Electricity Capacity (No. 2) Regulations 2019 — House of Lords, 2019-07-17
Topic: Energy
Oliver Michael Robert Eden (Conservative, Centre-right): My Lords, I am grateful to all three noble Lords for their interventions and I will try to deal with as many of the questions as possible. I believe I have a certain amount of time in which to respond. I am not quite clear when the usual channels want to return to other matters but I imagine that, whenever it is, it should be seen as a limit rather than a target. Therefore, I will try to keep my responses as brief as possible, and there are possibly one or two that I hope noble Lords will accept in writing. I am thinking particularly of the last point on the Explanatory Memorandum made by the noble Lord, Lord Grantchester I think we are all, to some extent, singing from the same song sheet in that we all have the same clear aim of wanting to head in the direction of getting to zero carbon by 2050, as we made clear in our recent announcement. It might be that others feel that it can be done quicker or in different ways, but we are all trying to do the same thing and to see that we achieve increasing amounts of electricity generation by low-carbon means. As noble Lords will be aware, we have achieved a great deal—consumption is down to something of the order of 5% coming from carbon We also believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. I will write to the noble Lord, Lord Teverson, who asked for detailed figures on the overall costs of that over the years. The noble Lord, Lord Grantchester, asked whether we could speculate about future auctions in the light of the continuously lower prices achieved at repeated auctions. Obviously, it would be wrong for me to speculate in any way about what price might be obtained—that is not what one does in advance of an auction—but it is encouraging that the price has come down. We still believe that that process is necessary and the right way to deal with these matters The noble Lord, Lord Grantchester, also asked about the five-year review. I can tell him that it will be published soon. I cannot give him a precise date at this stage but I will say "soon", "shortly" or something of that sort. However, it is certainly on its way and I very much hope that we can look at it in more detail in due course I turn now to the points raised by the noble Lord, Lord Stunell, particularly about the judgment of the European court and the decisions by the Commission. He said that the judgment was more than just procedural. The court identified elements of the capacity market which should have given the Commission doubts about whether the scheme was compatible with state aid requirements. That meant that the Commission should have conducted an in-depth investigation before deciding whether to approve the scheme. Importantly, however, the court did not rule that the design of the capacity market was incompatible with state aid requirements or direct that changes be made to the mechanism. We have carefully considered the matter. When I say "we", I mean department officials and my right honourable friend the Minister for Energy. I cannot confess that I have read the detailed paragraphs that the noble Lord referred me to, but we have carefully considered each of the issues raised in the court judgments, and we remain confident that the design of the capacity market is compatible with the state aid requirements, including in the way the system is designed in respect of demand-side response.