Renewable Energy Strategy: Electricity Costs (Hansard, 5 May 2004)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, for the period 1990–2010, the average annual cost of the Government's renewable energy strategy, assuming that the targets are met, is estimated to be very approximately £500 million per annum. For the period 1990–2015, the equivalent estimate is £800 million per annum and for the period 1990–2020, it is £1 billion per annum. These figures compare with the current total annual cost of supplying electricity to all consumers in the UK of around £15 billion.
1100 As with all long-term estimates, it must be appreciated that these are very tentative figures. Key areas of uncertainty include future progress in reducing the cost of renewables and the future rate of growth of electricity demand.

§ Lord Tombs
My Lords, I am grateful to the Minister for that helpful reply. I understand the uncertainties that underlie it. Very roughly, because I have not had the time to do the calculations thoroughly, this amounts to around £12 billion over the period. Is the Minister aware that one could meet the total construction costs, not the subsidy, of about 10 gigawatts of nuclear power for the same sum of money? Was serious consideration given to this as an alternative?

§ Lord Sainsbury of Turville
Yes, my Lords. All the options were reviewed when we modelled this. Of course, if we were to build nuclear power it would have implications on the cost side. Again, a very wide range of figures is being given for the cost of nuclear power, not least because the figures are hypothetical, no nuclear power station having been built in this country since 1995.

§ Lord Jenkin of Roding
My Lords, I understand the tentative nature of the figures given by the noble Lord though I have seen higher figures quoted. However, is it not clear that, whatever the cost, it is consumers who are going to pay this subsidy? It is not the Treasury. Ought not that figure, whatever it is, to appear on every consumer's bill so that they know exactly how much they are paying towards the cost of the Government's fixation on wind power as a way of solving our carbon problem?

§ Lord Sainsbury of Turville
My Lords, I think that the noble Lord revealed his starting point on this when he referred to the cost of the Government's position on renewables. Of course, it is the cost difference of getting carbon-free emissions. It is £1 billion in a total of about £15 billion, which is why I gave the other figure. It is an extremely difficult figure to calculate. On the whole, the British public feel that that additional cost per annum is well worth paying to deal with the very difficult problem of climate change.

§ Lord Tomlinson
My Lords, will my noble friend speculate about the cost of not meeting our targets for renewables? Is he satisfied that the Government are doing everything in their power and everything that is necessary to maintain their stated position of keeping the nuclear option open?

§ Lord Sainsbury of Turville
My Lords, I am very happy to give the other figures because the estimates have to be seen in the context of what happens if we do not. Perhaps it is worth quoting the Foresight flood and coastal defences project, which shows that in the most extreme case the cost of flood damage could rise from about £1 billion per year to around £20 billion per year by 2080. These are very large sums, whatever the course of action. It is also worth reminding the House that we currently 1101 have liabilities of approximately £50 billion for the civil decommissioning of nuclear facilities. There is no strategy here that is either simple or very low cost.

§ Lord Ezra
My Lords, will the Minister indicate the extent to which the savings likely to arise from the Government's recently published energy efficiency policy could offset the costs of the renewable energy strategy?

§ Lord Sainsbury of Turville
My Lords, I cannot give the figures now but I am very happy to write to the noble Lord with them. Clearly a significant part of them is what can be achieved by energy efficiency savings, which can be a very considerable figure. I shall write to the noble Lord with the figures and put a copy in the Library of the House.

§ Baroness Miller of Hendon
My Lords, does the Minister agree with the Royal Academy of Engineering that the cost of electricity from renewable sources is more than the cost from every other source of energy, including nuclear, even when the costs of nuclear decommissioning, which the Minister just mentioned, are included?

§ Lord Sainsbury of Turville
My Lords, I am aware of the Royal Academy of Engineering's figures on this matter. As is the case with all figures, they are very different from everyone else's. Compared with other figures that we have, the academy's figures seem to attribute a very low cost to nuclear and a very high cost to renewables, from which I conclude it is ever more important that we set up the UK energy research centre so that we have reliable figures independently produced and agreed which everyone can use for these debates.

§ Lord Tanlaw
My Lords, can the Minister say with some assurance that the renewable energy totals will be met when the Ministry of Defence is still objecting to the erection of wind generators in south-west Scotland, which has arguably some of the best onshore areas for wind power? The noble Lord, Lord Bach, said that that was because of learner pilots. Surely pilots of aeroplanes, civil or military, should be capable of manoeuvring around objects that are fixed on the ground.

§ Lord Sainsbury of Turville
My Lords, I am beginning to realise what fun I have missed by not taking part in the Energy Bill. From reading the debates on that Bill in Hansard, there appeared to be a great deal of discussion about whether people could manoeuvre yachts around offshore turbines and aeroplanes around turbines onshore. All these issues are being dealt with quite sensibly. We are proceeding on quite a good course to achieve our targets by 2010.

§ Lord Winston
My Lords—

Lord Campbell of Croy
My Lords—

§ Baroness Farrington of Ribbleton
My Lords, if both noble Lords are quick, we can hear from both of them.

§ Lord Winston
My Lords, does the Minister agree that not enough has yet been done to engage the British public in the issues that are raised with regard to global warming, the use of proper energy, its conservation and so on?

§ Lord Sainsbury of Turville
My Lords, there has been a considerable amount of debate but it is an issue to which more attention should be given in the next few years because we shall have to make some very big decisions. The more that the public are involved and see what all the issues are in terms of cost, energy security and the environment, the better it will be as regards coming to sensible decisions.

Lord Campbell of Croy
My Lords, is the United Kingdom still on course for meeting the 2010 target?

§ Lord Sainsbury of Turville
My Lords, that, of course, depends on a whole series of actions being taken and on the actions of the investment community. However, there is a reasonable chance that we shall meet that target.