Energy Bill

I am a little surprised that we have spent so much time talking about nuclear power when we are considering a Bill that will, I hope—one way or another—put us firmly on the road towards dealing with the challenges that are immediately ahead of us. Whether one thinks nuclear power is great or terrible, if we consider the energy debate facing us up to 2020, it is completely irrelevant in this country. That is because by 2020 we will have had to replace between 20 and 25 GW of our installed capacity for electricity generated power. We will have to replace 8 GW of capacity currently generated by coal-fired power stations, and 3GW generated by oil-fired power stations by 2016 under the EU large plant directive. By 2020, some 7 GW will be lost when nuclear power stations are decommissioned; it is unlikely that their lives will be extended, because of cracking in their cores. We will probably have to consider building 5 GW of additional installed capacity to cope with additional demand. Between 2020 and 2030, a further 7 GW of power will go out of commission and will need to be replaced. To put that in context, the UK's overall installed capacity is something like 76 GW. Within that installed capacity, we have to keep a running reserve, so that the lights stay on if everybody switches on their kettles at half-time in the cup final. That running reserve only comes on stream occasionally, when there are peaks in demand, but there will be bids to provide it if the system makes it possible for those bids to work when demand for electricity is high enough. Consequently some of the reserve will be provided by uneconomic power stations that are online for perhaps only a few hours a year but that none the less serve to keep the lights on. Because we have a bidding system, we know who has to bid the least: nuclear power. It cannot make top-end bids because it is a form of power that cannot be switched on and off; it has to be at the bottom of the ladder. We are in a market-based energy supply system. One reason why energy suppliers are being invited to build new nuclear power stations without subsidy is that if there were a lot of subsidy, it would wreck that energy market, and it would not be possible to continue with the bidding process. Therefore by enabling one form of power to keep the lights on, we would probably be switching the lights off in a number of other areas over time. That is the position as regards the energy gap and the way in which the market is used to keep the lights on. We face replacing many of our power stations by 2020; some 30 to 40 per cent. of our installed capacity will be replaced. As for the best estimates of when nuclear power will come on stream, even if everything went right and a nuclear power station were built ahead of schedule—that would be unparalleled in the world—even if the permissioning regime for a new power plant were fired up and there were lots of new officers, so the process was very quick and even if the planning process were relatively short, there would probably not be a single new nuclear power station on stream by 2020. Just conceivably, 1 GW of power might be generated by then, and 2018 is the earliest possible date; that would be possible if everything went right and a number of processes were carried out in parallel, rather than in sequence. It is more likely that it would be the early 2020s before any new nuclear power went on stream in the UK. The real energy challenge for the next few years is how we replace on-market principles without being able to demand that any of our power stations be replaced. Indeed, we may well be unable to demand that any nuclear power stations be replaced. We have to replace all our capacity—and on a low-carbon basis, because as we heard earlier this evening, the EU is coming up with mandatory targets for the percentage of power that will come from renewables by 2020. That will require 15 per cent. of the country's energy to be renewable and that means that 25 to 30 per cent. of our electricity must be produced from renewable sources. Similar mandatory EU targets on carbon emissions will be imposed by 2020. That power must be replaced, without any intervention from nuclear power, on a low-carbon basis, and that must be done in a reliable fashion so that the lights can be kept on and the market can keep running. As things stand, the most likely way of achieving that is by gas generation, but that would result in our missing all those EU targets, as well as all our climate change targets. The challenge is to make sure that, over that period, the vast majority of the gap is made up either by renewables or by sustainable forms of energy, carbon capture and storage or—and this is my personal choice—energy initiatives such as making sure that any new gas power station is not only combined heat and power enabled but is attached to CHP distribution networks, so that its carbon footprint is half what it would otherwise be. That is how the renewables obligation banding will move centre-stage. Regardless of whether we think feed-in tariffs would be a better idea in the first instance, it is important that we give the industry certainty and a forward look at how we will replace those forms of energy. To do so, we must introduce a renewables obligation banding system that will develop initiatives on CHP, biomass, mixed fuel and waste co-generation of power. Achieving a different mix of nuclear and sustainable power on the basis of a known, forward, reliable system of underwriting should be our priority. That is probably the key way in which we will bridge the energy gap by 2020 without any new nuclear power coming on stream. The Bill is important, given its proposals on renewables and the renewables obligation certificates. Those systems will cause the market to ensure that we invest in renewable and sustainable energy. I therefore hope that the Bill completes its Second Reading. I endorse many other things mentioned by hon. Members, including the need to ensure that we encourage microgeneration by installing net meters alongside smart meters. Overall, we have to make an effort now on renewable and sustainable energy: to coin a phrase, there is no alternative.