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Gas-fired Power Stations: Capacity Mechanism

Volume 607: debated on Thursday 24 March 2016

5. What steps she is taking to ensure the effectiveness of the capacity mechanism for new gas-fired power stations. (904296)

New gas is already coming forward. Since 2010, six new combined cycle gas turbines have been commissioned, representing over 8 GW of capacity, but we will need more new gas as we close our coal-fired power stations as part of our decarbonisation objective. We have announced changes to the capacity market to buy more capacity, and to buy it earlier, thereby ensuring security of supply during the transition, as well as promoting investment in new plant such as gas.

Given that Rugeley power station, which is coal fired and based in the constituency of my hon. Friend the Member for Cannock Chase (Amanda Milling), is scheduled to close, may I suggest that Rugeley would be an ideal site for a new gas power station?

I pay tribute to my hon. Friend the Member for Cannock Chase (Amanda Milling) for her excellent work in representing those affected by the closure of Rugeley. The decision on how to use the site is obviously a commercial issue for ENGIE, but I encourage the company to discuss its plans with the Planning Inspectorate, which can clarify the process for building a new gas plant, and particularly how long it might take to do so.

Yesterday marked the end of an era with the sad closure of Longannet power station. I put on record our thanks to the countless folks who worked there and kept the lights on in Scotland for over 40 years. When does the Minister expect new CCGT gas in Scotland to replace Longannet?

I, too, wish to express enormous gratitude, on behalf of Conservative Members, for all the work that has been done at Longannet over the past 47 years. It certainly is the end of an era. It is astonishing that the plant was expected to last for only about 25 years, and the extension of that to 47 is pretty impressive.

As I have said, the capacity market needs to buy earlier and buy more capacity at a time when wholesale prices are so low and various plants are struggling, partly to ensure that new gas is available. The location of the combined cycle gas turbines will, of course, be a matter for individual developers.

It will be a matter for developers, but one of the biggest hurdles to new CCGT in Scotland, and one of the reasons for the early closure of Longannet, has been the imposition of transmission charges, along with the additional costs that are levied on generators in Scotland, primarily owing to their location. Margins are tight, and they are getting tighter. Can we remove this barrier to new gas generation?

It is extraordinary that the hon. Gentleman should say that, because Scottish consumers are huge beneficiaries of locational charging. He needs to look at the situation in the round. Scottish consumers benefit from being part of a Great Britain-wide energy market. Had the Scots voted for independence, today would have been the day when they were on their own. Issues such as the price of energy and the locational pricing would have worked very much to their detriment without that GB-wide market.

I thank my hon. Friend the Member for Stafford (Jeremy Lefroy) for raising the possibility of a gas-fired power station at Rugeley B if the existing power station is closed. Existing infrastructure with national grid connectivity and a highly skilled work force could be used in that event. What measures are being taken to encourage the development of gas-fired power stations on sites such as Rugeley B, where energy generation has been taking place for decades?

My hon. Friend has done a great job in promoting that idea, and, while I do not want to stray into the realms of telling a private company what to do, we would be very pleased if this company looked into the opportunities for establishing a new gas plant. The capacity market auction will give certainty to potential providers of new gas plants, and should lead the company to consider those opportunities very seriously.

Is it not very odd that the Tory Government never seem to talk about the 40 million tonnes they are importing from countries abroad that they cannot even trust? Rather than keeping the British pits open, this Tory Government have presided over even more coal imports. Which of the power stations will use that coal? They will not be using gas. There will have to be power stations to use that coal. Where are they going to be?

I am sure the hon. Gentleman will be pleased to know that a new opencast coal mine has recently started producing—

The hon. Gentleman must surely acknowledge that the time for deep coal mines is over, because of the health implications and the carbon implications.

The hon. Gentleman must be aware that my Department is committed to moving away from coal, through gas, to a clean energy future.

The Secretary of State has produced no impact assessment to accompany her proposals to bring forward the first year of the application of auctions to the capacity market, but all estimates confirm that the auction will have to clear at a far higher price than has hitherto been the case if any new capacity is to be produced by means of this device, with a consequent huge cost to bill payers—an extra £20, according to some estimates. What does the Minister think the additional cost to customers will be, and can she look me in the eye and tell me with reasonable conviction that she is sufficiently certain that the auction will lead to substantial long-term capacity agreements for new plant to make that huge cost anywhere near justifiable?

I can absolutely look the hon. Gentleman in the eye and tell him that bringing forward the capacity market a year early—I am trying to make serious eye contact with him; I am not looking away for a moment—is absolutely in the interests of consumers. He will know that, with wholesale prices where they are at present, old plants are struggling to continue. By bringing forward the capacity market, we are giving them the certainty they need to ensure security of supply. If you like, this is an insurance policy on security of supply, and it is absolutely in the interests of consumers.