HL Deb 20 November 2003 vol 654 cc2042-6

11.9 a.m.

Lord Ezra asked Her Majesty's Government:

What strategies they are pursuing to guarantee security of electricity supplies for the future.

Lord Davies of Oldham

My Lords, maintaining the reliability of energy supplies is a key goal set out in the Government's energy White Paper. Through competitive markets participants have incentives to maintain reliable supplies of electricity. These incentives are backed by licence conditions and statutory obligations, enforced by Ofgem. The Government have a role to provide information to the market. A major component of this is our work with Ofgem, through the joint energy security of supply working group, to monitor energy security. The group's third report is on the DTI website and will be placed in the Library of the House.

Lord Ezra

My Lords, I thank the noble Lord for that Answer but does he recall that this week there have been no fewer than three Questions on the issue of electricity supplies—one from the Conservative Benches, one from the Labour Benches and now one from the Liberal Democrats—indicating the importance which we generally attach to this issue? Does he agree that the electricity capacity of this country is ageing rapidly and that over the next 15 years or so much of the nuclear and coal-fired plant could be withdrawn from the market? Does he further agree that in the mean time the gas price has risen very substantially—it has doubled in the past year—and is likely to rise again as the UK becomes a major importer, thus putting companies off investing in new gas-fired electricity plant? In those circumstances, how is this widening gap in electricity capacity to be filled?

Lord Davies of Oldham

My Lords, the noble Lord has—as have previous questioners this week—identified quite rightly the challenges that face the Government and our society in the changing electricity supply environment that we clearly foresee for the future. But he will recognise that these issues were addressed in the White Paper. There have been Questions which have expressed anxiety about this coming winter on which we were able to give full reassurances. As to the longer term—which is the burden of the noble Lord's Question today—the White Paper clearly identifies how we intend to supplant former systems of electricity generation with newer ones.

Lord Jenkin of Roding

My Lords, does the noble Lord recognise—

Lord Peyton of Yeovil

My Lords, while I do not in the least—

Lord Jenkin of Roding

My Lords, I am grateful to my noble friend. Does the Minister acknowledge that an increasing number of people recognise that there will not be security of supply unless the Government turn their option for nuclear power into reality? Is he aware that some 80 constituencies represented in another place have civil nuclear installations and that some 60, 000 people are currently employed in civil nuclear generation? Is the Minister further aware that there are no undergraduate courses in nuclear engineering and only one post-graduate course in that subject? How will that option be made a reality in the light of those facts?

Lord Davies of Oldham

My Lords, I am not sure whether the noble Lord was in his place when this Question was addressed earlier in the week. I indicated then the resources that we are making available towards increased research for the nuclear industry because the Government recognise that resources are necessary to sustain the concept of the nuclear option against a background of changing circumstances. The noble Lord is right: there is a substantial amount of employment in nuclear energy at present. He will also recognise that it is a long-running programme of nuclear rundown—the final power station does not close until 2035. The Government will of course continue to keep the situation under active review.

Lord Bridges

My Lords, is not the difficulty that the Government's White Paper is not an action plan but an essay, which sets out, in an academic way, certain elements in the Question? Surely the Minister would agree that we require a policy that will lay down the basis for future supplies of electricity.

Lord Davies of Oldham

My Lords, the White Paper is not an essay. It is a very clear analysis of energy needs, the current provision that we have available and the strategies that we need to pursue to guarantee energy needs for this country. As the noble Lord will recognise, the Government are already acting against some of the perspectives of the White Paper. When anxieties are expressed about current supplies of electricity, we are able to demonstrate that we have taken action and that that action has been taken in the market place to guarantee that we have a sufficient cushion to supply electricity to the country.

Earl Ferrers

My Lords—

Noble Lords


The Lord Bishop of Worcester

My Lords, does the Minister share my memory, which I hope is correct, of a quotation associated with the noble Lord, Lord Ezra, that the principal competition he faced at the Coal Board was the second jumper? If he did make that observation, does it not underline, in our present situation, the need to make the general public aware of our profligacy and extravagance with energy use? That must be one of the major foci of strategy at present.

Lord Davies of Oldham

My Lords, I am grateful to the right reverend Prelate. He has reminded the House of a fact which I think has not been covered so widely in previous short debates on this issue. I refer to energy conservation and the way in which we can more jealously guard our fuel stocks in every respect. That means that for householders, too, there are ways in which energy conservation can be followed. The Government are concerned to produce incentives towards that end.

Lord Tomlinson

My Lords, is my noble friend aware that he worries some of his friends when he talks about the nuclear industry and uses the word "rundown"? That does not imply an open mind towards the options—it indicates a closed mind and a strategy that is already determined. Some of his friends and other Members of this House are saying that there should be no closing of existing options unless and until alternative sources of energy are not only theoretically available but also actually in place.

Lord Davies of Oldham

My Lords, I apologise if I have created anxieties for my noble friend. He has given voice to these anxieties on more than one occasion this week. Let me assure him that when I have referred to changes in the nuclear power industry, I am merely reflecting the natural life of nuclear installations. He will appreciate that the date for the closure of such installations runs from 2007 right through to 2035. Of course, within that framework, we must ensure that any gap which is left by the decommissioning of such stations is filled by alternative energy supplies. I have indicated a number of ways in which we intend to do this, not least our involvement in substantial negotiations, for the supply of liquid natural gas from abroad. This country will not be self-sufficient in energy, as it has been for several decades, so we have to look to supplies from elsewhere.

Lord Peyton of Yeovil

My Lords, may I reciprocate what the noble Lord, Lord Tomlinson, said the other day? On this occasion I ask: is the Minister is aware that I warmly agree with everything his noble friend has said?

It would be very unfair for us to blame the Minister. He is, after all, merely the vehicle which carries the DTI's verbiage on a very difficult subject. Will the noble Lord convey to the DTI that it has failed? When I asked him the other day for details about what is called the "nuclear option" and the cost, he never referred to the cost in any numbered terms. I hope that he will do so.

Lord Davies of Oldham

My Lords, this is the second time this week that we have seen the emergence of that healthy alliance between the noble Lord and my noble friend on these issues. I can assure the noble Lord that I took back to the DTI the questions that were addressed to me earlier this week, and we examined any shortfall that there may be with regard to the answers.

I reiterate that we are conscious of the fact that a certain amount of electricity generation will of course come from the nuclear source. We are keeping the nuclear option open and investing in the necessary research and skills to guarantee that this option becomes viable.

Lord Avebury

My Lords, further to the question asked by the noble Lord, Lord Tomlinson, are there technological factors that make immutable the closure dates of 2007 to 2035 that the Minister mentioned in his reply? Alternatively, is one way of improving our security in the long term to extend the lifetimes of those stations? Are the Government working on that possibility?

Lord Davies of Oldham

My Lords, the House will recognise the public anxiety and concern about aspects of nuclear generation. That is why the Government are not putting an enormous reliance on the nuclear option for the future. However, all strategies will be adopted against the background of the resources that are made available. All strategies will be pursued to extend the nuclear option if we fail to fill the necessary gap from other sources. Noble Lords will recognise that the Government are active in ensuring that there are incentives to alternative energy supplies to fulfil the broad objectives outlined in the White Paper.

The Lord Bishop of Hereford

My Lords, will the Minister say what progress is being made by the local energy agencies set up to encourage the generation locally of power from renewable sources? I declare an interest, having been asked to be a trustee of the Marches Energy Agency. What arrangements are in place and what price will be paid if there is surplus power from such local schemes to be fed into the National Grid?

Lord Davies of Oldham

My Lords, the right reverend Prelate identifies an important consideration. Against a tough target of hitting 10 per cent of our energy supplies from renewable sources by 2010, we will consider all forms of energy generation, such as those that he has identified. We are concerned to give every incentive in that area. Of course, if there is an economic perspective as regards any surplus from such sources available to the National Grid, we shall seek to follow that.