Energy Security and Net Zero Committee
Oral evidence: Keeping the power on: our future energy technology mix, HC 116
Wednesday 20 March 2024
Ordered by the House of Commons to be published on 20 March 2024.
Members present: Angus Brendan MacNeil (Chair); Vicky Ford; Barry Gardiner; Mark Garnier; Mark Pawsey; Lloyd Russell-Moyle; Alexander Stafford; Derek Thomas.
Questions 509 - 613
Witnesses
I: Andrew Bowie MP, Parliamentary Under-Secretary of State (Minister for Nuclear and Renewables), Department for Energy Security and Net Zero; and Dan Osgood, Director of Energy Markets and Analysis, Department for Energy Security and Net Zero.
Written evidence from witnesses:
– Department for Energy Security and Net Zero
Witnesses: Andrew Bowie MP and Dan Osgood.
Q509 Chair: Good morning. This morning, in our final session on keeping the power on, we welcome the Parliamentary Under-Secretary of State, the Minister for Nuclear and Renewables, at the Department for Energy Security and Net Zero, Andrew Bowie. Minister, can you introduce who is with you as well?
Andrew Bowie: Yes, this is Dan Osgood from the Department for Energy Security and Net Zero, but I will let Dan introduce himself.
Dan Osgood: I am the director for energy markets and analysis at the Department.
Q510 Chair: Excellent, thank you. Just before I kick off, there is something that you probably know from ministerial questions has caused a lot of interest. When do the Government plan to open the barriers to community energy schemes, given that the Government have been talking about this since forever? When do you plan to open a consultation on this, I should say?
Andrew Bowie: We announced a consultation and, indeed, £10 million to fund community energy schemes through the Energy Act, and in the passage of that Act I engaged quite extensively with groups and with colleagues. I understand that the publication of that consultation is imminent.
Q511 Chair: Imminent is weeks, days, hours?
Andrew Bowie: Imminent is imminent, Chair. It is incoming.
Q512 Chair: I feel like we are in an episode of “Yes Minister” here, Mr Bowie. We are at imminent, so we can all decide what Government means by imminent.
Andrew Bowie: I should qualify that by saying that the community energy projects have the full support of the Government and we want to see them succeed. Indeed, it is one of the priorities of the Secretary of State to ensure that we get this right, which is why such time is being taken over the formulation of that consultation. But it is on its way, I promise you that.
Chair: Thank you for that. I think that would be encouragement for a lot, although that last comment is just—I think we are looking for sooner rather than later in this “imminent”.
Andrew Bowie: Understood—as am I.
Q513 Chair: Okay, thank you. Is the Government’s intention to encourage the construction of new gas stations a concession that this Government’s decarbonisation plans are off track?
Andrew Bowie: Absolutely not. In fact, nothing could be further from the truth. I am very proud of what we have done regarding decarbonisation so far. We are the first country in the G7, the first country in the G20, to halve our emissions. We have done that at the same time as growing the economy by nearly 70% from 1990. I have some of the stats in front of me here. Record generation in 2020—
Chair: I have the feeling it is going to be a stats morning.
Andrew Bowie: —of renewable capacity installed since 2022, 40 GW of renewable capacity connected since 2010, and the largest auction for onshore wind to date announced just last week; that was £800 million.
If you look at what we are doing in terms of transition, we are leading the world. When we go to COP and I represent this country in various forums across the world, other countries look to us in awe at what we have managed to achieve.
Q514 Chair: Minister, I do enjoy a party political broadcast—I am one of the few viewers that do—or a Government political broadcast, but what was your alternative consideration to gas? Can you show us the working for that?
Andrew Bowie: It is incredibly important. The subject of this inquiry is keeping the power on. We have a responsibility to the British people to do just that and, of course, tough decisions must be made in that regard. We all recognise that towards the end of this decade there could be a capacity gap, so to ensure that the lights stay on, people’s homes are heated and businesses can continue to flourish, we need to do what we need to do to keep the power on in this country, and that means installing and ensuring that we have new gas facilities.
Q515 Chair: Is there anything else apart from gas, or is it just gas?
Andrew Bowie: Of course, we considered—we are investing in a range of technologies right now.
Q516 Chair: What could have been the alternative to gas? If the gas was to suddenly end tomorrow, what would you have done instead of gas?
Andrew Bowie: But gas is not going to end tomorrow. There will be significant amounts—
Q517 Chair: No, but if it had—I am asking about your alternative. I am just postulating that so that I can get to your alternative. What would your alternative have been?
Andrew Bowie: When it comes to value for money, reliability of supply and ensuring that the lights stay on in this country, which is one of the key jobs of the Department—it is the Department not just for Net Zero, but for Energy Security—the decision was taken that that was where we are headed.
Q518 Chair: Maybe I am being presumptuous. Was there an alternative considered to gas? I have asked you for the alternative. I have not heard the alternative yet, so now I will go back and ask was there an alternative considered.
Andrew Bowie: This decision was taken because we have a responsibility to the British people to keep the lights on in this country, and that is what we are going to do, which is why the Secretary of State took the tough decision that she did last week. Dan Osgood has been involved in the formulation of that policy, so maybe Dan would like to say a bit more about how we came to the decision that we did.
Q519 Chair: Give me the alternatives, Dan. This is really what I am pushing at and I think that is what viewers and people who are paying attention to this would like to know. What alternative was considered?
Dan Osgood: We looked at the likely electricity demand projections over the next 10 or 15 years. We looked at the capacity we already have on the system, a lot of which is unabated gas at the moment. We have 35 GW of unabated gas generation on the system. We commissioned external consultants to do a deep dive into all those existing plants and understand when they might be likely to retire, and what that showed was perhaps 10 to 15 GW of the existing gas generation might retire.
Q520 Chair: How many gigawatts are you planning to build?
Dan Osgood: If I can continue with numbers, there are 35 GW of existing gas on the system at the moment and 10 to 15 GW of that gas might retire up to 2025. So we looked at the other technologies that are available, particularly technologies that can provide a similar system function, so power CCUS, hydrogen to power. What that showed is the development time, the infrastructure lead times, for some of those technologies is seven to 10 years away. That is not just us saying that; the Committee on Climate Change is saying that as well. The only technology that is available at the moment, in the timescales that we are talking about, looking at the late 2020s to early 2030s, is unabated gas, whether that is building new unabated gas to replace the existing power plants as they come offline or investing to extend the lifetime of that existing gas. That is what we looked at.
Q521 Chair: Do you agree that by 2035, it should be less than 2% of the UK’s electricity?
Dan Osgood: I think the Committee on Climate Change projections are for unabated gas to be 2% of our generation by 2035, but the projections that the Department has published in the past suggests that it is in the 1% to 2% range. The announcement last week is entirely consistent with those.
Q522 Chair: How many gigawatts are you aiming to build?
Dan Osgood: As the Minister set out, we expect that it could be up to 5 GW of investment in new and refurbishing existing gas generation.
Andrew Bowie: It should also be recognised that that will be down from 38% of the UK’s energy supply by gas today, which is a significant reduction.
Q523 Chair: You are seeing a big drop in gas?
Andrew Bowie: Absolutely, yes.
Q524 Chair: Therefore, dependence on imported gas will not be as big in future, do you think?
Andrew Bowie: Yes, which is one of the reasons that we are taking the action that we are, not just to drive towards our net zero targets and decarbonise our energy system, but to improve our energy security and independence.
Q525 Chair: Finally, to avoid asset stranding, should it be mandatory for new gas plants to be built with CCS and hydrogen firing installed up front?
Andrew Bowie: Yes, all new gas plants should be net zero-ready. The Secretary of State has set that out quite clearly.
Q526 Mark Garnier: Following on from that, just doing the maths, you have 35 GW of existing gas capacity, you are losing 15 GW and then you are going to refurbish or renew 5 GW. Is that right?
Andrew Bowie: Yes, roughly.
Q527 Mark Garnier: So you end up with 20 GW of capacity or thereabouts?
Dan Osgood: Again, looking at the numbers that other organisations put out there, the system operator has projections that suggest we might need around 25 GW to 27 GW of unabated gas on the system by 2035; the National Infrastructure Commission I think 22 GW to 28 GW. Again, what we said last week is entirely consistent with those numbers and with other forecasts from other organisations.
Q528 Mark Garnier: I follow this on one of these WhatsApp things that you can get, and currently we are using 15.8 GW of gas, which is 43% of our demand at 36.7 GW. It rarely goes above 15 or 20 GW. You could almost lose that 15 GW and not have to renew anymore.
Andrew Bowie: But we have to ensure that the capacity is there, Mark. The coldest days in this country tend to be the days when the wind is not blowing and the sun is not shining, and there needs to be the ability for us to continue to generate power in those circumstances.
Q529 Mark Garnier: Today is a good example, because you have 3.4 GW of wind and 3.3 of—so nuclear is pretty steady at around 3.7 GW.
Andrew Bowie: Yes. Of course, we want to increase that to 24 GW by 2050.
Q530 Mark Garnier: This is exactly what I want to come on to. You have been looking at developing bespoke support arrangements for a suite of flexible low carbon technologies. We are looking at CCS, hydrogen power stations, hydrogen storage, long-duration energy storage. By 2035, how much of this is going to be available?
Andrew Bowie: We do not have set targets when it comes to that. We are working on investing in a range of technologies, including, as you have said, CCS and hydrogen storage capacity. By supporting two projects in the first allocation round, we fully expect them to be up and running by 2035, but that is as part of a wider energy mix.
Q531 Mark Garnier: Yes, but none the less, there are an awful lot of people who require some quite clear definition of what is going to happen in the future. How long does it take to build a gas power station, for example—10 years? A nuclear power station is 15 or 20 years. If we are looking out to 2035, it is quite tricky.
Andrew Bowie: I completely understand that and the need to give investors certainty, and to give the markets and, indeed, the British people the certainty that we are taking the right decisions. I understand why they need certainty and stability. Through Track-1 and Track-2 CCS projects, by developing our hydrogen plan, and through all the work that we are doing on those technologies, as well as all the others—including the nuclear technology that I am responsible for—I think we are setting out a clear direction of travel for the UK.
I understand very much why more certainty and clarity is desired. That is completely understood and we are working to deliver that, but these things take time. For example, I know that there are some questions around why we set out a target for future gigawatt for nuclear but we have not for some other technologies. The reason is that this is an established technology and there are many variables when we move towards talking about CCS and hydrogen that have not been proven at scale. We are, as I said, supporting two of the projects through Track-1 and moving forward.
Q532 Mark Garnier: I wanted to ask about nuclear. You said 24 GW is the commitment for the Government, and that is three power stations. We have one that we are going to hear about and be committed to before the end of this Parliament—and who knows when it could be? Maybe October or maybe even this week if we go early. There will then be two more in the next Parliament, which then requires the next Government—which obviously you and I will be hoping for, but we must be realistic. Again, there is still quite a lot of uncertainty. These things take up a huge amount of time.
One of the things that we have heard during the course of these inquiries is that we can see a nuclear power station being held up for a year while the local planning authority is arguing the toss about where to dump silt from the cooling stations of that nuclear power station. This can take years and years. Can we wait as long as the next Parliament to have two thirds of the production being decided on?
Andrew Bowie: We are developing Hinkley right now, as you say. We are moving forward with Sizewell—the capital raise process is under way right now. We moved the development consenting order for Sizewell in January and, yes, we are going to be moving towards a decision on a third gigawatt scale reactor in the next Parliament. That is certainly the ambition.
Above and beyond that, we have a small modular reactor programme that we are developing. We are running the down selection competition right now and we have six technologies from six vendors across the world competing to win the Great British Nuclear SMR down selection for investment in this country. So there is a combination of small modular gigawatt scale—and we are anticipating advanced modular reactors that do not need the Government support to go through the Great British Nuclear process to also be a part of that 24 GW mix. That would be roughly 25% of the UK’s energy demand by 2050, we anticipate.
Q533 Mark Garnier: I have only about 30 seconds left, but can I ask a quick question about alternatives? One of the things that has not been coming up in any of this, apart from one occasion, was local heat distribution networks. This Committee went to Copenhagen to have a look at that. I think 99% of buildings there are now heated by local distribution networks. I have not seen anything from the Government about any of this. Is this something that the Government are looking at?
Andrew Bowie: Actively looking at, and I would be happy to write to you in more detail, given the time that we have, on what we are doing on heat networks, but it is something we are very supportive of and taking action on.
Q534 Barry Gardiner: Remind me when the Xlinks subsea cable from Morocco is coming in?
Andrew Bowie: I have met with that company and I am very interested in what they are proposing.
Q535 Barry Gardiner: It comes in at 2030 and it would then supply 8% of UK electricity—is that correct?
Andrew Bowie: Yes, I think roughly.
Q536 Barry Gardiner: Why is that not factored in your 10 to 15 replacement that you need?
Andrew Bowie: Because although I am very supportive of what Xlinks is doing, it has not been given final approval yet. To build that into our projections when that project has not been given final approval either by our Government or, indeed, by the other Governments that have to be aligned—
Q537 Barry Gardiner: A lot of this has not been given final approval yet, has it?
Andrew Bowie: Yes, but we can make projections.
Q538 Barry Gardiner: Yet you are talking about building out new gas-fired power stations that have not been given final approval.
Andrew Bowie: Yes, they are fully within our gift, Mr Gardiner. For Xlinks to proceed, it is in the gift of many Governments, as you know—from Morocco to Spain, to Portugal, to France and, indeed, to our own—to ensure that that project gets speedy delivery and is able to come on to the grid. It is a project that I am very supportive of and I want to see succeed.
Chair: Okay. Lloyd Russell-Moyle, we have a minute for you.
Q539 Lloyd Russell-Moyle: For the new gas you are saying that it will all be carbon capture and storage?
Andrew Bowie: We want all new gas stations to be net zero-ready and yes, of course, that means ultimately being carbon capture and storage.
Q540 Lloyd Russell-Moyle: But you dismissed the other options such as hydrogen because you said it was not proven technology.
Andrew Bowie: It is not proven at scale just yet. It is not that we dismiss it, but we cannot set a specific target.
Lloyd Russell-Moyle: You dismissed it for this particular set of plants.
Andrew Bowie: Yes.
Q541 Lloyd Russell-Moyle: Equally, just a second ago, you acknowledged quite rightly that carbon capture and storage is equally unproven at scale and is likely to take the same amount of time to prove at scale. So why have you supported gas CCS in this particular option but not other options, when they were all, in your own words, unproven technologies at mass scale?
Andrew Bowie: As you know, Lloyd, we have developed the Track-1 and Track-2 for carbon capture and storage so we know that these hubs will be up and running at the time that we need the new gas to come online.
Q542 Lloyd Russell-Moyle: The plants will be up and running but the CCS commitment is probably a wish and a hope.
Andrew Bowie: It is not a wish and a hope. We are absolutely committed to it, but it is impossible for us right now to set a target of gigawatt on something that has not been proven at the scale it would need to be. We have set our ambition on CCS to Track-1 and Track-2 and we are confident that we will deliver, but we cannot at this point, in 2024, set a target for gigawatt, given the unknowables when it comes to that technology.
Q543 Derek Thomas: Thank you for your time today. What is your Department doing at present to prepare for future energy security issues?
Andrew Bowie: We are investing a lot of time on considering energy security issues. As you can see from the name of the Department for Energy Security and Net Zero, it is the reason that we were set up—so everything from issuing new licences for North sea oil and gas production, to reducing our reliance on overseas, to developing the new technologies such as nuclear, and new renewables to become more energy-independent. All that is being done to ensure that we become more energy secure.
What informs us on that journey is the annual energy security report that we get submitted to us by the ESO, soon to be the NESO, and obviously capacities for generation are developed through the capacity market scheme.
Q544 Derek Thomas: That is what I wanted to pick up on—where the responsibility lies. As regards security of supply, how is it split between the Department, Ofgem, NESO, which you have just referred to, and the centre of Government? It is quite complex.
Andrew Bowie: I would not say it was complex. They are shared responsibilities. We all have responsibility to ensure the security of supply and the energy independence or increased energy independence of the United Kingdom. I work very closely with colleagues at Ofgem and, as it is right now, the ESO to ensure that we achieve our aims and, as this report is looking into, keep the power on.
Q545 Derek Thomas: One thing that frustrates us all is the lead time to get infrastructure built. It drives us all crackers. Do you think your Department looks far enough ahead at what infrastructure is needed, given the time it takes to get shovels in the ground?
Andrew Bowie: Absolutely. I know there is a huge frustration, not just from this Committee but across industry and the country at large, at the long lead times and connection times and the lack of action when it comes to developments or improving and modernising the grid. That is why we commissioned Nick Winser to compile a report and give Government recommendations on how we halve connection times, so that we can build the grid infrastructure that we need. We responded to that with the transmission acceleration action plan. That was in November last year. Essentially, Nick Winser gave us 10 recommendations. We adopted all 10 recommendations wholesale and we are now implementing those recommendations.
There is also work going on between the ESO and Ofgem to look at the existing queuing system for projects. There are lots of zombie projects in there that are holding up legitimate projects that will connect to the grid, so it is about how we can look at that, review it and remove those projects that have no prospect of connecting and are holding other projects up. There is a host of activities ongoing right now that we are engaging in to ensure that we can get to the point we need, which is to build the infrastructure required to decarbonise and move our transmission network into the 21st century.
Q546 Derek Thomas: We just had a long discussion about where gas fits in and why we need to secure supply. The Government set up an energy taskforce to look at how we reduce energy demand—I think it was called the energy efficiency taskforce. That was then scrapped. Have the Government given up on looking at how we reduce energy demand to just concentrate on ensuring there is enough supply?
Andrew Bowie: Absolutely not. We are very focused on looking at reduced demand—you can look at our work on insulation, for example, at what we are doing in encouraging people to take simple steps to reduce their own personal demand, and at how we are working with business to ensure that they also take steps to reduce their energy use. The Government are absolutely committed to that. We saw just a year and a bit ago Grant Shapps’ campaign with the elf on the shelf. That, of course, remains very important to us, but ensuring that we have the requisite supply to keep the lights on in this country is our overarching ambition.
Q547 Derek Thomas: I understand the reasons behind why the energy taskforce was scrapped, but it was a very positive intention. Is there any intention in the Department now to look at how that can be recommissioned or set up differently?
Andrew Bowie: To the best of my knowledge, no, but I will take that away and ask the question within the Department and get back to you.
Chair: Thank you, Mr Thomas—very efficient indeed.
Q548 Mark Pawsey: Minister, you have spoken about not knowing which technologies are going to be the answer in the future. You said the technology is not yet proven, and there are lots of technologies awaiting final approval. But where is the plan? The Government have promised to commission the national energy system operator to produce a strategic spatial energy plan, but it is a moving target. When are we ever going to be in a state to say that we know enough about the various technologies to have a plan, which would mean that decisions such as the one we learned about on gas only the other day would not come as such a shock to people?
Andrew Bowie: I hear you, Mark, and I completely sympathise. We are the first Department to commit to a strategic spatial energy plan. I think that would be greatly to the benefit of industry and to the country at large, to give that sense of certainty and that direction of travel. We aim to commission the ESO to begin work on this in the spring and we also expect—
Mark Pawsey: So that work would start next year?
Andrew Bowie: Work would start next year, yes.
Q549 Mark Pawsey: How long would that take and when would it be ready to be delivered? Crucially, who is responsible for making sure that it is adhered to?
Andrew Bowie: The centralised strategic network plan will be published and actions taken from that in summer 2026. That is our aim. Who is responsible for that would be the NESO, which was established as the FSO through the Energy Act.
Q550 Mark Pawsey: Are you confident that we will know enough about these emerging technologies to be able to set out a programme that can be adhered to?
Andrew Bowie: Yes. As you said, it is a moveable feast. There are improvements, developments and new technologies coming on stream all the time. If I look at the developments in wave and tidal, for example, that will obviously play a larger part in our energy mix moving forward than it plays now. I do think we will have enough of an understanding of what we need from what technology to enable us to develop that plan, which will allow investors—this is key to succeeding—to come to the UK. We are already the fourth best country in the world when it comes to investability in new energy projects. We want to move up that league table and this plan will help us to do that.
Chair: Thank you very much—again, very efficient.
Q551 Vicky Ford: We know that more home heating needs to be electrified, both from the energy security and the net zero points of view. How are you going to ensure that that new electricity demand is as flexible as possible?
Andrew Bowie: By investing in the range of technologies that we are. That is why we have taken the decisions that we have to move to Track-1 and Track-2 with CCUS. That is why we have taken a decision to invest in nuclear. That is why we have developed our hydrogen plan. That is why we are investing as much as we are in renewables, be that solar or tidal, and looking afresh and investing and ringfencing in the last CfD round in geothermal. We need a wide range of energies, as well as building up the storage capacity in this country—be that battery storage or pump storage. Through the investment in all these technologies and the development that we are making across the piece, we believe that we will have the flexibility required to support this country.
Q552 Vicky Ford: You have just given us a long list of technologies and the one that you did not mention was wind.
Andrew Bowie: Yes.
Vicky Ford: Okay. Some of those technologies are very new and unproven, including carbon capture and storage and some of the hydrogen technologies, but it is great that we are working on them. On wind, which is the most proven, is it possible to achieve a net zero electricity system by 2035 without significant amounts of onshore wind?
Andrew Bowie: We have onshore wind right now—we have 15.5 GW of onshore wind. When it comes to wind overall—
Q553 Chair: Is that in Scotland or England?
Andrew Bowie: A significant amount of that is in Scotland, yes, because of the different planning and consenting regimes when it comes to onshore wind north and south of the border.
When it comes to wind overall, Vicky is right: it plays an incredibly important role in our energy mix, and we are very proud that we have the first to fifth largest offshore wind farms in the world generating power for the UK right now.
Vicky Ford: Onshore wind.
Andrew Bowie: We are investing in onshore and offshore. Where there is community support and buy-in in England, those projects can proceed. As I said, there is a different planning and consenting regime in Scotland, so right now a significant amount of that onshore wind is being developed in Scotland. As a wider part of the mix, we are on track to meet our 2035 objectives.
Q554 Vicky Ford: The Government’s new policy about onshore wind, with community consent—and I completely understand that community consent is important. Actually, the “with community consent” is needed, for example, for the grid to take the electricity where it goes. On onshore wind, why are the Government not yet committed to setting a target for that and should they?
Andrew Bowie: We are committed to investing in every conceivable technology that will decarbonise, reduce our reliance on fossil fuels, and improve our energy security and independence. I gave you a long list of what we were doing there, including what we are doing in offshore wind. We have made it easier for communities that want to see onshore wind developed in those communities to do that in England, and in Scotland there is onshore wind proceeding apace, which plays into the overall energy field in the UK.
However, it is really important—you mentioned community consent—that communities across this country feel like they are being taken on the journey and are being worked with and are not having things done to them. If that happens too much, we will see a rise in the scepticism that we already see across the country when it comes to our overarching net zero objectives. Ensuring that communities are taken with us and can have that conversation is vitally important.
Q555 Vicky Ford: I appreciate that the change in policy to allow onshore wind in England with community consent is quite new. Are you already working with certain communities to try to deliver some of the first projects—in which case, where? And if not, when do you expect to see some of those first projects delivered?
Andrew Bowie: It is a commercial decision for the companies involved to determine where those projects should be, and they do have set guidelines as to how they are able to deliver those projects. We have made it easier for those communities that want to see onshore wind being built in them, and we stand ready to assist those companies and communities to deliver those projects where they are wanted.
Q556 Vicky Ford: How many companies are currently talking to local communities about those projects?
Andrew Bowie: I do not have that information to hand. That would be commercially confidential.
Q557 Vicky Ford: I am sure that you could provide us without necessarily giving examples—
Andrew Bowie: Through the next auction round, I think it will become quite apparent the number of interested parties.
Q558 Vicky Ford: I am sure it would be very helpful, Chair, if the Minister would write to the Committee with the numbers of projects that are currently in discussion.
Andrew Bowie: If it is possible and not breaching any confidentiality agreements, then I would be happy to do that.
Q559 Vicky Ford: I think that would be very helpful, because there is some suggestion that none of these projects have started discussions. If that is not the case, let us show that.
What technologies are you expecting to play a greater role after 2050? We have heard of projects that are so far away, but what is the vision for that?
Andrew Bowie: It is difficult to say. For up to 2050, we have set out our ambitions; for example, we want to see 70 GW of solar on the grid by 2035. Solar, wind, tidal, hydrogen and nuclear will all play a part in generating power post-2050. I think this is one of the greatest jobs in government because, on a daily basis, you see new technologies pass across your desk and developments being made in nascent technologies, such as tidal, that will play a larger role than they do at the moment in generating power for the UK. However, it does make it a near impossibility to give a qualified assessment of how power will be generated post-2050, other than to say that everything we are investing in right now will play a significant role post that date.
Q560 Vicky Ford: We have been told that the planning and consenting system for energy infrastructure is very short-staffed at the moment. Is that true, and in which case, what are you doing to fix it?
Andrew Bowie: We need to see what we can do as central Government to support those at the various levels of the planning and consenting process. For example, in local authorities and even going all the way down to parish councils, which are the first rung on the ladder when it comes to the planning and consenting regime, we are doing a lot of work alongside DLUHC to review the planning and consenting process to make it easier to build energy infrastructure, while at the same time recognising the huge community concerns that are evident across some parts of this country when it comes to building that infrastructure. Staffing up those offices in local authorities across the country is a priority and we are looking at how we can do that. It may be through the community benefits package that the Chancellor unveiled at the autumn statement. It could be through some other means, but it is recognised and it is a problem.
Q561 Vicky Ford: Very briefly, we had the most wonderful visit to the community hydrogen project in Scotland. I would like to say—I hope on behalf of all the Committee members who went—that it is a really interesting project. It was very good to see how the local community had been brought in alongside that. Those community projects, I thought and I think we all felt, are very beneficial.
Andrew Bowie: This is in Fife—I completely agree. The way they have gone about that project is an exemplar to other companies who are seeking to develop new technologies, develop energy infrastructure, or invest in parts of the country that are not used to the investment that they are seeing right now, in terms of how to engage with communities and take them on that journey. It is something that I do not think happens enough at present and is certainly something that we are seeking to encourage. We should look to the hydrogen project in Fife as an example of what to follow.
Q562 Chair: I have a quick one before I turn to Barry Gardiner. Is there a problem with the configuration of wind in that the hiatus or the pause that came into the construction in England leaves problems with transmission? To reach net zero for the UK and effectively England by 2035, there is going to be significant demand or need for onshore wind in England—yes?
Andrew Bowie: Chair, as I said, we have changed the system—
Q563 Chair: How many turbines were built in England in 2022? Two turbines.
Andrew Bowie: Yes, okay. I do not share the concern that we are not going to reach our 2035 objective as it stands right now, given everything that we are investing in and given the incredible pace with which we are building these—
Q564 Chair: I have faced Ministers from the former DECC who told me that the smart meter roll-out was going to happen in about 2017 or 2018. Those Ministers that were in place did not take any responsibility. The Department has gone, and when a Minister tells me that he is quite confident of something in 10 years’ time, you will forgive me for my pinch of salt when I hear it.
Andrew Bowie: If you would let me finish my point, it is incredibly important that where we do build these new technologies, where we are building up—
Q565 Chair: My question about onshore wind in England, do you think it is important—
Andrew Bowie: For the communities that want to see onshore wind being built in that community, it is now easier for that to happen. It is easier for those companies to develop what we need to onshore.
Q566 Chair: Do you think onshore wind in England is important for the net zero targets in England?
Andrew Bowie: I think all of what we are investing in right now, Chair, is important—offshore wind, onshore wind, nuclear, tidal, wave, geothermal, hydrogen. All of that is vitally important to reaching our objectives for 2035 and our ultimate objective for 2050.
Chair: I can see where that is going. Lloyd has time for a quick question before Barry Gardiner.
Q567 Lloyd Russell-Moyle: You have set targets for the amount of gas that you want in the medium term. You have just discussed the targets of the new gas. You said it was a proven technology and that is why you wanted to do that. Why are you unable to set targets for onshore wind when it is a proven technology? You do not put the caveat of community buy-in for horrible gas power stations next to their houses, so why do you put an additional caveat for wind? This is additional, despite it being much nicer to live next door to.
Barry Gardiner: It is political.
Andrew Bowie: I take issue with that, Barry. I am going to have to correct you. We do not have a target for gas. It is our expectation that that is the amount of gas that is going to be required.
Lloyd Russell-Moyle: Why do you not have an expectation on onshore wind?
Andrew Bowie: We do have an expectation of what we are going to need for onshore wind and that is why we are investing in onshore wind. That is why we have 15.5 GW of onshore wind on the grid right now.
Q568 Lloyd Russell-Moyle: You have a gigawatt expectation for gas. What is your gigawatt expectation for onshore wind? It is easy—come on.
Andrew Bowie: We have an expectation that across the piece we can reach our 2035 objectives—
Lloyd Russell-Moyle: You do not have anything and you have not done the work. That is fine.
Chair: That is fine. Barry Gardiner, thank you.
Q569 Barry Gardiner: The subsidy to Drax during the period 2012 to 2027—just so we agree the figure—is £11 billion. Is that correct?
Andrew Bowie: Yes.
Q570 Barry Gardiner: I am sure that you hate public money being spent recklessly or wastefully, and you will know that your own report, the Task and Finish Group report, found that the top issue affecting whether BECCS can deliver net removal of CO2 is the integrity of the biomass supply chain.
You will also recall the National Audit Office’s report and its conclusion, which was that “in our view the lack of an evaluation of how effective”—the Government’s monitoring arrangements for biomass—“have been, particularly given the long supply chains involved, means the government cannot demonstrate that its current arrangements are adequate to give it confidence industry is meeting sustainability standards.”
By my basic logic, putting all that together means that we are spending £11 billion subsidising a technology that we are not monitoring the delivery of carefully enough to ascertain whether it is meeting our decarbonisation and sustainability objectives. Is that also the logic that you would apply to the situation?
Andrew Bowie: No. We are supporting our technology to ensure that the electricity system that we have in the UK is reliable and is dependable and keeps the lights on in this country.
Barry Gardiner: So—
Andrew Bowie: Mr Gardiner, if I could finish, the Government only support—
Chair: I am going to let the Minister respond.
Andrew Bowie: The Government only supports sustainable biomass in generators and the NAO report found that there were no sustainability breaches whatsoever. We are continuing with our policy of supporting technologies that ensure that power is delivered effectively across the United Kingdom while ensuring that only sustainable biomass is used in that process, and we have absolute confidence that that is the case right now.
Q571 Barry Gardiner: I cannot see how you can have absolute confidence that what is happening is sustainable, when the National Audit Office has said that there is no evaluation of how effective you have been in monitoring supply chains, particularly about the confidence in meeting the sustainability standards. For you to sit there and tell me that we are supporting only sustainable biomass when the National Audit Office is telling you, reporting to Government, that you have no way of knowing that it is sustainable, I find absolutely perverse.
Andrew Bowie: The National Audit Office report found that there were no breaches in terms of sustainability requirements.
Q572 Barry Gardiner: There can’t be if you don’t monitor it properly.
Andrew Bowie: They are monitored, Mr Gardiner—please calm down. They are monitored and the Government have been quite clear we would not be supporting these companies generating biomass if it was not sustainably sourced biomass that they were using. That is why we are continuing to support and we have absolutely no evidence either as a Department or through the National Audit Office that that is not the case.
Q573 Barry Gardiner: You have no evidence at all?
Andrew Bowie: No.
Q574 Barry Gardiner: You have not seen, for example, the “Panorama” report or the Canadian report? You have not watched any of those or had any qualms—
Andrew Bowie: We obviously continue to monitor the situation, and where there are issues raised, we investigate them, but thus far—
Q575 Barry Gardiner: But not adequately monitor it, according to the National Audit Office.
Andrew Bowie: They also found that there was no evidence of any sustainability breaches.
Q576 Barry Gardiner: Because you have not adequately monitored it, Minister. Let’s not go round in that circle again.
Andrew Bowie: I am happy to go round in circles because as it stands right now, the Government are quite clear, I am quite clear, that my Department is monitoring and only supporting those who are sustainably sourcing their biomass.
Q577 Barry Gardiner: If the police force said to you that they have no evidence of this crime and you found that no detective had gone out there and looked for any evidence, would you not think that the police force was not doing its job properly?
Andrew Bowie: The idea that we are not monitoring is for the birds, Mr Gardiner. You know that. I am very confident in our monitoring procedures and, as I said, there is no evidence—
Q578 Barry Gardiner: You cannot be confident in the monitoring procedures, Minister, if the National Audit Office is telling you that they are inadequate to ensure that it is sustainable.
Andrew Bowie: We disagree with the National Audit Office on that point.
Q579 Barry Gardiner: Ah, okay. Now we are getting somewhere. Thank you, Minister. So actually, the National Audit Office is wrong. You think that your monitoring is absolutely fine.
Andrew Bowie: Yes.
Q580 Barry Gardiner: Great. Okay. Well, at least we have a response and we know where we stand now. Thank you very much.
Let us turn to small biomass power stations. The Government are proposing to let the subsidies lapse in 2027. We have heard from some of those small biomass power stations. They say if current Government policy prevails and ROCs end in 2027 with no replacement revenue support mechanism, potentially more than 50 biomass plants will have to shut down between 2027 and the early 2030s, with the removal from the grid of up to 2.8 GW. Does that give you any cause for concern?
Andrew Bowie: We look at all these things in the round. The situation, however, is that the view has been taken, which I agree with, that the renewables obligation no longer offers value for money. It has been running for 20 years and we will be looking at other options to support technologies across the United Kingdom. As it stands right now, the renewables obligation will be coming to an end. It does not offer value for money for people in the UK. I understand the concern around this. We will continue to investigate and look at what we can do to support not just small-scale biomass, but other technologies.
Q581 Barry Gardiner: There may be a new subsidy regime?
Andrew Bowie: I am not committing to anything right now, but, of course, we are looking at all the options to ensure that we continue to generate the power that we need.
Chair: Thank you, Mr “Columbo” Gardiner. We are very impressed. Vicky Ford, do you want a supplementary in this area or are you happy? Has everything been aired properly?
Q582 Vicky Ford: When Drax came to see us, they tried to explain that you could cut down one great big tree and plant a little tiny sapling and that would all be carbon neutral. Do you agree that that is absolute rot? Sorry for the language.
Chair: “Rot” is a permissible word in the Committee.
Andrew Bowie: I have not seen nor read Drax’s evidence, so I would not like to comment.
Barry Gardiner: He has not monitored it properly, Vicky.
Q583 Vicky Ford: Could I strongly advise that the Minister should read the evidence that is given to this Committee, and that if the Minister treats this Committee seriously, as they should, they or their staff should do this Committee the courtesy of reading the evidence that has been given by previous witnesses before coming to the Committee?
Andrew Bowie: I do read the evidence from previous Committees, but I have not read that specific session in detail enough to qualify your comment that what they, as in your words, were saying was rot.
Q584 Vicky Ford: They made that comment a number of times and I asked them to stop making that comment because clearly cutting down a mature tree for a small one—if you were purely burning wood that had fallen from trees, that was making fire breaks, it was trying to reduce forest fires, that might be a good way of being carbon neutral. Does the Minister agree that there must be much better monitoring of our and the world’s forests to ensure that the UK is not involved in deforestation at scale?
Andrew Bowie: The UK has led the way when it comes to combating deforestation but, of course, there are always improvements that can be made and we are working with international partners to ensure that we do make those improvements.
Chair: Our “Columbo” audition wants another three seconds.
Q585 Barry Gardiner: Just to remind you, Minister, as we always used to remind Ministers on the Public Accounts Committee, the Public Accounts Committee reports are agreed reports with the permanent secretary. Given that you have now stated publicly that you disagree with the National Audit Office report, I trust that you will bottom that out with your permanent secretary and write to us about how you resolved that disagreement.
Andrew Bowie: I would be very happy to write to the Member at any time, but can I just qualify what I said? We disagreed with the supposition that the monitoring was not adequate. Of course, we do not disagree with the report in total, which found that there were no breaches of sustainability.
Q586 Lloyd Russell-Moyle: Do you expect consumer energy bills to become more or less expensive over the next decade and into the long term?
Andrew Bowie: We expect them to come down. In fact, we are seeing energy bills reduce as we speak. I think they are down £200 from this point last year, and over the course of the next few decades as more of these technologies come on stream, we are very confident the energy bills will come down quite considerably.
Q587 Lloyd Russell-Moyle: Hinkley Point C now looks like it may cost up to £46 billion. Considering this, is new large-scale nuclear worth the price?
Andrew Bowie: Yes. Large-scale nuclear is expensive, but in my view, it is an expense we cannot afford not to spend. Nuclear is vital when it comes to delivering on our net zero objectives. It is now agreed across the world that there can be no net zero without nuclear, and 30 countries came together at COP28 under the leadership of John Kerry—interestingly, somebody who used to do the campaign against new nuclear power stations in the United States—to pledge to increase nuclear-generated capacity by 30% by 2050. The UK was in the vanguard of that, and through our nuclear road map that we published and our commitment to 24 GW by 2050, we are sure that not only will this new nuclear-generating capacity reduce our reliance on foreign imports and fossil fuels. but it will also put us in the position where energy bills are coming down. If you look at Finland, for example—
Q588 Lloyd Russell-Moyle: Do you expect new nuclear power to come on board cheaper than Hinkley Point?
Andrew Bowie: Yes, we do. In fact, we expect Sizewell, for example, which is a sister to the Hinkley reactor, to be far cheaper when it is delivered, due to lessons being learned at the Hinkley site right now. Ultimately, it will have the effect of driving down consumer bills. If you look at Finland, where they have a huge reliance on nuclear power for their energy, bills have fallen by about 70% in the last few years.
Q589 Lloyd Russell-Moyle: Our bills have gone up because of our reliance on gas. On Hinkley point—
Andrew Bowie: Which is why we need to reduce our reliance.
Q590 Lloyd Russell-Moyle: At Hinkley Point, we are indemnified against some of those price rises because we signed a contract and EDF must pay for some of the overruns. I assume the Government are not going to come and suddenly bail out a very rich company. For the potential new nuclear sites, where will the risk burden be placed if the costs do spiral?
Andrew Bowie: Yes, you are right when it comes to Hinkley. It is a commercial project and the cost of that project will be borne by EDF. Moving to the future, we are using the regulated asset base model, which has been used, for example, for the Thames tideway tunnel, as a way of giving the market confidence that the Government will support this project, but we are not—
Q591 Lloyd Russell-Moyle: In layman’s terms, where is the risk?
Andrew Bowie: The risk will lie with the commercial partners, and that will be a part of the commercial discussion that takes place.
Q592 Lloyd Russell-Moyle: So if any price rises increase in future nuclear projects, the commercial company will bear the whole cost?
Andrew Bowie: It will depend very much on the individual contracts that are signed for those projects. We are not at that point when it comes to Sizewell, and certainly not at that point when it comes to a prospective third gigawatt scale, of having those discussions just yet.
Q593 Lloyd Russell-Moyle: MIT research shows that nuclear is the only technology that does not get cheaper as you build more. In fact, all the studies in the US show that the more plants you build, the higher the per-unit cost is—in fact, doubling each time cumulatively a new power station is built. This is the reverse nuclear paradox to some extent because all other technology follows a different path. Noting that, and noting the same problems that Finland has had with its new nuclear reactors, which have been far more expensive than its old nuclear reactors, is there a danger that the £46 billion price tag will go even higher for new nuclear and, in fact, it is just a cash cow that the Government keep milking?
Andrew Bowie: No. First, Hinkley Point C specifically has been borne by EDF, so the British taxpayer—
Q594 Lloyd Russell-Moyle: Eventually, someone has to pay for it. Money is not magicked up. Is there a danger, noting the MIT research and noting the Finland example where the reactor came in far more expensive than previous reactors that they had built, that nuclear technology is not depreciating in price, but it increases in price and, therefore, is not good value for the public?
Andrew Bowie: Nuclear is expensive; that is right. We are looking at what we can do to deliver nuclear cheaper. The Secretary of State has commissioned work on that just recently, and when it comes to looking at how the regulatory bodies work, which add cost and time, we think we move too slow in this country, for example, and those can add cost to the process.
Q595 Lloyd Russell-Moyle: The US example is that technology prices cost more, not regulatory processes.
Andrew Bowie: The ultimate cost to bill payers will be reduced if we get more nuclear on stream and a reliable non-fossil fuel baseload, because the highly fluctuating—
Q596 Lloyd Russell-Moyle: Baseload is yesterday’s technology.
Andrew Bowie: That is debatable, but we can have a discussion on that another time. The highly fluctuating gas market, as you have already said, is the reason that energy prices went sky high over the past couple of years. Reducing our reliance on that and moving to other technologies is very important and will reduce the price people pay for their energy.
Q597 Lloyd Russell-Moyle: Do you think your 24 GW nuclear target is achievable?
Andrew Bowie: Yes, I do.
Q598 Lloyd Russell-Moyle: Why does the energy system operator say that by 2050, you will only have 16 GW?
Andrew Bowie: I disagree with that view. I do—I disagree with that view. We are allowed to disagree and question.
Q599 Lloyd Russell-Moyle: The organisation that you have set up—the organisation that your Department has established to do the assessments, the organisation that your Department has established to help the delivery of the infrastructure—says that it will not be possible and that it will be 16 GW. Why do you know more than the organisation that you set up, that you have the overview of, and that is the expert in this? Why are you so clever and everyone else is so stupid?
Andrew Bowie: As you know, I would never go as far as to suggest that. We do not take these decisions or make these assumptions or pronouncements in isolation. We do this in discussion with—
Lloyd Russell-Moyle: What other evidence do you have—
Andrew Bowie: If you look at our programme build, if you look at what we are doing on gigawatt as well as on small modular reactor, it is absolutely achievable that we reach 24 GW by 2050, which will be 25% of the overall UK energy demand.
Chair: Entertaining as that is, time marches on. Mark Garnier.
Mark Garnier: This is fantastic telly.
Chair: Box office—
Mark Garnier: Shut up.
Chair: Excuse me!
Q600 Mark Garnier: Just very quickly, on this new 24 GW production, what is the cost coming out of the power station before any subsidies and all the rest of it per megawatt-hour? Do you know the cost of the—
Andrew Bowie: There has been a lot of work done, and is being done, to assess what the cost will be eventually when these new power stations are up and running. It is impossible to say that sitting in 2024 for a technology that will only come on stream in 2029 or 2030.
Q601 Mark Garnier: But it is going to be way higher than the spot price now, isn’t it?
Andrew Bowie: That is one of the suppositions, yes.
Q602 Mark Garnier: What I really want to do is talk about interconnectors. Ofcom has recently judged that it does not want to support several interconnector projects, and it demonstrated the fact that there are a whole lot of trade-offs that exist between, for example, the benefits of stronger energy links to our neighbours, such as increased resilience and reduced emissions, and against that is the cost to British consumers, and that can be summed up with things like the cost of curtailment for wind farms. How do you propose to strike the balance with all this?
Andrew Bowie: It is important. Interconnectors are vital to the UK in delivering on our net zero objectives when it comes to importing clean power, but also in exporting power to Europe. I think there was a recent report published that suggested that Europe will not reach its net zero objectives without offshore wind which is being developed in British waters. Obviously, we export that power to the continent. There is a fine balance between the cost to the consumer and the cost to the bill payer and achieving those objectives, which we believe ultimately will reduce bills in the long run. That is why ultimately the decision on interconnectors does lie with Ofgem, so that it can take that balanced view about the cost to the bill payer and whether it is desirable.
Q603 Mark Garnier: Some of that argument is man-made or Government-made reasons. For example, curtailment is a pain in the neck for everybody because we are paying wind farms to spin around and not deliver the electricity. Surely there must be a better way of organising this.
Andrew Bowie: Yes, definitely. That is the reason why we are looking at building up our storage capacity, and that is the reason why we are improving our transmission network so we do not need to curtail—
Q604 Mark Garnier: Interconnectors are one of those solutions.
Andrew Bowie: Interconnectors are one of those solutions to that issue, yes.
Q605 Mark Garnier: Ofgem is at odds with the thinking of the Government. Is that right?
Andrew Bowie: I do not know if it is at odds. Some of the recent announcements from Ofgem on these projects are interim and no final decision has been taken. There are discussions around what can be improved. I know that discussions are going on with our European counterparts, and I have been in discussion with my counterparts on the continent. I am, in fact, travelling to Belgium tomorrow to continue those discussions, to see what can be done to allay some of the concerns.
Q606 Mark Garnier: I think you are probably going to meet the same Minister of Energy that we met when were over there a few weeks ago, Tinne Van der Straeten. She was very impressive. When we met her, we were talking about the fact that there was probably going to be 100 GW of capacity in offshore wind farms in the North sea. Obviously, not all of it is going to be the UK, but it is going to be across a lot of nations. The North sea is a big place but we have a long North sea coast. What are the UK Government doing to ensure that we have a seat at the table when we decide what is going to happen with the North sea and where this energy is going to go?
Andrew Bowie: I am not just having a seat at the table, Mr Garnier—tomorrow, I am convening a meeting of the North Seas Energy Co-operation at the British embassy in Brussels to ensure that those discussions are taken forward and that the UK plays a full and active role in those discussions. We were present at the Ostend summit and have been engaging. I met with the European commissioner for energy two months ago and I am meeting the commissioner again tomorrow.
Q607 Mark Garnier: Okay. That sounds great, but we are not a member of the European Union. You have a bloc there and you have the United Kingdom. Do you find that we have been compromised in this discussion?
Andrew Bowie: I do not think so. We have been able to invest and be much more flexible in what we can invest in, in terms of technologies, than the member states of the European Union have. For example, we have been able to move as fast as we have in some regard because of not being a member of that 27-nation bloc. What I am finding is that, yes, of course, following our immediate departure, relations were strained between the EU and the UK across a whole host of areas, including energy, but in my recent engagements with the EU Commission and bilaterally with my counterparts in Belgium, Denmark, Sweden, the Czech Republic and others, those relations are in a much better place. I expect to continue to improve on that and to develop our plans together when I meet a whole host of them tomorrow in Brussels.
Q608 Mark Garnier: As a general final point, when we look at integration with the European market and potentially talking about integration with the North American market, how important do you think all this is for the UK’s energy mix? I am not necessarily asking this from the point of view of how we are going to import our electricity from elsewhere, but how we can smooth the grid out and ultimately get energy security.
Andrew Bowie: I think it is vitally important, and I would not be spending as much time engaging with my European counterparts as I am if I did not think that was the case. We look forward to moving the chapter on energy through the TCA on to where it should be. It is one of the areas of greatest concern that we have not moved that forward as much. In terms of interconnectors, as I said, I look forward to having discussions with my Belgian and Dutch counterparts specifically on the concerns that have arisen through those.
Q609 Mark Garnier: I am delighted it is not just the air miles you are after.
Andrew Bowie: To be clear, I am going by train.
Q610 Chair: Minister, the title of this inquiry is “Keeping the power on”. There has been talk about zonal energy. How will zonal energy help in your view? It is a general and broad question.
Andrew Bowie: This is a part of the consultation that we are engaging on right now, Mr MacNeil. You understand that there have been concerns raised about the cost being borne by some communities in terms of hosting the infrastructure and the high price of energy that they have to pay. We are having a discussion right now. Ofgem is engaging in a review.
Q611 Chair: Do you get a positive feel?
Andrew Bowie: I would not want to pre-empt the findings and the workings of Ofgem on that point.
Q612 Chair: A final point from me. Hinkley C started off being £18 billion to deliver power in 2017. It is now at £44 billion. If that was known at the time, do you think Hinkley would have been built?
Andrew Bowie: As I said, nuclear is expensive, but it is an expense we cannot afford not to spend if we are going to reach our net zero objectives.
Q613 Chair: If a devolved Government had done this, you would just shrug your shoulders?
Andrew Bowie: No, absolutely not. Of course, we are disappointed that Hinkley has the cost and time overruns that it has, but you must remember the difficult environment in which they have been building, not least the difficulties in construction that arose through being in a pandemic and working through lockdown. Discussions have been had with EDF, which is responsible for that project. It continues to work on that project and we are very confident that it will deliver, but the cost ultimately lies with EDF.
Chair: I do not think it was lockdown that cost £26 billion but anyway, Minister, we shall leave it there. Time has the better of us. Prime Minister’s questions are on the way.