Fifty-Ninth Report - Decarbonising the power sector

Select Committee
Public Accounts Committee HC 1003 21 June 2023
Report Status Government responded
Conclusions & Recommendations 23 items (3 recs)
Source View on Parliament website
Government Response (AI assessment · 22 of 23 classified)
Accepted 15
Acknowledged 1
Not Addressed 1
Rejected 5
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Fifty-ninth report from Session 2022-23 · published 24 Sep 2023
Read the government response ↗ Response on the tracker

Recommendations & Conclusions

23 results
2 Conclusion Accepted
Provide annual updates to Parliament on progress towards energy objectives and risk mitigation.
Conclusion
We are sceptical that plans for expanding nuclear, solar and wind power are credible. Government has set itself highly challenging electricity generating capacity ambitions for nuclear (24GW by 2050), solar (70GW by 2035) and offshore wind power (50GW by 2030). … Read more
Government Response Summary
The government agrees with the recommendation but states it already provides annual updates to Parliament through its responses to the Climate Change Committee's annual Progress Reports and other departmental publications.
HM Treasury
View Details
3 Recommendation Accepted
Set out plans to provide greater clarity to the private sector for decarbonisation investment.
Recommendation
We are not convinced that government is providing enough clarity to the private sector to attract the investment that is necessary to build infrastructure, spur innovation and drive competition to lower costs. Government estimates that hundreds of billions of pounds … Read more
Government Response Summary
The government published several strategies and roadmaps (Green Finance Strategy, Powering Up Britain, specific sector roadmaps in March 2023) to provide investment clarity, and plans to publish further roadmaps for other sectors later in 2023. It highlighted £20bn funding for CCUS and annual CfD auctions as specific actions.
HM Treasury
View Details
4 Recommendation Accepted
Set out strategies to influence other departments for power sector decarbonisation collaboration.
Recommendation
It is not clear the Department has the support it needs from other departments to achieve government’s power sector decarbonisation ambition. While it holds responsibility for, and takes the lead for achieving energy security and net zero, the Department nevertheless … Read more
Government Response Summary
The government states it already has robust governance and reporting processes at ministerial and official levels, including various committees and groups, to ensure cross-departmental collaboration and prioritization for power sector decarbonisation.
HM Treasury
View Details
5 Recommendation Rejected
Publish delivery plan information on decarbonisation cost impact for energy bill payers and taxpayers.
Recommendation
The Department has not yet set out how it expects decarbonising the power sector will impact energy bill payers and taxpayers. While government recognises that initially it will rely heavily on private investment to fund the clean energy transition, the … Read more
Government Response Summary
The government rejects the recommendation, stating that future costs are uncertain and that it already publishes information on cost impacts for specific policy interventions in Impact Assessments and monitors energy prices via Quarterly Energy Prices reports.
HM Treasury
View Details
6 Conclusion Accepted
Write to Committee setting out demand assumptions for energy efficiency and consumer behaviour policies.
Conclusion
We are not yet clear what the Department’s plans are in respect of energy efficiency and consumer behaviour. The Department acknowledges that improving energy efficiency and changing consumer behaviour are key to meeting net zero. However, recent energy bills support … Read more
Government Response Summary
The government states it has already modelled two scenarios (Net Zero Higher and Lower) and that full details of its modelling, assumptions, and how policies reflect energy efficiency and consumer behaviour are set out in the technical annex to the Net Zero Strategy and the Carbon Budget Delivery Plan.
HM Treasury
View Details
1 Conclusion Acknowledged
Committee takes evidence from Department on power sector decarbonisation report.
Conclusion
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Energy Security and Net Zero (the Department) about decarbonising the power sector.1
Government Response Summary
While responding to a conclusion, the government outlines its 'whole system' approach to power sector decarbonisation and states it intends to publish a short overarching plan later in the year to coherence its various policies.
HM Treasury
View Details
7 Conclusion Not Addressed
Regulatory system for nuclear energy insufficient to deliver government's ambitious pipeline.
Conclusion
In the last two decades, government has only agreed one nuclear project, at Hinkley Point C.18 The government is now creating Great British Nuclear to help it build capacity and expertise, and a regulatory regime aimed at expanding its nuclear … Read more
Government Response Summary
The government states it agrees with the recommendation and provides annual updates to Parliament through responses to the Climate Change Committee’s reports and other publications. The response does not address the committee's observation regarding the efficiency or speed of the nuclear regulatory system.
HM Treasury
View Details
8 Conclusion
Offshore wind project pipeline could exceed ambition, but not all expected to succeed.
Conclusion
The Department also told us that it is tracking offshore wind projects at various stages of development that could produce 80GW of electricity when operating, more than its 50GW ambition. However, it acknowledged that not all these projects would succeed. … Read more
HM Treasury
View Details
9 Conclusion Accepted
Uncertainty creates investment hiatus despite billions needed for power sector decarbonisation.
Conclusion
The government estimated in its 2021 Net Zero Strategy that £280 to £400 billion of public and private investment in new generating capacity would be needed by 2037 to decarbonise the power sector. These costs represent the construction costs for … Read more
Government Response Summary
The government agrees with the committee's observation, recognizing the importance of clear plans for private investment. It has published several strategies, committed £20 billion for CCUS, launched annual Contracts for Difference rounds, and is producing sector-specific investment roadmaps to provide investor clarity.
HM Treasury
View Details
10 Conclusion Accepted
Contracts for Difference mechanism effectively reduced offshore wind costs and spurred investment.
Conclusion
The Department told us that its role is to enable competition to drive innovation and cost reduction, and that the best example of this is how contracts for difference have sustained investment and innovation from the private sector in offshore … Read more
Government Response Summary
The government agrees and aims to provide clarity to the private sector to encourage investment by publishing the 2023 Green Finance Strategy and other plans. These initiatives include £20 billion for CCUS, annual Contracts for Difference rounds, and sector-specific investment roadmaps to boost investor confidence.
HM Treasury
View Details
11 Conclusion Accepted
Government's ambitious CCUS strategy remains untested at scale despite significant investment
Conclusion
At the 2023 Spring Budget, the Chancellor announced £20 billion for carbon capture, usage and storage (commonly referred to as CCUS).32 However, while providing a signal to the sector and investors, this technology is untested at scale in the UK. … Read more
Government Response Summary
The government accepts the committee's observation, stating a target implementation date of December 2023, and details its efforts to provide clarity and encourage investment through recent publications, £20 billion funding for CCUS, and plans to publish further sector-specific roadmaps later in 2023.
HM Treasury
View Details
12 Conclusion Accepted
Inconsistent government energy policy undermines investor confidence and hinders decarbonisation progress
Conclusion
More generally, changes in policy direction can affect investor confidence in government.36 Energy policy instability, such as the stop-start nature of some initiatives like the Green Homes Grant Voucher Scheme, which was extended and then abruptly closed, have eroded investor … Read more
Government Response Summary
The government agrees with the committee's observation and has published the 2023 Green Finance Strategy, Net Zero Growth Plan, and Energy Security Plan to provide clarity and encourage investment. These plans include £20 billion for CCUS, annual Contracts for Difference rounds, and sector-specific investment roadmaps.
HM Treasury
View Details
13 Conclusion Accepted
Department for Energy Security & Net Zero has limited levers to influence other departments
Conclusion
On 7 February 2023, the government announced that the Department for Business, Energy & Industrial Strategy (BEIS) would close, and its responsibilities would transfer to new departments, including the Department for Energy Security & Net Zero (the Department).39 The Department … Read more
Government Response Summary
The government states the recommendation has been implemented, describing its existing robust governance and reporting processes at both ministerial and official levels, including regular inter-departmental meetings, to ensure collaboration and alignment across government departments on decarbonising the power sector.
HM Treasury
View Details
14 Conclusion Accepted
Skills shortages and planning system issues hinder energy sector decarbonisation progress
Conclusion
The Department has created offshore wind, hydrogen, electricity network, and nuclear champions whose role includes identifying potential risks, barriers and bottlenecks to progress and making recommendations for both the Department and other parts of government where issues cross departmental responsibilities. … Read more
Government Response Summary
The government agrees with the committee's observation, stating the points raised are already implemented through existing robust governance and cross-departmental processes to coordinate action across relevant departments.
HM Treasury
View Details
15 Conclusion Accepted
Cross-Whitehall collaboration challenged by competing departmental ambitions and long-term skills gaps
Conclusion
The Department told us that it is essential that it builds strong partnerships and collaborative relationships with relevant departments across Whitehall, and that it works with No. 10 and the Cabinet Office to ensure that departments are aligned.48 However, other … Read more
Government Response Summary
The government states the recommendation has been implemented, detailing its existing robust governance and reporting processes, including ministerial and official level committees, to ensure collaboration and alignment across departments on decarbonising the power sector.
HM Treasury
View Details
16 Conclusion Rejected
Significant investment in power sector lacks clear assessment of spending timelines and funding
Conclusion
While government has estimated that £280 to £400 billion of public and private investment in new generating capacity will be needed by 2037, it has not yet assessed when there may be periods of higher spending and how this will … Read more
Government Response Summary
The government rejects the committee's observation, stating its focus on consumer security, affordable bills, and its current approach to policy decisions, cost impacts, and monitoring energy prices.
HM Treasury
View Details
17 Conclusion Rejected
Nascent technologies for decarbonisation will incur significant costs for taxpayers and consumers
Conclusion
We questioned the Department as to how it is planning to protect consumers and taxpayers from the cost of decarbonising the power sector, particularly when a challenge of proceeding quickly is that deploying nascent technologies before there is a competitive … Read more
Government Response Summary
The government rejects the committee's observation, outlining its focus on consumer security by reducing and affording bills and describing its approach to managing policy interventions, cost impacts, and monitoring energy prices.
HM Treasury
View Details
18 Conclusion Rejected
Long-term consumer bill reductions from renewables seem inconsequential amid high wholesale prices
Conclusion
Although the Department was unable to tell us when bill payers would see lower bills as a result of investment in zero and low-carbon generating infrastructure, it highlighted recent analysis by Ofgem that renewables funded by contracts for difference are … Read more
Government Response Summary
The government explicitly disagrees with the committee's (implied) recommendation, stating its focus is on consumer security by bringing down bills. It highlights past support schemes and its long-term strategy, Powering Up Britain, to deliver wholesale electricity prices amongst the cheapest in Europe.
HM Treasury
View Details
19 Conclusion Rejected
Department exploring fundamental electricity market reform to reduce long-term consumer costs
Conclusion
The Department is also currently considering fundamental market reform of how electricity is bought and sold, through which it hopes to reduce costs of electricity to consumers over the long term. The Department expects reform of the retail market to … Read more
Government Response Summary
The government rejects the committee's observation, stating its focus is on consumer security by reducing and affording bills, and explaining its approach to policy interventions, cost impacts, and monitoring energy prices.
HM Treasury
View Details
20 Conclusion Accepted
Energy bill support schemes prioritise cost reduction over encouraging demand efficiency
Conclusion
Government’s Net Zero Strategy expects a 40% to 60% increase in electricity demand by 2035 as more modes of transport and heating switch to electricity from fossil fuels.61 The Department told us it is expecting a corresponding increase in electricity … Read more
Government Response Summary
The government states the recommendation has been implemented, describing its existing Net Zero Higher and Lower modelling scenarios which estimate future power demands and consider consumer choices and energy efficiency. Government policies are designed to incorporate these factors and incentivise behavioural change, as detailed in the Carbon Budget Delivery Plan.
HM Treasury
View Details
21 Conclusion Accepted
EPC rating C requirement implementation faces ongoing cost-effectiveness and affordability debate.
Conclusion
We asked the Department about its plans to encourage consumers, industry and households to invest in greater energy efficiency. It told us that this is an important aspect of its strategy, which includes encouraging short-term demand flexibility from consumers to … Read more
Government Response Summary
The government agrees with the committee's observation, stating the points raised are already implemented through existing strategies that use modelling scenarios and policies to encourage energy efficiency and consumer behavioural change, as detailed in their Carbon Budget Delivery Plan.
HM Treasury
View Details
22 Conclusion Accepted
Government's energy efficiency initiatives plagued by fragmented, stop-go implementation track record.
Conclusion
In its 2022 Autumn Statement the Chancellor announced new funding of £6 billion from 2025 to 2028 to improve energy efficiency for households, business and the public sector. The Chancellor announced that an Energy Efficiency Taskforce would be charged with … Read more
Government Response Summary
The government agrees with the committee's observation, stating the points raised are already implemented through its existing strategies that use modelling scenarios and policies to encourage energy efficiency and behavioural change, as detailed in the Carbon Budget Delivery Plan.
HM Treasury
View Details
23 Conclusion Accepted
Significant uncertainty remains regarding consumer behaviour change for power sector decarbonisation.
Conclusion
We also asked the Department about how government can influence consumer behaviour. The Department told us that its modelling of power sector decarbonisation by 2035 covers different pathways characterising different assumptions of consumer behaviour and energy efficiency (such as home … Read more
Government Response Summary
The government states the recommendation has been implemented, explaining its existing Net Zero Higher and Lower modelling scenarios that estimate future power demands and consider consumer choices and energy efficiency. Government policies are designed to incorporate these factors and incentivise behavioural change.
HM Treasury
View Details