Gas Storage Levels

15:40:00

(Urgent Question): To ask the Secretary of State for Energy Security and Net Zero if he will make a statement on gas storage levels.

Energy security is a key priority for this Government, and at no time was there any concern about Britain’s energy system being able to meet demand. Our systems worked entirely as intended. We had capacity to deal with market constraints, and that has been backed up by the two authoritative voices on this issue in the country—National Gas, which runs the gas network, and the National Energy System Operator. We have sufficient gas supply and electricity capacity to meet demand this winter, due to our diverse and resilient system. While storage is an important flexibility tool in the gas system, our varied sources of gas supply mean that the UK is less reliant on storage than some other European countries that have a more limited supply options. Our diverse options include the UK continental shelf, our long-term energy partner Norway, international markets via the second largest liquefied natural gas onshoring capacity in Europe, and two interconnectors. Gas storage is used throughout the year, but typically operates in winter to help meet peaks in demand. Through colder spells, storage levels are expected to fluctuate across the winter period. That is what happened last week following the severe cold weather, and it is a sign that the gas and storage markets are working exactly as they should. That is precisely why we have those systems in place. In their winter outlooks, National Gas and the National Energy System Operator assessed that there is sufficient supply to meet winter demand, including the role of storage. On Friday, National Gas, the owner and operator of Britain’s gas networks, confirmed that “the overall picture across Great Britain’s eight gas storage sites remains healthy.” We will continue to work closely with National Gas, NESO and storage operators to maintain continued security of supply. I reiterate: Britain’s energy system is working to continue to meet the demand of consumers across the country.

All our constituents will be aware of the freezing temperatures experienced across the United Kingdom last week, dipping to minus 18° in the north of Scotland. However, many will not be aware of just how close this country came to an energy shortage, blackouts, or demand control—closer than at any point in the past 15 years. On Friday Centrica, the owner of British Gas, issued a stark warning that freezing weather and a spike in demand had reduced our gas storage to “concerningly low” levels—26% lower than this time last year. At a time when temperatures dropped below freezing for an extended period of time, our stores were set to last for less than a week. Earlier in the week the National Energy System Operator issued a call for electricity providers to step in to provide extra electricity to meet demand and limit the risk of blackouts, paying 10 times the average daily amount to keep the lights on, all of which will end up on the energy bills of our constituents. With an incredibly tight margin between demand and available power generation, we were once again forced to rely on reliable gas power plants to keep the lights on in this country, showing that gas is and will be a vital component of our energy security for decades to come. With their rush to meet the Secretary of State’s ideological target to decarbonise the entire electricity grid by 2030, this Government are playing fast and loose with our ability to keep the lights on. They are rushing headlong into a renewable energy dominated system—a Chinese renewable energy dominated system—but Ministers cannot escape the fact that when the wind does not blow and the sun does not shine, wind turbines and solar panels will not keep the lights on in Britain. We should be in no doubt that this Government’s ideological plans for our energy supply will leave the UK dependent on foreign imports, send bills soaring, and leave us teetering on the brink of blackouts. Interestingly, when Labour was last in government in 2010, the Secretary of State whipped his then Ministers to vote against Conservative proposals to increase gas storage capacity in the United Kingdom, with a Labour MP on the Energy Bill Committee saying that “the climate of this country, other than in the past month, is usually such that we do not quite need the same storage facilities as other countries in mainland Europe?”––[Official Report, Energy Public Bill Committee, 19 January 2010; c. 282.] Does the Minister think the Secretary of State regrets not backing that proposal in 2010? Does he accept that the push towards renewables will lead to higher levels of intermittency, and does he accept that we will need to urgently review our gas storage capacity in the immediate future?

The shadow Minister’s point would be well made were it not for the fact that it is completely untrue. If we look at the facts, the capacity market notice that he mentions was cancelled—

Order. The Minister has made a direct hint that what the Member said was untrue. Is he sure of that, or does he want to rephrase it?

I apologise, Mr Speaker; I think the shadow Minister was confused in the facts that he gave to Parliament today. I am happy to set that right. Let us look at the facts. The National Energy System Operator—the people who run the system—stated clearly: “At no point were electricity supplies less than anticipated demand and our engineers were able to rebalance the system without the need to consider any emergency measures.” If we listen to the experts—to National Gas and to NESO—they both confirmed over the weekend that there was resilience in the system. I reiterate the point that the system operated exactly as it was intended to do. If the shadow Minister has complaints about how the system operates in the country and the gas storage situation, he may want to look at some of his colleagues who were in power over the past 14 years. He knows the truth about his party’s record. He is a very smart guy, and he knows they left us exposed. He knows they did not do enough to build the system that we need and he knows what caused the worst cost of living crisis in living memory. While his party is busy crowdsourcing policy advice on Twitter from net zero sceptics, it would be far better if they looked at their own record in government and, instead of criticising us, recognised that we are getting on with building a resilient energy system for the future.

I call the Chair of the Select Committee.

The shadow Minister missed from his story the role of Liz Truss. When she was the Chief Secretary to the Treasury in 2017, she made the decision to close our gas storage facility. Does the Minister agree that if we want energy security and lower prices, that all depends on reducing our reliance on the volatile nature of the international fossil fuel market? Does that not mean that his clean power action plan for 2030 is exactly the right policy to address the events of the past few days?

My hon. Friend is absolutely right. The decisions that the previous Government took on storage are for them to answer, and anyone who looks at their record will rightly raise questions about that. On the broader point, he is right. The only plan for how we can get off the volatile fossil fuel markets, to which the previous Government left us far too exposed, is the clean power action plan that we have announced. If the Tories oppose that, they need to come up with their alternative to deliver the resilience in the system that we are fighting for every single day.

I call the Liberal Democrat spokesperson.

The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) is right to raise this important question about energy security. Gas supplies are running low because of the unexpected cold snap over the past two weeks. While those who can afford it have continued to use gas, the energy crisis has left energy prices skyrocketing and energy bills spiralling, with many having to make the decision between putting food on the table or staying warm. That is the case for too many families in my constituency of South Cambridgeshire. The shadow Minister accused the Government of playing fast and loose, but it is due to the decisions of the last Conservative Government that we find ourselves in this mess, with their reckless dither and delay over insulation and decarbonising our homes and the irresponsible decision around our gas storage capacity. This is about overreliance on gas. For too long—

Order. You are over time, so I am sure you are coming to the end.

I am. What steps are the Government taking to reduce overreliance on gas by bringing in an emergency home upgrade scheme that will enable people to insulate and to keep their homes warm with heat pumps this winter, rather than waiting until spring?

I think the Minister has got the point.

The hon. Lady is right; this is an incredibly important issue that gets to the heart of the fact we inherited from the previous Government not just an economic mess but a series of policy decisions not made, and an energy system that needed us to take serious decisions quickly to build resilience for the future. On the broader point about consumers, she will know that my hon. Friend the Minister for consumers is doing a lot of work on exactly what the warmer homes scheme will look like, to ensure that people have as warm a home as possible. She is right that at times such as this, the people in the poorest households struggle the most. We are doing what we can to ensure that homes are insulated and, in the long term, to bring down bills. The only way to do that is to deliver clean power by 2030—faster than the previous Government would ever have managed.

The shadow Minister comes to the House with no shame. As has been referred to by my hon. Friend the Member for Sefton Central (Bill Esterson), the shadow Minister’s party closed Rough in 2017, leaving us exposed. I commend the Minister on taking urgent steps through our clean power mission to secure our energy system, and I urge him to ignore the political distractions of the Conservative party.

My hon. Friend is right that this Government are moving as fast as possible to build a more resilient system to get the country off the rollercoaster of volatile fossil fuel markets. The Conservatives seem to oppose that, but they have been on something of a journey in all these questions: they used to champion net zero and recognise that climate change was a clear and present danger to the world, but now they are drifting further away from that, looking for more extremist views on Twitter and elsewhere to crowdsource their policy. We are getting on with building the energy system to bring down bills, deliver energy security and, yes, to deliver climate leadership.

The National Electricity System Operator issued a warning of a 1,700 MW shortfall at the evening peak. It revised that down to barely more than 1,200, and it was running at one point with only 580 MW of margin. How are the Government so complacent about this? It is astonishing. As someone who has followed the energy debate for the past 30 years or so, I warn the Minister that this is almost unprecedented. For him to say that everything is absolutely fine is incredibly irresponsible, when his own Government’s policies are contributing to the tightness of the generating margin. If the lights go out, will he resign?

That is the kind of extremist scaremongering that we have come to expect from the shadow Secretary of State on Twitter, but we are now hearing it in the House. It is thoroughly irresponsible to use such language. In my answer, I read the very clear view of the National Energy System Operator, which runs the system and is the expert. I repeat it for the benefit of the House: “At no point were electricity supplies less than anticipated demand and our engineers were able to rebalance the system without the need to consider emergency measures.” The shadow Minister and Back-Bench MPs can repeat the phrasing around blackouts all they like, but at no point was that a concern. The reality is that while the Conservatives are happy to throw around such phrases without any evidence, we are building the resilient system of the future, and we will get on with doing that.

In government, the Conservatives saw the closure of Rough and reduced gas storage. In opposition, they oppose our proposals for clean power, and would see this country more reliant on volatile gas markets and higher energy prices. Is it not the truth that the Conservatives want us more reliant on gas, with higher bills and more likelihood of blackouts, because they oppose our plans for clean power and tackling runaway and accelerating climate change?

The decision on whether to run gas storage sites is a commercial one for Centrica. The storage site at Rough was closed between 2017 and 2022—hon. Members may remember that that was when the “beast from the east” was attacking the country. The previous Government will have to answer for the decisions that they made on that. We are making it clear that the only way to build the energy system that we need in the long term is the clean power action plan. The Conservatives used to support much of that but, increasingly, they have decided to walk away from it. They will either keep us attached to the volatile fossil fuel markets, with all the price spikes that our constituents continue to pay the price of, or they will have to come up with an alternative plan. We are getting on with doing the work.

Can I encourage the Minister to come out of combat mode for a second and consider a constructive proposal? If we are not to become re-dependent on gas when the wind does not blow and the sun does not shine, and we do not want to be dependent on foreign countries indefinitely, can he see a future role for modular nuclear reactors?

If I am in any kind of attack mode, it is because the Opposition do not seem to be dealing with reality, and I think it is important to correct that. The right hon. Gentleman is right that the future energy mix, as we outlined in the clean power action plan, will involve a range of technologies. We outlined the range we would expect for each of those, and nuclear—in particular small modular reactors—will play an incredibly important part in that. We are moving forward with the programme we inherited from the previous Government, which was yet another incomplete process. We will make it happen as quickly as possible, and SMRs will play a key role in our energy mix.

Following on from a previous question, clearly, the previous Government did delay investing in and starting up more nuclear power opportunities and options. What progress has been made since this Government came into power on plans to take forward nuclear power as part of our supply?

When?

Conservative Members ask, “When?” —they had 14 years in power, and in 14 years did not build a single new nuclear project. The former Minister for nuclear, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), loves to shout about all the consultations that he launched, but he did not build a single new nuclear power station. My hon. Friend is right to make the point that we should move forward with nuclear—we want to see nuclear projects move forward as quickly as possible. My hon. Friend the Minister for nuclear is moving forward with two of the biggest projects, as well as the small modular reactor competition. We are quite rightly going through a process to ensure that it is as robust as possible, but we will have more to say in due course.

Last Friday, I met Wales & West Utilities, which runs the gas grid in my constituency and beyond, where I heard that hydrogen is still a very viable option for home heating. Although there have been a number of pilots, the Government have recently gone quite quiet on hydrogen in home heating. Will the Minister update us on the steps he is taking to progress hydrogen for home heating?

The hon. Lady raises the potential of hydrogen in our energy mix. Of course, one of the real strengths of the gas network is that it can be changed into other things in the future; that is a real strength of what we have, and we are looking at what those options might be. There is a mix of options available with hydrogen, including home heating, but it could still play a really key role in industrial projects, for example, in the shorter term. We are looking at those projects. We need to ensure that it is financially viable and that we have worked out all the technological details on how we would make it happen. We will have more to say on that in due course.

My understanding is that these notices are issued at times of high demand, and that they are evidence of the system working in order to prevent power cuts or the system breaking down. I would have thought the Conservatives would have learned their lesson from the spike in international gas prices that caused the crisis in people’s fuel bills and led to a cost of living crisis, but they have learned nothing from that. Does my hon. Friend the Minister agree that this really underlines our policy of ensuring that we have a secure provision of renewable energy, which leaves us less open to spikes in prices on the international market?

My hon. Friend is absolutely right. It is worth saying that electricity margin notices are not unexpected, particularly at this time of year. They mean that there is enough generation available to meet demand, but that NESO would like to see a larger safety cushion; that is the important point for people to understand what margin notices are about. The notice was cancelled, of course, because there was sufficient supply to ensure that cushion. My hon. Friend’s broader point is important. We have outlined in great detail how we will deliver clean power by 2030. The Conservatives now claim to oppose that; in fact, they oppose much of net zero full stop. They will have to answer how they would deliver a secure and resilient energy system of the future that brings down bills and delivers on climate leadership.

I am unconvinced, to use parliamentary language, by the Minister’s reassurance that the lights did not almost go out last week. I am also unconvinced by his saying that the system is robust and resilient. This is the Minister who told electors in Scotland that energy bills would come down by £300 under this Government. They have gone up, and will go up twice more. Given the perilous gas storage situation—it is at 1%, compared to the 25% the EU enjoys—what steps will he take to de-stress the system by accelerating investment in long-duration energy storage?

I thank the hon. Gentleman for his characteristic question. On the first point, let me just say that it was not I who said anything about what the margins were. I quoted the National Energy System Operator, which actually delivers in this country—and will quote it again for the benefit of the hon. Gentleman: “At no point were electricity supplies less than anticipated demand and our engineers were able to rebalance the system”. He can take or leave my words—I am not particularly bothered—but those are the words of the people who actually operate the energy system. On the hon. Gentleman’s final point, I absolutely agree with him on the importance of long-duration energy storage. That is why, for the first time in 40 years, this Government announced a new cap-and-floor regime to deliver new long-duration energy storage schemes. That is a huge step forward from the position under many previous Governments, and it will allow the building of the pumped hydro schemes and new innovative technologies that will deliver that energy storage. We are moving as fast as possible. I hope that he and his hon. Friends will support those decisions.

I thank the Minister for updating and reassuring the House and residents on the robustness of the system, and for his work taking forward a wider diversification of energy supply. Will he update the House on support for the take-up of heat pumps, to ensure that, in the long run, we are far less dependent on gas from overseas? Will he also say something about the importance of insulation and what the Government are doing to support further measures to encourage insulation?

My hon. Friend is right that as well as building an energy system that will deliver generation capacity for the future, we need to work as fast as possible to reduce demand. Part of that is about moving away from gas to heat pumps. That is important not just for our energy system and climate, but for individual households in reducing their bills. We already see a huge shift in the uptake of heat pumps across the country. There is, of course, much more to do on that if we are to reach our target, but the Government are committed to that, and it is important for households right across the country. I echo his points on insulation. Those in fuel poverty are more likely to live in houses that are cold. The more we can do to create warmer homes—that is what the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Peckham (Miatta Fahnbulleh), is doing—the better for everyone.

Last week was the coldest week of the winter. Also last week, 41.9% of our energy mix was gas and just about 25% was wind. We have heard about issues with gas storage, and the Government are penalising the oil and gas sector by extending the windfall tax, not allowing new licences, and removing investment allowances. It feels like this Government are not taking our energy security seriously. Can the Minister reassure the House that that is not the case, and that he will engage with our oil and gas companies to ensure that we are secure in our energy today, despite what they are trying to do for the future?

I can give that assurance. Indeed, every month I have been in this job, I have been in Aberdeen, meeting oil and gas companies to discuss the issues. We are not going to agree on everything, but I have been very clear that there will be a long future for oil and gas in the North sea. Yes, we absolutely have said that we do not want to issue any new licences for new fields, but we will not revoke any existing licences. That means that there will continue to be work in the North sea for a long time to come. I repeat that it is categorically untrue that our electricity or gas supplies have been at risk over the past week. We have robust systems in place, and they worked exactly as they should. Consumers lost absolutely no supply over the last few days, nor will they in the weeks and months ahead.

I draw the attention of the House to my entry in the Register of Members’ Financial Interests about my membership of the energy unions, GMB and Unite. In 2017, the then energy Minister, the noble Lord Harrington, said: “the closure of Rough will not cause a problem with security.”—[Official Report, 27 June 2017; Vol. 626, c. 446.] Will the Minister confirm that the five wasted years that followed before Rough was reopened at reduced capacity continue to impose restraints on the network? Will the Government take an open-minded approach to Centrica’s proposals to gradually convert that storage capacity to hydrogen?

These are commercial decisions for Centrica, although if it brings those decisions to us, we will of course look at them. Let me reiterate that the UK has a robust set of storage facilities to ensure security of supply. Rough is one of them, but at moments such as this, in the winter, it is not the most important, because it is the slowest to move gas into the system. The remainder are in an entirely robust state and will continue to deliver, but as I have said, what it chooses to do with its site is a commercial matter for Centrica.

We have heard in the House today about an over-reliance on gas, but surely, in reality, it is an over-reliance on imported gas. The forces of this Government seem to be driving us into the hands of foreign suppliers, and as much as 80% of our gas may be imported by 2030. Should we not support domestic sources of oil and gas, and back the 200,000 industry jobs found in constituencies across the land, rather than pushing those people off a cliff?

I take issue with two of those points. First, in the past decade, 100,000 jobs have already been lost from the oil and gas industry, and that happened under a Government whom the hon. Gentleman supported. The industry is changing. We are putting in place a robust set of plans to help the workforce into the jobs of the future, rather than burying our heads in the sand and pretending that the basin in the North sea is not super-mature. Secondly, even if we were to extract more gas from our continental shelf, given that it is traded on an international market, and the pricing is set not by us but by the international market, we would continue to pay more for it, whether or not it came from the North sea, so that would not deal with the pricing issue reflected in the hon. Gentleman’s question.

Did the Minister assume that after the Government had robbed pensioners of the winter fuel allowance, gas consumption would go down, or are this Government so obsessed with their net zero policy that they do not really care whether we have enough gas to meet our energy needs? Does the Minister not realise that being reliant on foreign suppliers will push up fuel prices in the UK? How does he justify the fact that under his net zero policy, the Government are ignoring the fact that we have 150 years-worth of gas naturally stored in the United Kingdom, and will not use it?

Let me repeat what I said a moment ago: even if we were to take much more gas from our continental shelf, it would still be traded on the international market. The reason why the right hon. Gentleman’s constituents and mine still face a cost of living crisis is our exposure to petrostates and dictators around the world. He would clearly like to expose us to them even more, and I think that the Conservatives would support him in that, but we want to get ourselves off the rollercoaster of volatile fossil fuels and deliver a clean power system that is cheaper in the long run and delivers energy security. That is what is best for consumers, and for all our constituents.

The Minister has several times mentioned energy security, and has said that the drive to net zero will make us more energy-secure, but now that Europe has learned the lesson of taking fossil fuels from Russia, we will take our renewable resources from China, which manufactures and processes the vast of majority of the materials needed. What contingency plans has the Minister made in case China decides to get into a trade war with the UK on renewables, or to cut off supply? The threats that could come from China are exactly the same as those that came from Russia about fossil fuels.

Let me say two things to the right hon. Gentleman. First, our approach to China is that we will co-operate when it is in our interest to do so, and will challenge when necessary. That is the point that the Chancellor is making. Secondly, the way to ensure that what he describes does not happen, and that we build as much as possible in this country, is to build an industrial base in this country and to bring clean power jobs to the UK. The last Government failed to do that. We are driving forward an industrial strategy that will ensure that the jobs that arise from the clean power plan that we designed are in this country. The Opposition can either support that or oppose it.

This whole discussion underlines the importance of electricity storage, including at the battery energy storage system in my constituency, the Bredbury substation. How can we encourage more communities to welcome BESSs to their area, perhaps by considering community benefits, such as district heat networks?

The hon. Lady makes a really important point about energy storage in its various forms. Battery storage technology is moving forward extraordinarily quickly, and the short duration that we can get from batteries is improving quite considerably, so batteries will have a key role to play. Importantly, there is the potential for communities to drive some of that. We have been really clear in our local power plan that we want communities to be in the driving seat as much as possible, so that they can secure community benefits. We also want them to own some of the infrastructure. In a few weeks’ time, I will visit a scheme in Scotland where the community would be able to own not just a battery storage project, but a wind turbine that fills the battery. They would get a double benefit from the energy that they are generating and able to store. We would like to see more such schemes right across the country.

I have a certain amount of sympathy for the hon. Member for Widnes and Halewood (Derek Twigg), whom the Minister slightly fobbed off with his answer. Now that he has had a chance to calm down and check his notes, I will ask the question again on the hon. Member’s behalf: what have the Government done to advance the case for nuclear energy since they took power?

That is a very good question. I thank the hon. Gentleman for giving me a second chance to reiterate that we inherited a whole series of plans that were not delivered. We have moved forward as quickly as possible to deliver significant projects, but we have also moved forward the competition on small modular reactors. [Interruption.] The shadow Minister says, “All you had to do was sign it off.” Maybe he forgets the state in which he left some of his policies when he departed office.

As well as improving energy storage, we should be improving energy efficiency in our homes. The average energy performance certificate rating for properties in Caerfyrddin is D; it comes fourth-lowest in Wales in that respect. The Government plan to increase the EPC rating for rented properties to C by 2030. If we are to meet that aim through insulation, what lessons can be learned from previous schemes, such as the ECO4 scheme, which has been beset with problems, including contractors carrying out poor work on the properties of older and vulnerable people?

That is a really important point. My hon. Friend the Minister for Energy Consumers is leading a review of some of this work, and will have more to say about it soon. We need a scheme that rolls out far more insulation to retrofit homes. We have also driven forward a higher standard for new houses, but the delivery of the schemes has been questionable in places. I recognise some of her points, and that is part of what we have been reviewing. I recently met my Welsh counterpart to talk about planning regulations that are being brought forward in Wales, which will also make a difference to these kinds of projects.

In 2022, following the full-scale invasion of Ukraine, we saw a huge Government subsidy for household energy bills and an extra £15 billion per year in additional support for households. I appreciate that gas is traded globally and that the gas price moves globally, but if storage had been greater in 2022, could any of that £15 billion have been saved for taxpayers?

That is a really interesting question that I asked myself when I came into this role. Logically, we might assume so, but we do not empty the gas storage and then wait to refill it; we refill it constantly. That topping up will be done at whatever the price in the market at the time. The main reason why we would have used the gas in storage is that there is such demand in the system that the price is likely to be higher anyway. The hon. Gentleman makes a really important point, but I do not think that gas storage would have been the issue. I reiterate the point I made at the beginning: part of the reason why we have less gas storage than other European countries is that we have a different mix of routes to get gas in, and far more reliable supply chains for it, so we do not need to store quite as much as our European neighbours.

I thank the Minister for his answers and for what he has said so far. Approximately 330,000 homes and businesses in Northern Ireland are connected to gas, and there is also a scheme to enable social housing to use gas. That means that some of our elderly and most vulnerable people have no access to heating other than gas. How can the Government ensure that the most vulnerable in our society are guaranteed their gas supply over the next weeks, and how can the Government keep those in priority need at the top of the supply chain?

Characteristically, the hon. Gentleman raises an important point, and he has raised similar points with me before. It is important that the most vulnerable on the priority registers are prioritised for any additional support, and that is what we continue to do. Energy is a transferred matter in Northern Ireland, so I do not have a direct role to play in the gas system there, but I continue to engage with both Ministers in the Northern Ireland Executive that have an interest in this topic, and we have talked about these issues most recently.