Lord Whitehead (Lab)

I thank noble Lords for their very constructive and interesting contributions. I will attempt to address them as best I can. I do not think that I will have to write to anybody but, if necessary, I will make sure that it is done. I have worked very successfully with the noble Lord, Lord Teverson, over a number of years in all-party groups and as shadow Energy Minister, and have always found him to be very constructive and helpful. He has been particularly helpful today by raising geothermal, which for a long time has been one of the issues closest to my heart. The Southampton geothermal scheme came in seven years before the Government recognised that geothermal had some interest and future. I acknowledge that this was in 1990, but the Southampton scheme had been up and running for seven years before that. However, that is a very minor point. The noble Lord put important points forward concerning what is likely to happen to geothermal. Do we think that it is a very important technology for the future? Yes, and it is a very important technology in terms of the rollout of heat networks that is taking place. Also, being one important low-carbon source for informing those heat networks, it is pretty good for ensuring that, if you have a low-carbon alternative to what is normally the case in heat networks—a high-carbon gas engine—going into the scheme, geothermal can be a very efficient, long-lasting and virtually permanent alternative to that gas engine putting the heat around the network. There are questions to answer about the capex involved with that process and how that is undertaken—whether jointly with the heat network or in addition to a heat network that is already existent. There are also questions on how geothermal may or may not be eligible for the AR process. The noble Lord knows that geothermal is not just one thing. Sedimentary geothermal is normally drilled at shallower depths, gets heat up from aquifers and associated activities and then goes through a heat transfer arrangement. Then you have much deeper geothermal, which can go far deeper and penetrate, for example, hot rocks. That is what is happening in Cornwall, which the noble Lord opened up. I was unfortunately unable to be there on the opening day, but I was very glad that he was the person chosen to open those proceedings. The noble Lord will know that those particular schemes, of which there are three—one of them is now operational—are all about producing mainly electricity with, interestingly, lithium extraction as a by-product, but they are not strictly comparable with sedimentary geothermal, which is all about heat elsewhere in the country. Indeed, there are much greater prospects than were hitherto thought for both sedimentary thermal and hot rocks. As the noble Lord mentioned, it was almost a lucky accident of AR5, you might say, but the miserable outcome of AR5 was tempered somewhat by the fact that, because there were no bids in the main pot, geothermal actually managed to get its bids in at that particular point. Bringing that together for AR8 and future allocation rounds, clearly, allocation rounds are based on the production of electricity, so purely heat-based geothermal would not qualify and would need to be supported— if it is to be supported—by means other than the allocation round process. So, as far as AR8 is concerned, the question of the pots and so on is still being determined, but it is certainly the case that purely heat-based geothermal will not qualify in future. Then we have the question of the United Downs schemes. We await the outcome of the other two schemes. Of course, they have a great deal on their plate at the moment, so I am not sure whether they will be bidding for a lot more schemes right this minute, but that is where we stand as far as geothermal and allocation rounds are concerned. The noble Earl, Lord Russell, was concerned about the extension of the CfD from 15 years to 20 years in the most recent rounds. I note his party’s policy to take that even further. The extension from 15 years to 20 years was certainly a measure to make sure that those people who are bidding into the system have good, regulated cover for their product for a reasonable number of years; obviously, that then reflects on to the amortisation of the capital process and the security that that gives. Clearly, that was a factor in making sure that so many people got into the allocation rounds, bid and succeeded. Whether that 20-year figure needs extending further, as far as offshore wind is concerned, will need to be looked at in terms of the experience of AR8 and, possibly, AR9—and, indeed, the practical outcome of AR7. So, it appears at first sight that it has been a very positive extension, but, of course, as the noble Earl will know, there were different levels of CfD provision for, for example, Hinkley. So it is not the case that CfDs are “one size fits all” as far as those terms are concerned. The noble Earl also asked what is being done about onshore wind. There is a lot happening as far as onshore is concerned, in addition to offshore, in terms of its access to the AR process, from which it was previously banned, in effect, and in terms of not just powering new onshore schemes but repowering existing onshore schemes. He will know that the intention is to bring repowering into the AR process, if that can be done, which would in itself be a considerable step forward—for example, in the threefold additions that one can get from repowering on sites that have hitherto worked to a much lower capacity in the past. I think I have responded to the points from the noble Earl, Lord Russell, but if he does not think so, I can certainly take them up in writing.