Electricity generation always needs to balance supply and demand. The transmission system clearly has to change to accommodate expanding renewables, and Ofgem’s new framework will help that happen.
I note that my right hon. Friend does not give any costs for the extra capacity required for when the wind does not blow or the sun does not shine and the extra transmission lines required to transmit from long distance. Will he confirm that those costs are not included in the £7.6 billion levy control framework, despite the fact that the former power director of the National Grid puts them at £5 billion a year? If they were included, the potential total cost of all the subsidies could be £500 per household per annum.
The levy control framework specifically controls the amount of direct subsidy, but a whole series of changes needs to happen to make sure that our transmission system can keep up with the distribution of energy supply as well as the demand. That includes changes to interconnectors—in other words, getting more of them—and making sure that we have a smarter grid and distribution system. It is difficult at this stage to calculate the cost of those changes.
14. Does my right hon. Friend agree that one very effective way to address the issues raised by intermittency from renewable generation is greater use of demand-side management, which is both cost-effective and environmentally attractive? As we get more sophisticated in our use of demand response, the balance can be maintained even with intermittent peaks and troughs in generation. (908207)
I pay tribute to the huge expertise of my parliamentary neighbour, who will step down from this House next week, in this area. He has reminded me of something I should have said in my previous answer, which is to include demand-side response as one of the many ways in which we need to help manage the transmission system with more renewables on the grid.
According to National Grid, on 26 December less than 1% of power generated into the national grid in Scotland came from wind, meaning that electricity generated south of the border and the doubling of output from the coal-fired Longannet power station in Fife kept our lights on. The Minister will be aware that Iberdrola, the Spanish owner of ScottishPower, which operates Longannet, has decided not to invest to make it compliant with the industrial emissions directive and is now threatening to announce the closure of that power station next week, jeopardising hundreds of skilled jobs. Given Iberdrola’s public statements, what discussions has the Minister had with the Spanish power company or National Grid about the implications of potential closure?
We have of course considered the implications of the closure of any major power plant. Alongside National Grid, we continually assess the security of supply risks across Great Britain, including in Scotland. We are confident that we have the tools to address any issues at Longannet and any other fossil fuel plant that may close. We will ensure that the procedures and policies are always put in place to make sure that the supplies of energy are secure.
I thank the Minister for that reply, but he will be aware that various public claims have been made by or on behalf of Iberdrola ScottishPower about the impact of closure on both security of supply and group resilience, and that National Grid has rejected those claims. What assessment has his Department made of the claims and their implications? Given the conflicting statements made in the public domain, will he publish the assessment and advice so that the veracity of the claims and counterclaims can be properly tested?
I have looked in detail at the claims, and they are not correct. National Grid’s assessment is that the closure of Longannet is not a threat to the security of supply. I think that we should trust the assessment of the transmission grid operator, rather than that of an individual company playing one small part in the operation. I will of course look at what we can publish to make those reassurances yet more concrete.