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Renewable Energy

1 pm

Ian Lucas (Wrexham) (Lab): It is a great pleasure to have secured this debate on my twin passions of manufacturing industry and renewable energy. It is a particular pleasure to have secured a debate under you, Mr. Hood, and to have the opportunity to speak to my hon. Friend the Minister for Energy on this important issue.

This has been an auspicious seven days for microgeneration. The Chancellor's announcement in last week's Budget of an additional £50 million in investment for microgeneration has been widely welcomed, even by Greenpeace, which said:

That is high praise indeed from an organisation that has been one of the Government's most vociferous critics, and I am pleased that the Government have taken such positive steps.

At the outset, I should declare that I have a substantial constituency interest in microgeneration. Sharp, in my constituency, is one of the few United Kingdom plants manufacturing photovoltaic solar cells. It had been in Wrexham for about 20 years before it began manufacturing cells there in July 2004. Since its decision to invest in Wrexham and to show confidence in the work force there, it has been rewarded by the work force with a tripling of photovoltaic solar cell production at the factory. The site has therefore expanded and there has been real development in the renewable energy sector in north Wales. Indeed, north Wales is developing a reputation as something of a renewable energy hub. We have the North Hoyle offshore wind farm, and the planning stage has begun for Gwynt-y-Mor wind farm, which will produce energy on a much larger scale. I enthusiastically support that project.

In north-east Wales, we also have a strong tradition in manufacturing industry. That is very important in my constituency, where a quarter of the work force is employed in manufacturing. There are also historic energy links because the north-east Wales coalfield produced energy for many years and was part of the powerhouse that the UK economy was in the past. I want that energy production to continue in the new century, with microgeneration and manufacturing developing together to create new jobs and new potential in the north-east Wales economy. In the renewable energy industry, we have a huge opportunity to develop the UK's manufacturing base and we must seize it.

I am presently engaged in discussions with Wrexham county borough council and the Welsh Assembly to develop the use of renewable energies in Wrexham. We must use the fact that the town now has a reputation for producing manufacturing goods in microgeneration to ensure that the development that is taking place in the town uses renewable energy as far as possible. In that way, the town will become a showcase for the potential of renewables and demonstrate how the difficulties of global warming can be addressed.
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As I mentioned, production of photovoltaic solar cells in Wrexham has tripled in less than two years, and there is huge and increasing demand for them, but they are largely being exported. As the Minister is aware, the biggest market for them in Europe is in Germany. For some years, the German Government have pursued an active strategy of promoting solar energy, and their successful 100,000 roofs programme is recognised to have caught the German public's imagination, encouraging individual householders to take steps to produce their own energy, rather than see it as something that is always produced far away by a large power station.

What is perhaps less well known is that the solar industry in Germany has been successful in promoting employment. Against the backcloth of the difficult employment situation in Germany over the past five years, photovoltaics have been a manufacturing success story. According to the Bundesverband Solarindustrie, 30,000 people are now employed in Germany in the production, distribution and installation of solar systems, with 20,000 employed in photovoltaic technology and 10,000 employed in solar heat technology. In the past year alone, 5,000 new jobs have been created in the booming photovoltaic sector, and it is predicted that as many people will shortly be employed in solar energy as in heavy coal mining. Over the past five years, turnover in the German solar power sector has increased by an average of 43 per cent. per annum and turnover for 2005 is predicted to be €2.7 billion.

Solar energy and microgeneration are therefore big business, and I am pleased to say that the United Kingdom is benefiting from the development of photovoltaics not only in Germany, but in other European economies, such as Spain and the Netherlands. The factory in Wrexham, for example, is exporting to those countries on a huge and increasing scale as their domestic markets develop. However, those who work in the UK microgeneration industry have been frustrated by the fact that development in our domestic market has been rather slow in comparison, and that is where the Chancellor's announcement last week can be so important. The energy White Paper set out the goals for energy policy, including renewables, but there has been confusion over the successor to the clear skies programme in the past two years. The announcement of the low-carbon buildings programme, coupled with the Chancellor's commitment to provide an additional £50 million in investment, is a real opportunity to get the development of microgeneration back on track.

I make a plea that the central focus of the strategy to take microgeneration forward should be not simply on the UK domestic market, but on the individual domestic consumer. Indeed, I sense that we are on the cusp of a large increase in demand for individuals to make their own contribution to the fight against global warming. In that respect, I must pay tribute to the excellent work of my hon. Friend the Member for Morley and Rothwell (Colin Challen), who has done so much to take forward the concept of individuals taking responsibility for their own carbon footprint. In my constituency, Sharp recognises that more work needs to be done on education and has committed itself to developing an education centre on the Wrexham site. It is encouraging
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local schools and local industry to visit the plant and become much more aware of the potential of photovoltaics and of the way in which the industry can develop to provide a renewable base in the fight against global warming.

However, the Government must play a central role. In designing the new low-carbon buildings programme, they must commit to a real expansion of stream 1 funding to help make microgeneration accessible to the domestic consumer. The present proposed funding is £3.5 million, falling to £2 million in year two of the project and £1 million in year three. However, public demand is much greater and was about £4.5 million last year so, even at the present stage, public demand exceeds the fund's capacity to deliver. Given the Chancellor's announcement this week, it is important that we increase stream 1 funding to at least the level that is required to meet current demand. Indeed, I hope that we can increase it above that level so that future demand can also be met.

I also make a plea for simplifying the process of securing the benefit of grants for consumers. I confess that I speak as someone who downloaded the application forms for the clear skies programme around 18 months ago. Confronted with those long forms, which have sat on the corner of my desk since, I never got past the first page, which asked for the square metreage of my roof. I did not undertake to investigate that—I thought of sending my son up to check, but thought that somewhat reminiscent of chimney-sweeps in the 19th century. The forms are seriously intimidating to someone who is keen to invest in microgeneration. A straightforward system for individuals would be much more effective, so that they could ensure that they had easy access to microgeneration.

The cause is very noble. We are all committed to addressing the problems of global warming. We have heard the news on climate change in the past three days, which is of some concern. We need to establish that individuals have a responsibility to make a contribution. The Government need to put in place a system that will facilitate that. In addition, we can develop our own manufacturing sector in the industry. There is a real demand across Europe for microgeneration, which a company based in Britain is now meeting, although that demand is less within the UK.

Given the investment that the Government have put in place, we have an opportunity to create domestic demand in the UK. We have can demonstration projects but, even more importantly, individuals need to decide to join the fight against global warming. If they do so and if we create a strong domestic market, that will mean more employment in the UK in both microgeneration and manufacturing. I suggest that we should work firmly towards that worthy goal over the next few months. I hope that the Minister will be able to give me that commitment.

1.12 pm

The Minister for Energy (Malcolm Wicks) : My hon. Friend the Member for Wrexham (Ian Lucas) should be congratulated on his sense of timing. Not only was there a useful Budget announcement on microgeneration, but
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today sees the publication of the climate change strategy and of our microgeneration strategy. His sense of timing should be commended to the England manager—I do not know whether my hon. Friend is a footballer, but we need more of that timing.

My hon. Friend raised important and interesting points about micro renewable energy in the UK, and the contribution of the photovoltaic sector in particular. We remain committed to micro renewable energy and to the development of a sustainable market for such technologies. We have demonstrated that commitment in support of the clear skies and PV programmes, which have made a considerable contribution to the development of markets for those technologies. However, we want to go further and create sustainable markets for technologies of that sort.

These programmes are due to finish at the end of this month, but they will be superseded, as my hon. Friend acknowledged, by the low-carbon buildings programme, which is due to start in a few days' time, at the beginning of April 2006. Although the current programmes have gone some way towards raising awareness of the potential of renewable energy, we still have some way to go. In November 2005, I announced a £30 million budget over three years, and the Chancellor added a further £50 million in his Budget statement, as has been said.

The low-carbon buildings programme was designed following a review of the UK's potential renewable energy resources that was conducted in 2004, the renewables innovation review. The review recommended that we continue to support the installation of photovoltaics and other small-scale renewables through a low-carbon building programme. The new programme will mark a significant change to current grant programmes as it aims to take a more holistic approach to reducing carbon emissions, by using innovative combinations of microgeneration technologies and energy efficiency measures.

Although there will be continued support for individual installations, there will be a shift in emphasis to large-scale developments. The focus on larger developments is designed to engage the construction sector more widely and to increase the take-up of microgeneration products in new build and refurbished developments. It is hoped that the change in focus will go some way towards constructing standard low-carbon buildings that can be more easily replicated.

The Department of Trade and Industry will be working closely with the Carbon Trust to develop that aspect of the programme, which will be important to ensure that projects deliver the low-carbon developments that we want. We aim to promote those developments in ways that clearly communicate the replicability, cost-effectiveness and appeal of low-carbon technologies. We also need to engage the wider construction industry in understanding the potential of microgeneration technologies and how to use such technologies, combined with energy efficiency measures, to develop buildings with low-carbon footprints.

We believe that the low-carbon buildings programme and the microgeneration strategy will provide a great stimulus to the microgeneration industry, building on what has been achieved over the past few years. The
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microgeneration strategy will aim to tackle the non-grant barriers that have been hindering the development of sustainable markets for microgeneration technologies. One of the barriers has been acknowledged by my hon. Friend and, as by-elections are expensive, we need to prevent MPs from clambering on their roofs to measure square metreage. I am slightly shocked that my hon. Friend did not know the square metreage of his roof, but there we go. That is the sort of planning barrier that we need to overcome, and the Office of the Deputy Prime Minister is working hard with us on that strategy.

The need for improved information provision at all levels and the importance of a trusted accreditation programme for products and installers that can build confidence in the industry are some of the measures that we aim to take to raise awareness of such technologies and to build a sustainable market. Other areas that the microgeneration strategy will address are regulations and planning, and how they affect the development of the policy. The strategy will also look at the physical infrastructure, in terms of technical issues that need to be resolved with metering and the connection of microgenerators to the distribution network. My hon. Friend may have noted that the Chancellor has provided moneys in the Budget for the development of smart metering, so that people will be able to see the contribution that microgeneration is making to their electricity supply. Other issues that we need to consider are relevant to the photovoltaic and other sectors, and I commend the strategy to my hon. Friend.

Sharp contributes to the economic development of Wrexham. I understand my hon. Friend's point that we can now develop renewables as a major manufacturing industry or industries. I also take his points about the comparison with Germany. Under the PV programme, I understand that Sharp modules have been used on grant-funded work to the tune of more than £790,000 on household projects and more than £2.4 million on larger-scale projects. Let us be clear that Sharp and other companies will continue to benefit under the new programme and the wider measures that the strategy will seek to introduce.

I hope that my hon. Friend will agree that the new measures are good news for the PV industry. Although the new programme will not be a dedicated programme for PV—I know some have argued for it, and there has been some disappointment—the more holistic approach is important as it will provide ongoing support for the development of the market for PV.
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That change of approach in the Government's support for the microgeneration industry builds on our past commitment to PV. We have committed £41 million to the major PV demonstration programme and the PV field trials since 2001, and we expect photovoltaics to be a significant technology in the new programme. We want to see the full potential of all microgeneration technologies being developed in the United Kingdom.

The photovoltaics sector also benefits from Government support for industry-led research and development through the technology programme. Research and development into PV technology is important on a global scale in order to reduce the cost of the technology—my hon. Friend will acknowledge, I think, that it is still relatively expensive—and we want the UK to play a full part in that. The most advanced microgeneration technologies and the emerging ones both have a part to play.

Ian Lucas : I am grateful to my hon. Friend for reassuring me about the commitment to microgeneration and photovoltaics. Will he consider the points that I raised on stream 1 funding, as I am a little concerned about engaging individual consumers? I note the shift of emphasis to which he refers; will announcements be made on the future funding of the different streams?

Malcolm Wicks : Yes, of course they will. My hon. Friend will realise that the £50 million has only just been announced. Some of that money will be for social-sector housing, and some of it will be for school programmes.

It is particularly important that we find ways to ensure that more schools have something to do with renewables, because although we still need to talk about technologies, we need also to win over hearts and minds. We want more of our children to work in schools where teachers can demonstrate how renewable technologies are working; it will help with the school's role in teaching them about the planet, geography, science and civics. Among other things, that will produce more potential customers for renewables in their own homes. We must not forget that among the greatest teachers of parents are the children themselves. We will be making further announcements about that.

I thank my hon. Friend for raising this important subject on a such a significant day for micropower and microgeneration.

1.22 pm

Sitting suspended.

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