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Energy Security

Several speakers have talked about the oil and gas industry in the North sea, but I would caution Members about writing it off. The Energy and Climate Change Committee report shows that this industry still has a future, not only because there is a large amount of oil and gas in the North sea, but because there is an opportunity to use the skills developed in the North sea to move forward into renewables industries, particularly offshore wind and tidal and wave power, which could be the key to much of our energy for the future. I agree with what the right hon. Member for Croydon, North (Malcolm Wicks) said about the dash for gas. Generating electricity might well not be the best use of our gas reserves, but the fact is that gas is a major part of our electricity generation at the moment. Under current proposals, 33 gas plants have received planning permission but are not yet in operation and another nine are under consideration, totalling about 15 MW already planned to come on stream. They will play a considerable part in our energy provision for the foreseeable future. In Committee, I proposed an amendment to the Energy Bill to try to get the Government to look at gas combined capture and storage. The Government opposed and defeated it. I entirely understand the Government's wish to concentrate on coal in the first instance, and I understand, as do all members of the Committee, the need to get CCS for coal, but I do not understand the refusal even to consider gas for the near future. Given the amount of gas that we still use in generation, it seems to me that it is going to be part of our energy mix for the foreseeable future, so we are going to have to decarbonise gas as well. Even at this late stage, I ask the Government to think again. In the remaining few minutes, I want to concentrate on the vital issue of transmission charges, which I raised in an intervention. If renewables are going to play a major part in our energy mix, we will have to deal with this matter. The Government have rightly announced ambitious plans for offshore wind farms, but that energy has to come ashore, get into the national grid and be transmitted to the areas where it will be used. The current transmission regime was developed for a grid where power came from big coal, gas and probably nuclear stations, which were often located near the main centres of population, but it is not fit for a new century of renewables, when energy sources are in much more remote areas and there are greater difficulties in getting that energy into the national grid. The locational charging methodology used by Ofgem levies higher charges on generators furthest from the main centres of demand, which generally favours those in the southern part of the UK over those in Scotland. Indeed, it has been calculated that transmission charges are £21.58 per kilowatt-hour in the north of Scotland compared to an effective subsidy of £6.90 per kilowatt-hour in London. That is a lunatic system when we are looking to develop renewables. As a result, Scottish generators produce 12 per cent. of UK generation but account for 40 per cent. of the transmission costs—about £100 million a year more than their fair share. Wind is not the only issue here. For example, there are huge opportunities in the Pentland firth for tidal power, but we need the infrastructure to bring that power into the grid. It is not a case of putting the cost on the developer; the matter should be part of a national plan for renewables. Only last weekend, a considerable amount of controversy arose over suggestions that National Grid might be thinking of doubling or tripling charges to the islands, although it has been denied. Will the Minister look seriously at instructing Ofgem and National Grid to undertake an objective and open analysis of the impact of locational charging, broken down by each part of the UK and by type of generation for both current and future generation mix scenarios. That should address the key question of how much more productive or competitive a renewable project in Scotland has to be to offset the impact of a locational charge. Alternative models of charging should be considered, particularly the post stamp model, which would be in the national interest as well as in the interests of generators in Scotland. If we do not get this right, I greatly fear that we will end up—