Energy: Generating Capacity (Hansard, 28 January 2004)

§ Lord Davies of Oldham
My Lords, the construction and operation of new generating capacity is a commercial matter for generating companies. According to data from National Grid Transco on the possible non-renewable future power stations in England and Wales that have the necessary legal consents, around 1.7 gigawatts of new capacity could be commissioned in 2004; 0.8 gigawatts in 2005; and 1.7 gigawatts in 2006.

§ Lord Tombs
My Lords, I thank the Minister for that Answer. It is intriguing that, since the seven-year statement by National Grid Transco for 2003, the figure has fallen by almost 50 per cent—that is in years during which the prospects for construction should have been fairly certain.
The Minister will know that I already think that the margins are inadequate. Does he take the view that the Government have any responsibility for securing electricity supplies? How much of the reduced capacity now to be commissioned in the three years considered will be on interruptible gas supplies?

§ Lord Davies of Oldham
My Lords, as the noble Lord indicated, we discussed the issues recently. Of course, the Government are responsible for the security of energy supplies to the nation. We monitor the situation with great care, through the Joint Energy Security of Supply Working Group in order that signals should be sent to the market about where shortfalls might occur in sufficient time for there to be a proper commercial response to such shortfalls. It is on that basis that we have confidence in the system as it works at present.
This winter, there has been only one occasion on which a signal was sent out about an immediate shortfall, which did not occur. No signal is being sent out in the present week, although noble Lords will recognise that this is the coldest week we have experienced thus far.

§ Lord Jenkin of Roding
My Lords, has the Minister's attention been drawn to the very powerful letter in the Times a fortnight ago by two very respected and acclaimed experts in this field, Professor Sir Hermann Bondi and Professor Ian Fells? They said: A decade or two ago there was in this country a comfortable excess of generating capacity over peak demand, but this margin has been allowed to be eroded almost to vanishing point". Do Ministers take that seriously?

§ Lord Davies of Oldham
Certainly, my Lords, Ministers take the margin seriously. What has been reflected is that the margins of security which obtained 20 years ago look to have been wider than were necessary for the system to guarantee that heating, light and power were provided to our people. At present, plant operating margins, for example, are considerably lower than they were in the 1980s. However, I put it to the noble Lord that I thought that was the principle under which his administration introduced privatisation of the system.

§ Lord Ezra
My Lords, following on from the question of the noble Lord, Lord Jenkin of Roding, is 198 the Minister aware, and does he agree, that in the period between now and 2020, according to the DTI Energy Paper 68, the closure of coal-fired and nuclear plant could result in a one-third reduction in present generating capacity? In view of the fact that there is a reluctance to introduce sufficient new gas-fired plant, that the contribution from renewables is likely to be limited and that the Government have deferred their decision on new nuclear plant, the question I put to the noble Lord is: how is the generation gap to be filled?

§ Lord Davies of Oldham
My Lords, I am grateful to the noble Lord for projecting the issue two decades further on. It is right that we address the issues of electricity generation in the long term because we need to make long-term plans for it. The noble Lord will recognise that the Government have a commitment to renewables—to increase generation from that source by 10 per cent by 2010 and by 20 per cent by 2020. Of course, if that target looked as if it were not realisable for any reason, it would be necessary to review the process and the programme whereby, for example, nuclear production is being run down. However, he will appreciate that the Government are regularly monitoring not just the immediate needs of this particular year but also projections over the next three decades.

§ Lord Tomlinson
My Lords, does my noble friend agree that the generation of electricity from renewables must have certainty? At the moment, the only certain thing is that it has the status of a letter written to Father Christmas, hoping that by the years 2010 and 2020 we may have a present of that magnitude. In the mean time, there should be, as the noble Lord, Lord Ezra, suggests, no closures of existing power stations, be they coal-fired or nuclear-powered, unless and until the adequate alternatives are in place rather than merely on a plan.

§ Lord Davies of Oldham
My Lords, my noble friend presents a cheering line about the light-hearted approach to renewables. That is not exactly the view of the Danish Government with regard to renewables; they have invested substantially in offshore wind generation. Of course he is absolutely right that any one group of turbines will be subject to intermittency because of the wind factor, but the proposal is that the wind turbines will be spread very widely across the United Kingdom. Most parts of the United Kingdom, for most of the year, have a fairly significant wind factor. It is also the case that we need additional research to ensure that from wind turbines energy can be stored more effectively than at present. However, I assure my noble friend that wind turbine technology is not quite at the primitive and insecure level that he suggests.

§ Lord Peyton of Yeovil
My Lords, is the noble Lord aware that the wind factor is infinitely variable? All Governments should be aware of that.
199 The Minister's reference to some decades ahead was very welcome. But so far as the DTI is concerned, are not those decades a vacuum, altogether lacking in any long-term policy?

§ Lord Davies of Oldham
My Lords, I do not think that that is fair, given that there is a clear series of dates for the decommissioning of individual nuclear power stations, for example. That process could of course be subject to reverse, given that one of the power stations we are talking about will not be decommissioned until 2035. The process can be adjusted against a background of changes in energy supply if necessary.
However, there are very significant developments in potential energy provision to this country—the stupendous investment that is being made across the world. The development of liquid natural gas and of major pipelines which will serve the whole of Europe— and Britain will play its part here—is guaranteed to meet the energy needs of a continent, not just the United Kingdom.

§ Lord Bradshaw
My Lords, if the Minister is giving figures, will he make them quite clear? He said that we had 4.2 gigawatts of new capacity coming on stream in the next three years, or the potential for that. Is that a net figure or does it make an allowance for the decommissioning that will take place?

§ Lord Davies of Oldham
My Lords, the Question was asked about new plants being developed, and I replied on those plants that have obtained planning permission and will be constructed and will therefore be contributing to the grid along the lines of the figures that I mentioned in my initial Answer.

§ Baroness Miller of Hendon
My Lords, would the Minister mind if I reminded him that in his answer to the noble Lord, Lord Tomlinson, he quoted the Denmark experience? Perhaps he has forgotten that at the moment Denmark has stopped all that. I would have thought that that was quite significant.
I bring the Minister back to the first reply that he gave to the noble Lord, Lord Tombs, about new generating capacity. What is likely to be the amount of generating capacity during that same period, if there is decommissioning for the reasons that the noble Lord, Lord Ezra, gave, relating to the closure of nuclear and coal-fired power plants?

§ Lord Davies of Oldham
My Lords, I do not have those precise figures to hand. The reason why I have not is straightforward. I was asked a Question about new plant, in which we would invest and on which money would be spent in this country over the next three years, in terms of the committee's report and surveillance of the availability of energy to meet our needs for generation. That is kept under regular review.
I have sought to indicate to the House that it is of course not the case that Britain relies totally upon self-sufficiency as regards energy. That will certainly not be the case five years from now, because of the reduction 200 of North Sea products. It is against that background that into the equation must come the question of energy sources from elsewhere, to which I referred in my previous answer.

§ Lord Dubs
My Lords, does my noble friend accept that replacing the Magnox stations with new nuclear stations might be a better alternative than extending the life of stations that have pretty well passed their useful life? Does he further accept that all that needs to be set against the background that we shall be increasingly dependent on imported gas from politically volatile regions? Therefore, we do not have the security of supply that we have traditionally had.

§ Lord Davies of Oldham
My Lords, we do not currently have that security of supply in terms of indigenous resources. We certainly cannot foresee, in the fairly near future, anything that obviates the need to import, in exactly the same way as every other country in the European Community will be a net importer of energy. There is no solution to the situation in the way indicated by my noble friend.
As for the question of whether new nuclear power stations would be superior to the old, that is a market decision. It is not the Government who build nuclear power stations; that issue will be decided by the market and whether the generation of nuclear power becomes more economic than it has been in the recent past, which has led to the fact that nuclear-powered electricity has been so expensive.