Power Struggle: Delivering Great Britain’s Electricity Grid Infrastructure (Industry and Regulators Committee Report)

Lord Wilson of Sedgefield Excerpts

Tuesday 4th November 2025 Grand Committee

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

I thank noble Lords for their participation in this debate, which is obviously a very important one. We are dealing with issues here that are going to transform the way we deliver energy for this country. I thank the noble Baroness, Lady Taylor of Bolton, for tabling a debate that recognises the urgency of our transformation of the GB electricity network. I thank noble Lords for their welcome contributions to the debate, which touches so many salient issues. I think it is fair to say that we are more or less in the same space. We have questions, we wonder how we will get to where we need to be, but, on the whole, we are more or less on the same path.

The noble Lord, Lord Liddle, was on about the energy industry back in the 1970s. I grew up in the great northern coalfield and represented a constituency there. It was that coalfield which basically powered the industrial revolution. When I think back to the research I did when I was an MP, I remember that 3,500 miners were killed in accidents in my constituency over the decades. Thousands were injured, including thousands who got compensation for pneumoconiosis, for example. Although it was exciting in one way for the Industrial Revolution to drive growth, I think we can be really proud of the fact that we are going to achieve what we need to do, not just to decarbonise the grid in this country but to help save the planet as well, by moving away from that and looking at industries that are not going to bring in the problems in the human way we had to suffer back in those years.

The electricity grid we have today has suffered from decades of underinvestment. That legacy means that it is outdated, constrained and unable to meet the demands of a clean energy system. Because of this, upgrading and expanding the electricity network has never been more critical. Our current network, largely built in the 1960s, was not designed to handle the scale of home-grown, low-carbon energy generation we are now deploying. Upgrading our network infrastructure not only enables the Government’s clean energy superpower mission but brings forward significant opportunities for investment in our economy.

As outlined in the Government’s response to the committee’s recommendations, the clean power 2030 action plan sets a clear path towards delivering a modernised electricity system. These reforms will transform the GB electricity system, and actions by industry, government, Ofgem and the National Energy System Operator, or NESO, are already delivering results. Chief among these is the Planning and Infrastructure Bill, currently progressing through Parliament. The Bill aims to accelerate the delivery of clean energy projects by reforming planning processes. The reform of the grid connection process will address the long delays that projects currently face to connect and ensure that strategically important ready-to-go projects can connect quickly. This will enable clean power 2030 and put in place a process that is fit for purpose in the long term.

We are also going further and are making major improvements to better support strategically important demand-side connections to boost growth and unlock investment. We will launch a connections accelerator service later this year to prioritise support for projects that guarantee high-quality jobs and bring the greatest economic value. We plan to use new powers in the Planning and Infrastructure Bill to create measures that will allow network companies to prioritise capacity for government-designated strategic demand projects. Through the National Energy System Operator, we are taking a strategic approach to planning the electricity network. The centralised strategic network plan, due in 2027, will build on the strategic spatial energy plan, expected in 2026, and guide the future siting of infra- structure, balancing energy needs with environmental and community considerations.

The transformation of our electricity network must, as colleagues have made clear, ensure that communities have a say. I assure noble Lords that this remains fundamental to the approach we are taking. The independent planning process will ensure that communities continue to have a say, through statutory consultations and often through additional voluntary consultations by network companies.

We recognise that the communities most affected must benefit directly from this nationally beneficial infrastructure. The Government have announced a scheme of bill discounts and published guidance for local community funds which will be received by communities and individuals living near new transmission network infrastructure. Delivering energy bill savings is a priority for this Government and the actions to transform our electricity network are a major contributor to ensuring that the cost of living is brought down. Delivering an expanded and transformed electricity network for 2030 will prevent an escalation in the constraints caused when grid capacity is insufficient to transport renewable generation. In the longer term, the decarbonised energy system will deliver lower energy costs to consumers, as we remove ourselves from the risk of the volatile price of fossil fuels. If gas prices today were at pre-crisis levels, bills for families would be £200 a year lower than they are at the moment.

I now want to answer some of the questions I was asked. If I do not answer them all, I will make sure that we scour Hansard and get back to noble Lords. The noble Lord, Lord Teverson, said that if I could answer his question in five seconds, that would be great. I am afraid that I am not going to be able to do that, but if I do not answer the questions, we will get back to noble Lords with the answers in writing. I shall just go through the questions noble Lords asked, one by one.

To respond to some of the points made in the debate, starting with those raised by the noble Baroness, Lady Taylor, network infrastructure is not very expensive but brings a lot of value. Network infrastructure costs have historically been 12% of the average bill. To pay for this current transformation, network costs are currently 13% of the bill. Reducing delays in construction and reforming connections could bring forward £90 billion of wider investment over the next 10 years and avoid between £4 billion and £5 billion of constrained costs in 2030. Investment in networks and the generation it connects could amount to £200 billion by 2030.

On zonal pricing, first, there is a fairness principal. We looked hard at whether a zonal system could be introduced without passing the impact on to consumers. The conclusion was that it could be possible to protect domestic consumers, although it would be very difficult, but some businesses would be left exposed to unfair energy prices. Secondly, we looked at affordability. The transition into zonal pricing would have created at least seven years of uncertainty, putting a risk premium on new investment that could have caused bills to rise in the short term. The Government recognise the pressures facing local planning authorities and are investing £46 million in 2025-26 to strengthen their capacity and capability to deliver planning reform.

The noble Baroness, Lady Coffey, raised the strategic spatial energy plan and its publication date. The plan is expected in 2026 and will be published independent of government by the National Energy Systems Operator. On the point raised by the noble Baroness about the wider network, the Government do not plan to develop the electricity network; this is undertaken by network companies based on the strategic planning of the National Energy Systems Operator. The Government set the rules for a robust and independent planning process, and all projects are required to progress through a thorough consultation which communities can participate in.

The noble Baroness, Lady Coffey, also raised a point about projects dropped in the process. Those that are not initially offered a confirmed connection date will be able to reapply when they are ready and may benefit from capacity freed up through these reforms. Viable generation projects above the 2030 capacity ranges may still be able to connect in 2030 if there is spare capacity after pre-2030 projects have been assessed. If no capacity is available before 2030, these projects will be offered connection dates in the 2031 to 2035 period. If a viable project extends the 2035 capacity range, they will receive an indicative offer with opportunities to join the queue in future through twice yearly application windows where gaps emerge.

The noble Lord, Lord Teverson, made a point about grid connections, gate 2 connection processes, and asked specific questions about providing confidence to projects to enable them to engage with the supply chain. I will write to him in detail on the issues he raised.

On the wider point about cost, the vast majority of the bill is for the wholesale cost of energy. Network companies are closely regulated to ensure that their rate of return delivers value for money to bill payers. The scale and pace of this transformation is unprecedented in terms of investment.

To the noble Viscount, Lord Chandos, I add my appreciation for the work of the National Energy Systems Operator. On his questions about zonal pricing, as I said earlier in response to the noble Baroness, Lady Taylor, the Government looked closely at zonal pricing and felt there were principles around fairness and affordability that made us decide to not go down that route.

Reforming the national market will combine the collaboration of appropriate planning and pricing to support the building of new energy sources in the best locations. The power grid can grow to provide the energy we need. The noble Lord, Lord Liddle, made an insightful point about the history of the electrification of the UK. The network was last transformed in the 1960s and has been underinvested in since privatisation. Now, as new generation sources are increasingly far from centres of demand, the network is being expanded and upgraded to meet our changing generation profile and the anticipated increase in electricity demand. We are changing our entire energy system to benefit the whole country: some change will be inevitable.

The last energy system, dominated by coal, changed certain parts of the country and communities enormously in ways still felt today. In this transition, we are working with communities in recognising the impact on network infrastructure through community benefits and bill discount funds. Across the entire transition, the department’s clean energy jobs plan outlined efforts to double the number of jobs in clean energy by 2030 from 400,000 to 800,000 jobs. The point made by the noble Lord, Lord Liddle, draws an interesting line between the Central Electricity Board and what we are now asking of NESO. We once again have a strong, central, single-minded and independently operated system, as the noble Lord mentioned.

The National Energy System Operator in its new role, following our acquisition of it from National Grid plc, will be and already is an indispensable asset, in our drive not only to ensure the planning, operation and rollout of the network but to be critical, as seen through the complex work of connections reform, to the whole clean power 2030 target, ensuring value for bill payers. This can be done only though the establishment of an independent expert system operator, which, as my noble friend Lord Chandos noted, has already made a significant impact in the short number of months that it has had its new, wide-ranging brief. We will write with further details of the specifications of its acquisitions.

The noble Lord, Lord Howell, made a point about pylons. System design is and will remain based on raw carbon-generated electricity. Hydrogen may well have a role in the wider energy transmission. However, the demands of the economy require a clean, efficient and fast network for electricity transmission to ensure that homes and businesses and therefore growth have the power that they need at all times. It is clear that electricity is the system that can enable this. Not all projects being built on the network are pylons; many are upgrades to existing infrastructure, while several enormous projects will run offshore.

The noble Baroness, Lady Miller, raises an important point on local energy. The Government recognise that local energy will be of great importance to this work. Great British Energy is already looking at how it can be more closely supportive of local schemes, including the recent work to install solar panels on the estates of schools and hospitals. We will look to take forward its local energy schemes.

The noble Earl, Lord Russell, raised planning—grid connections and the need for forward looking—which the Government are doing in partnership with the National Energy System Operator and Ofgem. On his views on zonal pricing, I welcome his support for the decision and the reformed national pricing system, which will look to strike the right balance for the country, with the delivery plan on the reformed national pricing due before the new year. The noble Earl also asked about AI tools as well as the energy code in this space, and I shall write to him on those issues.

The noble Lord, Lord Offord, pointed out the assessment of other approaches driving net-zero ambition. I would point to the cost of not doing this. We need to get off wholesale prices and volatile fossil fuels to protect consumers, but also future generations. This transformed grid and energy system will let us connect and transport our own homegrown clean energy and get us off the rollercoaster of global gas prices, create good jobs, support economic growth and bring down bills, tackling the climate crisis.

The Government are determined to increase the share of renewables on the system so that the electricity price is set by cheaper clean power sources, rather than gas. Every wind turbine that we switch on and solar panel that we deploy helps to push gas off as the price setter. Government support, such as the contracts for difference scheme, has been highly successful in driving investment and renewable electricity, and our clean power 2030 mission is focusing on accelerating the transition to a renewable power system. This will help to reduce reliance on gas and protect consumers from volatile fossil fuel prices.

The Government are determined to increase the share of renewables on the system, so that the electricity price is set by cheaper clean power sources rather than by gas. Every wind turbine we switch on is well worth it to help to keep down bills. Government support, such as the contracts for difference scheme, has also been very successful.

In conclusion, this Government are committed to the biggest transformation of our electricity infrastructure in a generation. We must confront the tough and responsible decisions that need to be taken without delay. While the challenges are significant, we are already meeting them. We can secure clean power, protect households from price shocks and harness these opportunities to deliver growth. I wish to thank committee members for their thorough and dedicated attention to this most critical matter and reiterate the Government’s dedication to transforming this country’s electricity network.