Oral evidence: Energy resilience, HC 171.

Oral evidence, 21 October 2026.

Witnesses

Michael Shanks MP and Dan Micklethwaite.

Chair

Welcome to this morning’s session of the Energy Security and Net Zero Committee. We are talking about energy resilience, a very topical discussion given today’s announcement. Welcome to Minister Michael Shanks and to Dan Micklethwaite from the Department. Minister, you have a big announcement today. I know you have a statement to give in the House later, but we will undoubtedly be pursuing it here because of the topic being absolutely relevant to what you have announced. Can you tell us to start with how today’s announcement to approve Jackdaw will contribute to the UK’s energy resilience?

Michael Shanks

Good morning, Chair. It is good to be with you again on a really important topic. What we are announcing today is that the Energy Secretary has given her agreement and the NSTA has given its consent to the Jackdaw project to proceed. It is a gas project in the North sea, which is an already licensed field, and Members will recall it was consented previously by the previous Government. That ended up in the courts, and we have been responding to that since and have come to the decision today. It is important for a number of reasons. First, it does strengthen our energy security. It is important for me to say we have a diverse range of supplies of gas at the moment from the continental shelf on our own side, from Norway and from other imports, but undoubtedly a project like this helps strengthen that energy security. Of course because the court allowed the project to continue its development while awaiting consent, it will be able to bring that gas on to the system in the UK this winter, which is important. We estimate that it will make up 6% of our gas at its peak. So it is important from that point of view, but we have also—

Chair

Can I just interrupt you there? It will, at peak, be 6% of the entire gas demand for the UK. Have we got that right?

Michael Shanks

Yes, so 5% of domestic production, and around 6% at its peak over the lifespan of 11 years. That is what we estimate from the project.

Chair

Six per cent of production, not of demand?

Michael Shanks

It is expected to increase domestic gas production by around 6%, which is what I said in my initial answer, but you are right to clarify it. At its peak it will be 5% of domestic gas production. It is estimated to have a lifespan of around 11 years.

Chair

How much of our demand will that comprise?

Michael Shanks

Do you mean of this particular project?

Chair

How much of UK gas use will be produced—will be contributed to—by Jackdaw at peak?

Michael Shanks

I do not have the number that way round, but our domestic production at the moment is 42% of overall. Overall, 42% of our gas supply comes from UK continental shelves, so it will contribute to that. I don’t have the figure—the reverse—for Jackdaw.

Chair

So will the 6% figure increase that from 42%, or will it maintain it at around the 42% level?

Michael Shanks

Well, it will increase production.

Chair

It will increase that.

Michael Shanks

Yes.

Chair

So production will go from 42% to 48%—is that a reasonable assumption to make?

Michael Shanks

No, because clearly the fields are changing at all times, so we will see fields that will reduce. Of course, the exact numbers change all the time, so the live numbers change depending on what is extracted at any given moment.

Chair

Thank you for engaging with the figures.

Michael Shanks

We are doing the numbers early on.

Chair

Yes, you might find some of those questions reappear during the day, I dare say. Can you tell us how the energy wealth fund will operate? In the press release, there is a reference to it contributing to the energy transition, for example.

Michael Shanks

Partly that is about recognising that we are really clear that the long-term future of this country does not lie in oil and gas. Although gas remains important in the short term, we have to start building much more quickly the infrastructure that gets us away from fossil fuels. That is absolutely central to our long-term resilience as a country. What we have announced today is that we will set up an energy wealth fund, which is about funding the transition. It will be capitalised initially with £2 billion up front and will be added to with revenues from the Jackdaw field as those come in. However, it is about funding the infrastructure that we need to get us off fossil fuels. What we have already been doing as a Government to date is bringing in private investment alongside public investment through the National Wealth Fund and Great British Energy. This is about increasing that and making sure that we are in a position where, although we need gas in the short term, we are building our way out of that need for gas in the long term.

Chair

One of the concerns raised with us, and I know with you, has been around the impact on communities and on workers—over a lot of years, in fact. Is part of the role of this fund to invest in those communities most affected? How will that operate?

Michael Shanks

We do two things on that. We have always said the transition has to bring the communities with us. The workers who are powering the country right now in the North sea, and who have done for 60 years, do an incredibly important job, but they are also the workers who will help us build the projects of the future. It is in our own interest to make sure the transition puts them right at the heart of it. We are doing that through the North sea future plan. I think I have spoken to this Committee before about the North sea jobs service, which will be in place early next year to support workers into new careers, but this is also a really important part of that. The more we invest in the infrastructure here in Britain, the more we can keep the jobs and crucially the supply chain, which is where most of the jobs in oil and gas are. We can keep those in the UK, keep workers employed and keep investment in communities, but also build the infrastructure we need for the future.

Chair

Thank you. Before I move over to Melanie Onn, how will this announcement improve the national security elements of our energy supply and energy security?

Michael Shanks

I want to say first of all that clearly domestic production from the UK continental shelf is important in an uncertain world. If we can get it from the North sea, that does provide benefits to us. However, I also want to be really clear that in the long-term picture, it is relatively marginal overall. We will not stop being a net importer of fossil fuels because of this decision. This is the argument I have made previously. Our long-term trend for more than two decades now has been to import more. That is not going to change. Our long-term answer to that security and resilience point is to break away from fossil fuels so that we have energy sovereignty here in the UK. That is going to come from renewables and from nuclear. It is not going to come from oil and gas.

Melanie Onn

Good morning, Minister. I was listening intently to the Secretary of State on the “Today” programme. The first thing that she said in response to Nick Robinson’s question was, “This will not bring down bills.” I wonder why, when the cost of living is such a critical issue for this Government, constituents up and down the country should support this decision if it doesn’t help them and it doesn’t help towards decarbonisation.

Michael Shanks

We have been very clear that new oil and gas does not take a penny off bills and any argument that suggests it does is simply wrong. We trade as an international commodity what comes off the North sea and we pay the price. We are always going to be a price taker, which is why we are saying that our long-term future does not lie in oil and gas. But it does do other things. I think we need to be really clear that the vast majority of British homes are heated by gas, so while we have to electrify the economy and move away from gas for home heating, that is not going to happen overnight. Therefore, our supply does matter and if we can get it from the continental shelf that is important—that is the judgment the Energy Secretary has made on this particular project. It also is important for jobs and it is important as a source of revenue, which we are going to fund into the transition. I am not going to cut across anything the Chancellor might say about wider support for consumers, but I would say that it is important that we invest now in building the things that get us off fossil fuels in the long term. People’s bills have gone up because of our exposure to fossil fuels. We have to do that piece that breaks us from that, but this is really important for our short-term energy security.

Chair

Thanks very much. Just a question or two on energy security. We have heard reports of recent attacks, or potential attacks, on the UK’s energy infrastructure. What steps have you been taking as a Department to increase awareness and resilience within the system following the reports of what we have seen from Russian submarines and, indeed, cyber threats as well?

Michael Shanks

The most important responsibility I have as Energy Minister is the resilience and security of the system. I will ask Dan to add to some of this. The steps that we have been taking are, first, to continue to look at the Government’s risk assessment to make sure we have those risks fully up to date. There is a public version of that risk register. There is a version kept at a classified level to make sure we are really considering each of those risks in turn. We will be bringing forward an energy resilience strategy later this year, which picks up on many of the points that have been raised by this Committee and others to make sure that we continue to have as robust a system as possible. There is legislation going through Parliament at the moment on cyber-security, which continues to be a really important risk that we are looking at. Across Government, in each Department that has a responsibility for security, there is a very active conversation about making sure we are as resilient as possible and we are also preparing the public so that they have resilience in this situation as well. Dan might want to add more.

Dan Micklethwaite

Yes, that is absolutely right. We do ongoing monitoring of risks as well as the structural, cyclical approach to that through the national security risk assessment. We do that on a tactical basis as well with our security partners and energy partners. There is already a strong regulatory framework in place for cyber-resilience. That is going to be strengthened through the cyber-security and resilience Bill, and we have an energy cyber-security strategy about going further and faster on that as well. Again, we talk tactically to the industry about that on specific information as and when we have it. We have quite strong resilience plans already for a wide range of disruption scenarios that are, if you like, cause-agnostic—we have those already. As the Minister said on the energy resilience strategy, we will take that further and think about how we can set clear energy resilience policy statements across a range of areas consistent with our cyber-security plans, our critical energy plans and our physical plans.

Chair

We look forward to reading the energy resilience strategy when it is published.

Torcuil Crichton

I know the session is mainly about energy resilience, but part of that, obviously, is today’s Jackdaw decision, which I welcome as a practical step in energy security, but also as a signal that we are in the North sea today, tomorrow and for many years to come as that base is wound down. I think, as the Chair said, the most important part of this announcement today is the £2 billion fund to help the transition from one industry to another. Can you give us any more clarity on that and on how you will be engaging with the Scottish Government, for example? Will this fund be restricted to the north-east? We know that jobs and supply chains are not just in Aberdeen—they are all across the UK—so how will this £2 billion be felt in communities like mine and in others?

Michael Shanks

It is really important. The first thing I would say is that we shouldn’t think about this as just £2 billion for the transition. This is on top of what we have capitalised into Great British Energy, which is entirely about driving forward the transition but with the Government owning a stake in those projects, and the National Wealth Fund, which has clean energy as one of its driving missions. This is £2 billion on top of that existing investment and it is to make sure that we capitalise investment into clean energy projects that are creating jobs and actually retaining jobs and retaining the supply chain. The vast majority of the oil and gas jobs are in the supply chain. We need those jobs for the clean energy sectors we have to build. Decisions about what that will be spent on will be made on the basis of individual projects, but it is fair to assume that given the number of projects that are already in Scotland and the potential for additional projects—the pipeline of offshore wind and other technologies is much greater in Scotland, and the supply chains are in Scotland—the vast majority of this will probably end up being spent in Scotland. The benefits of this—I think you have made this point before—are in every single postcode across the country in supply chain jobs and in manufacturing. It ties into the wider Government strategy around re-industrialisation, not just investing in projects, but making sure those projects are built in Britain with the jobs that go with it.

Torcuil Crichton

I see the First Minister of Scotland, John Swinney, has welcomed this through gritted teeth, saying that it provides some certainty in the north-east. Have you had any chat with the Scottish Government or spoken to them about how this £2 billion might benefit Scotland?

Michael Shanks

I haven’t specifically yet, as we have only announced it today. Certainty is one thing I could not say about the SNP’s energy strategy. I have no idea from one day to the next whether they are in favour of oil and gas or not. I don’t think we have seen very much clarity on that. However, I will say that, on delivering on the clean energy future that we need, we have a very good collaboration with the Scottish Government Energy Minister; it is important that we work together where we can on things. But we do need to move at pace on things like consenting, which is the responsibility of the Scottish Government, to make sure we are delivering the projects that the people of Scotland expect us to build together.

Torcuil Crichton

Let’s move on to the wider theme of this session, which is meant to be about resilience and how the energy infrastructure of the country is protected. Apart from what you have said to the Chair, what further steps do you need to take to future-proof the energy system from cyber-attacks and physical attacks?

Michael Shanks

There are a number of things. One of the things I did not say before that I think is important is I am now chairing a group of senior chief executives in industry because the Government, of course, operate none of this infrastructure directly. It is in the hands of individual organisations and we have to make sure that resilience, particularly cyber-resilience, is taken seriously in every single part of every single organisation. One of the things we have been driving that forward on is making sure that we have the industry-led technical knowledge that is necessary, so that people have sufficient training at all levels of organisations. We are looking at whether we need to review legislation and whether we have the right powers to be able to do more in that space, and we are also looking at all sorts of national emergency planning and cyber-resilience planning. All of these things are live processes we are working through. Building resilience at every single level of the energy system is what we see as absolutely crucial. It is one thing for company boards to say it is important; it is another thing for the person operating the terminal to see it as their absolute priority. We are driving that forward at the moment as well.

Dan Micklethwaite

To add to that, the industry and the Department work really closely with the National Protective Security Authority and the National Cyber Security Centre as well, which regularly brief and work quite closely with the industry on the steps they need to take. Bringing it back to something the Minister said before about the energy transition, that of course is a once-in-a-generation opportunity to ensure that what we are building is resilient by design, which is far more efficient than retrofitting or trying to patch up the system that may be in place right now. There is just a big opportunity with the transition to strengthen things as we build them.

Torcuil Crichton

You anticipated my next question, Dan, which you can answer possibly. How well is this understood across Government and other parts of Government?

Dan Micklethwaite

I would say very well. It is something that the Government take incredibly seriously, not just because of the wider external environment but because of how important the energy system is to households and to the rest of the country’s critical national infrastructure as well. It is understood very well and we work quite closely with the rest of the Department to make sure, as they are developing their policies, that they take security and resilience as a fundamental requirement of that.

Torcuil Crichton

Just one last question in passing. There is a concern about cyber-security but also physical security. We have heard reports of unidentified lights, possibly drones, around North Sea structures and infrastructure. Without giving something away, what practical steps are you taking to make sure the physical infrastructure is protected?

Michael Shanks

Again, physical resilience and security are hugely important. I would say that although we take these threats very seriously and they are developing at all times, we have a very good success rate in protecting that infrastructure. But clearly the threat landscape is always changing so we have to stay on top of that. On drones in particular, we have been working with industry to make sure they have appropriate guidance on what steps they can take. Drones are obviously becoming much more prevalent than ever before and people can get their hands on drones in a way that they couldn’t before. We are exploring whether we do need to go further in that area, looking at the National Security Act to take any additional powers through that, including looking at whether we need more restrictions on flying and other aspects. We keep all of this under review. Again it goes back to the point around bringing industry with us on this. Ofgem has taken security and resilience very seriously to make sure that the companies it regulates are investing in their physical and cyber-resilience to make sure it is as robust as it needs to be. On the previous point, I think this is something that is taken seriously right across Government. Dan Jarvis is the Security Minister who is chairing a number of ministerial groups to make sure every single bit of Government is focused on critical national infrastructure but also, as I said before, on domestic resilience, to make sure we as a country are prepared. We are a bit of an outlier as a country in how much we bring people with us on their own personal resilience. That is going to be important, not just for security but for responding to storms and other events, so that people have a bit of personal resilience as well.

Wera Hobhouse

First, when can we expect the energy resilience strategy?

Michael Shanks

We have said later this year.

Wera Hobhouse

Okay, later this year—as late as 31 December 2026?

Michael Shanks

That is as late as we could go in the year, so hopefully by then, yes.

Wera Hobhouse

Thank you. On physical attacks, I was at a breakfast meeting bringing together the industry on flexibility. The argument is very clear: it is much easier to attack one big central power station, for example, or an installation, than hundreds and thousands of little installations. In the forthcoming energy independence Bill, will there be a reflection on how we should increase the flexibility markets, recognising that lots of energy is now going to be created in a decentralised way and that, in many ways, that is the best way of physically protecting it? How are the Government thinking about this?

Michael Shanks

I completely agree with you. You tempt me to reveal what is in the energy independence Bill, which I will not do at this stage, but we will see it soon. You are right about both decentralisation of energy infrastructure and flexibility, and we see that as critical. That is partly why we are investing in the first long duration energy storage in 40 years. It is why we are seeing more battery and shorter duration storage deployment, so that we have that flexibility in the system. We also see much more deployment of the ability of consumers to make use of flexibility in terms of time-of-use tariffs that benefit the system as well as consumers. On the broader point, from a resilience point of view, I think is absolutely clear, as Dan said earlier, that we have a once-in-a-generation chance to build a decentralised system that reduces the risk to individual parts of the system, because it is decentralised right across the country in tens of thousands of pieces of infrastructure. There are complexities in doing that but I would look to Ukraine as a really good example. Ukraine is building back from attacks on energy infrastructure by building the exact decentralised energy system that we are building, partly to decarbonise but partly because it is much more difficult to attack the individual parts and have a wider impact on the system. It is about strength by design. That is another reason why we see it as a hugely important aspect of what the energy system looks like in future.

Wera Hobhouse

In terms of oversight, should the strategy seek to shift the burden of resilience from central Government to local government?

Michael Shanks

We want it to be a partnership, and it is at the moment. Resilience absolutely has to sit with central Government and local government in partnership, because the levers that we both have—the local knowledge and the local levels of trust in responding to incidents—have to sit with both. It is one of the things the Prime Minister has been very clear on: strengthening the devolution agenda and that partnership with local government at all levels. It is also some of the work we have been doing on Storm Arwen. The report that came after that was partly around how the Government respond to major incidents, a storm in that case, but it would apply to other things. Rehearsing some of this, and building the training and the support that local resilience forums have, are really important parts of this as well, but it has to be about both.

Wera Hobhouse

Shifting to extreme weather events, then, to what extent will the energy resilience strategy actually talk about extreme weather events and resilience? Can you go into a bit more detail?

Michael Shanks

I can’t go into the detail on something we have not published yet, but it is about our general sense of resilience in the energy system, which is responding to a whole series of things. Storms and extreme weather events are going to become much more frequent. We saw the summer heatwaves having a real impact on gas generators being able to generate, for example. There are widespread impacts that we have to take into consideration. That will all be part of it. However, our response, and I suppose what the strategy is about, is focusing on the overall resilience of the system and the further steps we have to take, whether we are responding to storms or threat actors.

Wera Hobhouse

Okay; I will ask the next question about the strategy. You might say that you can’t tell me because the strategy is not published, but I will try anyway. Should the UK be prioritising the domestic manufacturing of components, with the subsequently increased cost, to reduce supply chain dependencies?

Michael Shanks

I think this is really important. I can say what the Government’s position on this is because we have been clear on it for two and a half years. We have to build supply chains much more in the UK. That is a security and an economic imperative, and it is a view shared across Europe as well about domestic supply chains in Europe. It is really important because in an uncertain world, relying on supply chains from other parts of the world makes it more difficult for us to maintain our resilience. Obviously the more we manufacture in the UK, the more economic benefit we are getting from that. But also the transition to clean power is not just happening in Britain; it is happening right across the globe and there is competition for supply chains. If we can build and manufacture more of this in Britain, we have more of a chance of getting it quickly on to the system to help us deliver the outcomes we want to see. From a security point of view, it is important but actually it is about the economic opportunity of the clean power transition.

Dan Micklethwaite

Just to build on that, if I may, we have very good information on the supply chain and critical inputs to critical national infrastructure, working with the Department for Business, Innovation, Science and Trade. As the Minister said, having clear policies in place to boost domestic supply chains is really important. I draw attention to the clean energy supply chain fund, which was £1 billion to support companies with high growth potential to develop those domestic supply chains, and the clean industry bonus, which was also to reward the supply chain development of investment projects in the UK. Clearly, there is only so far you can go, and we work very closely with industry on what stockpiles and reserves they have of critical components. We are talking to them about standardisation of components as well to make it easier to move components around should we need to do that.

Wera Hobhouse

Slightly moving away from that, industry always tell us that the problem is that energy is too expensive. The first thing for business needs to be that our energy price—our electricity price in particular—will have to come down. There is still no clear evidence that the Government are really working hard on making sure that energy prices are coming down. Otherwise, we can talk about wanting to bring manufacturing back into this country, but it will not happen if energy is so expensive.

Michael Shanks

You are not going to get any argument from me or anyone else in Government when you say that energy prices are too high. We have been very clear on that—they are far too high. The Prime Minister has set out the ambition that we will equalise with the European average on energy prices to deal with that competitive issue that you raise, but it is not going to happen overnight. The challenge is that the Government is investing significant amounts of money to bring down the costs of crucial industries, but we have to fundamentally break the link with gas if we are going bring down prices for everyone and in the long term. We are doing that in parallel, with investments to support targeted industries with electricity costs, and in the meanwhile, building the clean power system that breaks that link and gets bills down for everyone. That, in the long run, is the thing that will help deliver domestic manufacturing. I would just say, though, on the cost point, there is always a trade-off here, and we are really clear about this. We want to see domestic supply chains wherever possible, and we are doing everything we can to support those domestic supply chains, but we also have to tackle affordability. That is a tension, clearly, because it is more expensive to build things here than elsewhere. However, there is a social benefit that Governments for far too long have not calculated about domestic procurement that we have to shift. If we manufacture things in Britain, we have a more resilient supply chain, first of all, but we also create jobs, which creates additional tax receipts, and we deal with some of the fundamental issues in this country about us just being agnostic about industrial policy for far too long. There are social benefits of saying we want to build things here in Britain, and there are energy security arguments for why those supply chains being here leads to a more resilient system.

Chair

Thank you. We are going to move on. I would love to explore that further, so perhaps we will get you back yet again to probe into that answer.

Michael Shanks

I can’t say no.

Chair

We may come back to it.

Sir Christopher Chope

Minister, you have said on several occasions that gas will remain part of the energy mix up to and beyond 2050, so can I ask a few questions about gas security? The National Energy System Operator—NESO—has said that it has identified an emerging risk to gas supply security in the unlikely event of the loss of the single largest piece of gas infrastructure in the system. What is the single largest piece of gas infrastructure in the system, and what is the threat to it?

Michael Shanks

Each year we do an assessment, something called N1, which is essentially an assessment of whether the gas system can cope if the biggest single piece of infrastructure was—in an extremely unlikely scenario I should say—no longer available. For example, that could be an LNG terminal—Milford Haven would be an example of an LNG terminal. The second part of the test is it has to be a one-in-20 demand day—the coldest winter day that the UK could expect in 20 years. A combination of things has to occur at the same time—that is the resilience test we have. In all likelihood, the system never has to reach that point, but the whole point is that it should be resilient, so we should be able to. We should have sufficient redundancy in the system to meet that test every single year. The Secretary of State has to be able to be assured that that is the case every year.

Sir Christopher Chope

That is a given then, that we are secure in that respect—guaranteed?

Michael Shanks

Every year we have to assess all the available evidence for the year ahead and make that assessment. We have to be assured that is the case, or take actions to make sure we can meet that.

Sir Christopher Chope

Where does the gas grid fit into this, because 23 million homes are dependant on the gas grid. Can you confirm the gas grid will remain part of our critical national infrastructure well beyond 2050?

Michael Shanks

It will remain important until the last customer has been disconnected. We are working—on a domestic and industrial level—to move customers away from gas, but that will not happen overnight. The transmission network and the distribution network that go into streets and homes will remain important. We do have a challenge that we are working through at the moment that we need to work with industry on around how we continue to invest in that gas grid while we will see customers disconnecting. That will be quite piecemeal; customers will disconnect as they choose to take on other technologies. That is a challenge for us as a country, but the gas network is hugely resilient. It has been invested in and upgraded much more recently than the electricity network, and we need to maintain that while moving people off it as quickly as we can.

Sir Christopher Chope

There are a lot of people with off-grid homes dependent upon LNG and there seems to be some confusion in the Government as to what the policy is towards LNG. Do you support the promotion of liquid gas as an alternative fuel for housing into the indefinite future?

Michael Shanks

We have been agnostic around exactly what choices individual consumers should make. We are not legislating to ban people from making their own choices, but we do want to make it affordable and accessible for people to choose technologies that help us decarbonise. That is important and we will continue to do that. Off-grid households are not off the electricity grid. Yes, they are off the gas grid but they do have access to electricity and so some of the electrification technologies—be it solar, batteries or heat pumps—are available. I do not have the exact number in front of me but we can share it with the Committee. We have seen an uptick in investment in that from off-grid households since the situation in the middle east has developed, because the economics of it have become much clearer for people.

Sir Christopher Chope

Electricity still remains, as you accept, far too expensive but if there is to be investment by the liquid gas industry in LNG for households then it needs to have a clear signal that the Government recognise in the long term that this is a worthwhile investment, including investment in biogas. At the moment that has not been forthcoming, which is causing a stuttering in that industry, unlike what is happening on the continent. Can you clearly say today that there is a strong long-term future in the Government’s eyes for the LNG industry?

Michael Shanks

I can say what I have said already, which is that households will make choices about the technologies that they want to use in their own homes and their own circumstances. We said in the warm homes plan that we would not choose individual technologies—that the Government would say households should choose—but that we would incentivise heat pumps, solar panels, batteries and others. I am interested in developments in biogas and other things, but the Government obviously have to weigh up the investment cost of doing that versus the long-term trajectory we want to be on as a country. I am not for or against these things. There is often a sense that one individual thing will solve the whole issue, but the truth is that we will need a whole range of things and they will be different in every part of the country. On the devolution agenda, that is why the Government’s commitment to devolve the entirety of the warm homes plan is so important because choices will be made in individual parts of the country that will be different. It is right and proper that those are made by local decision makers.

Sir Christopher Chope

Indecision by Government is inhibiting investment in a whole lot of different areas including—I mentioned last time we had a session—the Rough system, the storage facility. There has been no clear decision on that; there has been no clear decision on the future of LNG. You have put forward today what I think is a very welcome decision on the new gasfield but that has been delayed far too long. What are you doing to bring different parts of your Department together to deliver a strong lead in all these areas and stop the indecision?

Michael Shanks

I am not aware there is a specific decision we have not made on biogas in front of me. If there is something I am not aware of, I will go back and look at it. I get the general point is about steers from Government; I hear that regularly from industry. I cannot always give a running steer on things but I do not think there are any specific decisions that are in front of me. We did respond to consultation on the gas system and transition, which asked a number of searching questions that, in all honesty, we should have been looking at a decade ago or more on what the gas system—which has been in transition for a long time—looks like and how we maintain that investment now and build for the future. On storage, Rough is a commercial decision for Centrica. They have asked the Government for a particular mechanism and we will respond to that, but storage plays a much smaller role in the British system than it does for our European neighbours because we have a diverse range of supplies, not least the pipeline from Norway and our own continental shelf, as well as the LNG import terminal. Storage plays a fundamentally different role.

Chair

Thank you, we will move on. Before we move on to Matt Western, you were talking about customers who are off the gas grid but on the electricity grid. Does that suggest that there will be special support for those customers to enable them to electrify their homes for heat and power?

Michael Shanks

Not specifically at the moment, but one of the things around devolving the warm homes plan is that we will look at how that funding could be used in specific parts of the country that have a significantly higher number of off-grid gas households. We have already provided increased support for the deployment of heat pumps, solar panels and other technologies so those households can take that up. We have seen an uptick in that already.

Chair

On biogas, do you have a target in mind—a sense of how much biogas you are expecting to be on the system as a proportion of our total gas supply in the coming years?

Michael Shanks

I do not have a figure to hand, no.

Chair

Thank you. We are joined by Matt Western, the Chair of the JCNSS, as a welcome guest on the Committee today. Matt, over to you.

Matt Western

Thanks, Chair. Good morning, Minister. I want to touch on offshore security. In terms of the power generation cables coming ashore, how many cables do we have coming in, as a risk or vulnerability, and what percentage of our electricity is coming typically—either in winter or summer, or on average—from those cables, whether that be from other countries or from our arrays?

Michael Shanks

I do not have the exact numbers to hand, forgive me, but I can absolutely send them to you. The interconnectors between the continent and us are hugely important. We use the interconnectors and have done for a long time to ensure that we are able to balance electricity. The import and export across help both Europe and the UK so that remains hugely important. We have the generation capacity in the UK to meet that demand as well, but the interconnectors play an important part.

Matt Western

That would be very useful to know if you want to come back in writing, because we are tight for time.

Michael Shanks

Dan, very helpfully, has pointed out we do have those figures—10 GW.

Dan Micklethwaite

For the electricity interconnectors, it is 10—

Matt Western

What about the percentage—not total gigawatts?

Dan Micklethwaite

We would have to come back on the percentage.

Michael Shanks

It is another one of those questions where the answer will fluctuate hour by hour.

Matt Western

Give me an average, or for winter or summer.

Michael Shanks

Yes, we can share that.

Matt Western

Sadly on one of my days off, I went to visit an interconnector, which was interesting. NESO and National Grid are headquartered in my constituency so I take an interest in this stuff. How would you assess the security and vulnerability of those sites?

Michael Shanks

First, we have not had an attack directly on that infrastructure. We obviously continue to monitor this closely. The former Defence Secretary, now the Chancellor, made a very clear statement recently about Russian activity on top of subsea infrastructure, so we are aware that there is a level of interest in this. We obviously take as many proactive steps as we can to mitigate that risk. Part of what I said earlier around bringing industry around the table is that interconnectors are a good example of where private industry manages the sites but we obviously have an interest in making sure their security arrangements are as robust as possible. We continue to keep all of that under review, and the cyber-security risk comes into that as well.

Matt Western

One of the things we discovered with data cables is that there is a concentration of vulnerability. Is that something that concerns you? How many interconnector sites do we have around the country?

Michael Shanks

I can name five of them, but I want to check there are not more than five. We have a number of sites and we want to see more interconnections.

Matt Western

Fewer than 10?

Michael Shanks

Yes.

Dan Micklethwaite

But they are geographically distributed across the North sea so they are not all concentrated, in terms of electricity cables and gas pipelines.

Matt Western

On power cables, what is the assessment of the risk of vulnerability to a state wishing to sever those cables? What is your assessment of that?

Michael Shanks

Dan might want to come in on this. I am always cautious about going too far into hypotheticals on particular pieces of infrastructure, but clearly in the Baltic sea there have been incidents involving cables. As I said earlier, we have obviously seen some interest in our subsea infrastructure. We recognise that it is a risk and it is on the risk register on that basis, but equally we think we have sufficient measures in place to tackle it. Importantly, even if we were to lose a single interconnector, we have redundancy built into the system.

Dan Micklethwaite

Those security of supply standards that are built in for electricity and gas do take account of loss of assets. We talked about gas a moment ago and it is the same for electricity. Because we have that distribution—as your colleague mentioned earlier—we can absorb the loss of some of these things, which do occasionally go on outage for maintenance reasons anyway.

Matt Western

How many gas pipes come into the UK?

Michael Shanks

Our key pipeline with Norway is an important piece of infrastructure and it is joint with the Norwegians. I was meeting the Norwegian Energy Minister a few weeks ago in Norway to talk about this. We take the security of that very seriously.

Dan Micklethwaite

There are a number of gas pipelines.

Michael Shanks

There are a number of other pipelines.

Dan Micklethwaite

And two interconnectors as well, to the Netherlands and Belgium.

Matt Western

On the Hamburg declaration, how well co-ordinated do you think any response would be, given that there is this European network we are part of? How well co-ordinated is that? How developed is it and how do you see that in the future?

Michael Shanks

It is well developed but we want it to go further. The Hamburg declaration was an important moment. I have attended the NSEC—the group of North Sea countries—twice now. It is an important group of Ministers who meet, but the official engagement between those countries on a more regular basis is important. We are also doing much more exercising between countries to make sure we are prepared to respond to incidents. Dan might want to say more about this, but I was in Lithuania more than a year ago now to see some of the work that DESNZ is doing there on sharing our expertise, but also learning from the Baltic states’ response to where there have been incidents as well. It is an ongoing piece of work but we recognise even closer collaboration across the North sea countries is absolutely crucial.

Claire Young

Minister, you have already talked quite a bit about cyber-security. What lessons should the UK learn from the recent cyber-attack on Poland’s energy grid?

Michael Shanks

We are still working on some of the lessons from that but it was an important moment for us to recognise how real the threat is. We explored that in some detail with the security taskforce that I chair to make sure companies are aware of the risks. One of the key lessons—I mentioned it in one of my earlier answers—is that it has to be embedded throughout a whole organisation because some of the real risks that were identified were actually from practices that were quite straightforward to resolve but were not acted on. Standardisation of passwords is an example that we all know about. Some are probably still guilty of not taking password security as seriously as we could. There are some straightforward operational things we learned that we should improve on. There are wider lessons that we are learning and we have good engagement with the Polish Government on this. There are obviously security conversations that we have at a more classified level on detail.

Claire Young

You have mentioned the energy sector cyber-security strategy, the cyber-security and resilience Bill, and we also have Ofgem and DESNZ’s consultation on reshaping cyber regulation. How do these all interact with each other, and are we in danger of having a mishmash of things happening? Is it clear who is ultimately in charge of each?

Michael Shanks

Dan wants to come in on this, which will be useful. We are aware of that, which is why the work that Dan Jarvis is leading in the Cabinet Office is about cross-Government resilience and bringing all these strategies together. Crucially—and I always say this—strategies are only useful if they are actually implemented. That is the important piece of work. It is not just about having risks on a risk register and mitigations on the risk register, but whether those are being implemented and whether we are following up and making sure that action is dealing with the risk. That is the practical work going on across Government as well.

Dan Micklethwaite

If we start with the cyber assessment framework under the Network and Information Systems Regulations, that is basically the regulatory basis for cyber-resilience in the UK. That is split into oil and upstream gas, for which DESNZ is the named competent authority, and downstream gas and electricity, which is shared between DESNZ and Ofgem—but Ofgem take up the regulatory role there whereas we do the regulatory for oil and upstream gas. Those are the things that set the basic profile that industry needs to reach, and if they reach the basic profile they will be resilient to quite a lot of the incidents that we are seeing. There is then also a timetable for them to get to the enhanced standard, which further strengthens them to more sophisticated levels of attack. What the cyber-security and resilience Bill does is extend the scope of that regulation to a wider set of entities, including the supply chain, that provide critical services, including IT services, to the energy sector—because you are only as strong as your weakest link in the supply chain. It also increases the enforcement powers for Government. That is how they fit together, but we have clearly defined responsibilities for who is responsible for regulating what.

Claire Young

On extending the responsibility to the supply chain, one of the issues that we have discussed in the Committee is the issue of overseas supply chains, so how will the Bill apply extending those responsibilities?

Michael Shanks

On the supply chain, we obviously make decisions on a case-by-case basis. We have talked in the Committee before about one particular decision that we made. It is important that those are on an individual basis and those assessments are always made on particular projects. The supply chain is crucial to this but, equally, the balance we have to strike is about making sure resilience is everyone’s responsibility. Security should be everyone’s responsibility, but there are key actors who have a particular responsibility, which is what these strategies are trying to get at. Collectively, the system has to work towards the same aims and that is the general steer that we give right across the energy sector.

Claire Young

Will the Bill in any way change how you make those individual decisions?

Michael Shanks

Not on specific decisions about whether—

Claire Young

It will not change the factors you are looking at in any way?

Michael Shanks

No, and we think we do have a sufficient lever to be able to make those decisions at the moment,, so we are not looking at that again.

Claire Young

Coming on to the increasing threat from AI, can you explain what you are doing to prepare for cyber-security attacks involving AI? Obviously it can be used defensively as well, so how are you doing that? Does it matter that we do not have any of the top AI models in the world? It is very dominated by America and China, with France having Mistral as well. Could you explain what we are doing to prepare, how we are using it defensively, and whether you are concerned about our ability to do that given the way the AI market is going?

Michael Shanks

It is hugely important, and a live discussion on the sovereign capability that we have in the UK is going on right across Government. Kanishka Narayan’s appointment as a Cabinet Minister looking at AI is an important statement of how crucial we see that across Government. You are absolutely right to recognise that there is an increased threat from the capabilities people have by being able to use AI, but there is a real opportunity for the energy system there as well, including for flexibility as we were talking about earlier. If we can run a smarter system with AI, there are benefits that come from that. We are doing a number of things. Ofgem published guidance in May on the safe use of AI within the energy system. We do want to see much more innovation in this space, so we do not want energy companies to be resistant to the opportunities that might come from it, but it has to be deployed in a safe way. We are obviously looking much more at the security aspects of how we can make sure we are protecting infrastructure from the use of AI as a form of attack.

Dan Micklethwaite

There are opportunities for the industry to use AI to identify their own weaknesses so they can strengthen their own systems. We are encouraging them to do that as well.

Michael Shanks

We are working with the AI Security Institute, which has an extraordinary amount of experience and insight into this, to make sure we are doing everything we can as well.

Claire Young

Have we actually seen material evidence of increasing use of AI in cyber-attacks on our energy infrastructure, or is it still a theoretical risk?

Michael Shanks

I probably do not want to be drawn on individual instances that do or do not occur. The resilience of our system is such that any attempts have not been successful but I want to be careful not to go too far into it. We recognise generally that AI significantly increases capabilities of people who might not otherwise have that capability.

Claire Young

You talked about the use of AI both offensively and defensively when it comes to cyber-attacks, but the data centres to run it also create a great demand on the system. We are limited to what we can provide in electricity supply. I asked the Secretary of State last week about how we ensure that the demand is not being taken up with things that do not further our national interest. Are you concerned that the demand that AI is creating is a threat to our energy resilience?

Michael Shanks

No, I do not characterise it as a threat but it is a serious issue. The sheer amount of demand is something we are looking at. We should not see data centres as not providing any benefit to the country. Having sovereign compute in the UK is hugely important for us—

Claire Young

To be clear, I am not saying it does not provide anything; I am saying that in some instances it may be—

Michael Shanks

I totally understand the point, and you are right. I have been at this Committee before talking about the generation connections queue. The demand queue is becoming increasingly difficult because of the proliferation of data centres in that queue. We will have to manage that and we have announced some measures to do so. There is a balance to be struck. There is actually an opportunity: if we deploy data centres strategically on the system, we will soak up some of the excess electricity we are currently generating that cannot be used in the system. That is good for affordability for everyone because they become a customer for that electricity, and it can reduce restraints if done strategically. We are working with the industry to look at whether data centres could be much more flexible in their use of electricity. At the moment it is very much an “always on” model, but are there AI models that do not require that firm power all the time so we could then make use of excess power at specific times of the day. We are open to that, but we also see AI as crucial for our economic growth and, therefore, we will make sure that we have the electricity that is necessary and work through the processes to get those on the system where appropriate.

Lizzi Collinge

My colleagues have covered quite a lot of the questions I had about the Jackdaw decision, so I will move on to talk about the role of nuclear in energy resilience. Obviously nuclear energy gives us domestic baseload, but a lot of our nuclear generation is coming towards the end of its life. Minister, are you confident that nuclear regulators are able to take into account strategic factors such as energy resilience and security of supply when they are discharging their functions, whether that is to do with new build nuclear or indeed the end of life of existing power stations?

Michael Shanks

Last week, I chaired the nuclear regulation delivery group, which is the implementation panel that is moving forward on the Fingleton recommendations to make sure we are implementing those as quickly as possible. One of those recommendations was about making sure nuclear regulation can take a basket of factors into consideration. Nuclear safety and security will always be the overriding consideration for nuclear regulation, and we are not suggesting at all that we should move from that, but there are a number of other factors—energy security being a crucial one—that we need to take into account. I will not sit here and say that we are in the strongest place we could have been, because we will see a significant amount of nuclear decommissioning before we have brought on the fleet that we need for the future, and that is because of decades of indecision on nuclear. I think the last time we took a decision on a nuclear power station that is currently generating I was not even born, and that demonstrates the fact that as a country we have been asleep at the wheel on making decisions we need to make. We are now making up for that and the nuclear regulatory taskforce is all about making sure we can build safely, but much more quickly.

Lizzi Collinge

Are you confident that the Fingleton review will be implemented in a timely way? Are you confident that the Department is working at the pace necessary to make up for those years of inaction?

Michael Shanks

I am. I have given very specific steers on this. One is to make sure that we have the outcome in mind throughout. I do not want us to become too wedded to individual ways of implementing things if we can find faster ways of achieving the same outcome. I have given that steer clearly. We had Sizewell C presenting at the implementation panel about the innovation they are doing to make decisions faster—that is not in Fingleton, but is actually important. There are opportunities to go further but we are also preparing to introduce the nuclear regulation Bill early next year to make sure that where we need to legislate, we will legislate. Our aim is to keep that Bill as focused as possible so that we can get it through Parliament as quickly as possible, hopefully, and into implementation. I have also been clear that we should be trying to do what we can without legislation to achieve the outcomes we want to achieve.

Lizzi Collinge

Do you think the industry is as confident as you are in the pace of the Department?

Michael Shanks

There will always be arguments that we can go faster on things. I do not think it is only for the Department; I think it is for regulators to work together. I am confident from the conversations I have had right across the regulatory landscape that people are seized of the ambitions we have to recognise how we will get there. That always requires people to move out of their comfort zones and the proof will be in the pudding. It is one thing to say everyone is supportive of it; it is another thing when we get into implementation. That is partly why I have been very clear that people will have to move from what might be entrenched positions to get to the shared outcome we all want. That is for Government and regulators, but it is also for industry as well to be part of that conversation. The crucial thing is to bring all of that together in how we deliver these projects. We have a huge opportunity with the SMR programme at Gwyndod, which I am visiting tomorrow, to make sure that in the Government-backed programme—the first-of-a-kind fleet of SMRs—we are building those in a different way and putting the Fingleton principles into practice as we are building right now.

Lizzi Collinge

Do you think the regulators are fully onboard with that and have moved to a position where they are taking risk-based decisions based on strategic factors and current scientific evidence, and on the full range of safety factors that are very strong in the nuclear industry?

Michael Shanks

There definitely is a shifting of culture but there is a lot more to do. Culture will be key to this. It is one thing to implement new regulation or new guidance, but we all know it is the decision making itself, and the culture of that decision making, that will actually shape whether we feel any difference at the end of it. All of the regulators recognise that but changing culture is difficult. My very clear view on this is that we absolutely have to implement all the recommendations in as practical a way as possible so that they can get on with delivery, but then I want to see progress on culture shift as well so that people are meeting the spirit and the outcome that is intended from that review.

Lizzi Collinge

How are you learning from other places, such as France, which have a strong safety culture but have delivered far more nuclear energy than we have?

Michael Shanks

That is one of the key things I asked. We always assume that we have to reinvent the wheel—it is true across the energy industry. Countries are struggling with the same things but they have also found ways through a lot of it. Part of why we said we wanted to work more closely with the US on this is that we very much share the same safety standards, but if a project should be approved by a regulator in the States, it should be approved by a regulator in the UK if we believe in that. There are lessons to learn from that. About France, you are absolutely right. There are still people unconvinced by nuclear power. The last few months have demonstrated very much that France has weathered the impact of the closure of the strait of Hormuz far better than we have, and it is because their nuclear fleet has responded and kept bills low. That is the opportunity we could have had if we had been building nuclear over the past two or more decades.

Melanie Onn

To ensure the country’s future resilience, we do have to continue to build out a clean power system that works with a mix of energy. We have had a long consultation about that, which has confirmed that is the case. It was due to be included in the energy independence Bill we expected to see earlier this year, but that has been delayed again. Earlier in this session you said we would see it soon. Will we see it before Christmas or after Rosebank?

Michael Shanks

I will not be drawn on the Rosebank decision, which is another regulatory decision for the Secretary of State, but you will see the Bill before Christmas.

Melanie Onn

That is good to hear.

Michael Shanks

Or 31 December.

Chair

Christmas 2026?

Michael Shanks

I hope you will see the Bill much sooner than that but—

Melanie Onn

We should have been clear on the specification of the year.

Michael Shanks

Parliamentary timetabling is not in my brief, I am afraid, but you will see the Bill soon.

Melanie Onn

But you anticipate it will be by the end of this year and that is what you are working towards. To secure all of these projects and deliver greater, broader independence of our energy, do you think within that Bill we will see—and are you working to ensure it is included—the reformed national pricing policy giving some certainty to developers, especially ahead of AR8?

Michael Shanks

While I do not want to get into the details of the Bill, we have already confirmed that the reformed national pricing package will be legislated for where necessary. Some of it does not require legislation, but we will legislate on that. I think transmission charging is the point that you are particularly focusing on as part of that. We have said to industry we wanted to see if there was a more permanent solution we could implement to TNUoS volatility before AR8. We have not been able to find what that mechanism is, and Ofgem has worked to see if that is possible, but we have been clear we want to find an enduring solution before AR9. On AR8, the timeline is already under way and the bids will be going in in the coming weeks and months. We have not been able to resolve it for then, but we are absolutely committed to dealing with the long-term volatility in TNUoS. Reformed national pricing requires two things. One is absolutely a reform to transmission charging, but still with a recognition that we need a signal about where to build things most efficiently in the country so that we bring down the cost of transmission. That is important. The second bit of that is the strategic spatial energy plan, which is about us setting out where future infrastructure should broadly be built to make sure that we are building the cheapest system.

Melanie Onn

Yes, which is what I was coming on to, because the strategic spatial energy plan also has the pathway for grid connections post-2030. Are you worried about delays impacting on existing projects in the planning pipeline?

Michael Shanks

If I am candid with the Committee, I am worried about connections reform. It has been an extremely difficult and frustrating process and continues to be. I do not backtrack at all from what I have said previously about how important it was. The queue was completely unmanageable and we have cleared out a lot, but I am acutely aware that it is having a real, live impact on projects right now and that risks investment confidence. I want to be honest about that. It is a huge frustration for me and much of what we have talked about today genuinely keeps me up at night, but the connections process is a genuine concern. We are doing—

Melanie Onn

If you cannot deliver these projects—there is no point in building them if we cannot get them connected, because they will not provide the energy—can we say that we are delivering resilience and energy security for the country?

Michael Shanks

Yes, we can. I completely agree with you: if we cannot connect these projects, and connect them in such a way that does not create additional constraints, then we are not benefiting consumers in the way we should be. I do not think that means the absence of that makes the system any less resilient. We are connecting a huge number of projects all the time, but not as many as I would like. This goes a long way back to the approach we took to how projects could connect to the system. Even in the dying days of the last Government, the connections queue stood at 400 GW and it somehow got to more than 700 GW before we came into government. It was a completely unmanageable but foreseeable problem that they should have done something about. We are now grappling with that and I regret that it is as difficult as it is. On the strategic spatial energy plan, the Secretary of State now has the pathways and we will consider them in detail, and then there will be a consultation early next year from NESO on it. We have been clear that that process is not about creating a black and white plan of what projects can and cannot go forward; it is about saying that we need a coherent way of building the transmission system for the future instead of patching it up to where ad hoc renewables projects were built over the past 20 years. We should not have done that. We now have to build back a better system. I share the absolute concern and I want to assure the Committee that, for me, the concern is translated into very firm action from the Department bringing NESO, Ofgem and the transmission owners together to find a way through this as quickly as possible. It is not pain free and I will be honest in saying it is not about to become any easier. It is a difficult process and we are doing everything we can, but it will remain difficult.

Chair

Thank you very much indeed. Minister, Director, thank you for your evidence this morning. That is the end of our session.