The following Answer to an Urgent Question was given in the House
of Commons on Wednesday 13 March.
“The second consultation of the review of electricity market
arrangements was launched yesterday. It sets out the choices that
we need to make to deliver a fully decarbonised electricity
system by 2035. Since 2010, the Government have reduced emissions
from power by 65% and thus made the UK the first major economy in
the world to halve emissions overall. We have built record
volumes of renewables, from less than 7% of electricity supply in
2010 to nearly 50% today, allowing us to remove coal altogether
by October this year.
Our success in growing renewables is the reason we need flexible
back-up for when the wind does not blow and the sun does not
shine. Our main source of flexible power today is unabated gas.
More than half of our 15 gigawatts of combined-cycle gas turbines
could be retired by 2035. Meanwhile, electricity demand is set to
increase as heat, transport and industry are electrified. We must
ensure that we have sufficient sources of flexibility in place to
guarantee security of supply. We need up to 55 gigawatts of
short-duration flexibility and between 30 and 50 gigawatts of
long-duration flexibility. Our aim is for as much of that
capacity as possible to be low carbon.
While low-carbon technologies scale up, we will extend the life
of our existing gas assets, but a limited amount of new-build gas
capacity will also be required in the short term to replace
expiring plants as it is the only mature technology capable of
providing sustained flexible capacity. We remain committed to
delivering a fully decarbonised electricity supply by 2035,
subject to security of supply, and we expect most new gas
capacity to be built net-zero ready. The Government have
committed £20 billion to carbon capture, usage and storage, and
are developing comprehensive support for hydrogen. In the future,
unabated gas plants will run for only a limited number of hours a
year, so emissions will be entirely in line with our legally
binding carbon budgets”.
2.19pm
(Lab)
My Lords, it is fair to say that there has been some scratching
of heads as to why exactly this announcement was deemed
necessary. There is general agreement that gas-fired power
stations will be needed during the transition to net zero.
However, there is disquiet at the emphasis on this aspect of
policy rather than on alternative approaches such as ramping up
investment in renewables.
If new-build plants are needed, it is essential that they are
capable of converting to hydrogen or are connected to functioning
carbon capture and storage. May I seek assurance from the
Minister that this is indeed the Government’s view? Can he also
inform us what estimate has been made of how many of these new
gas plants will be needed, when they will come on stream and how
long reliance on them is expected to last?
(LD)
My Lords, this announcement comes out of the blue and fuels
doubts that this Government are on track to meet their own target
of fully decarbonising power generation by 2035. So far, instead
of progress we have seen repeated failures to prepare; the
offshore wind auction collapse; an effective ban on onshore wind;
nuclear power projects delayed; slow or no progress on battery
storage, hydro-generation and tidal projects; and a lack of
investment in overall grid capacity. I ask the Minister to
confirm that the Government are still committed to fully
decarbonising power generation by 2035 and that these will be the
last ever carbon-based power generation plants to be built in the
UK.
The Parliamentary Under-Secretary of State, Department for Energy
Security and Net Zero ()
I thank the noble Baroness and the noble Earl for their
questions, especially the noble Baroness, although I am slightly
perplexed. If she thinks that this announcement was unnecessary,
why did the Labour Party ask for it to be repeated in this House
today, given that it makes the same point? However, essentially,
I accept the point that the noble Baroness has made. We think
that this capacity is necessary; it is all about security of
supply. The estimate is that in 2035, it might account for only
1% to 2% of all of the capacity that might be required. We are
looking forward a decade, with uncertain projections of what the
demand will be, how much renewable capacity will be available and
even what the weather conditions will be like that far ahead. So,
this is sensible contingency planning.
On the questions from the noble Earl, we very much hope and
expect that these will be hydrogen ready or capable of having
CCUS fitted. Indeed, some gas plants are already taking part in
the CCUS cluster sequencing process. This announcement is
entirely compatible with our net-zero obligations. Indeed, this
is net zero: there will be some emissions but those can be
abated, eliminated or captured, or the power stations can run on
hydrogen.
We are very proud of our record. We have one of the fastest rates
of decarbonisation in the G20, and we announced before Christmas
that we have reduced our emissions by 50%. We have the five
biggest wind turbine farms in Europe, and that capacity continues
to be rolled out. This is sensible contingency planning to make
sure that the lights stay on at those times when, as we all know
happen, the wind is not blowing and the sun is not shining.
(Con)
My Lords, I welcome this announcement because it seems to have a
strong element of realism and honesty in this whole advance
towards net zero, which I personally welcome.
If the aim is to ensure that when we get to net zero, although
there will be fossil fuel burning, carbon is captured from
that—indeed, there will be gas burning, as there is now, as part
of our existing electricity generation —does this not have to go
hand in hand with dynamic development of cheaper, simpler and
more efficient carbon capture and storage systems, which, if
applied to gas burning, will enable us to say, “Net zero is
roughly there”? That seems to be the key question, and I hope my
noble friend will elaborate on it.
(Con)
I thank my noble friend for his question. He is, of course,
absolutely right, and his extensive knowledge of the power and
energy system, based on his previous career, is well respected in
this House. I can tell him that we are rolling out CCUS at pace.
We have allocated £20 billion for support for CCUS clusters. We
are progressing our two initial track 1 clusters: HyNet and the
East Coast Cluster. We are in final negotiations with the
transport storage systems and the emitter projects, some of which
are gas power stations, within those cluster projects.
We again intend to be European and world leaders in CCUS. We have
massive storage potential in the seas surrounding us; they have
powered this country for many years and will help us to store
emissions in the future as well. It is something that could even
become a net revenue earner for the UK. We are indeed fully
committed to that.
(GP)
My Lords, the House of Lords Science and Technology Committee
yesterday released a timely report, which I am sure the Minister
is aware of, on long-duration energy storage. It stresses the
importance of that, rather than relying on expensive gas and the
deeply uncertain technology of carbon capture and storage. The
report points out that the Government have said that they plan to
have enough storage to balance the system and that the cap and
floor mechanism has worked very well with interconnectors to
deliver that. A key point of the report is that the Government
have not set a minimum target for long-duration energy storage.
Will the Government now set a target for this clearly preferable
alternative for long-duration storage?
(Con)
My Lords, the essential misunderstanding of the energy system
from the noble Baroness continues apace. The answer to the noble
Baroness’s question is that we need both. We need long-duration
energy storage, long-term battery storage, pumped storage and
long-term hydrogen energy storage—all of which we are
progressing. We have the most ambitious plans in Europe in all
those areas. However, all independent forecasters who have looked
at this, including the Climate Change Committee, agree that, in
addition to that, we may need gas-fired generation, of relatively
short duration and maybe only 1% or 2%—obviously, the Greens
would prefer the lights to go out in their yurts before the rest
of us progress in an advanced industrial society. This is
essential contingency planning, and we make no excuses whatever
for saying that the energy security of the UK is our priority. We
can do that in a net-zero scenario, and we will progress
that.
(LD)
My Lords, I have a question about baseload capacity. Under the
present Government, the number of larger generators on the grid
has fallen quite considerably. Due to that, we will obviously
need gas-fired power stations in the short term. However, there
is a problem there, because the Minister is talking about
short-term capacity. Can he say whether those investing in gas
power stations would see a return on investment? The reason why
gas-fired power stations have failed to be built over the last 10
years is that, because of the CfD, it has been almost impossible
to make the financial case for building those power stations.
(Con)
The noble Lord is right in that the number of larger generators
on the system is falling, with the elimination later this year of
coal generation —we will have phased it out completely. He is
right, again, that the gas generators that we are talking
about—which will be some refurbished existing plants, but also a
few new ones—will be able to take part in the capacity market
auctions. These are essentially auctions for back-up capacity
that may be required in certain scenarios.
(Con)
My Lords, I wonder if my noble friend the Minister can enlarge
slightly on the question posed to him by the noble Baroness on
the Labour Front Bench about hydrogen adaptation. I very much
welcome the Statement; it seems to me important to tackle this
issue in the proportionate, affordable and measured way, rather
than in a millenarian spirit. Can my noble friend the Minister
outline a little bit of what the Government’s hydrogen strategy
is as part of that solution?
(Con)
I thank my noble friend for the question; I am very happy to do
that. We are progressing a very advanced hydrogen strategy, which
I will try to summarise in a few words. We let the first 11
electrolytic hydrogen contracts before Christmas, offering £2.1
billion-worth of long-term support for the development of
electrolytic hydrogen. We have a few blue hydrogen projects that
are currently taking part in the CCUS negotiations. We are
currently putting in place business models for a transportation
and storage system and hope to progress that later this year, as
well as the first couple of storage projects. We have a very
ambitious hydrogen project; we think that hydrogen has a very
important role to play in the net-zero scenario, both in terms of
long-term energy storage and in decarbonising some elements of
industry that are particularly hard to decarbonise. We should of
course electrify where we can, but we will still need hydrogen
power to generate power in some of those sectors.
