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"PROMOTION OF MICROGENERATION
(1) For the purposes of encouraging use of new and renewable energy sources, the Secretary of State shall within twelve months of the passing of this Act and at least every three years thereafter publish a plan specifying what steps he proposes to take to promote the growth of microgeneration.
(2) In any plan published pursuant to this Act the Secretary of State shall consider the role of microgeneration in—
(a) reducing the emission of carbon dioxide;
(b) alleviating fuel poverty;
(c) reducing the need for reinforcement of electricity networks; and
(d) ensuring security of supply of electricity.
(3) Before publishing any plan under this section, the Secretary of State shall consult such persons as he considers appropriate.

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(4) In this section the following terms shall have the following meanings, that is to say—
"new and renewable energy sources" mean sources of production of energy from or by means of—
(a) wind power,
(b) solar power,
(c) ground source heat,
(d) micro combined heat and power systems,
(e) fuel cells, and
(f) other low or zero carbon sources.
"microgeneration" means generation of energy by means of equipment installed in single units of residential accommodation or office accommodation."

The noble Lord said: Here we come to another important amendment dealing with a new energy technology. This is concerned with the promotion of microgeneration or micropower. In that connection, I must declare an interest as chairman of Micropower Limited. I should explain why I am chairman of that company, because it is relevant to the proposition. I am chairman of it, because I have thought for some time that we ought to be balancing the supply of electricity with a growing proportion of electricity produced on a smaller scale. The technology for doing so has much advanced, and the benefits are very considerable: the waste heat can be used, transmission losses can be avoided and emissions can be reduced. Therefore, it seemed to me that this is a very desirable objective at a time when we are concentrating more and more on the environmental aspects of energy policy.

I gathered together a number of the main companies involved in this procedure, some of which are ready to market their products, in order to push this technology ahead. I believe that, if you really want to pursue an objective, you might as well do something about it, quite apart from the importance of speaking occasionally on the subject in this august Room. So I did. I have no qualms about declaring that interest and explaining why it has come about.

The energy White Paper refers positively to microgeneration or micro-CHP, which are other ways of describing the same thing. We have now reached the stage where the technology has been completed—certainly that based on the Stirling engine—where the market prospects have been carefully investigated and where products are due to come on to the market very shortly, that is domestic-sized boilers, which have been extensively market-tested. However, the problem is that in the build-up period there will obviously be a cost. Until a substantial, sufficient run of product can be achieved, there will be a considerable cost encountered during the first few years. It is during that period that I believe some support should be given.

This is the same issue as I raised under the previous amendment. It is a question of balancing normal market forces against environmental objectives. There is not the slightest doubt that this serves environmental objectives in a major way. If one can achieve about 90 per cent efficiency in a domestic combined heat and power plant, compared with the 50 or 52 per cent efficiency from a conventional power station, to which

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must be added the transmission losses of up to 10 per cent, this is obviously serving a very desirable objective. Therefore it is something that we should aim to get off the ground. The work has been done, the technology has been done. Supporting the R&D is not an issue here. That has all been done. We have reached the stage of marketing the appliances—that is the companies involved, I am not directly involved in any of those companies—and need to have support in the build-up period. That is what this is about.

I hope that again the Government will respond to this positively and say that they may agree or disagree with the wording of the amendment, but that they accept that there is a problem here, there is a desirable objective to be achieved, and that this is another matter that they will take away and think about. I beg to move.

The Duke of Montrose: I was interested to see this amendment being tabled on microgeneration. Of course, I do not have anything like the expertise that the noble Lord, Lord Ezra, brings on this subject. However, I was interested that in his list of microgeneration sources in subsection 4(f) he puts,


    "other low or zero carbon sources",

but that there is no mention of microhydro. As someone who looked into microhydro at one point in my life, I do not know whether the noble Lord, Lord Ezra, has thought about this one. There are run of the river hydro schemes and other very small-scale hydro schemes that have the great benefit that they are not visible. They do not rise 150 metres up into the air. These are something that would come in under subsection 4(f) and to that extent I would like to support the amendment.

Lord Ezra: I would very strongly agree that microhydro should be included and, indeed, micro-anything-else that anybody would like to think of. It is the micro side that is important.

Lord Tombs: I think that I would prefer to call this consumer-based generation because fuel cells, solar power and all kinds of technologies such as microhydro could come into this question. Among the matters that have to be considered is that the individual choosing to generate locally will want a stand-by supply. That is not free of cost, or does it follow that the savings in the distribution system would be as big as might be envisaged?

Lord Whitty: The Government are in favour of encouraging micro and other small generation. We have been working to ensure that the barriers to the connection of micro-generation are addressed. The noble Lord, Lord Ezra, will know that the DTI, together with Ofgem, established the Distributed Generation Working Group. The group has subsequently established a number of workstreams which are now coming to fruition in support of micro-generation.

We have announced our plans to enable smaller generators to accumulate their output over a year and to be awarded renewable obligation certificates. Noble

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Lords who have followed the proceedings closely will have noted that the draft order to allow renewable micro-generators to obtain ROCs as from 1 April 2004 was laid in the House two days ago. A fair amount of activity is taking place in this respect which indicates that the Government's vision of and commitment to a significantly enhanced role for micro-generation in energy supply is already there.

The amendment relates to the writing of a plan and reporting specifically on micro-generation. We believe that would be a duplication of what is already provided for in terms of reporting. There are separate reporting arrangements for other energy policy aims covered by the amendment. Under the Sustainable Energy Act 2003, for example, the Government have a duty to report annually on progress towards our sustainable energy aims. It requires us to publish an annual report on the cutting of carbon emissions, maintaining the reliability of energy supplies, promoting competitive energy markets and reducing fuel poverty. All of those areas are subject to a report.

The means by which we meet those objectives is not hugely specified in the legislative reporting requirements. Nevertheless, the annual reporting mechanism is rather more demanding than the measures contained in the amendment and clearly will need to address micro-generation and a number of other issues.

The Government will review the renewals obligation in 2005–06. This will cover a wide range of issues, including micro-generation. So it would be perhaps premature to legislate for a specific reporting requirement before that review has taken place.

In view of what is already in the pipeline and the quite stringent reporting arrangements in regard to energy policy which are already the responsibility of the Secretary of State, and given the assurance that the role of micro-generation will be conducted in that context, I hope the noble Lord will not seek to impose the separate strain of reporting outlined in the amendment.

Lord Ezra: I thank the noble Lord for his response. It is perfectly true that the issue of micro-generation will be in a number of reports which are to be prepared. The trouble is that they are all rather disparate so far as concerns micro-generation. It would be helpful if whatever relates to micro-generation could be brought together in order that a clearly defined policy in relation to this important emerging technology can be clearly set out and understood. Otherwise it will be necessary to go through a whole range of documents—including the fuel poverty action reports and various energy policy reviews produced by the Government—and it would be beyond the scope of the average interested party to gather together what is the Government's policy in the quite important and formative area of micro-generation.

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While I shall withdraw the amendment, I hope the Government will bear in mind what I have said and try in some way to bring together their thinking in relation to micro-generation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 105 agreed to.

4.30 p.m.

Lord Gray of Contin moved Amendment No. 113ZK:


    After Clause 105, insert the following new clause—


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