, along with our economic growth and industrial strategy, in how we will broadly deliver net zero.
Before I address some of the right hon. Lady’s points on the Peak Cluster, I want to repeat a point I made in the Adjournment debate about the voice of local communities, which is one that she also rightly made. She made a point about the nationally significant infrastructure project regime, which I want to clarify. Perhaps I misunderstood, but I think she was trying to suggest that the Government have somehow contrived for the Secretary of State to make a decision on a particular project. The NSIP regime exists—indeed, it existed under the previous Conservative Government—to recognise that there are some projects of such a scale that local councils cannot individually decide on them, so they should be decided on at a national level.
That is a process that has been undertaken for many years. I want to be really clear, however, that that recognition does not suggest, in any way, that there will be a particular outcome from the process. Not only has there been no decision from Government on this project, but it has not even been submitted for a decision at this stage. It is a long way from that process.
Michael Shanks
I will give way in just a second. The right hon. Lady’s point about the NSIP regime was quite wrong. Decisions are made based on applications that are submitted, but no application has been submitted. They are based on all the facts, including the community engagement that takes place—I will come back to that after I have given way. Applications must demonstrate genuine community engagement and learning from the views of communities; it is not just a listening exercise but a shaping exercise, and that has not yet concluded.
Esther McVey
Can the Minister confirm that the final sign-off on this project, via a development consent order, will be done by the Secretary of State for Energy—by, in other words, the Government? Is that true or false?
Michael Shanks
I think I just said that the nationally significant infrastructure project regime exists so that decisions can be made at a national level by different Secretaries of State. In this case, it is an energy project, so yes, the decision will be made by the Secretary of State for Energy. The right hon. Lady seems to be implying that there is somehow a predetermined outcome, but the application has not even been submitted for consideration, so I do not think that is a sensible position to take.
The right hon. Lady also cast aspersions on the North Sea Transition Authority, which is an independent regulator. It was the Oil and Gas Authority for many years; it is now the North Sea Transition Authority. It has operated under Governments of all political persuasions to make decisions about how we steward the North sea licensing regime not only for oil and gas but, increasingly, for carbon capture. It makes those decisions independently of Government; Ministers do not interfere in the decision making of the NSTA. Again, she seems to be drawing conclusions about an independent regulator that are neither fair on the regulator nor accurate in fact.
Esther McVey
Will the Minister give way on another inaccurate piece of information?
Sarah Russell
The Minister has referred to the fact that, as yet, there has been no application and therefore no ministerial decision, but he has also said that community engagement is an important part of the decision-making process. My concern on behalf of my constituents is that they do not feel engaged with; they do not feel that they have a voice in this process and they do not feel that they are getting information at all. I appreciate that it is not the Minister’s job to provide that information, but can he be extremely clear about the level of engagement that is required?
Michael Shanks
My hon. Friend is absolutely right, and that was the point I was going to come on to. Community engagement is absolutely critical. It is an absolutely firm expectation from Ministers that any of these large-scale infrastructure projects should have meaningful engagement with communities. However, it is also absolutely critical for any project that wants to succeed in the NSIP process to demonstrate not only that it has carried out consultation but that that consultation has had a meaningful impact on the shaping of the project. That is one of the key factors in decision making in NSIP applications.
I want to echo a point that was made in the Adjournment debate on this subject and that many Members have raised with me outside of debates in Parliament, which is about the need for extensive consultation on this particular project. Criticisms have been levelled at the Peak Cluster project that its consultation with communities has not yet been good enough. I understand that it is planning to do more, but it is not for me to direct it to do that. It must engage meaningfully with communities because, once a proposal has been submitted, if community engagement has not been meaningful, that will count against the project.
There is a wider argument here about principle. The Government have said from day one of coming into office that it is important that we build things as a country again and that we do not become a country that just spends decades talking about important infrastructure but never builds it. However, that building should never be done without proper engagement with communities, which means communities feeling that they have had their say and that their say has been listened to. This project is one example of where much more consultation has to happen.
Andrew Cooper
The important thing for my residents is this: does this project work and is it safe? Those are the two key points. I note that my hon. Friend the Member for Wirral West (Matthew Patrick) is in his place today. He has been challenging these plans on behalf of his community, as have I and my hon. Friend the Member for Congleton (Sarah Russell). This is not a done deal, and Peak Cluster needs to listen to the community’s concerns and act on them. Does the Minister agree with all those points?
Michael Shanks
First, on the point about this somehow being a Government project, it is absolutely not. That is why my answers to the right hon. Member for Tatton reflected the fact that, right now, private developers across the country in a whole range of sectors are developing private propositions for all sorts of things.
Until those proposals come to Government, either with a request for funding or as part of the NSIP regime, the Government do not have a view on whether they are Government projects or not. They are not delivered by Government; they are private investments and therefore it is for those companies to put forward their proposition. The Government will then take a view on it, as we do with all nationally significant infrastructure projects. That is the first point about this being a Government project, which it is absolutely not. Peak Cluster is also not one of the clusters that the Government have initially taken forward. We are taking forward two clusters initially to drive carbon capture and storage; the Peak Cluster is not one of them. I make that point again on the record.
My hon. Friend the Member for Mid Cheshire (Andrew Cooper) made a second point about safety. It is really important to say that carbon capture and storage is not a new technology; it has been tried and tested, across industry and across power generation at scale, for a long time. Geological carbon dioxide storage has been in operation for decades. Norway has stored CO2 since 1996—it has stored over 20 million tonnes of it so far—and a safe and robust regulatory regime exists precisely to ensure that safety standards are as high as they possibly can be.
Safety will be at the forefront of any decision about how we take this project forward. It is absolutely critical but, as I have said, CCS is not some novel technology whose safety considerations we do not understand. It is managed, understood and regulated effectively at the moment.
Esther McVey
I see the hon. Member for Wirral West (Matthew Patrick) in the seat behind the Minister, although I appreciate that, as a Parliamentary Private Secretary, he is not able to speak. The Minister might not know this. but I confirm that Wirral council in its entirety, across all parties, objected to the Peak Cluster project. Do the Minister and the PPS sitting behind him know that?
Michael Shanks
I am aware of that. Councils can take a view on a whole range of things; I do not think there is anything controversial about a council making its views known on a particular project. It is very welcome to do that, and that is why we have democratically elected councillors in this country.
On a final point by the right hon. Lady and others about Government funding for this project, she draws a connection between the investment of the National Wealth Fund and the fact that it is wholly owned by the Government. I understand the connection, but equally, it is not correct to say that that represents financial support from my Department or the Government for a project.
The National Wealth Fund was set up to provide investment for important infrastructure projects, and it makes its decisions independently from Government. I have not seen or signed off any funding applications for the Peak Cluster pipeline and nor have any Ministers. The NWF makes those decisions on its own framework, as set out by the Treasury and Parliament. It should not be taken as any indication of my Department’s support or otherwise for a particular project.
Sarah Russell
What sort of people work at the National Wealth Fund and make these decisions? Who is evaluating this?
Michael Shanks
I can write to my hon. Friend with the specifics of the investment committee, but the National Wealth Fund is set up independently from Government to take stakes in projects on behalf of the British public, so that we would own a stake in some of these projects—instead of just handing out grants for things, we would actually own part of them. There is an investment committee that sets up these decisions, and the Treasury is the body responsible for the National Wealth Fund. I can write to her with specifics.
Esther McVey
Did the Minister just say, “so that the Government can part-own some of this”? Were those the words he used?
Michael Shanks
The principle of the National Wealth Fund is that we can make financial investments in projects. In some of those cases, that means taking an equity stake. Sometimes it does not, but sometimes it does. The National Wealth Fund has been around for long enough now; I am sure Members are aware of it.
I will close with something that, in part, reflects what Members said in the Adjournment debate secured by the hon. Member for Chester South and Eddisbury. Any large-scale infrastructure project comes with concerns from local communities, and it is right and proper that such communities voice those concerns in any way they can. That has to be a respectful exchange of views, which has not always been the case thus far, but I understand the strength of feeling on this—it is absolutely understandable.
The exchange of views is important, and everyone, whether or not they are listening to this debate, should know that the Government take community engagement very seriously. We expect to see meaningful engagement with communities, but at the same time the Government have set out an ambitious plan to decarbonise our economy. That is important for a whole range of reasons, but it is also a hugely important economic opportunity for us as a country.
Decarbonising hard-to-abate sectors such as cement and lime, which are critical to our economy, is difficult. CCUS is a route to doing that. It is essential not only for meeting our climate commitments, but for the economic opportunities that it offers. Future project proposals are subject to scrutiny, high standards and a tough regulatory regime. The Government will look at all of this in the round in terms of individual projects.
I repeat the point that I made at the beginning: this is not a project that the Government are driving forward, and it is not a project that we are saying we do or do not support, because at this point in time no proposal has come before us to do that. In due course, we will do that. In the meantime, I encourage everyone in the local community, Members of Parliament, the Peak Cluster itself and others to engage with the process.
Michael Shanks
I am just rounding up. In the end, I hope that we will come to a view where communities feel they have been heard and where projects can move forward on their individual merits. That will be part of the process when we come to it.
Question put and agreed to.
National Energy System Operator: Blackout Risk
Michael Shanks Excerpts(1 week, 6 days ago)
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Claire Coutinho (East Surrey) (Con)
(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on allegations from whistleblowers within the National Energy System Operator regarding summer blackout risk.
The Minister for Energy (Michael Shanks)
On 7 July, the shadow Secretary of State, the right hon. Member for East Surrey (Claire Coutinho), wrote to the Government alleging practices of poor information handling in NESO and interference in operational decision-making in the control room. The Government take this issue incredibly seriously. Since the allegations came to light, we have been engaging with NESO and Ofgem to establish the facts. Both my right hon. Friend the Secretary of State and I have spoken to the chief executive of NESO.
NESO has now appointed an external legal firm to conduct a full investigation into the claims, and a report is to be delivered to the board’s head of risk and controls and to Ofgem in the coming weeks. The legal firm will interview members of the control room, without any other NESO employees present. NESO has already responded publicly that all operational decisions are taken solely by authorised operational control room personnel, and that NESO does not instruct employees to avoid retaining records. We will work closely with Ofgem to monitor both the progress and the outcome of the investigation. However, it would be wrong to pre-empt that outcome, and the investigation must be allowed to run its course.
I want to make it clear that during this period of unprecedented extreme heat, the Great British grid remains stable. No customers were impacted by tight electricity margins, and NESO had a number of tools available to ensure our energy security. Great Britain has one of the most resilient energy systems in the world, and the Government work closely with NESO and the wider sector to ensure that this resilience is constantly maintained. Market notices, such as those issued by NESO during the heatwaves, are standard operational tools that can be used to support energy security, and these were used successfully to maintain grid stability. However, it is important to acknowledge that extreme heat events, such as those experienced this summer, are likely to occur more frequently as our climate continues to change.
My Department will continue to work with NESO and Ofgem to identify any lessons from these events, and to work to ensure that our electricity system remains resilient. Ofgem, as the independent regulator, is also working with NESO to initiate a formal review of events during the June heatwave. I welcome this important transparency, and look forward to working with NESO and Ofgem on taking forward the lessons learned.
Claire Coutinho
Control room operators at the National Energy System Operator have the life-or-death job of balancing our electricity supply and demand. If they do not get it right, we will have blackouts, and in blackouts, people die; it is that serious. That makes what I am about to say all the more extraordinary.
I have been approached by multiple whistleblowers within our grid operator. Their allegations are: first, that on 23 June, the operator failed to meet the grid security standards put in place to prevent blackouts; secondly, that the corporate affairs team interfered with operational decisions—that is not something that the Minister denied—putting the reputation of the operator above security of supply; and thirdly, that operational decisions are being recorded in live documents, with no audit trail. Again, the Minister did not deny that.
I first raised questions on 2 June. Since then, we have had three public electricity margin notices—warnings to the market that we may be short on supply. I cannot stress enough that this is completely unprecedented. Multiple whistleblowers have now come forward. This, too, is unprecedented. I have raised this matter twice in the House. Despite the seriousness of the allegations, the Government shockingly dismissed me on both occasions as “scaremongering”. Considering the consequences of blackouts to people’s lives, that is nothing short of a disgrace.
NESO has now agreed to hold an external independent investigation. That is positive. However, while the Government wash their hands of this situation, the investigation that has been set up is a complete sham. It will not look into whether the grid is being run securely, or whether there was a breach of security standards on 23 June. It does not grant anonymity to any control room operator who wants to come forward. Those who are not selected by NESO management will have to ask those managers if they can participate, if they have concerns. Remarkably, on an all-staff call on Monday, the chief executive of NESO prejudged the outcome of the investigation by calling the allegations false, while senior management said that the whistleblowers had let them down. Let me be clear: the whistleblowers who have put the national interest over their own careers should be celebrated for their courage and integrity, not denigrated. Will the Government finally get a grip on this? Can the Minister guarantee that every single control room operator who wants to share their concerns will be given the opportunity to do so anonymously?
Mr Speaker
Order. Can I just remind those on the Front Bench—it is nothing personal; far from it—that you have only two minutes? Please, can we can try to stick to the rules? It makes things hard when we do not.
Michael Shanks
First, I reiterate what I said at the beginning of the statement. The shadow Secretary of State raised these concerns about whistleblowers who had been in touch with her for the first time at Department for Energy Security and Net Zero oral questions. I said to her, in that session, that if she had details, she should share them with the Department. She did that, and subsequently we have taken this matter incredibly seriously. A process has been put in place; an independent review will be conducted, taking into account the information that she has shared. If she has more information from subsequent whistleblowers, I am sure that she will share that with us.
We take this matter seriously. Nobody is washing their hands of this matter at all. As I have said to the shadow Secretary of State before, though, she is conflating two things, I think wilfully. There are questions to be asked about things that have been raised with her by whistleblowers, which we will now investigate. However, she suggests that the electricity grid was in a state in which blackouts were imminent, which is simply not the case. I gently say to her that it is irresponsible to suggest, in this place and on social media, that our energy system was at risk in recent periods. Electricity margin notices are a standard tool. I do not have time to read all the dates on which electricity margin notices were issued under the previous Government, but I can tell the House that they are a standard tool that has been deployed a number of times. We all have a duty to be careful about our words in this House. Ramping up the rhetoric does not get to the facts that we both share an interest in understanding. I make that point first.
Secondly, can I just endorse the comments she made at the beginning about the critical role that operators in the NESO control room play every day? I was privileged to visit the control room in my role, and to see the job that they do. They have an enormous amount of responsibility on their shoulders; we should recognise how seriously they take their role. This investigation, which is independent from NESO, is so important for uncovering the facts. The terms of reference have been published, and are available on Ofgem’s website. They state clearly that power system managers and other control room personnel who worked on shift during the period in question will be interviewed.
However, it is right and proper that, as I think everyone in the House would expect, we wait for the outcome of an inquiry that will take a matter of weeks to establish the full facts, so that we can use any additional learning from it, but also so that we can continue to ensure that the country is confident that our energy system is resilient. We met the electricity demand on every single one of the days in question, although I do not doubt for a second that it was difficult on some of those days, as it was throughout Europe. The solution to that is to invest further in the stability of the grid, and also to tackle the fundamental question of why our temperatures are rising year after year, the answer to which is climate change.
If the right hon. Lady genuinely believes in the long-term impact of what is happening, I hope she will change course herself and support the policies that would tackle it. In the meantime, we will take this issue seriously. We will investigate all allegations that come to us to ensure that there is confidence in the energy system, and that it is operating exactly as we would expect it to.
Bill Esterson (Sefton Central) (Lab)
Last week the Committee heard from Claire Dykta, the director of strategy and policy at NESO, who told us:
“Operational decisions are taken by authorised, trained personnel only.”
Her comments were confirmed by Alastair Martin, the chief strategy officer at Flexitricity, who, in the same session, said:
“I do not think the idea that the head office at NESO told the control room what to do is plausible.”
Does the Minister agree that it is important for public reassurance, especially at a time of threats to energy security, that the line is not crossed in any way between properly evidenced scrutiny on one hand and conjecture on the basis of rumour, which is verging on scaremongering, on the other?
Michael Shanks
I welcome my hon. Friend’s comments. Let me first reiterate that, as I said a moment ago, incredibly skilled staff work in the control room 24/7 to ensure that we are balancing our electricity demand and supply across the country, and have done so without any disruption to that supply; I pay tribute to the work that they do.
What I said earlier in response to the shadow Secretary of State was not that the allegations that have emerged today were somehow scaremongering. If whistleblowers have raised concerns, it is right and proper that we investigate them fully, and we will absolutely do that. However, it is scaremongering to take to social media or come to the House and somehow imply that we were close to blackouts, which is simply not the case. We have a responsibility in this House not to ratchet up the rhetoric simply to get some retweets on Twitter, but to take seriously the job of balancing our energy system, as we did every single day—and NESO has confirmed that.
Mr Will Forster (Woking) (LD)
These allegations are extremely serious. If it is true that NESO bosses instructed control room staff to conceal evidence of grid instability from public scrutiny, that is a shocking breach of trust from a taxpayer-owned body. The investigation must be genuinely independent and its full findings must be published openly, not quietly filed away. However, let us also be clear about the fact that this is not a verdict on renewables, much as science-denying climate change sceptics wish to push that idea. It is a warning sign that our grid is straining under record heat, that ageing gas plants are failing, and that there have been years of under-investment in storage and capacity. The Government must get very serious about grid resilience. Will the Minister guarantee protection for those who have come forward, commit himself fully to a genuinely arm’s length investigation, and guarantee full transparency in respect of the findings of that investigation?
Michael Shanks
The hon. Gentleman has made a number of important points. The terms of reference are available on Ofgem’s website for the inquiry that NESO has commissioned an independent law firm to carry out. It will conduct interviews with staff who were in the control room on that day to get to the bottom of the allegations that have been made, because it is right for us to take them incredibly seriously, and transparency will be an important part of that. I should add, however, that if there are lessons to be learned, it is critical that we implement them very quickly. NESO has already said—and the inquiry will discover further details in this regard—that corporate affairs staff are present in the control room at a number of times, but that they do not interfere in any way with operational decisions. Obviously the inquiry will get to the bottom of the operator’s views on that, but that is the point that it has made in recent days.
As for the hon. Gentleman’s wider point, I agree with him. It is important for us to recognise that grid stability is foundational to everything in our energy system. That is why we are investing record amounts in upgrading the grid so that it is resilient for the future; it is also why we are looking at how we invest in, for instance, storage—which the hon. Gentleman rightly mentioned—so that we can store renewable energy that we are generating until when we absolutely need it, and have more tools at our disposal at moments of tight margins such as the one under discussion. As I have said, however, although at times frequency moved outside the normal operating range, it never moved outside the statutory limits. We met demand for all customers, and there was no disruption for customers at all. That is an important fact that is borne out by all the data that has already been published, although it does not take away from the fact that if we have lessons to learn from those incidents, we will absolutely learn them.
Mr Toby Perkins (Chesterfield) (Lab)
I commend my hon. Friend’s approach. He is right to say that these allegations are incredibly serious, and that it is crucially important not only for there to be a full investigation but for it to be seen to be independent so that people can have confidence in it. He is also right to draw attention to the difference between the concerns that are raised by those whistleblowers and any suggestion that our grid is about to lead to blackouts. Does he agree that while it is absolutely true that one of the terrible legacies that this Government inherited from the last Government was a grid that had been woefully under-invested in for a very long time, and that there is a substantial need for investment in it in order to achieve our energy ambitions, that should not be allowed to be conflated with the suggestion that the lights are about to go out? Can he give confidence to my constituents this summer that NESO has given him all the assurances that he needs that there will be no blackouts?
Michael Shanks
I thank my hon. Friend for the way in which he has framed his remarks. He is right to say that these are incredibly serious allegations, and we take them with the seriousness with which they should be taken and will take on board any lessons learned. As for his point about the importance of grid investment, we inherited a grid that was not only in dire need of investment, but had not been designed to meet the full needs of generation that had been built for many years and not connected. We are currently constraining renewable energy that has been built over the past few years because it had not been connected to the grid. We are doing that work to ensure that the grid can continue to do what it needs to do.
As for my hon. Friend’s final point, let me state very clearly that electricity supplies were maintained throughout the June heatwave. No customer demand was subject to disconnection. Statutory frequency limits were maintained throughout the event, and the largest credible loss that could have occurred was also covered. Let me explain exactly what we mean by the margin in this instance. The margin represents the cushion of spare generation above the peak demand that is maintained by NESO, and at no point did we come close to breaching that. It did not indicate any kind of emergency situation. Demand was met, and those are the facts.
Sir Oliver Dowden (Hertsmere) (Con)
When I was in government we conducted one of the largest exercises, Exercise Mighty Oak, which involved more than 4,000 people testing the effect of a power outage. That exercise demonstrated that it cascaded very rapidly and that it very rapidly affected water supply, transport and other public services. Will the Minister confirm that he has had an opportunity to read the findings from that exercise, and can he update the House on what point the Government have reached in implementing its recommendations?
Michael Shanks
I pay tribute to the right hon. Gentleman, and to all who were involved in that incredibly important exercise. I was not aware of it at all until I came into this job and read the full report, as well as the breakdown of all the actions that had been started during his time in office and have been continued by officials now. As he says, the cascading impacts of a national power outage are extraordinary and very quick, which is why we are first investing in the grid to ensure that that remains a very low risk on the national risk register, and secondly taking forward all those actions. I do not have the detail in front of me, but very few of the actions remain open; most have now been completed. We are also, across Government, continuing to organise exercises—on a much smaller scale—to ensure that Ministers are prepared and that we continue to keep on top of the actions, because these are not one-time events. The water industry, to which the right hon. Gentleman rightly referred, must continue to look at preparedness. That is the wider work that we are taking forward on resilience.
Ms Polly Billington (East Thanet) (Lab)
I am grateful to my hon. Friend for coming to the House and providing clarity and reassurance that the allegations will be taken seriously, but does he agree that alongside the transparency of this process comes the need for responsible reporting and a responsible Opposition? The electricity margin notices are a standard tool that NESO has used for many years, and that includes the time when the Opposition were in government.
Michael Shanks
Yes, I agree. At the risk of repeating myself, electricity supplies were maintained throughout this period. Tight margins were caused by unprecedented warm weather—as I think we can all testify, having lived through it that week—and we were not alone in that. Other European countries were facing similar challenges and similar pressures on their electricity systems because of the extreme weather. I say gently that our aim as a House should surely be to do everything we can to prevent that extreme weather from becoming even more frequent, and I hope we will rebuild some of the consensus on that.
My hon. Friend is right to say that the margin notices are a standard operational tool. Although there is enough generation available on the system to meet demand, NESO would like to have an even bigger cushion on that generation, and that is what the electricity margin notices are for. They were withdrawn because that generation was met, and at no point were any customers disconnected.
Richard Tice (Boston and Skegness) (Reform)
There is complete chaos at the National Energy System Operator. Whistleblowers are phoning politicians to express their concerns about blackouts. Independent investigators have had to be appointed, and NESO had to cut the interconnector for exports, without notice, in order to guarantee supplies. I wrote to the chief executive, Fintan Slye, two weeks ago, but I have had no reply to my detailed question. There is arrogance and complacency from the Minister. Can he guarantee that there will be no blackouts? Does he have complete confidence in the chief executive? And will the independent investigation be published for us all to see?
Michael Shanks
It is right and proper that we are talking about this issue, but I can assure the hon. Gentleman that there is absolutely no complacency on my part or that of the Government. I take my responsibilities incredibly seriously, as do NESO and Ofgem, the operator, and I think he should be careful of his language on an issue as serious as this. [Interruption.] He shouts from a sedentary position about blackouts. That is exactly the point I am making: this is irresponsible language. We are not debating across the House, and it is totally irresponsible.
I am not sure how much more clearly I can say it to the House, but I can point the hon. Gentleman to some published reading material on the nature of what happened during that week. I have not denied at all that an extreme weather event caused pressure on the grid, but at no time did frequency move outside the normal operating range, at no time did we not meet demand across the country, and at no time were we close to disconnecting anyone whatsoever from the system, let alone to a potential blackout, as he frequently likes to share on social media.
We have a robust and resilient energy system that came under pressure, and it responded exactly as it should. The allegations that have subsequently been made about how decisions were made that day are serious and will be taken seriously in the investigations, and we will learn any lessons that come from that, but that does not detract from the fact that we met electricity demand on every single one of the days that it was under pressure. He can dispute that all he wants, but it is a basic fact.
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
It is right that an investigation into these allegations has been confirmed, and I welcome reassurances that the grid remains stable. As an electrical engineer, I have always been in awe of the work of our grid, and of the challenges it faces: climate change, electrification, the demands of renewables and AI, and cyber-attacks. Could the Minister set out what steps the previous Government took during their 14-year tenure to invest in a more resilient grid, and what steps this Government have taken?
Michael Shanks
In the past two years, during which I have had the privilege of doing this job, my hon. Friend has frequently shared her experiences as an electrical engineer, and she is right. I, too, am in awe of the grid and of the work that its operators do day in, day out as part of the extremely complex job of balancing supply and demand 24/7. I will not get into what the previous Government did or did not do, but they did not do enough. I am not saying that they had no interest whatsoever in this issue, but there was clearly a long period in which there was not enough investment to build the grid that we need for the future. They did not maintain the resilience of the grid or invest enough to ensure that it was able to cope with these kinds of weather events, which we know will become much more frequent, so there has to be increased investment.
That is why we are driving forward the biggest upgrade in the grid in generations, and the work that the operators do at NESO is a critical part of that. The system is becoming more complex, which presents opportunities for decentralised energy and for using much more renewables in the system, but it is more complex to manage as well. I am absolutely confident that NESO is able to do that, but this is a lessons-learning exercise and we will learn the lessons from it.
Sir Julian Smith (Skipton and Ripon) (Con)
I am really worried about this urgent question. We sat here last night and talked about requiring honesty from public servants, and we voted on the Public Office (Accountability) Bill, but as we have heard from my right hon. Friend the shadow Secretary of State and the hon. Member for Boston and Skegness (Richard Tice), serious questions have not been answered. The chair of NESO is paid the equivalent of £230,000 a year. Has the Minister met him recently? May I ask about the whistleblowers, who were apparently told by the chief executive yesterday that they had let down the company? On the question that my right hon. Friend asked about record keeping, what discussions has he had with NESO about whether she is correct?
Michael Shanks
The right hon. Gentleman asks a number of questions. On his point about the governance of NESO, I engage with its chair but also with the Government’s independent director. NESO is regulated by the independent regulator, Ofgem, which has responded in the last few days by scrutinising and governing the outcomes of the inquiry, as we would expect it to do.
On the right hon. Gentleman’s wider point about documents, I am not going to comment on a process that is now under way to establish the truth. The version of events that I have seen suggests that that is not the case, but we are now doing an inquiry to establish the truth about version control, the sharing of documents and everything else. That is one of the key questions in the terms of reference.
The right hon. Gentleman is right to highlight the Public Office (Accountability) Bill, which we voted on yesterday, because transparency is important. I am not seeking in any way to suggest that we should not be transparent, but I am suggesting that we need to let the inquiry run its course so that we can establish the facts before we pass judgment.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
My constituents in Stoke-on-Trent Central are used to just plugging something in, switching a switch and there being electrical power, but I think we can all accept that with extreme weather becoming a bigger pattern in our lives, these events may be more frequent in the future. What conversations is the Minister having with colleagues across Government about developing public education programmes to explain how consumers can do their bit to help reduce demand at peak times, much like the water companies do when there is extreme heat? Given that we have discussed the speculation, and the whistleblowers who have rightly come forward, on the Floor of the House, can the Minister commit that once the independent inquiry has completed, the report is brought to the House so that we can discuss the outcome with the same prominence as we have discussed the speculation?
Michael Shanks
I thank my hon. Friend for both of his questions. On the first, he is right to imply that it is good that the vast majority of the public do not think about the electricity system at all when they switch things on or off. That is the system working as it should do. He is also right to say that extreme weather events will become more frequent in the years ahead, unfortunately, and we do need to respond to that. That is partly why we are investing in the grid.
My hon. Friend’s wider point is about how much we talk to the public about resilience. We are quite an outlier in Europe in not engaging with the public regularly on the question of personal and household resilience, whether during floods, storm events or any other incidents. We will take forward work as a Government to make sure that we are talking to the public much more, so that people are prepared for such circumstances and would be able to respond if they were to occur. On his final point, the report will be published when it comes forward, and I absolutely commit to making sure that the House has a copy.
Mike Martin (Tunbridge Wells) (LD)
I am curious about this mantra that there have not been any blackouts. Over the past six months, businesses in the St John’s area of Tunbridge Wells have complained of blackouts. I surveyed my constituents who live in the area, and 60% said that they had experienced some blackouts—not long-term ones, but intermittent blackouts. Will the Government engage with me on this issue and give my constituents some guarantees that the situation will improve?
Michael Shanks
I think we are probably speaking at cross-purposes. I suspect that when the shadow Secretary of State refers to blackouts, she means a national power outage rather than supply disruption, which does happen. I cannot give a guarantee that there will never be some supply disruption, because there are faults in the system and things will occur, which can lead to a temporary loss of supply. If the hon. Gentleman refers to a recurring issue, I am very happy to work with him so that we can make sure that the local DNO or the transmission owner is looking at particular faults. If he writes to me with the details, I will follow up.
Lizzi Collinge (Morecambe and Lunesdale) (Lab)
These are very serious allegations. It is right that they are investigated independently, and I think all of us urge NESO to have full candour. Grid stability is really important, and the recent heatwave shows the challenges that climate change brings and the importance of our clean energy transition. Does the Minister agree that nuclear plays a vital role in providing stable baseload energy and supporting grid stability?
Michael Shanks
I congratulate my hon. Friend on getting a question about nuclear into this, and she is absolutely right.
Michael Shanks
I agree with my hon. Friend 100%—as, I hear, does the shadow Minister.
This is one of those rare areas where I think we do have complete consensus—well, maybe not complete consensus, but widespread consensus—across the House. Nuclear is going to play a really critical part in our future energy needs. It provides the stable baseload power that runs on the system 24/7 for decades. Nuclear power that we build today could well still be operating by the end of this century. It is an extraordinary technology that we should be supporting and investing in as much as possible. That is why we are taking forward Sizewell C and Hinkley, but also why we have unlocked the small modular reactor programme and are delivering it at scale, and why we will take forward the reforms in the Fingleton review to make sure we can build things even faster in Britain.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
Can I just point out that the very fact that the Minister is at the Dispatch Box answering this urgent question is itself an indictment of the confidence that not only the public, but people working in NESO, have in the resilience of the system? Can I also point out that commentators have been warning for a decade or more about the risk to the security of supply from the over-reliance on intermittent renewables? While we in the Conservative party have learned that lesson, and are determined to have a much more robust and secure electricity policy, why are the Government doubling down on the risks they are creating by rushing ahead with renewables, vastly expensive grid investment that would otherwise be unnecessary and, of course, these absurd and obscene constraint payments to wind farm operators that cannot feed their electricity into the grid and get paid for it anyway, costing customers billions of pounds?
Michael Shanks
There was a lot there, but I am sorry that the hon. Gentleman is not happy to see me at the Dispatch Box. I am very happy to see him in his place, and to be here to answer this important urgent question. On security of supply, let me say that, yes, renewables are not going to be the entirety of our mix at all times. That which is why nuclear is important as well, it is why storage is important—so we can store energy for when we need it—and it is why our interconnectors to Europe are critical.
The hon. Gentleman said two things in his question that I think show the problem with the Conservative party’s logic at the moment. First, on an urgent question about the resilience of our grid, he is saying that we should not invest in the future of the grid, which is the very thing that would lead to more issues with grid resilience. [Interruption.] The hon. Gentleman did just say that. If Opposition Front Benchers read his question back, I think they will see that he did.
The hon. Gentleman’s second point is rightly a challenge about constraint payments, which we should not be paying, but I gently challenge him: if we had not built renewables without strategically planning where they were and the grid to connect them into, we would not be paying that money. His party may want to reflect on exactly why that happened. We are fixing the problems we inherited, and that involves investing in the grid.
Chris Vince (Harlow) (Lab/Co-op)
Mr Speaker, I wish you a belated happy Yorkshire Day for yesterday. [Hon. Members: “Oof!”] It’s all right—he didn’t hear me!
I thank the Minister for his answers so far and the shadow Secretary of State, the right hon. Member for East Surrey (Claire Coutinho), for bringing forward this urgent question. This is a really important issue and my constituents will be keen that it is dealt with. I think we would all reflect that, as we move more and more towards reliance on technology, grid connection and resilience are hugely important. Could the Minister tell us more about what he is doing to ensure we have grid resilience in Harlow, in the east of England and across the UK?
Michael Shanks
I almost thought my hon. Friend had asked a question without mentioning Harlow, but we got there in the end. I am afraid I cannot give him a specific answer about the work we are doing on the grid in Harlow, but I can confirm that we will be investing in ensuring that the grid is as resilient as it can be for all his constituents in Harlow.
We are doing two things with the grid that really matter. One is recognising the scale of investment that is necessary to connect not just renewables, but the economic opportunities, growth projects and demand projects that need electricity, and we need the upgrade of the grid to do that. Secondly, we are reforming the grid so that it works much more efficiently. We are reforming the connections queue, which got completely out of control under the previous Government, so that projects can connect, and businesses and households in my hon. Friend’s constituency can benefit from clean, cheap, secure, home-grown power.
Sir Julian Lewis (New Forest East) (Con)
I have some sympathy with the Minister’s situation, because this is a highly technical issue, and presumably he will have been briefed to deal with this urgent question by the senior management at NESO—or at least they will have briefed the civil servants who briefed him. What is bothering me is the lack of independence in this process. It appears that the senior management made an all-staff call in which they denounced the whistleblowers as having let the company down. From what the Minister said, it appears that the firm that is going to conduct the inquiry is an independent legal firm, which will be paid by the senior management of NESO. Would it not be better, from the point of view of objectivity and transparency, for Ofgem to engage whoever is going to conduct this inquiry, not the very people whose own careers will be on the line if the whistleblowers are vindicated?
Michael Shanks
First, I am not going to comment on leaks from internal conversations that may or may not have happened. I was not in the meeting, so I am not going to comment.
On the right hon. Member’s point about the review’s independence, I do not know Eversheds Sutherland, but I am sure it would challenge his view that it is not independent. It has been asked to carry out an independent review. The findings will be reported to the independent director on the NESO board, and it will be shared with Ofgem. I have also committed to sharing it more widely. If there remain questions that the process has not answered, clearly we will look at what further investigation is necessary.
I take this matter incredibly seriously. At the bottom of it all, this is not about trying to conclude some process; it is about trying to understand the concerns of the whistleblowers, who have shared their information with the shadow Secretary of State. They have not shared it with me; all I have seen is a summary of those points in a letter—a one-page letter—from the shadow Secretary of State. I have not seen the detail of the allegations, and she has not shared the details with the Government. However, we take this seriously. We have to get to the bottom of the matter and find the truth, and we will do whatever is necessary to do that.
Rachel Gilmour (Tiverton and Minehead) (LD)
I should remind the House of my entry in the Register of Members’ Financial Interests. For 30 years, I have been a member of the GMB trade union, where I was greatly supported as a whistleblower, and I have just joined the board of WhistleblowersUK.
With that in mind, what is the Minister doing to actively protect whistleblowers who come forward with serious concerns about both public and private organisations, and will the Government heed Liberal Democrat calls to establish an office of the whistleblower to better help and protect these individuals?
Michael Shanks
First, whistleblowers are protected under legislation, and rightly so. That is important, and we have reiterated to all those involved in this incident that they are protected in law from their employers when coming forward with allegations, as has clearly happened. However, the inquiry should also protect their ability to speak about their engagement in all this without any other NESO staff present, so that their evidence can be compiled for the inquiry report without the management being part of that process. I take the hon. Member’s point very seriously.
On the second point about an office of the whistleblower, I am afraid that is not in my portfolio, but I will certainly pass it on to other Ministers.
Douglas Lumsden (Aberdeen South) (Con)
This is a really worrying situation that perfectly highlights why we need an energy mix in our grid. In that energy mix, we need to have nuclear, as was mentioned before, but we also need to have gas to provide the inertia in our grid. The people of Aberdeen South understand that, but does the Minister understand that, and is he concerned with the lack of inertia in our grid as we move to more and more intermittent sources?
Michael Shanks
First, no, I am not concerned, because other tools can be deployed to ensure that need is met, and they are being taken forward. Secondly, if the hon. Member looked at the disruption caused by the weather, he would see that a significant part of the issue was caused by gas power stations not being able to operate at full capacity because of the heat. I am afraid that his suggestion is not quite the silver bullet he thinks it is.
Mark Garnier (Wyre Forest) (Con)
May I associate myself with the comments of my right hon. Friend the Member for New Forest East (Sir Julian Lewis) about the management of NESO creating a hostile environment for technicians in the distribution centres? Like the Minister, I have met the individuals in the control rooms, and I have nothing but admiration for them, so for them to be condemned as enemies of the company by being whistleblowers is profoundly wrong.
We have heard Members raise other problems. In particular, the hon. Member for Tunbridge Wells (Mike Martin) spoke about small blackouts in his constituency, and the Minister brushed that off as a little local problem. The reality is that at the moment we use about 36 GW of power, and during the winter we use about 45GW of power, and that is before we have electrified transportation and before we have invested a huge amount in data centres and artificial intelligence. Blackouts are indicators that the grid is not working. A small blackout in Tunbridge Wells is an indicator that there could be big blackouts in the future. What is the Minister doing to resolve these problems?
Michael Shanks
First of all, I did not brush anything off. I gave a very serious answer and said I would follow up with the individual distribution owner to resolve the issue. I said what I hope will be pretty obvious to everyone: that there are faults in the system now and again that lead to temporary disruptions to supply in households and streets, which are corrected by engineers who do an incredible job to fix things and for whom I have huge admiration. That is the nature of the system. I do not think we could ever have 100% of every single part of the system operating—I wish we could—but I did not brush it off in the slightest. I am happy to look into the issue in the constituency of the hon. Member for Tunbridge Wells (Mike Martin) if he wants to raise it with me.
Secondly, the hon. Member for Wyre Forest (Mark Garnier) refers to—I do not know where this has come from—a “hostile environment” and “enemies of the company”. I have not said anything of the sort here. People have come forward with allegations and we are going to investigate them seriously, because we appreciate the fact that they have incredible skill and knowledge of what is going on in that control room—better than any of us, frankly—from the job that they do day in, day out. An independent inquiry will now interview them to establish the facts. We should wait for those facts before we jump to conclusions.
Sir Christopher Chope (Christchurch) (Con)
Balancing the grid is really important, but why is the cost of so doing rising from about £1.5 billion a year to £10 billion by 2030?
Michael Shanks
First of all, investment is necessary to bring down the costs in the long term. We are currently paying to constrain the renewables that are generating often much more electricity day after day than we are able to get to homes and businesses. Instead of doing that—paying to both turn off wind and turn up gas somewhere else in England to fill the gap—we should be building a transmission system that brings that clean power to houses and businesses across the country. That requires an initial investment, but that investment is repaid, long into the future, from the virtually free fuel that comes from solar and wind. Many, many projects were built under the previous Government and I am very happy to champion those projects, but the problem is that they did not connect them.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
I welcome the Minister’s response so far, amid the shocking allegations that staff covered up the greater risks of power blackouts during the recent heatwave, but it is not just heatwaves and climate change that are increasing demand for electricity. Artificial intelligence data centres are expanding rapidly across the UK and internationally, bringing with them significant demands not only for electricity, the demand for which is estimated to double globally by 2030, but for water for cooling, land, construction and infrastructure. Will the Minister set out what steps his Department is taking to ensure that the rapid expansion of AI infrastructure does not compromise our energy security, increase the risk of supply shortages or blackouts, place unsustainable burdens on local infrastructure, or leave local communities bearing the costs while others reap the benefits?
Michael Shanks
The hon. Gentleman asks a number of important questions about the role of data centres in the future of the country. First, there is a real opportunity if we get this right, but I take his challenge about properly planning where they should go. Data centres are an opportunity to soak up some of what we are currently constraining, which will actually bring down bills. If we can deploy them in the right places, we get a greater customer base for electricity, rather than consumers paying to switch off.
Secondly, AI is a huge opportunity for us as a country and it will become increasingly important to have sovereign capability here in the UK. In the energy space, there is a real opportunity to utilise AI to run the system in an even more efficient way. The hon. Gentleman is right to say that we have to get this absolutely right so that local communities get the benefits and not any downsides. We are working through a data centre strategy with my colleagues in the Department for Science, Innovation and Technology. On the energy side, we are working to ensure that we are getting the best possible locations for the benefit of the energy system and consumers.
Jim Shannon (Strangford) (DUP)
I thank the Minister, as always, for his answers and for his solution-based responses. My constituents watch developments with absolute dread, when every day families and vulnerable pensioners face skyrocketing bills. The very least they deserve is the truth about whether the lights will stay on this summer. The Minister will know that that NESO recently signed a major partnership with the system operator for Northern Ireland to deeply integrate our grids and balance system resilience, so a crisis of integrity at the top of NESO is a crisis for the whole United Kingdom network. Can the Minister guarantee that the allegations will not undermine energy security or grid stability in Northern Ireland?
Michael Shanks
I am disappointed, Madam Deputy Speaker. I heard that the hon. Gentleman rapped some of his speech in a Westminster Hall debate today, so I am disappointed that he did not do a rap in his question. He is a man of many talents, but he has disappointed me in this final week before recess!
First of all, he knows that my answer—I hope he never takes it to mean that I am not interested—on the grid in Northern Ireland is always that it is a transferred power, because there is an all-Ireland grid. However, he is right about the connections with NESO. Our interconnectors with Ireland and Northern Ireland are an important part of balancing across the system. When there were storms in Northern Ireland recently and generation was switched off, those interconnectors were vital. The partnership that we have and the partnership between the two system operators are really important, so I will take his points away.
Sizewell B: Contract for Difference
Michael Shanks Excerpts(2 weeks, 5 days ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Energy (Michael Shanks)
My honourable Friend Lord Vallance of Balham, Minister of State for Science, Research and Innovation, has today made the following statement:
The Government mission to become a clean energy superpower is about delivering secure, affordable and low carbon electricity for households and businesses, reducing our dependence on volatile fossil fuel markets and protecting billpayers for the long term.
As we move towards a clean power system, electricity demand is expected to increase significantly as heat, transport and industry are electrified. Delivering this transition at the lowest cost requires a mix of technologies. While renewable energy will form the backbone of the system, baseload power such as nuclear is essential to maintain system reliability, reduce overall system costs and protect consumers from exposure to global energy price shocks.
Nuclear power therefore plays a vital role in delivering a secure, low cost and low carbon electricity system. As a source of reliable electricity produced wholly within the UK, it provides baseload generation to complement renewable output and helps reduce reliance on imports.
Extending the lifetime of existing nuclear power stations is the most cost-effective way of delivering further nuclear generation. It allows the UK to make best use of existing assets, delivering significant volumes of clean power at lower cost than alternative forms of new generation.
This approach is consistent with international best practice. Several countries, including Belgium, France and the US, have recently taken steps to extend the lifetimes of their existing nuclear power stations to strengthen energy security and support decarbonisation.
Located in Suffolk, Sizewell B is a critical part of the UK’s nuclear fleet. Since coming online in 1995, it has provided over 270 TWh of low carbon electricity, helping to maintain security of supply and reduce emissions. Without intervention, the plant is currently expected to cease operations in 2035, despite it being technically feasible for it to continue generating for an additional 20 years.
There are strong reasons to support the continued operation of the plant.
Firstly, on security of supply, Sizewell B provides electricity that is not dependent on weather conditions. This is critical to maintaining a resilient electricity system, particularly during periods of low renewable output, and helps reduce reliance on imported energy.
Secondly, analysis shows that extending Sizewell B and making continued use of the existing infrastructure will significantly reduce overall system costs, relative to a low carbon counterfactual without the project. By locking in a stable price, the contract for difference will also help protect consumers from future volatility in wholesale electricity prices. During periods of high prices, payments flow back to billpayers, delivering direct consumer benefit. Had Sizewell B been operating under this agreement during the energy price crisis following Russia’s invasion of Ukraine, consumers would have saved around £2 billion.
Thirdly, the project will support 900 highly skilled on-site roles, helping to sustain both the UK nuclear supply chain and the expertise required to deliver future nuclear projects. This is in addition to the economic benefits associated with the new investment required for the life extension works.
To unlock the private investment required for this extension, the Government have reached agreement on a commercial heads of terms with EDF Energy Nuclear Generation Ltd for a bespoke contract for difference to support the lifetime extension of Sizewell B.
The contract for difference, once signed, will enable the continued operation of Sizewell B beyond 2035, securing sufficient low carbon power for the equivalent of 2.5 million homes for a further 20 years, supporting our clean power mission and wider energy security objectives.
The key terms are as follows:
A strike price of £70.50 per MWh (2025 prices), reflecting robust due diligence and benchmarking against comparable projects.
A 20 year contract term, aligned with the planned extension period.
A two-way contract for difference structure, ensuring that when electricity prices are high, payments flow back to consumers.
Consumer protection measures, including a one-way cost gain share mechanism, which would ensure consumers benefit from cost savings during the refurbishment phase. All cost overrun risk sits with the developer.
Incentives to support timely delivery of the lifetime extension works, avoid extended plant downtime and efficiently manage operation costs.
Existing arrangements for decommissioning and waste management remain in place.
Taken together, these terms represent a balanced deal that supports investment while protecting billpayers.
Implementation of the heads of terms is subject to reaching agreement on the long-form contract for difference, as well as required regulatory approvals and legislative amendments to enable existing nuclear plants to become eligible for contracts for difference. The Government intend to progress these steps in parallel to support the timely delivery of the project. Further details of the agreement will be published in due course.
[HCWS205]
Greenhouse Gas Removals Sector
Michael Shanks Excerpts(2 weeks, 6 days ago)
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The Minister for Energy (Michael Shanks)
May I congratulate the hon. Member for West Dorset (Edward Morello) on securing a debate on this important topic? I thank him for all his engagement on this and many other issues, and for his leadership on the energy transition. In the rising noise in and outside this place against facts on the climate crisis in front of us today, it is genuinely a relief to have conversations with him about what we can do about the reality. On that, he makes a hugely important contribution to the House. In all my engagements with him, I come away having learned something new; I thank him for that.
I will start where the hon. Gentleman started: by recognising that we cannot put off our response to the climate crisis to tomorrow. We are now living through extremely hot weather caused in part by the action that we did not take to tackle the climate crisis. While this is one of the hottest summers that we have lived through, it is almost certainly one of the coldest summers that we will live through, so every single step we can take to tackle this crisis should be taken.
We absolutely need greenhouse gas removal technologies to reach net zero and to tackle the climate crisis. Such technologies give us a not just a huge opportunity to balance the residual emissions from hard-to-decarbonise sectors, but—as we have said throughout all of the work the Government are doing on the clean power mission and beyond—an exciting opportunity to grow our economy and secure new investment into the UK. When I say that, I mean all parts of the UK, including Northern Ireland, which the hon. Member for Strangford (Jim Shannon) rightly always challenges me on. This is not just the Government’s view; it is firmly the view of the Intergovernmental Panel on Climate Change and our own independent Climate Change Committee. That is why we are looking ahead and investing in these technologies.
Last year, in our carbon budget and growth delivery plan, we set out how the UK will continue to reduce emissions in a way that lowers bills and secures good jobs, including developing and deploying GGRs at scale. We forecast 0.7 megatonnes of engineered GGRs deployed in 2030, with that figure increasing exponentially to 21.8 megatonnes by 2035. We are laying the groundwork now to support the massive growth that we expect to see in the 2030s, because, as exciting as these technologies are, they are new, and it will take a comprehensive and holistic policy framework to get us to where we need to be.
I will set out six steps, many of which will respond to the points made by the hon. Gentleman. The first is providing support to incentivise private investment through a contractual revenue support mechanism. That is the GGR business model, designed to stimulate private investment in GGRs by providing revenue support under a contract for difference mechanism. It aims to capitalise on growing demand for high integrity GGRs in the voluntary carbon market and, in the longer term, in the UK emissions trading scheme, designed to enable the deployment of GGR projects at scale in the UK while ensuring at all times value for money for taxpayers.
We are employing similar approaches to support energy from waste, with carbon capture and storage through the waste industrial carbon capture business model and large-scale bioenergy with carbon capture and storage, or BECCS, through our power BECCS business model. We are also exploring the case for financing GGR technologies not reliant on CO2 transport and storage infrastructure, such as enhanced rock weathering and CO2 mineralisation in building materials, as we recognise that there are a number of benefits to a diverse portfolio of GGR technologies. No decisions have been made on the particular intervention or mechanism.
I want to reference the point that the hon. Gentleman has raised with me before and he raised today as well on the British carbon bank, or the idea of some kind of revolving fund. It is a serious idea that we will look at carefully, because we recognise that there is a real benefit to having that portfolio in place. We have already invested money, as I will come on to, but looking at interventions like that is important. We will continue to engage with him and the wider sector on how that could work.
Secondly, we are introducing a new standard to ensure that investors and the public have confidence in these technologies. To complement the business models, we have commissioned the British Standards Institution to develop methodologies under an official UK GGR standard, and that is expected to be published next year. This is about making sure that carbon removals are genuine and verifiable, and having a standard in place so that we can objectively assess the viability and suitability of projects applying to the business model.
The BSI development process generates high-integrity standards and benchmarks, bringing together industry specialists, academics and policymakers from across relevant sectors to produce a consensus-based final product. It is an example of a strong point made by the hon. Gentleman: everything we need to make this work is already here in Britain. The academics, the industry specialists, the skills and the capabilities are all here, and we just need to look at how we capitalise on those resources as quickly as possible.
Thirdly, we know that carbon capture, usage and storage infrastructure is critical for enabling some of these technologies, and we have been committed to deploying CCUS at scale. I agree with my hon. Friend the Member for Middlesbrough South and East Cleveland (Luke Myer) about the need to capitalise on investment that we have already made, and to continue down that path by investing in these projects. In October 2024, just a few months after we took office, we made a significant funding commitment of up to £21.7 billion over 25 years to kick-start the CCUS industry here in Britain. GGR projects have been able to apply to the expansion of the HyNet and East Coast clusters through the HyNet Track-1 expansion process, the Teesside selection process and the non-pipeline transport pathfinder process—all very catchy names. I can already confirm that the HyNet Track-1 expansion includes two GGR projects that are in the negotiation phase of that process.
Fourthly, we are investing in innovation. For many of these technologies, there is research that still needs to be undertaken and there are breakthroughs that are waiting to be made. We have already invested over £80 million through the direct air capture and greenhouse gas removal innovation programme and the UK Research and Innovation funded greenhouse gas removal demonstrator programme and its co-ordinating hub.
The carbon budget and growth delivery plan committed to launching a series of cleantech innovation challenges that target mission-critical innovation. These will set specific, measurable, time-bound goals for innovation, co-owned with industry, which will mobilise public and private sector investment and focus policy efforts on creating the necessary market pull for new technologies and, in the process, de-risking those investments into new innovations.
That leads me to the fifth point about how we stimulate market demand. We want to engineer GGR projects to generate high-quality carbon credits that can be sold on high-integrity negative emissions markets, and so we will maximise the opportunity for the voluntary carbon markets to channel private finance into those GGR projects. At COP29, we launched six principles for voluntary carbon and nature market integrity to guide organisations into taking voluntary action towards nature-positive and net zero goals.
When we consulted on those principles with stakeholders, they highlighted that, in order to unlock the full potential of the voluntary carbon market, there is a need for greater clarity on the definition of high-quality carbon credits and how credits could be used in corporate net zero claims. Alongside the Governments of Singapore and Kenya, we are leading development of the Coalition to Grow Carbon Markets to strengthen corporate demand for high-integrity carbon credits, and anyone and everyone is welcome to join that coalition.
Our long-term ambition is for a competitive negative emissions market, underpinned by demand in the carbon market and the UK emissions trading scheme. We have signalled our intention to include GGRs in the UK ETS. Last summer, the ETS authority published a response to the consultation on the inclusion of GGRs in the ETS, setting out further details on how we will do this.
Finally, we are considering the findings of the independent review into GGRs that we commissioned last year under my noble Friend and all-round GGR and general energy expert and nerd, Lord Whitehead, who did fantastic work. I can assure the hon. Member for West Dorset and the House that that review is certainly not gathering dust on my desk; I have been flicking through it far too much for it to be gathering dust. I can say to the hon. Gentleman that the review includes many interesting and useful conclusions. We are taking time to go through them in detail, but we aim to publish the response this month. I am sorry that that is not quite an exact date, but I hope it is close enough.
I hope that the steps that I have outlined today will reassure the House that this Government take the future of GGRs extremely seriously. We know that these technologies will be essential to reducing our emissions while growing the economy on the road to net zero by 2050, and that is why we are acting now. I want to conclude by coming back to the point where the hon. Gentleman started. It is absolutely critical that we rebuild, where we can, the consensus on acting on the most existential crisis that this planet faces. The climate crisis is not some future threat that we can have a theoretical debate about now and worry about later; it is a very real and pressing threat, and GGRs will play a really important part in addressing it. The Government are determined to make that happen, and there is an economic opportunity if we get this right as well. I absolutely commit to working with the wider industry, with the hon. Gentleman and with everyone else who has an interest in this fascinating subject in order to make this work.
Madam Deputy Speaker (Ms Nusrat Ghani)
Unless I am misunderstanding him, the Minister has committed to making a policy announcement this month. There are only a few more sitting days, and he will know that Mr Speaker does not take lightly policy announcements being made outside the House; this House is where those announcements should be made for scrutiny by Back-Bench MPs. No doubt the Minister’s staff will be scribbling that down.
Question put and agreed to.
Point of Order
Michael Shanks Excerpts(3 weeks ago)
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The Minister for Energy (Michael Shanks)
I am very happy to answer, because I responded to all the right hon. Lady’s written parliamentary questions, as I always do. In my answers, I set out very clearly that this is not a Government project so the Government do not have all the details. It is a private project, and as with any other private development going on around the country, we would not expect the Government to have an insight into all that data. The Government have not backed that project, so the answers to her questions were as I accurately gave them, and that is the case for all my written parliamentary questions.
Mr Speaker
It is good to hear that the questions have been answered. What more could one ask for?
Draft Contracts for Difference (Definition of Eligible Generator) (Amendment) Regulations 2026
Michael Shanks Excerpts(3 weeks ago)
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The Chair
Before I call the Minister, I invite Gentleman Members to yourselves of your jackets if you feel so inclined in this hot weather. I call the Minister.
The Minister for Energy (Michael Shanks)
I beg to move,
That the Committee has considered the draft Contracts for Difference (Definition of Eligible Generator) (Amendment) Regulations 2026.
Thank you, Mr Wishart. Not willing to be half jacket on, half jacket off during my speech, I will continue as I am at the moment, but it is a genuine pleasure to serve under your chairship for the first time.
The contracts for difference scheme is the Government’s primary way to incentivise low-carbon capacity in the electricity system. The draft regulations change the scheme’s eligibility criteria to include the lifetime extension of nuclear plants. Nuclear power is expected to play a key role in the UK’s future energy system. By generating baseload power in the UK, nuclear energy can complement renewable sources, helping to maintain price stability for consumers and reduce our dependence on fossil fuels. It also lessens our reliance on imports from overseas, strengthening our energy security. However, the UK’s present operational nuclear fleet, including the four advanced gas cooled reactors and Sizewell B, the UK’s only pressurised water reactor, are due to begin decommissioning in the coming decades; this means that around 15% of our current electricity generating capacity could be lost by 2035. While the Government continue to take forward the wider nuclear programme through Sizewell C and through the Great British Energy nuclear small modular reactor programme, we should also make sure that suitable mechanisms are available to support continued generation at existing nuclear stations, where financial support is necessary and likely to represent value for money. In the absence of that support, nuclear power plant operators may choose not to make the investment necessary to extend the operational lifetime of the stations.
Before speaking to the provisions in more detail, I will set out some background to the contracts for difference scheme. As I said, that is the Government’s main mechanism for supporting low-carbon electricity generation across Great Britain. Under a CfD, the generator is paid a fixed price for electricity generated across the lifetime of the contract. It sells the electricity it produces into the wholesale market, and when the wholesale price falls below the strike price the difference is received in payments from the Low Carbon Contracts Company. Where wholesale prices rise above the strike price, the generator is required to make up the difference in payments to LCCC. Where the LCCC makes difference payments to the generator, these are funded through a statutory levy on licensed electricity suppliers, and are therefore passed on to households and businesses through electricity bills.
The CfD mechanism is central to delivering the Government’s objective of a fully decarbonised power system while securing value for money. It protects consumers when electricity prices are high and gives generators income stability over the duration of the contract. For example, had Hinkley Point C been operational during the last energy crisis, consumers would have saved around £5 billion.
The draft instrument before us today amends the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 so that the Government have the option to use the CfD mechanism to support the continued generation of electricity at existing nuclear power stations. Nuclear energy is already eligible for CfD support for new-build capacity, with a CfD having been taken forward for the construction of Hinkley Point C, but nuclear stations seeking to undertake refurbishment in order to extend their operational lifetime are not currently eligible. Broadening the eligibility criteria in this way allows existing nuclear capacity to continue to generate low-carbon electricity over extended operating lifetimes, with support under the CfD where it is judged safe and economical to do so. The Government’s assessment is that nuclear lifetime extensions can provide value for money for consumers, given that lifetime extensions will be considerably cheaper than building new generation. Modelling indicates that extending nuclear plants lowers overall electricity system costs compared with other low-carbon routes to net zero.
It is important to state that the draft instrument does not in itself commit any support; nor does it guarantee a CfD for any particular project. Its purpose is instead to allow the Government to consider CfD support for lifetime extension projects for nuclear. Any decision to award a CfD will be subject to all relevant approvals, including value for money tests, and will be announced in due course.
The draft regulations widen the eligibility criteria for contracts for difference, so that existing nuclear plants can qualify for support for lifetime extensions. It strengthens our security of supply by enabling access to financial support where needed to sustain electricity generation from existing nuclear infrastructure. That means low-carbon baseloads can remain on the grid without the higher costs and longer delivery times associated with new build. I commend the draft regulations to the Committee.
Michael Shanks
I repeat these points regularly, but the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine, often talks about his party’s “intention to do”, “ambition to do”, “we aimed to do”, but in 14 years the Conservatives did nothing to build any new nuclear, and that is the record he has to defend. Intention is all well and good, but delivery is what this Government are focused on.
We have not ruled out new gigawatt-scale nuclear, but we want to look at it in the context of the future system. That is partly about what the strategic spatial energy plan looks like, but it is also about learning from the deployment of small modular and advanced modular reactors, which we will roll out in due course, and things like the measures we have taken to produce a new regulatory framework, so that we get private sector interest in building nuclear—the Centrica X-energy project in Hartlepool being a good example. It is possible we will have a much more developed approach and innovation in shaping the future nuclear fleet; it might not require a gigawatt-scale project, but we have not ruled it out and it continues to be something we will consider.
The hon. Gentleman asked about the CfD itself. As I said, this set of regulations before us today does not agree to any particular CfD, but he is right to point out the value for money point. Any specific contract we looked at would be subject to subsidy control regulations, assessing first of all whether that support is absolutely necessary for the lifetime extension to continue, whether it is proportionate, and the value for money for consumers point which is really important. We will look at that very closely, but as he rightly says there are examples around the world of really significant lifetime extensions to fleets which could give us decades’ more nuclear power at much lower cost than the cost of rebuilding.
To the Liberal Democrat spokesperson, the hon. Member for South Cambridgeshire, I will just say that I agree completely that the future of our energy system in terms of security and value for money is a mix of nuclear and renewables, as well as everything else we are doing around storage and investing in the grid. This instrument is a hugely important step in maintaining the fleet we have at the moment for a bit longer while we build the generation that comes next, and I commend it to the Committee.
Question put and agreed to.
Draft Electricity Capacity (Amendment and Transitional Provision) Regulations 2026
Michael Shanks Excerpts(3 weeks, 1 day ago)
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The Minister for Energy (Michael Shanks)
I beg to move,
That the Committee has considered the draft Electricity Capacity (Amendment and Transitional Provision) Regulations 2026.
It is a pleasure to serve under your chairship, Mrs Harris. Laid before the House on 14 May, this statutory instrument seeks to make technical improvements and changes to the capacity market, which is the Government’s main tool for ensuring security of electricity supply in Great Britain. Before outlining the specific provisions in the instrument, I will briefly provide some context.
The capacity market was introduced in 2014 and is designed to maintain the security of electricity supply by ensuring that sufficient capacity is available to meet future demand predictions. Through auctions held one year and four years ahead of delivery, the capacity needed to meet future peak demand under a range of scenarios is secured, based on advice from the National Energy System Operator. Through those auctions, participants secure agreements requiring them to make capacity available at times of system stress. It is a technology-neutral scheme that pays providers for making capacity available when needed, covering generation, storage, consumer-led flexibility and interconnection.
Since its introduction, the capacity market has contributed to investment in about 20 GW of new capacity needed to replace older and less efficient plants as we transition towards the clean power 2030 target. To ensure that the capacity market continues to function effectively, we regularly amend the implementing legislation, based on what is required to best ensure continued security of supply.
Let me now turn to the detail of this instrument. It amends 11 regulations in, and introduces one new regulation into, the Electricity Capacity Regulations 2014, it amends two regulations in the Electricity Capacity (Supplier Payment etc.) Regulations 2014, and it revokes one chapter of the Electricity Capacity (No. 1) Regulations 2019.
First, this instrument will ensure that assets awarded a contract for difference following a direction from the Secretary of State will be allowed to participate in the capacity market until the start of the asset’s CfD support. That will better align the capacity market with the clean power ambition and ensure a smooth transition from payments under the capacity market to a CfD.
Secondly, the instrument will strengthen delivery assurance by increasing termination fees and credit cover to restore their value broadly in line with 2016 levels in real terms. Thirdly, it makes several amendments and a revocation to ensure that the legislation delivers on the policy intent. It gives the Secretary of State and NESO the powers to extend the prequalification deadline for an auction following a major IT outage. It will align the capacity market timetable with the ongoing market-wide half-hourly settlement reforms, and it will remove obsolete provisions.
Two public consultations in relation to the measures in this instrument were conducted towards the end of 2025. Respondents were broadly supportive of the measures that clarified regulations or enabled participants with a direct-award CfD to manage their transition off the capacity market. Responses to the delivery assurance reforms were more mixed. Having carefully considered those responses, the Government have proceeded on the basis that these increases are necessary to realign delivery incentives and strengthen delivery assurance. The changes are proportionate, aligning fees with their real-terms-equivalent values in 2016, and will apply only to participants entering the scheme after the instrument comes into force.
We have also made several technical amendments to the capacity market rules, which support the regulations. The Capacity Market (Amendment) (No. 2) Rules 2026, which were laid before the House on 14 May, alongside these regulations, and the Capacity Market (Amendment) (No. 4) Rules 2026, which will be laid in due course, will come into force alongside this instrument.
In conclusion, the instrument enables the continued efficient operation of the capacity market so that it can deliver on its objectives. It will improve delivery assurance and ensure that the legislation is as clear as possible for all participants. I commend the regulations to the Committee.
Michael Shanks
For the third time, let me welcome the hon. Member for Aberdeen South—although I think he was in a Delegated Legislation Committee in his first week in this place. I am not sure whether his SNP predecessor was ever in a Delegated Legislation Committee in all his years in this place, so the hon. Gentleman is already making progress on Stephen Flynn in that respect.
First, I welcome the support for the capacity market, which was introduced by the previous Conservative Government. It has served the country well, and it continues to play an important role in bringing forward the investment needed to ensure the security of supply in the future. I want to make a couple of points clear. The T-4 auction for delivery in 2029-30 secured 40 GW of capacity at £21 per KW per year, which is above the target capacity that we set out. We work towards a range of future scenarios, which is why we have both the four-year-ahead auction and the one-year-ahead auction. As we get closer to those dates, we have a much more accurate sense of what demand will be, and we therefore procure additional capacity in the one-year-ahead auction.
I would gently challenge a number of the points made by the shadow Minister. First, we are moving towards a low-carbon power system because that is what will get us off the volatility of fossil fuels. Gas will play a strategic reserve role in the system, as was highlighted in the clean action plan, which set out that 95% of our generation will come from clean sources, with the remainder coming from gas and other sources. I would also say that this is not just about gas and renewables; new technology is coming in all the time. We just saw investment into long-duration energy storage in this country for the first time in 40 years, which involves some really world-leading battery projects that will give us that additional capacity.
Consumer-led flex is not about forcing consumers to do anything; it is about giving them the power to make choices that can bring down their bills, if they use technology in different ways, and it also helps the system. Consumer-led flex is a win for both consumers and the system. It is bizarre that the Opposition see it as some sort of enemy of the people, even for their race to the bottom on future technology.
On the point about blackouts, I have genuinely seen an increase in the number of people from both the Conservative party and Reform peddling nonsense about blackouts in this country. We should be very careful about nonsense scaremongering that is not based in fact whatsoever.
The draft regulations are about improving the already strong capacity market so that it can continue to deliver our energy security, now and into the future. It has made Britian’s energy system one of the most resilient in the world, which will continue to be the case in future with a mix of technologies. The draft regulations help to achieve that, and I commend them to the Committee.
Question put and agreed to.
Nationally Significant Energy Infrastructure Projects
Michael Shanks Excerpts(4 weeks ago)
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The Minister for Energy (Michael Shanks)
It is a pleasure to serve under your chairship today, Ms Vaz.
I thank my hon. Friend the Member for Suffolk Coastal (Jenny Riddell-Carpenter) not only for securing the debate but for all the conversations we have had. She should never fear repeating the same message; it is important. She does a great job championing her community in this place; she has always sought to do so, in all the meetings I have had with her. I might add that she has also sought to be constructive, as she reflected in her opening remarks. Her constituents are not against the move to clean power, and know how important it is, but they recognise that there are impacts locally. That is a really important place to be on this issue.
Communities that host nationally significant infrastructure obviously experience disruption and change, and that comes with real consequences. I understand the challenges that such infrastructure places on communities at a local level, and it is right that we not only take account of those concerns when they are raised but do everything we can to provide those people with the community benefits. They are hosting infrastructure on behalf of the nation, and they should benefit from that.
This important debate also comes to the heart of the broader question facing the country, and why we have, as a Government, decided to move even further and faster to deliver the infrastructure that not only delivers economic growth and energy security, but gets us off fossil fuels as quickly as possible. Infrastructure does matter, and I am not going to shirk away from making the argument that after a long period of not building the infrastructure this country needs, we have to build it. But communities have to be at the heart of that decision as well.
It is great to see that some young people have joined us for the debate, because at the heart of our reason for building this infrastructure is the future of our planet, as well as our energy security right now. For decades, we have not done enough to tackle the climate crisis, but neither have we done enough to safeguard ourselves from the volatility of fossil fuels, which has put all our bills up year after year. That is what this is all about, and I know my hon. Friend the Member for Suffolk Coastal absolutely supports that point.
It is also an economic opportunity. Just last week, we hit the huge milestone of £100 billion of investment in clean energy since this Government came to office almost exactly two years ago. That is creating jobs and boosting our energy security. As I have said, every wind turbine, every solar panel, every nuclear power station and every bit of transmission line that we build helps to create a more secure and resilient energy system now and in future. I do not say that lightly, as if building those projects does not come at any cost for people locally. New infrastructure does mean difficult decisions, and there will always be local impacts. I fully recognise that will bring concerns for local residents, just as much as it brings huge opportunities nationally.
My hon. Friend the Member for Suffolk Coastal powerfully outlined some examples of the impact of Sizewell C, one of the most important energy projects that we are building. The last time we built a nuclear power station in this country, I was not even born, so it is really important that we push forward on those projects. However, I recognise that the scale of Sizewell C has an impact on roads and local businesses. I would be happy to meet my hon. Friend again to talk specifically about that point; I would also be happy to set up a meeting with her and the team at Sizewell C, because I know that they are also seized of the importance of getting this right.
I should also say that this is partly why we have a rigorous planning system. All nationally significant infrastructure projects have to address the cumulative impacts to which my hon. Friend referred, and there are many opportunities for communities to have their say. I recognise that communities do not always feel that that is taken into account, but I say genuinely that it is taken into account. Projects have to demonstrate that they have considered the cumulative impact of other NSIPs as part of their process through the system.
I have said that communities providing a service to the country by hosting this infrastructure have to benefit from it. We have already taken decisive steps to ensure that they have tangible and lasting benefits. For the first time ever, we have announced community benefits from network infrastructure: direct bill discounts for consumers, so that those closest to transmission lines and substation upgrades feel the benefit in their energy bills, but also wider community benefits, so that communities can benefit from funding. The hon. Member for Strangford (Jim Shannon) and other hon. Members raised a point about long-term, sustainable and really impactful benefits. My constituency is close to some of the biggest onshore wind farms in Europe, and in truth we have not seen the long-lasting community benefits that we might have seen. This is about trying to shift that, so that there are real investments in communities.
Ms Billington
I recognise what my hon. Friend says, but as my hon. Friend the Member for Suffolk Coastal (Jenny Riddell-Carpenter) pointed out, these are guidelines at the moment rather than obligations. Because they are only guidelines, they can be ignored. Including things like jobs and traineeships within the community allowance limits the genuine potential benefit for host communities. We are grateful that we now have biodiversity net gain for nationally significant infrastructure projects. There should be a similar obligation to make sure that communities benefit and have ownership of and accountability for how that money is spent. I will say this now on the record: £2.1 million, as my hon. Friend said, is a rounding error. That should be multiplied by 10 if we are really going to get the benefit for our communities in the long term.
Michael Shanks
Let me come to both of those points. First, we are potentially confusing two different things. Community benefits for transmission infrastructure are mandatory; we have separately consulted on whether community benefits for wider energy projects should be mandatory, and we will respond to that consultation soon, because I recognise many of the points that have been made. What we do not want to do, though, is create one-size-fits-all solutions in Whitehall that will work differently in different communities. As a Minister, I do not want to sit here and say: “This is how your community benefit will work in your community.” Instead, I want to empower communities to figure out how that works best in their local area. I have seen models of that in all the visits that I have made across the country.
The minimum standards should be there to make sure that the process is transparent, with communities and not developers in the driving seat, and that there is long-term certainty. I do not think that we should say that play parks and cycle paths are bad things to invest in, but there should be some long-term investments alongside them. I have seen some good examples, just in the past few weeks, of that being done well. We need to separate out those two things.
I have wrestled with the cost point as well. In principle, I would like to see communities having even more community benefits, but we have to recognise that the cost of them will be borne by bill payers right across the country. The balance that we are trying to strike, as a Government determined to tackle the cost of living, is to have communities benefiting as much as they possibly can but without putting up bills significantly for all bill payers across the country, which would be a disproportionate impact at a time when the affordability crisis is our No. 1 priority.
Helen Whately
On the point about considering the community benefit, what counts as a community is really important. In some circumstances—this has come up in my local area—a large geographical area is considered as a community, even though the number of households that are very substantially affected is very small. It is what they want that should really matter. Yes, of course I care about what the wider community wants, but we need to think about the small number of households in which there has been a real impact on people’s day-to-day lives.
Michael Shanks
I totally accept the hon. Member’s point, although the point has been rightly raised that the impact of building these projects is often felt by a much wider community, which is why the community benefits are wider. I should also say that we have to separate questions of compensation from questions of community benefit. Compensation is paid, as part of a process, to those who have been significantly disrupted or whose land has been changed in whatever way: that is a contractual negotiation between a landowner or resident and a developer, and it is not for the Government to intervene in it. Community benefits are about a much wider view of how these projects benefit the wider community.
I take the point about the design of the community, which is really important. With something like the Sea Link offshore cable, it is sometimes hard to look at what the community around it would look like. We have wrestled with how to define it: there is a danger that if we have too broad a definition, the community benefit funds will not get to the people who would benefit most. There is probably more that we can do on that, and I am very open-minded about contributions from hon. Members on that point.
On the level of benefit—I know that these points have been raised before—the electricity bill discount will give the people living closest to the infrastructure money off their bills. We are seeking to remind people that the more of this infrastructure we build, the fewer constraints we have on the grid and the more we can get cheap, clean power into homes and businesses and bring down bills for everyone. There is an impact beyond the projects themselves.
Jenny Riddell-Carpenter
I do appreciate that argument, and I have toyed with saying this publicly, for good reason. Of course that is true, but in my constituency I also have lots of people who are off grid and are reliant on heating oil. With a lot of this infrastructure being built and hosted in my community, many people will not feel the benefit if they are reliant on other forms of energy. Until we understand that, we will not get to the heart of the frustrations that people living in Suffolk Coastal and other rural areas feel about this upgrade.
Michael Shanks
I take that point, to an extent, although being off the gas grid does not mean being off grid from electricity, so those people will benefit from cheaper electricity bills. I think that electrification is the answer, to support households off heating oil wherever possible. I know that that is not possible in every case, but there will be a lot of households that we can move away from heating oil, which protects them in the long term. We have also provided support for people on heating oil in the ongoing middle east crisis.
We have produced a working paper and a call for evidence on community benefits, which we are going through at the moment. We are also going further around shared ownership of low-carbon infrastructure. This Government do not see this issue as being just about community benefits. It is also about how we get communities either owning the entirety of the infrastructure themselves and holding the wealth that is generated in their community, or at least owning a share in it.
To their credit, in the Infrastructure Act 2015 the previous Government—although I suspect that they may not have realised this when they passed the Act—created a power to allow shared ownership. It was never enacted. We are now seeking to work out how to enact it so that communities can genuinely own a share. We know the difference that it makes: ownership matters, because it puts communities right in the driving seat when it comes to what they spend that money on. Whether they choose to make long-term or shorter-term decisions would be in their hands. That makes a hugely important difference to communities, as I have seen on visits.
Ms Billington
That is definitely the case for renewable energy generation projects, but we are talking about infrastructure projects. There needs to be some kind of mechanism by which we have some ownership and accountability for the communities that are hosting infrastructure projects. There particularly needs to be an energy foundation that allows them to reduce their energy bills, which would also take some of the overall burden off the grid.
Michael Shanks
I do not think we are disagreeing. Energy generation projects are infrastructure projects: whether the community owns them or not, the infrastructure still needs to be built. I would just like to see more communities owning those projects. We said in the local power plan that we want to make it possible to sell power locally, which would actively bring down bills, and for that wealth to be held locally. The grid and network infrastructure has to be built alongside that, which in previous years has not happened as much as it should have.
One of the biggest changes, which my hon. Friend the Member for Suffolk Coastal mentioned, has been about the cumulative impact and the sense that there has not been sufficient planning or a strategic approach. We will shift that with the national strategic spatial energy plan and, from that, the centralised network plan. We should have been doing that years ago. We have built lots of renewables projects, but have not worked out how we are connecting them to the grid. That is costing us in constraint payments, but it also means that we do not have as strategically aligned a grid as we should have. Unfortunately, we have to start from where we are. We will plan it more strategically moving forward, but I recognise my hon. Friend’s points.
Returning to the central point of this debate, I recognise that communities should absolutely be at the forefront of the energy transition. We want to see much more community and shared ownership as well as partnerships with communities, but the Government are also unashamedly building the energy infrastructure that this country needs to weather the uncertain world we live in today. That will protect us in the future and unlock huge economic benefits from electrification and the industries of the future. That means building things, and they have to be built somewhere.
My hon. Friend has frequently made the point that she agrees, but that she thinks Suffolk Coastal has faced a disproportionate number of those projects. I have some sympathy with her. We have to do everything we can to make sure that her communities and others like them benefit. The hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) made a point about pumped-storage hydro, which is an example of the infrastructure our country needs. We need to get the community benefits right that come with these projects.
We have made huge progress in two years, but I am not going to stand here and say that the job is done. We need to continue to make sure that communities benefit as much as possible—not least because, in a fractured debate on the energy transition, we have a job to do to convince the public that this is a journey that benefits all of us. It will bring down bills and protect us in an uncertain world. Fundamentally, if communities are hosting it, they are doing the country a favour and we thank them for it, but they should also get some benefit.
I thank my hon. Friend the Member for Suffolk Coastal again for securing the debate. I look forward to meeting with her again; she should never fear bringing up these issues with me again and again, because they are hugely important. I take them seriously, and so do the Government. I hope that together we will find a way through.
Question put and agreed to.