Rt Hon Lord Lilley

    Mr Peter Lilley (Hitchin and Harpenden) (Con): To ask the Secretary of State for Energy and Climate Change, with reference to his Department’s publication Estimated impacts of energy and climate change policy on energy prices and bills, published in November 2014, what provision has been made in that document for likely costs of (a) additional generating capacity related to the intermittency of renewables, (b) additional transmission lines to link wind and other renewable generators to centres of consumption and (c) other measures to strengthen the grid to dial with intermittency.

    Matthew Hancock:DECC’s modelling of the electricity sector takes into account the expected contribution of intermittent renewables to meeting peak demand when assessing how much capacity must be procured under the Capacity Mechanism to maintain system security. The costs of the Capacity Mechanism are included in the aforementioned published analysis.

    As also set out in the report, estimated network bill impacts are based on network operators’ revenue allowances under Ofgem’s price controls for electricity distribution (RIIO-ED1) and electricity transmission (RIIO-T1), and on offshore revenue projections estimated by National Grid’s TNUoS model that was built for DECC’s Electricity Market Reform Delivery Plan.[1] Projections used in DECC’s report are adjusted to reflect DECC modelling of capacity uptake.

    The RIIO-T1 Final Determinations [2] show that for electricity transmission, the main driver for expenditure is increasingly to connect new generation (about two thirds of the planned investment to 2021). Not all of this will be associated with low-carbon generation and, in the absence of low-carbon generation, there would be costs to connect further conventional generation instead.

    [1] https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/267614/Annex_D_-_National_Grid_EMR_Report.pdf

    [2] https://www.ofgem.gov.uk/ofgem-publications/53599/1riiot1fpoverviewdec12.pdf.