My Lords, the draft order was laid before the House 14 July 2020.
Electricity storage will play a crucial role in helping us meet net zero by 2050. It provides flexibility so that renewable generation, electric vehicles and heat pumps can be integrated on to the system. Deploying smart and flexible technologies, such as storage and demand-side response, could save up to £40 billion by 2050.
We currently have around 4 gigawatts of operational storage in Great Britain. National Grid estimates that we could need up to 40 gigawatts by 2050. This Government are committed to creating a best-in-class regulatory framework for storage by removing barriers, reforming markets and investing in innovation through actions set out in our 2017 smart systems and flexibility plan. Reforming the planning system to remove barriers and introduce a more appropriate planning treatment is a key action for storage under this plan.
Currently in England and Wales, where storage facilities are above 50 megawatts and 350 megawatts respectively, planning consent must be sought from the Secretary of State under the nationally significant infrastructure projects—NSIP—regime. Where facilities are below these thresholds, they are consented by the relevant local planning authority.
Evidence collected through a consultation published in January 2019 demonstrated that the 50 megawatt threshold is distorting sizing and investment decisions in England. For example, there is a clustering of storage projects sized just below the 50 megawatt threshold, and projects have been split into multiple 49 megawatt projects to avoid consent through the NSIP regime.
Following consideration of this evidence, in October 2019 the Government consulted on removing electricity storage, except pumped hydro, from the NSIP regime in England and Wales. We received 28 responses from industry, which were broadly supportive. The NSIP regime was established to streamline the consenting process for major infrastructure projects where the benefits are national, but the planning impacts are local. Here, it is appropriate for the Secretary of State to weigh up this planning balance.
For batteries and more innovative forms of storage, the planning impacts are low compared to pumped hydro and other forms of generation. Therefore, the extra time and cost of the NSIP regime is not proportionate and limits the size of new projects to 50 megawatts. We have not seen any stand-alone battery storage facilities deploy above 50 megawatts. This order removes these technologies from the NSIP regime, meaning consent will generally be sought from the local planning authority. To ensure consistent treatment and a level playing field in economic competitiveness across the locations, this will also apply to Wales where the NSIP threshold is currently 350 megawatts.
If storage was removed from the NSIP regime only in England, there would be different approaches between England and Wales, as only consents for generating stations below 350 megawatts have been devolved to Wales. This would result in storage facilities of any size in England not being consented under the NSIP regime, whereas in Wales, storage facilities above 350 megawatts would be consented under the NSIP regime. Under the SI we are debating today, electricity storage, except pumped hydro, will generally be consented by the relevant local planning authority in England and Wales.
This SI could unlock investment in larger storage projects, supporting low-carbon jobs and decarbonising the energy system. Additionally, we estimate that this could save industry between £500,000 and £7 million annually. These savings are due to the reduced administrative costs associated with the local regime and a reduction in infrastructure costs where projects now choose to co-locate rather than build separately.
Once the legislation is passed, in England the industry will still be able to use Section 35 of the Planning Act to request that the Secretary of State direct a project into the NSIP regime for consent if it so wishes.
This order does not remove pumped hydro storage from the NSIP regime. This technology has significant planning impacts and often requires several other consents, which can be granted under the NSIP regime, making it a more efficient consenting route. Further to this, the pipeline for pumped hydro storage projects is located in Wales and Scotland due to their favourable geographic sites. The threshold for pumped hydro storage to be consented by the relevant Ministers as opposed to the local planning authority is 10 megawatts in Wales and 50 megawatts in Scotland. Therefore, retaining the 50-megawatt threshold in England better aligns with the treatment of pumped hydro across Great Britain.
Should Parliament approve this order, a parallel order will be required to amend the Electricity Act to ensure that consents for electricity storage fall within the local planning regime. We will ensure that this applies for facilities onshore and offshore, and we are working closely with the Welsh Government, who intend to put requisite legislation in place for storage, except pumped hydro, located offshore in Welsh waters.
This order will ensure that storage is treated appropriately in the planning system, according to its planning impacts. It removes a key barrier and unlocks the potential for large-scale storage projects, which are critical for meeting net zero. I beg to move.
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