UK Parliament / Open data

Energy Bill [HL]

I thank all noble Lords for participating in what has been a fascinating debate on an important subject, very much building on the discussion that we had earlier this afternoon. I shall come on to the issue of gas storage—a popular topic of the day—a bit later.

I start with Amendments 50 and 51, tabled by the noble Lord, Lord Oates. Long-duration energy storage covers a wide range of technologies, and the Government are looking at the need for revenue support for these separately, as they all face different challenges and solve different problems. While I commend the noble Lord’s intentions, I put it to him that these amendments are premature at this stage.

In the case of electricity storage, I reassure the noble Lord that we are committed to developing policy enabling investment for large-scale, long-duration electricity storage by 2024, as we have set out in our response to the call for evidence. As noted by the noble Lord, Lord Oates, we recognise that these technologies face significant barriers to deployment under the current

market framework, due to their long build times, the high upfront costs, and the lack of forecastable revenue streams. Similarly, in the case of hydrogen storage, the 2021 UK hydrogen strategy set out our ambitions in this area.

More recently, and in recognition of the important role that hydrogen storage is expected to play in the hydrogen economy, we committed in the 2022 British energy security strategy to design hydrogen transport and storage business models by 2025. Indeed, we published a consultation on these matters in August. It is my contention that adding these clauses to the Bill now would prejudge the outcomes of the policy development which, as I hope noble Lords recognise, is already well under way.

6.15 pm

I move on to Amendment 225 from my noble friend Lord Moylan. The intention of this amendment is to expand on the discussion that we had at Oral Questions earlier and to increase gas storage capacity in addition to the 1.5 billion cubic metres of current gas storage capacity that we have in Great Britain, as I informed the House. To this end, my noble friend proposes that the Secretary of State for BEIS produces a strategy within six months of the day the Act is passed.

As my noble friend recognised, it is thanks to our indigenous supply source from the UK continental shelf, currently supplying about 45% of our gas demand, and a number of diverse international supply sources, that the UK is, thankfully, not reliant on gas storage as a source of supply. If I may put it like this, it would be a mistake to conflate greater storage capacity and greater energy security. To respond to the point made by my noble friend Lady McIntosh—I do not know whether she was in the House for Oral Questions earlier—the interconnectors have been helping the continent this year. We have 20% of the entire EU gasification facilities at LNG ports, and we have been using them to help Germany, Italy and others to refill their storage capacity during the winter months. So the interconnectors have been operating as much as they possibly can in the other direction, because the Germans failed to provide enough LNG capacity for themselves. So, given that we co-operate with them on this, we would hope that that co-operation would be reciprocated in response to any peak demand over the winter.

However, as the noble Lord, Lord Teverson, intimated without saying it directly, desperate situations sometimes cause desperate measures, as we saw during the vaccine crisis and the pandemic. We have legal and robust contracts with Norway, which is a trusted and valued supporter of ours, but we are not complacent about any potential risks. We keep these matters under careful consideration. I would say that at least a good proportion of the Norwegian output is portrayed directly via British infrastructure, and there is no option to go anywhere else. It does not apply to all Norway’s sales, but a good proportion come directly to the UK, and there are no connecting pipelines back to the continent except through the United Kingdom. I hope that that reassures the noble Lord slightly—but he is right to raise these matters and we do keep them under constant review.

Our current approach is agile and offers flexibility to the gas market when other sources are more expensive or not available. It can help to balance the effect of price volatility, allowing shippers—gas traders—to utilise market opportunities throughout the year. So the Government recognise the need to have some natural gas storage facilities in place as a source of balancing system flexibility when demand for gas is high—and also, of course, and crucially, allowing potentially for the future storage of hydrogen. Given the current situation in the international gas market, it is sensible that all possible options are considered to maintain security of gas supply, which includes the future of gas storage if required.

I understand that the Committee wants to push me further on the issue of the rough storage facility. Centrica has taken a decision and has applied for the consents to enable it to at least partially reopen the site for this winter. It has submitted a proposal for our consideration, which we are looking at. I can go no further than that at the moment, but I assure the Committee that when we have further news on this, I shall make sure that noble Lords are informed at the earliest possible moment.

Type
Proceeding contribution
Reference
824 cc231-3 
Session
2022-23
Chamber / Committee
House of Lords chamber
Subjects
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