Considered in Grand Committee
My Lords, the draft order was laid before the House 14 July 2020.
Electricity storage will play a crucial role in helping us meet net zero by 2050. It provides flexibility so that renewable generation, electric vehicles and heat pumps can be integrated on to the system. Deploying smart and flexible technologies, such as storage and demand-side response, could save up to £40 billion by 2050.
We currently have around 4 gigawatts of operational storage in Great Britain. National Grid estimates that we could need up to 40 gigawatts by 2050. This Government are committed to creating a best-in-class regulatory framework for storage by removing barriers, reforming markets and investing in innovation through actions set out in our 2017 smart systems and flexibility plan. Reforming the planning system to remove barriers and introduce a more appropriate planning treatment is a key action for storage under this plan.
Currently in England and Wales, where storage facilities are above 50 megawatts and 350 megawatts respectively, planning consent must be sought from the Secretary of State under the nationally significant infrastructure projects—NSIP—regime. Where facilities are below these thresholds, they are consented by the relevant local planning authority.
Evidence collected through a consultation published in January 2019 demonstrated that the 50 megawatt threshold is distorting sizing and investment decisions in England. For example, there is a clustering of storage projects sized just below the 50 megawatt threshold, and projects have been split into multiple 49 megawatt projects to avoid consent through the NSIP regime.
Following consideration of this evidence, in October 2019 the Government consulted on removing electricity storage, except pumped hydro, from the NSIP regime in England and Wales. We received 28 responses from industry, which were broadly supportive. The NSIP regime was established to streamline the consenting process for major infrastructure projects where the benefits are national, but the planning impacts are local. Here, it is appropriate for the Secretary of State to weigh up this planning balance.
For batteries and more innovative forms of storage, the planning impacts are low compared to pumped hydro and other forms of generation. Therefore, the extra time and cost of the NSIP regime is not proportionate and limits the size of new projects to 50 megawatts. We have not seen any stand-alone battery storage facilities deploy above 50 megawatts. This order removes these technologies from the NSIP regime, meaning consent will generally be sought from the local planning authority. To ensure consistent treatment and a level playing field in economic competitiveness across the locations, this will also apply to Wales where the NSIP threshold is currently 350 megawatts.
If storage was removed from the NSIP regime only in England, there would be different approaches between England and Wales, as only consents for generating stations below 350 megawatts have been devolved to Wales. This would result in storage facilities of any size in England not being consented under the NSIP regime, whereas in Wales, storage facilities above 350 megawatts would be consented under the NSIP regime. Under the SI we are debating today, electricity storage, except pumped hydro, will generally be consented by the relevant local planning authority in England and Wales.
This SI could unlock investment in larger storage projects, supporting low-carbon jobs and decarbonising the energy system. Additionally, we estimate that this could save industry between £500,000 and £7 million annually. These savings are due to the reduced administrative costs associated with the local regime and a reduction in infrastructure costs where projects now choose to co-locate rather than build separately.
Once the legislation is passed, in England the industry will still be able to use Section 35 of the Planning Act to request that the Secretary of State direct a project into the NSIP regime for consent if it so wishes.
This order does not remove pumped hydro storage from the NSIP regime. This technology has significant planning impacts and often requires several other consents, which can be granted under the NSIP regime, making it a more efficient consenting route. Further to this, the pipeline for pumped hydro storage projects is located in Wales and Scotland due to their favourable geographic sites. The threshold for pumped hydro storage to be consented by the relevant Ministers as opposed to the local planning authority is 10 megawatts in Wales and 50 megawatts in Scotland. Therefore, retaining the 50-megawatt threshold in England better aligns with the treatment of pumped hydro across Great Britain.
Should Parliament approve this order, a parallel order will be required to amend the Electricity Act to ensure that consents for electricity storage fall within the local planning regime. We will ensure that this applies for facilities onshore and offshore, and we are working closely with the Welsh Government, who intend to put requisite legislation in place for storage, except pumped hydro, located offshore in Welsh waters.
This order will ensure that storage is treated appropriately in the planning system, according to its planning impacts. It removes a key barrier and unlocks the potential for large-scale storage projects, which are critical for meeting net zero. I beg to move.
My Lords, I am grateful to the Minister for that introduction to this document. I am no great expert in power supply, but I find it interesting that the Government still see a difference between power generation and power generation and storage. They both generate power, but one of them takes the power when it is not being used and stores it, as in pumped storage.
As the Minister said, it is pretty unlikely that there will be any pumped storage of any significance in England, because the geography does not really suit. I was interested in her remarks about what I understood to be pumped hydro offshore. If that is really something that we should be looking at it has even greater potential for environmental damage, because presumably you would be using salt water rather than fresh water. I can see a lot of people not liking to have to create a new salt water lake somewhere in England, and I hope that that never happens.
It would be helpful for us in considering this to hear from the Minister exactly where the other storage will come from. She quite rightly said that there would be enormous demand for power storage in future, because of how we will be using electric cars and other electrical vehicles, including electric trains. One of the big potentials for power storage is in using people’s car batteries at night, provided that there was some kind of control system, so the power can be put back before people want to use their cars in the morning. It seems that there will be an enormous demand for storage, which must take into account when there is no wind and it is dark, so there is no solar energy.
I question whether this measure will be sufficient. I have no problem with the order in itself, but I worry about whether we will have enough in future and what the options are. I am sure, when the Minister comes to respond, she can put me right on all those things.
My Lords, it is a pleasure to follow the noble Lord, Lord Berkeley. I share his interest in vehicle-to-grid storage, as I shall reflect shortly, although I would place perhaps greater stress on the need for demand-side management, rather than thinking of electricity as water in a tap that you can just turn on whenever you want.
I note that the study carried out for the Government estimated that the benefits to the UK of a smart and flexible energy system could be somewhere between £17 billion and £40 billion by 2050. Batteries are clearly a crucial part of that, so I welcome the modest progress marked by this statutory instrument and the encouraging words of enthusiasm for battery storage from the Minister.
I often go back to the words of Steve Holliday, CEO of National Grid, in 2015, who stated that the idea of large coal-fired or nuclear power stations to be used for baseload power was outdated. He said:
“From a consumer’s point of view, the solar on the rooftop is going to be the baseload”,
and that energy markets
“are clearly moving toward much more distributed production”.
What was implied in that was a great growth of storage as well as renewable generation—local, household and business based. We can only regret the lost half decade in which progress has been so achingly slow. For example, I have often heard from a great community and social enterprise, Sheffield Renewables, which develops funds and builds, owns and operates renewable energy schemes. It has had some great successes, but been frustrated again and again by inadequate and unstable government policies.
In all these issues, with the previous SI that we were debating and this one, we must not lose sight of the fact that the best possible energy—the greenest, cleanest and cheapest energy—is the energy that we do not need to use. Every form of electricity generation and storage, and every form of energy production, has a cost, both financial and environmental. In recent weeks the International Energy Agency has been getting highly enthusiastic about extremely low-cost solar. This is something that must not be forgotten.
The previous debate focused on the importance of home energy efficiency and decarbonising heating. It is surely the correct order for us to be doing this, speaking about battery storage next, as part of a broader focus on ensuring that we can move towards a renewable-powered world. I would particularly like to see government policy promoting household batteries and rooftop solar, particularly in social housing, where the benefits come close to those who need it most—community distributed systems with distributed benefits. I saw examples of highly successful pilots of that five or more ago, but we have yet to see widespread rollout, although I note that Portsmouth council has just installed battery systems in 13 housing blocks, with a further 20 on the way.
When we talk about storage there is often a focus on batteries, but we also need to look at research and development and policy support for heat and chemical storage, which may well be cheaper and more suitable for some applications. However, in talking about vehicle to grid—I come back to my enthusiasm for that—many years ago I visited the Eden Project in Cornwall, which was already using it. It powered it office from cars and it was all powered up by solar. It is disappointing that we have not seen that taking off in what is now a very mature technology.
I conclude by welcoming the removal of what has clearly been the distorting impact of the NSIP regime on battery storage and the retention of the 50-megawatt threshold in the case of pumped hydro, reflecting, as the Minister did, the potential environmental and local impacts of that. On hydro more generally, I cannot but reflect on my visit to innovative hydro schemes on small farms in Wales a few years ago, which put income into small businesses and communities. There was a sudden change in government policy and that entire business collapsed. With energy policy, boom to bust and sudden changes in direction and policy simply have to end. We need to see consistent long-term stable policies to take us in the right direction in this climate emergency.
My Lords, I come to this debate not to oppose the SI in any way, but because I have a long-standing interest in renewable energy and storage. For nearly two decades, I was vice-chairman of the Parliamentary Renewable and Sustainable Energy Group. I have had a solar roof on a property of mine in Leicestershire for nearly 20 years, which was actually supported by the Labour Government, who were trying to increase usage of solar roofs. So I come to this with some knowledge of renewable energy and depressingly little knowledge of storing electricity. That has been the big problem—how to store renewable energy, which can generate when the wind is blowing hard, but storing it has been much more expensive.
I welcome this SI because it removes obstacles to storing electricity that might otherwise remain. The Dinorwig power station near Llanberis in Snowdonia opened 36 years ago and is the biggest pumped hydro in England and Wales. I have visited it in the past; it takes electricity that might be surplus to requirements—for example, in the middle of the night when there is no peak demand—and uses it through hydro a peak demand. That is one way of storing it. I once visited a similar place not far from me in Leicestershire, a small-scale plant owned by a gentleman who uses wind power from a wind generator to pump water uphill into a pond; he then lets it go when he needs lots of electricity at home. That is on an entirely different scale, but is very valuable. Of course, we have all put electricity into heat sumps; you heat the water up, then you have electricity within the water—or hot water, at least.
It always worries me that government policy can be a sledgehammer to crack a nut. Indeed, sometimes it changes rather quickly, as the noble Baroness, Lady Bennett, just said. But this is a good thing. Can the Minister tell me how battery development is proceeding? I know that it is proceeding. If she does not have the details immediately to hand, perhaps she might write to me with them.
My Lords, this is not really my territory. I hesitate to come into this discussion but I will not delay noble Lords long. I note that the Delegated Legislation Committee in the other place dealt with this proposal in 13 minutes and, even then, the Minister commented on the widening of the discussion beyond the SI itself. That has already begun to happen in this discussion.
There seems to be little controversy surrounding the SI. The 2019 consultation drew 28 responses from industry, which were broadly supportive. However, is not the question that needs to be addressed on what additional funding will be given to local authorities to ensure that there is sufficient expertise and capacity for local planning officers to make fully informed decisions about these planning requests? That is especially important, considering the technical nature of these planning proposals, which will not be spread evenly across the country. If the answer to that is in the fees charged for planning applications, how can we be sure that sufficient professional expertise is available to the local authority? How can we stop that being provided by consultants advising local authorities, which might be the very reason why this scale of project was seen as an NSIP?
Going a bit broader—I realise that this is trespassing—energy will be a key part of the Environment Bill. Members of the House understand the legislative pressures as we come to the end of the transition period for leaving the EU, but there will be little opportunity for the House to discuss that Bill when it eventually comes to us. Can the Minister ensure that we get on to ASAP?
Lastly, I want to echo some of the things that have already been said. One thing that we have learned during these strange times of Covid-19 is the importance of going local. Microgeneration is increasingly important. It does not necessarily depend on the national grid and is potentially much more flexible. We have lots of examples, but we need rapidly to generate more, from 93 solar panels on the roof of Salisbury Cathedral and local community energy schemes to micro hydro and the potential for electric vehicles to discharge into the grid. This is all highly regulated, so how is the development of microgeneration to be progressed more quickly so that we will be better able to live more sustainably with locally generated electricity?
It is a pleasure to follow the right reverend Prelate. I thank my noble friend the Minister for introducing this piece of legislation.
I presume that this legislation is potentially very exciting, if it means that we rely less on, and reduce our dependency on, nuclear, at a time when there is a great question mark over what nuclear facilities will be built. Is my noble friend in a position to say whether the Government or an organisation such as the National Infrastructure Commission have done an audit of the number of current facilities? My noble friend mentioned one, but there are multiples of 49 gigawatts round about. Do we know how many there are and where they are based?
I want to make a plea to the Government through my noble friend the Minister. As far as possible, where renewable energy is to be stored in this way, can it be stored as close as possible to the source of the energy’s production? For example, if it is from wind farms, which are often deeply unpopular if they are onshore, can it be stored as close to the source as possible, and can it be used by the local community? My noble friend has not said that there will any grief but, as the right reverend Prelate alluded to, there sometimes is in local communities, and we need to carry them with us. This could be a massive gain. Having got an onshore wind farm, local communities will then go on to benefit from a constant stream of renewable energy, once the energy has been released from the battery storage.
Can my noble friend say a bit about how electricity is to be stored once it has been released back into the national grid? As far as I am concerned, overhead pylons are a complete no-no. We do not way any more of them. I frequently visit my family in Demark, and I see these massive low-lying overhead pylons. They are very unsightly and they are generally dangerous for low-flying aircraft and helicopters. They could also have an impact on greater use of the new generation of drones that is coming along. That is yet another argument for why electricity should stay as local as possible to the source of its production. Can my noble friend rule out electricity being transported by overhead pylons as it comes on stream? Can my noble friend also confirm that this will help us to deliver low-carbon heating? If that is the case, how would that progress?
I confess that I am not sure how battery storage works. Can my noble friend assure me that, if this is to be treated as part of our critical infrastructure—as in the terms of Sir Michael Pitt’s report and the review following the massive surface water floods that we had in 2008—any electricity storage unit covered by the planning procedure before us today, however large it may be, will not be stored in a flood plain or an area that is potentially prone to flooding? Obviously, if it can be buried at sea, this is not an issue, but I would like my noble friend to put my mind at rest that we will not face challenges by losing electricity that has been stored in this way because of a future flood.
I broadly welcome the thrust of the order. The fact that it has not attracted a huge amount of public interest is obviously reassuring. It fills the gap between renewable energy that cannot be stored and being in a position to store it and bring it back on stream at such a time as it is required. Can my noble friend put my mind at rest that we will carry local communities with us, that electricity will be used as close to the source of its provision as possible, and that we will not have any hideous infrastructure such as pylons as a result of what we are passing today?
My Lords, I thank the Minister for her introduction to this SI. I declare my interest as a vice-president of the Local Government Association.
Also, until May last year, I was an elected councillor on South Somerset District Council. The Minister may know that South Somerset has invested in electric battery storage both to help to balance its budget and to play its part in helping England and Wales to reach their carbon neutral objectives. South Somerset is running a number of initiatives that could contribute to helping the country reach its carbon-zero targets by 2050.
The draft instrument that we are debating today is clear, as is the Explanatory Memorandum that accompanies it. The Government are changing the regulations so that electricity storage facilities over 50 megawatts do not have to go through the national significant infrastructure projects process, thus avoiding the involvement of the Secretary of State. All electricity storage applications will now go to local planning authorities, regardless of their size. The exception is for pumped hydro schemes, for which the threshold remains at 50 megawatts in England and Scotland.
This is definitely a step in the right direction. Local councillors and planners should be able to make decisions about infrastructure projects in their area. In direct contrast to my comments in the previous debate this afternoon, I congratulate the Government on taking this step to improve local democracy and speed up the process.
However, I want to comment on the timeline for the process that has brought us to this debate. In January 2019, the Government ran a consultation on the treatment of electricity storage. This included retaining the 50-megawatt NSIP threshold as it applied to stand-alone storage projects, at the same time amending the 2008 Planning Act to set a new NSIP threshold for composite projects. The consultation ran until 25 March 2019. As the Minister said, the Government then conducted a follow-up consultation, which ran from 15 October to 10 December 2019. This was a period when the country as a whole had its mind on other things.
In July 2020, the Government published their response to the consultation and introduced two statutory instruments, to come into effect on 14 July 2020, for the proposals to be dealt with under the Town and Country Planning Act in future. We are getting used to the Government laying instruments one day and implementing them 24 hours later but, given that the consultation finished on 10 December last year, a timelier implementation could have been achieved with a bit of forethought. The noble Baroness, Lady Bennett of Manor Castle, referred to slow progress.
Other Peers have mentioned other forms of energy generation and storage but electricity storage is vital to making the best use of renewable energy. The noble Baroness, Lady McIntosh, raised the issue of pylons; I will be interested to hear the response on that.
I note that, when the other place debated this SI, it took precisely 15 minutes to do so, as the right reverend Prelate the Bishop of Salisbury mentioned. Despite there being 13 MPs present, only two spoke, along with a Minister. It would be good if some of our debates took only 13 minutes, although I doubt that the quality of the debate would be very good.
That said, I fully support this SI and welcome the fact that local planning authorities will be able to deal with this issue themselves instead of having to go through the lengthy NSIP process.
I thank the Minister for her clear explanation of the order before the Committee. This simple order, which corrects an error from the Energy Act 2016, will make a key difference in the development of much-needed battery storage for the development of renewables and the pursuit of net zero. I am happy to approve the order in that respect.
The threshold of 50 megawatts for determining the avenue of planning requirements was always an impediment to progress. It is disappointing that the Government had to wait for the outcome of linked strings of 49.9 megawatt facilities to appreciate the position— a lesson that took the Government four years to appreciate.
The government consultation also highlighted industry’s concern that the pumped hydro storage threshold needs to be increased to 200 megawatts. The Government rejected that on the grounds of a lack of evidence. Does the industry need to repeat the experience for the Government? Is the Minister convinced that there is no lack of vision in this respect, and that faster progress could not be achieved by raising both thresholds above the 50-megawatt level? What evidence would the Minister’s department need? Would consistency across the devolved Administrations always be considered the more important aspect? However, avoiding the considerable extra burden of the NSIP regime is of great importance to the technology.
During the passage of the Energy Act 2016, there was a lot of general debate on battery storage, underlining the clear necessity of its development to capture greater benefits from renewable and low-carbon technologies. The key element of support for the development of battery storage revolves around how to categorise it under the regulatory framework. The case was made for the creation of a separate licensing regime, either as a subset of generation or as a stand-alone regime.
The smart systems and flexibility plan, and its follow-up in 2018, set out the intention to make changes to both arrangements as well as to the threshold arrangements. Can the Minister give the Committee any information on when further progress will be made with the battery licensing part of that intention? I understand that the department has completed preparatory work to define storage in primary legislation. Will the energy White Paper, which is now long overdue, include these aspects within its appraisals of future plans? Will there be answers in time for COP 26? What indications can the Minister give on that today?
The importance of energy storage’s linkage to the grid through different microtechnologies and the inclusion of schemes to small businesses and households were highlighted by other speakers. We all await the necessary technology improvements to make further progress and will wait to hear how the Government may enhance this with complementary schemes for local communities.
I thank your Lordships for their valuable contributions to this debate. I conclude by emphasising the importance of the changes contained in this SI. The Government are committed to removing barriers to the deployment of electricity storage. The Government and Ofgem’s 2017 smart systems and flexibility plan sets out a range of actions that will be taken to enable the transition to a smarter and more flexible energy system.
This SI will remove electricity storage, except pumped hydro, from the national planning regime in England and Wales. It will result in an appropriate planning treatment for electricity storage. Sizing and investment decisions will be based on a project’s economic potential or capability to store renewables, rather than whether it falls under the NSIP threshold. We estimate that this legislation could save the industry between £0.5 million and £7 million annually.
The noble Lord, Lord Berkeley, asked about pump storage in England—actually, in all places—offshore. To clarify, we are applying this onshore and offshore for legal consistency. We are not aware of any developments of offshore storage. However, storage located offshore, should it be developed, would need to seek planning permission. In Wales, it would need a marine licence from either the Marine Management Organisation or Natural Resources Wales, so there is an element of future-proofing this legislation.
The noble Lord, Lord Berkeley, and the noble Baroness, Lady Bennett, asked whether, given the enormous demand for storage in the future, this will be sufficient in meeting the demand for storage. We are taking a number of steps to remove barriers, reform markets and invest in innovation through the 2017 smart systems plan, including ending double payment of network and policy costs and making it easier to connect to the grid. We have made good progress in improving the regulatory and investment landscape for storage, and we are working closely with industry to develop the next phase of work under the smart systems plan.
The noble Baroness, Lady Bennett of Manor Castle, also asked about promoting household batteries. I wholeheartedly endorse her enthusiasm for these—and indeed for solar panel roof tiles. We have made good progress in improving the regulatory and investment landscape for storage, and we are working closely with industry to develop the next phase of work under the smart systems plan, including addressing barriers to domestic storage. The noble Baroness also made the point that saving energy is at least as important as generating it, which we should all keep in mind.
My noble friend Lord Robathan asked about the progress of battery storage development. There is currently about one gigawatt of battery storage in the GB system; the majority of this has been deployed since 2015. There are about nine gigawatts of storage in the planning pipeline, six gigawatts of which is battery storage and three gigawatts of which is pumped hydro.
My noble friend also asked about investment in new types of battery technology. We have launched a range of innovation competitions as part of our £70 million innovation funding for smart systems. This included a £20 million competition for demonstrating innovative storage technologies. As well as this, we have allocated £317 million to the Faraday battery challenge.
The right reverend Prelate the Bishop of Salisbury asked what additional funding will be given to local authorities. They already have experience of dealing with storage projects below 50 megawatts. We expect, with this legislation, to encourage projects to deploy at a larger scale rather than bring forward new projects. We are working with MHCLG to update the planning practice guidance to refer to storage. I will write to the right reverend Prelate on the possibility of future opportunities to discuss the Environment Bill. He also asked about support for rooftop solar generation; I will write to him with further detail on the actions that we are taking to support this.
In response to my noble friend Lady McIntosh of Pickering’s question about making electricity storage flood-proof, although her point is also applicable to other energy infrastructure, the planning system requires developers and decision-makers to consider the impacts of flooding on the projects in question. This will require consultation with the Environment Agency and other relevant bodies to ensure that any risks to infrastructure are thoroughly considered at every stage of the decision-making process. Following Sir Michael Pitt’s recommendations, guidance for local authorities in relation to this matter is now set out in the National Planning Policy Framework.
My noble friend also asked that local communities be involved in these decisions. These changes mean that storage facilities will generally be consented by the local planning authority, involving local communities in such decisions.
The noble Lord, Lord Grantchester, asked about the threshold for pumped hydro storage. There is no evidence to suggest a higher threshold is needed here. The analysis shows that the planned impacts of pumped hydro will be in an order of magnitude higher than other storage technologies, meaning that the NSIP regime is the most appropriate planning route. A 50-megawatt threshold is consistent with hydro generation, which has similar planning impacts.
The noble Lord also asked about our commitment to define storage in primary legislation. This is an important commitment, and one that we will honour when parliamentary time allows.
Several noble Lords asked about the development of pylons. I am afraid that I cannot give a detailed answer now; I will write to them on this.
To achieve net zero at the lowest cost, we will need significant levels of flexibility to integrate high volumes of low-carbon power, heat and transport. This will require a significant increase in the deployment of electricity storage. The changes contained in this order help to unlock the potential for large-scale storage facilities critical for meeting net zero.
To close, I will once more emphasise the importance of this order in removing a key barrier to the deployment of large-scale storage facilities. Approval of this order will help to bring forward such facilities, supporting low-carbon jobs and enabling us to maximise the output of our renewable generation and progress towards meeting net zero.
I remind Members to sanitise their desks and chairs before leaving the room. Thank you.