Statement on decarbonising electricity generation

Deputy Speaker,

I rise to give a statement on the government’s plans to decarbonise electricity generation. The Energy Act 2023 I co-authored set a deadline of 2035 for decarbonising this sector, and the government is committed to meeting this target. In this ministerial statement I shall be setting out our plans to achieve it. In the coming years, as transport, heating, manufacture and other sectors are increasingly electrified, demand for electricity will also increase, so this statement will also be outlining plans to increase how much electricity is generated in total.

The Committee on Climate Change (CCC) estimates, in its Sixth Carbon Budget report, that electricity demand will rise from around 300 terawatt-hours in 2020 to between 350 and 370 TWh in 2030, between 420 and 490 TWh in 2035, and between 550 and 680 TWh in 2050, depending on how much electrification occurs and how demand is managed. The government’s plans revolve around the Balanced Pathway set out in this report, which forecasts demand to rise to 360 TWh in 2030, 460 TWh in 2035, and 610 TWh in 2050. In this statement, I will be setting out the government’s plans for electricity generation up to the year 2035.

Sources of energy can be broadly split into the following categories: firm baseload power, variable renewables, dispatchable low-carbon generation, and storage.

Firm baseload power refers to sources of energy which essentially provide a constant power output which cannot easily vary to respond to changes in demand. In the UK nuclear power provides this role, and it will play an important role in decarbonising the electricity supply. The government is committing to the Balanced Pathway’s plan of having 10 GW of power provided by nuclear power, with 8 GW of this being from new nuclear power stations. Due to the longer timeframes that constructing a nuclear power station typically has, to ensure that the new nuclear power stations can start generating electricity by 2035, the government’s initial priority will be on building nuclear power stations; and the Department for Energy and Climate Change has decided to support the Bradwell B, Sizewell C and Hinkley Point C projects.

Bioenergy with carbon capture and storage, or BECCS for short, is considered by the 6th Carbon Budget to be low-carbon dispatchable generation, but the CCC expects it to run relatively inflexibly, so the role it will play may be closer to that of firm baseload power. BECCS power stations will burn fuels generated by biological processes, such as biomass produced from crops or biogas produced from the decomposition of waste; and, in the Balanced Pathway, will generate around 14 TWh of energy in 2035. BECCS has the potential to be the most carbon negative source of energy generation in the Balanced Pathway, but there are concerns over the sustainability of biomass supplies. To ensure that biomass used in BECCS is sourced sustainably, the government plans to minimise use of imported biomass in BECCS. Some BECCS power stations will be new-build while others will be converted from unabated bioenergy to BECCS via the installation of CCS, with most of this taking place in the 2030s.

Variable renewables refers to renewable sources of energy which naturally vary in power output over time, such as wind power and solar power. Wind, particularly offshore wind, will form the backbone of our future electricity network due to the abundance of wind in the North Sea. Under the Balanced Pathway, variable renewables would account for 60% of electricity generation by the end of this decade, and for 70% by 2035. The Balanced Pathway recommends that enough wind turbines should be built such that wind generates 265 TWh of energy in 2035, and that this can be achieved by installing around 3 GW of new capacity each year, with older sites being repowered as they reach the end of their lives. The Balanced Pathway also recommends increasing solar power from generating 10 TWh of energy in 2019 to 60 TWh in 2035, and that this can be achieved by delivering 3 GW of extra capacity per year on average. The government has accepted these recommendations, and plans to deploy variable renewables at scale during the next ten years.

Dispatchable generation refers to sources of energy which are not affected by changes in weather, and which can increase or decrease their power output at moments’ notice to respond to changes to demand. Currently, this role is mainly fulfilled by unabated gas power stations, which are set to be phased out by 2035. The Balanced Pathway suggests phasing out unabated gas generation in favour of dispatchable low-carbon generation, which includes gas power stations with CCS and and power stations which generate energy from hydrogen.

The Energy Act 2023 has placed a legal deadline of phasing out all gas power stations, both unabated and with CCS, by 2035; and the CCC has said that hydrogen power could replace gas CCS, with it being possible to retrofit gas power stations to instead burn hydrogen. Therefore, the government is committing to providing dispatchable low-carbon generation from hydrogen, with gas power stations being converted to run on hydrogen where possible, with most of this rollout taking place in the 2030s. In 2035, our plans would see hydrogen generate 50 TWh of energy. However, for hydrogen to be a truly low-carbon form of generation, the hydrogen it uses as fuel needs to be produced through low-carbon methods.

Hydrogen can be produced sustainably by passing an electric current through water, which splits the water molecules into oxygen and hydrogen gas via the process of electrolysis; and biohydrogen can be generated from biomass via BECCS, with the carbon this produces being captured and stored. However, it can also be produced from natural gas, a fossil fuel, through a process which releases carbon emissions. Under the Balanced Pathway, excess supply will be used to produce hydrogen via electrolysis, with it producing a quarter of the UK’s hydrogen supply in 2035, and close to a half by the middle of the century. The rest of the UK’s hydrogen supply will be produced from BECCS and from natural gas with CCS.

As our future electricity network will rely a lot on variable renewables, storing energy at times of high supply and low demand for use when demand is high but supply is low will be important. Hydrogen will be the primary way of storing energy: excess electrical energy will be used to produce hydrogen via electrolysis. The hydrogen this generates can then be used to generate electricity, as I discussed when I talked about dispatchable generation. Batteries will also play an important role. The Balanced Pathway features 18 GW of capacity in 2035. The final way through which energy will be stored will be through pumped hydroelectricity. There currently exists 3 GW of pumped hydroelectric capacity, and the Balanced Pathway would maintain this. The government accepts these recommendations, and plans to roll out most of this extra storage capacity in the 2030s.

The Balanced Pathway also recommends increasing the capacity of interconnectors which allow the UK to sell electricity to other countries at times of excess supply, and to import electricity at times when supply is low and demand is high. However, it is also important that we ensure that the electricity the UK imports is from renewable or low-carbon sources. With this in mind, the Balanced Pathway recommends increasing capacity from 6 GW currently to 18 GW by 2050. The government accepts this recommendation.

The final issue I wish to discuss is that of flexible demand. Currently, some energy companies ask their consumers to reduce their electricity consumption during certain times of day to avoid having to turn on a gas power station by shifting some of their electricity use to a different time of day, such as by running their washing machine or charging their electric car at a different time of day when renewables are generating more electricity. This will continue to play a part in our future electricity network so that renewables are utilised as much as possible, and to avoid power stations burning more bioenergy or hydrogen than they need to.

This plan to decarbonise the electricity network requires funding, and so I am proud to announce that the government’s budget will be providing the necessary funding to implement this plan, as recommended by the CCC. For the 2024-2025 financial year, 14 billion pounds of funding will be provided, increasing from under 4 billion for the previous year. It will increase to 15 billion next year, 16 billion for 2026-27, and 17 billion for the following 2 years. Due to the low cost of renewables compared to fossil fuels, this plan will pay for itself in the long-term, with the required capital expenditure being offset by operational cost savings by the middle of the century.

I commend this statement to the House.

This statement is delivered by the Secretary of State for Energy and Climate Change Rt. Hon. Sir LightningMinion CT CT KT CBE OM OM PC MP MSP

Sources used or referenced:

Sixth Carbon Budget Report - Committee on Climate Change

Decarbonisation of the power sector - House of Commons Business, Energy and Industrial Strategy Committee

The building blocks of a zero carbon power system - green alliance

Delivering a reliable decarbonised power system - Committee on Climate Change

Debate under this statement shall end on the 10th February at 10pm GMT