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Electricity Generation

Volume 482: debated on Thursday 13 November 2008

1. What assessment he has made of the effect of the current economic climate on investment in new electricity generation plants. (235267)

No sector is immune from the current economic climate and credit crunch. Along with the regulator Ofgem, we are closely monitoring the effects on the energy sector, including on investment plans. However, there is 11.5 GW of new plant currently under construction or consented and a further 12 GW in the consent process. That is a sign of the willingness of investors to make plans for new generation.

I thank the Secretary of State for that answer, but I also want to ask about a specific electricity generation plant, the Severn barrage. By my reading of article 5.2 of the EU renewables directive, the Government are not going to hit their renewables target without constructing the barrage. That would make nonsense of the studies that are under way and the great concern that there is locally. Will the Secretary of State confirm that the Government can hit their EU renewables target without having to build the Severn barrage?

Yes, I can confirm that. The Severn barrage is one of a number of options that we will be considering in relation to our renewables target. However, I would point out to the hon. Gentleman that we have made progress on renewables, admittedly from a low base, in the past few years. We want to make further progress, which is why, for example, we are banding renewable obligation certificates in legislation that is before the House, why I have made announcements on feed-in tariffs, and why the Planning Bill is intended to speed up the siting of new renewables facilities. I acknowledge that we need to make a lot more progress on a number of fronts on renewables. The Severn barrage is one option for doing so.

May I take this opportunity—my first—to congratulate my right hon. Friend on his appointment? Does he agree that a period of economic downturn is a good time to look again at the skills that we need, and the investment that we need to put into them, to help to recreate our energy generation sector? Will he have discussions with the Secretary of State for Innovation, Universities and Skills to pursue that agenda?

My hon. Friend makes an important point, and I should like to join the mutual admiration society and pay tribute to the work that he has done on climate change and energy over a number of years. He is right to say that, as we think about the current downturn, some people will say to us, “It’s time to abandon your climate change objectives.” However, the green jobs agenda and moving to a low-carbon economy give us an opportunity to prepare for the upturn and to find new ways of employing people. He is also right to say that the skills agenda is an important part of that, and I will have discussions with the Secretary of State for Innovation, Universities and Skills on the matter.

There may be 11 GW of replacement plant on its way, but it is not here yet, and there could be problems if there are unscheduled outages in major power plants, problems with the gas interconnector with Europe and a cold winter. What priority is the Secretary of State attaching to ensuring that there is not a major blackout in this country this winter?

Clearly, the hon. Gentleman makes an important point. The answer is that that is my top priority. The Minister of State and I monitor the situation on a weekly basis. We talk to the National Grid Company and Ofgem about all such issues. The National Grid Company is reassuring me about the prospects for this winter at the moment, but I am not complacent. We keep a very close eye on the situation.

Does the Secretary of State agree that, to help business through this difficult period and, indeed, in the short and medium term, we need to increase electricity capacity, thereby reducing prices? That would particularly help energy-intensive industries. Does he further agree that one way to do that is to extend the current life of safe nuclear plants while we are waiting for new build to come on stream? Will he agree to meet the Nuclear Decommissioning Authority and me so that we can make progress on a matter that has been ongoing in my constituency for some time?

Our team will definitely undertake to meet my hon. Friend, and I will definitely consider his suggestion. It was right to end the moratorium on new nuclear power stations, but the priority on nuclear is to work out how we can get new nuclear facilities built. The situation will be helped by the EDF takeover of British Energy. EDF wants to build four new nuclear power stations, which I think is right for our country. Lots of people have changed their opinion of nuclear power on the basis of the climate change challenge that we face. I think that we have got the right policy on nuclear, but I will endeavour also to look at the issue that my hon. Friend has raised.

Yesterday morning, the Minister of State told the “Today” programme that, far from facing energy shortages in 2015, 37 per cent. more power would be generated in comparison with today. Will the Secretary of State confirm that the National Grid Company seven-year statement takes no account of whether projects will get planning consent or even whether they will get the funding to build them? Will he also confirm that it does not take account of the extent to which generating capacity will be lost? Almost 15 GW of capacity is likely to be lost, as more of our capacity in nuclear, oil and coal closes down, so will the Secretary of State take the opportunity to set the record straight and admit that the outlook is much tighter than the Minister suggested?

My hon. and learned Friend the Minister of State was absolutely right in the figures that he provided, which come from the National Grid Company. As I said in my answer, there are issues about the next decade, but the prospect for new build happening is a good one. The difficult question for all of us is how to ensure that the supply of new build is diverse and not simply more gas-fired power stations. We want a diversity of supply and we want low-carbon options.

The hon. Gentleman shouts “Coal” from a sedentary position, but unlike Conservative Members, we have not set our face in principle against new coal-fired power stations, which is to prejudge the issue. The challenge is to get the capacity we need—I am convinced that we can—while also having a diverse range of energy sources.