Contribution
It is a pleasure, as always, to serve under your chairship, Sir Christopher. I thank the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing the debate. He and I have talked about this issue many times, but I never tire of it. As he rightly said in his speech, it is an incredibly exciting opportunity for the highlands and an important opportunity for the country.
I always know that winter is coming when the hon. Gentleman’s jumpers make a reappearance. I am a big fan of them, and it is great to see him here today. He is a great champion of his constituency, which covers an enormous part of Scotland. However, having run the Arisaig to Mallaig half-marathon, I would say that he has a significant amount of very beautiful sand in his constituency.
This has been an interesting debate. I will come to the hon. Gentleman’s points about long duration energy storage, but we have also heard about its cousins, such as pumped hydro and sand batteries, which is about storing energy through heat rather than in more conventional ways. It is important to be agnostic about the new technologies that are coming forward all the time and becoming ever more developed. We need a significant amount of flexibility in our system to be able to store and utilise the clean power that we are generating when we need it most. We should be open to a whole range of technologies, so I am very happy to have more conversations about all of them.
The hon. Gentleman made a strong case for the importance of long duration electricity storage. Over decades we have built a significant amount of renewable energy generation across the UK, both offshore and onshore, but we have not kept pace with being able to store that electricity for when we need it most, which has meant that our electricity system cannot get the full benefit of the clean, cheap, secure power that is being generated every single day. In fact, as the hon. Gentleman said, we have to spend considerable amounts of money on constraining that renewable capacity, because we did not build the grid. We have not built the necessary storage, so our transition to being able to deploy clean power when we need it requires much more flexibility, which comes from long duration energy storage.
I recently visited the pumped hydro project in Cruachan, which follows a well-trodden path of technology that we have deployed for a very long time. Pumped hydro lasts for a long time, is an important part of how we deliver long duration energy storage and will play a critical role in balancing supply and demand. In June, Ofgem published its minded-to list for window 1 of the cap and floor scheme. That was a significant milestone for the sector. I agree with the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter)—there is a double act of Members with long constituency names——about the ambition on long duration energy storage, but I would also say that this is the first long duration energy storage we have built in Britain in 40 years, and it is a significant amount: 7.5 gigawatts of capacity is not nothing. We remain really ambitious. He is right to say that future scenarios require even more long duration energy storage, but this is a remarkable turnaround from a 40-year gap in building any of these projects anywhere in the country.
Ofgem has provisionally selected 16 projects. It has made minded-to decisions, but a consultation process is running. Three projects are pumped storage hydropower in Scotland, representing over half the LDES capacity. Ofgem will announce its final decision on those projects by the end of the year. When they are delivered, they will reduce costs for consumers by maximising our renewable energy generation to make it available when we need it at peak times and reducing our reliance on natural gas, which is the part of the constraints that is often misunderstood in the press. The cost does not come from turning off wind; it comes from turning up gas somewhere else in the country. If we deploy LDES in the way we intend to, we will be able to reduce that dependency on costly gas generation.
I understand that the hon. Member for Inverness, Skye and West Ross-shire agrees with me on the need for long duration energy storage—we have had this conversation many times—but he also rightly wants to make sure that his community benefits from these projects. Their construction in itself creates a significant number of jobs over several years. That is expected to begin by next year and continue into the early 2030s. One project that he mentioned, Loch Earba, will create approximately 600 jobs over its five-year construction period, including at least 30 new apprenticeships. It is estimated that another project, Loch Kemp, will create 370 jobs in the highlands at peak construction. It has committed £7.5 million to a community fund, and to investing in projects such as the Caledonian canal and local roads.
The hon. Gentleman also rightly made the point about local supply chains and making sure we are delivering as much of the economic benefit of those projects in local communities. The single most important thing my Department has been driving in two and a half years in relation to the construction of these projects is no longer to be agnostic about where we build things as a country, because we actually care about industrial strategy. I have been very clear with all developers that expect to receive public money that they should look at every single part of their procurement to ensure, even down to the smallest contracts, that they procure locally as much as possible. I recognise that that is a shift from where we have been for a long time as a country, but it is critical because that is where we get supply chain jobs right across the hon. Gentleman’s constituency.