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Renewable Energy - Question for Short Debate

Part of the debate – in the House of Lords at 6:57 pm on 5th June 2019.

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Photo of Lord Henley Lord Henley Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy) 6:57 pm, 5th June 2019

My Lords, I, too, thank the noble Lord, Lord Cameron, for introducing this debate and emphasising that what we in this country should be doing is playing to our strengths. He mentioned that, unlike a lot of other countries, we have an awful lot of tides, just as we have an awful lot of wind, and that we should certainly make use of them. I hope that I will be able to set out what we are doing, what we feel we can support and what the constraints will be in the short time available to me.

I was very pleased that, in the main, everyone—excluding the noble Baroness, Lady Maddock, and the noble Lord, Lord Grantchester—took a relatively positive line on what we were doing. I think that we have a pretty good story to tell in this country. Over the past 30 or 40 years, under a variety of different Governments, we have reduced our emissions. My colleagues and I have said on many occasions that we have reduced them by more than 40% while seeing the economy grow. We want to continue that process.

I make clear in the presence of my noble friend Lord Deben that we will be responding to his committee’s report, with its challenging targets, in due course. My noble friend and other noble Lords would not expect me to presume on my right honourable friend the Secretary of State by responding at this stage. We have been set challenging targets. We will want to make progress towards them. We will want to continue to provide leadership for the world, as mentioned by the noble Lord, Lord Grantchester, the right reverend Prelate and the noble Lord, Lord Giddens, who talked about the failings of Brazil and America to acknowledge that there is any problem at all. Again, I remind the House that we are anxious that we should get the opportunity to host COP26 next year, and support from all sides of the House would create a very positive approach.

Living where we do, we obviously want a diverse electricity system that provides homes and businesses with secure, affordable and clean power. However—we keep coming back to this—we want that power at a cost that is both acceptable and supports continued growth. On many occasions, noble Lords have talked about the fact that costs come down. We have seen that with wind, solar and tidal; I am grateful to the noble Lord, Lord Berkeley, for his comments there.

There is some doubt about whether one will see costs come down in quite the same way for a technology that is not exactly new and, as the noble Lord reminded us, is largely about pumping a lot of concrete and rock into the ground; after all, concrete is not the most carbon-friendly material. One cannot see technology reducing costs there in the same way as it has done for wind and solar. Again, as the noble Lord, Lord Cameron, said, we must play to our strengths; we will do so for wind because we are a very windy spot. To do that, we obviously need to continue to bring down the costs of all forms of low-carbon generation; I am grateful to my noble friend Lady Bloomfield for mentioning how many there are. As the noble Lord, Lord Teverson, said, we have not seen the same cost reduction in areas such as nuclear as we are seeing with solar and wind.

I have some criticism of the noble Baroness, Lady Maddock, for taking a rather negative approach to what the Government are and have been doing. We are investing a great deal of public funds—some £900 million—in innovation, including a further £177 million to reduce further the cost of renewables and up to £100 million in leading-edge carbon capture and storage and industrial innovation. That is to drive down the costs there and, as I said, we have seen remarkable cost reductions over the year. We have seen low-carbon generation rise from 54% in the third quarter of 2017 to a record high of 56% in the third quarter of 2018, due to that increased renewables generation.

It has been a record-breaking year. I will give noble Lords some figures, although I will probably be able to give even better ones in a few weeks’ time. We have gone a whole fortnight without any coal-fired generation, which we aim to get rid of. This is in a country where, some 70 years ago, a Labour politician said:

“This island is made mainly of coal and surrounded by fish”.

Anyway, we are getting rid of the use of coal to generate electricity; as I said, we have just gone another fortnight without using any. Last year, there were nearly 1,800 coal-free hours over 10 weeks in total—so we are making progress.

I will deal with one or two individual issues. Since all noble Lords mentioned Swansea Bay, it is right that I address both that and the programme for six tidal lagoons proposed by Tidal Lagoon Power Ltd. I repeated the Statement made by my right honourable friend in another place on costs. We made it quite clear that the costs of that particular programme did not meet our requirements for value for money. I appreciate that the noble Lord, Lord Giddens, had some queries about that, as did other noble Lords, but we published a summary of our value for money analysis. The figures were clear; even the developer himself conceded that the project required a CFD strike price three times that of onshore wind.

Further, that issue was looked at by both the Welsh Affairs Select Committee and the BEIS Select Committee, which published details of the additional requests from the Swansea Bay developers over and above a 35-year CFD at £92.50 per megawatt hour. It was expensive. That fact was echoed by the National Infrastructure Commission in its national infrastructure assessment, published last July, which stated that,

“tidal lagoon power will remain an expensive technology in the future. The extra benefits which arise from its predictability are not enough to offset its higher capital costs. And it will never be a large-scale solution: an entire fleet of tidal lagoons would only meet up to 10 per cent of current electricity demand in the UK”.

I appreciate that other tidal projects are being looked at. For example, the Mersey and the Solway—in my part of the world—were mentioned. Officials and Ministers in the department have had several meetings with those promoting such things. We will continue to hold meetings and talk to developers. For example, the Solway Firth tidal lagoon project is at much too early a stage of development: to date, the engineering details have not been finalised and the developers have not yet applied for the consents and licences that would be required to develop the site. Obviously, we will continue to look at that project, take an interest and make a decision in due course on whether the project is good.

As the noble Lord, Lord Grantchester, mentioned, it is important to take environmental considerations into account, but there has been no detailed monitoring at this stage. For example, no seabed surveys have been undertaken on the sites; I am thinking in particular of the one in the Solway. So at this stage we must proceed carefully before going further.

Other noble Lords, of which the noble Lord, Lord Cameron, was the first, mentioned the possibility of tidal stream energy. Again, that should be looked at. The Government have provided long-standing and targeted support for the development of both wave and tidal stream energy. Since 2003, we have provided £175 million of innovation funding in the wave and tidal sectors; we have provided almost £80 million of that since 2010.

That has supported many firsts, including the wold’s first megawatt-scale tidal stream turbine, SeaGen, which was deployed in Strangford Lough in 2008. There has been much mention of Orkney, including by the noble Lord, Lord Berkeley, and the noble Baroness, Lady Maddock. I visited Orkney last year and met her colleague, Alistair Carmichael, and saw some projects that are being tried out there, with government money going into them. The world’s first pre-commercial array, the 6 megawatt MeyGen project off Caithness, received £10 million from BEIS innovation funding and is supported under the renewables scheme.

There have been some successful small-scale tidal stream tests over recent years. They are still at an early stage of development but they might be at the point where, as with wind, the price could come down—although I suspect that, for some of the bigger tidal barrages, the prospects are possibly less good. However, it must still be viewed in the context of the falling costs of other forms of low-carbon generation such as offshore wind. At the moment, their costs are five times that of offshore wind. I assure noble Lords that officials, Ministers and my right honourable friend Claire Perry will continue to engage with the sector to better understand its cost-reduction potential.

Finally, I reiterate that we will publish the energy White Paper in the summer, which will build on my right honourable friend’s strategy address in November of last year, setting out four guiding principles for electricity policy and addressing the challenges arising from the radical transformation of the energy system over the coming decades. It will take a long-term view of the energy system, out to 2050, and show just how we can deliver our climate change goals and the aims of the industrial strategy. At that point, or sooner, I hope that my right honourable friend will be able to respond to my noble friend Lord Deben and his climate change committee report.

I appreciate that my time is up. I hope that I have given a partially positive view of what the Government can do. There will be more we can do and further developments in all forms of renewable energy. Tidal may be part of that, and all forms of tidal—whether by barrage or otherwise—will be looked at.