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At the micro-level, you are dealing with monopolies which can make up charges at a whim—that is if they believe that you should be given access at all. Those of us who live on the borders in the north-east know a great deal about power cuts. I have completely given up ever reprogramming digital clocks on cookers because a couple of weeks later they will be flashing again. There are quite a few power cuts. However, I understand the difficulty that if you are feeding electricity on to the grid, there is a danger that you will electrocute those people who are sent out to mend the fault.

However, after months of fruitless work on this scheme, which never got off the ground, I thought about how much is put in the way of anyone trying to introduce a scheme—even a small scheme—at this level. On microgeneration, we are talking about only 0.2 per cent of the generating capacity of this country, which is hardly surprising because the number of hoops relating to paperwork and finance one has to go through is incredible. If you then think about larger scale projects, such as CHP, wind and biomethane, the latter of which is covered in the second part of the amendment, the costs become greater and accessing the grid becomes extremely problematical.

This amendment calls for the breakdown of those barriers. I have been to enough debates where we have discussed how the Government are in favour of all sorts of renewable generation. However, if you have ever tried to build such a project and connect it to the grid—and this was only a small-scale one; 6.2 kilowatts is not a large turbine—you will know that the costs are prohibitive for doing it on a multiple or community level. Renewables lend themselves to rural and more remote areas, where the carbon value of electricity is high, because to generate it centrally and pump it out is expensive. The cost of that grid access is a major issue.

People are talking about bringing terawatts of power into the grid with all the wind farms in Scotland. With the interconnectors, that will cost an extremely large amount of money. However, the amendment is not a blank cheque for those who want to bring forward those sorts of bills. It is written around proposed new Section 3B(1)(d)(i), which says that it,

“shall be based on objective, transparent and non-discriminatory criteria taking particular account of all the costs and benefits associated with the connection of these producers to the grid and of the particular circumstances of producers located in peripheral regions and in regions of low population”.

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I hope that the Government support the amendment. It is not a free-for-all for everybody to move forward, but it makes transparent the major costs associated with this. Without that transparency and regulated costs, you can find yourself in the difficult position of coming up with a scheme, especially with CHP and anaerobic digesters, that makes every sense in the world on environmental grounds and deals with some of the waste issues in a cost-efficient manner, but is destroyed because connection to the local electricity or gas grid cannot be argued over or taken to review to ensure that the networks do not erect a barrier of obstructive costs. It is not simple to deal with costs that are not currently transparent. The proposed new section is an attempt to remove the barrier to the electricity and gas grids. I hope that the Government support it. I beg to move.

The Lord Bishop of Chester: I strongly support the amendment for the reason given, and another in the area of cultural change. In our debates on these subjects, we often come back to the fact that, for all the rhetoric, people leave the lights on or do not understand the practical aspects of daily living that would lead to more efficient use of energy and other resources.

My wife is from Denmark, where we have often travelled. That country has a good record for renewable energy, partly through banks of offshore wind turbines but also through ready grid access for microgeneration. It is usual to see a couple of windmills on a Danish farm; it is part of the culture. The same is true of environmental awareness in other areas of Scandinavian life, such as campaigns to reduce the average speed on roads. Ultimately, you must engineer a cultural change in the public awareness for the public to realise that a thing must happen. Anything we do to bring home the need to be sensitive to environmental issues is absolutely right.

I keep a few hens in Chester because of distaste with some aspects of factory farming. A school trip was looking around Chester and had tea in the garden. I took some of the young children down to see the hens. One of them had recently laid an egg; there it was, warm. A young girl showed particular interest in it, and I said, “Take it home for your supper”. She said, “I couldn’t possibly eat that!”. To her a real egg came in a box from the supermarket; it was not laid by a real hen. That illustrates the reality of living in our society, and how we can get disconnected, as it were. There may be practical issues in the amendment that I have not picked up, but the real merit of it in principle is that it addresses the need for our communities at a local level to take these issues as seriously as possible.

5.15 pm

Lord Jenkin of Roding: There is a great deal to be said for such an amendment or something along these lines. I am not sure that the amendment moved by the noble Lord, Lord Redesdale, could be accepted in its present form. I have one overriding reason for saying that. I have discussed the matter with those who operate the grid in this country. To be fair to the noble Lord, he said that they would not find it difficult—and

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do not find it so—to accommodate small, genuine, local microgeneration sources because the amounts involved are very small. Applications to join the grid might come from community groups, or business groups, and as the amounts of electricity that the grid would have to accommodate become larger, it becomes more difficult for operators to sustain the viability of the grid.

One has seen the other end of the scale. I was interested in what the right reverend Prelate said about the Danish experience of the larger offshore wind farms. It is now two years since the Danes reached the maximum amount that they can possibly generate by wind before finding that the grid they have to operate becomes unstable. That matches entirely with the report produced two or three years ago by E.ON about its experience in Nordrhein-Westphalia and Schleswig-Holstein. I have seen with my own eyes the large number of wind turbines operating in that very flat land, which is suitable for wind power, but the company found that once you went beyond about 18 per cent of total generating capacity coming from wind, the stability of the grid becomes very questionable.

The reason for that is very simple. It is an intermittent source. If you go from full power to no wind power in a couple of hours as the wind falls away, you must have standby generation. Given the process of operating a grid in those circumstances with no doubt variable wind output having to be fed in, and then being offset as it goes down by standby operators, the company said that it could cope up to about 18 per cent. When you move to 20 per cent and beyond, the grid becomes so unstable that it is difficult to operate.

I say with some hesitation to the right reverend Prelate who, through his wife, knows more about this than I do, but I saw the Danish wind farms when we went on a cruise up that way some years ago. The wind was blowing perfectly well but none of them was working as they had reached the point when it was not economic. The amount that the Danish power companies had to sell at rock-bottom prices to other grids in order to get some return was simply not worth their doing it. That was also the E.ON experience. The stability of the grid and its management are a vital factor. I recognise that the noble Lord has sought to take this into account in his amendment, which states in proposed Section 3B(1) that,

“the Authority shall ensure that ... (a) ... operators guarantee the transmission and distribution of electricity produced ... without prejudice to the maintenance of the reliability and safety of the grid”.

It is there, but one then asks how that will operate. How will the microgeneration supplier be able to know when he can feed it into the grid and when he cannot?

Lord Redesdale: The noble Lord asks a number of questions, but the real issue is that we are so far from achieving even a proportion of the amount that affects the grid stability that he talks about—it is less than 5 per cent at the moment—that it would take us an extremely long time to get to that position. The second issue is that we are signed up to targets to get to 20 per cent, as the Government know, so his argument is slightly rhetorical.

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Lord Jenkin of Roding: I may have confused the noble Lord when I referred to the 18 per cent figure. The same applies if there are fluctuating inputs into the grid at a local level or indeed into the local distribution network—in many cases, the microgeneration has to go to the local distribution network. I have been told by those who run the grid that they can cope with small inputs, but that if they become bigger it will be more difficult for them to cope.

The noble Lord has sought to put protective words into his amendment. I quoted from proposed Section 3B(1)(a). He has also put, into proposed Section 3B(1)(c),

“insofar as the security of the national electricity system permits”,

and so on. He has acknowledged that the problem exists, but it is quite difficult to understand how this can be done other than on a micro scale. If we are to have more and more wind power, we will have to have standby generating power to cover the gap when the wind does not blow. Everyone recognises that. However, that does not happen with microgeneration. If it is very micro, I have no doubt that the distribution system can cope, but does it make sense to guarantee access? I question that.

I am totally in favour of encouraging microgeneration. The noble Lord has laid great stress on costs, and knowing the costs in advance is an important element. One is very sympathetic to that, but I hesitate to support the amendment without knowing a great deal more about how it would work.

Lord Oxburgh: I support the general drift of the amendment, particularly the aspects that seek clarity about the charges. As some noble Lords will be aware, Woking has been at the forefront of energy efficiency and local energy generation in this country. Having looked at the economics of the situation, it was obliged to put in its own local network to distribute to consumers the electricity that was generated by their intermittent sources. It would have been easier for them to feed into the grid at one place and to take it out again a mile away, but that was not acceptable. The prices need to be transparent.

Lord Davies of Oldham: I am grateful to the noble Lord, Lord Redesdale, for his amendment, which has prompted an interesting debate. The amendment seeks to provide priority of access both for electricity and gas transmission and for distribution systems for renewable energy sources. The text of the first part of the amendment comes from the current draft EU renewables directive, and many of the provisions referred to in the proposed new clause were in the 2001 renewables directive. That is why we recognise both the text and the significance of the issue. This is an important issue, on which I am grateful to have the opportunity to explain the Government’s position.

The key difference between the amendment and the provisions already in place in Great Britain—through licence conditions and underlying industry codes—is that the amendment would mandate priority access to the grid for electricity from renewable sources. It is worth noting that currently, as those who followed the debate in the other place will recall, that is a discretionary matter for member states.

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Before I analyse the provisions further, I make clear that once the Commission’s proposals for priority access are finalised and the directive agreed, the directive will be implemented in the UK. We should not be implementing legislative proposals simply because we have a legislative opportunity in the Bill, particularly as there is a risk that the directive will change and we could be in the ludicrous position of having produced recent legislation that is an ill fit with the final European directive.

As the noble Lord will recognise, as with any European directive the Government have the option, among others, of using Section 2(2) of the European Communities Act to implement it, if they so wish. In that sense, we do not need the legislation either. The eventual implementation route will depend to some extent on the form of the finalised directive, and we cannot pre-empt that at this stage. Those are relatively minor matters in relation to the amendment—although the appropriateness and accuracy of our legislation is important—which is about priority access from renewable resources.

The noble Lord, Lord Jenkin, illustrated why the Government would find the amendment difficult. We must not create uncertainty for existing generators and those planning future investments. Uncertainty would discourage investment, which would have serious repercussions on meeting our energy needs and targets. We need certainty, because the crucial responsibility of government is security of provision from the grid. As the noble Lord, Lord Jenkin, indicated, the problem with certain dimensions of renewables—we are to foresee for the immediate future the largest contribution being from wind sources—is the element of uncertainty. I never thought, having struggled with the Schleswig-Holstein question many years ago as a historian, that I would be grateful for such a reference many years later, but I was grateful for his evidence on E.ON’s experience.

Lord Teverson: Does the Minister know the answer to the Schleswig-Holstein question?

Lord Davies of Oldham: I never got a specific mark for that question, but I struggled through the paper. I did not have any more of an answer to it than the rest of the British or international community at that time, but I have an answer to this issue.

I pray in aid the Schleswig-Holstein experience, as I do the Danish experience. We are concerned that the renewable provision could be intermittent. Therefore, we need to guarantee the necessary back-up from more secure resources. I respect greatly the enthusiasm with which the noble Lords, Lord Redesdale and Lord Teverson, have pursued the renewables agenda in Committee. I emphasise that we have to guarantee certainty of supply. We will address those issues later in Committee. It will be recognised that it is not something over which the Government dare take risks.

5.30 pm

Lord Redesdale: On a point of clarity, I fail to understand what will change between now and the implementation of the directive in the grid. Will there

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be a massive change in the make-up of the grid that we have not known about in the next five years? Obviously, energy storage would be the holy grail. If the Minster is saying, on the one hand, that we are going to implement the EU directive, but, on the other hand, that we cannot do so due to question marks over the grid, what will change in that intermediate period?

Lord Davies of Oldham: We are involved in substantial consultations on the process by which we adjust the arrangements for the grid and make changes. I emphasise to Members of the Committee that we are seeking some positives from the probing that the noble Lord has made today. We have ended the requirement for planning consent for microgeneration from April 2008. I know that he will regard that as a minor concession in comparison to what he seeks, but it is the intent of the Government to give the support that they can. The Committee will have been saddened by the noble Lord’s personal experience of his microgenerator, and I understand the issues with regard to costs and the restrictions on access to the grid.

However, there is no doubt that we are taking steps to improve the position as regards microgenerators and that the current system provides disadvantages for smaller players. The noble Lord gave his personal experience. That is why we have set out to level the playing field for the distribution of energy. The measures set out in our recent consultation will reduce a whole range of these burdens, as experienced by the noble Lord. A report setting out the measures, which responds to all these issues, was published only a few days ago.

I want the noble Lord to be clear that we are taking the necessary steps to ease the problems of microgenerators and access to the grid. The rather global sweep of the amendment is not well timed and, at this stage, we are not in a position to accept it. We certainly are considering reforms to grid access, which would ensure that the regulatory framework remains fit for purpose in the medium and the long term. That will condition the way in which we are able to respond to the European directive. It is clear from this work that there are ways in which we could significantly improve the connection opportunities for renewable generation. We will set out this analysis when the final report of the review is published this week.

The Government are well charged of the issues which the noble Lord raised on access of minor generation, but I also indicate to him, as did the noble Lord, Lord Jenkin, in his contribution, that there are strategic aspects to which we must have regard. It is certainly clear that the growth in intermittent renewable generation will require us to have a serious examination of access to the grid, which is why we are involved in these consultations. Grid capacity needs to be shared between different forms of generation, but no one in the Committee will underestimate the complexities of these matters against a background where the Government are bound to have as their priority security of provision.

On the second part of the new clause proposed in the noble Lord’s amendment, I do not want to return to that intensive debate that we had on biomethane. I was grateful to the noble Lord for truncating his contribution on that today, and I will follow suit. Until

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we have reviewed the evidence about the costs and processes involved in upgrading biogas to biomethane and injecting into the gas system, we will not be able to assess the potential unintended or undesirable consequences, or the balance between costs and benefits that might flow from any proposed change to access rules. The kind of market enablement provided by the amendment is somewhat premature.

We have said on many occasions that we will do what we can—and we are steadily making progress—on support for renewables. But I hope that the noble Lord will recognise that the Government have a clear priority with regard to the grid and electricity, and it would be somewhat jumping the gun to introduce part of a European directive, which is not finalised at this stage, into our legislation at this point. That is a premature initiative, although the Government share with the noble Lord the broad objectives. The Government have to hit those targets, which we have all identified will involve considerable change to access to the grid.

The Lord Bishop of Chester: On the question of possible limits in Scandinavia, there will obviously be limits to the level of generation from different renewable sources that are consistent with security of supply. However, it would be helpful if estimates of the natural limits that would apply in the UK for wind power were more widely available. It would help people to estimate the different values to be given to the various issues around policy. Following on from that, is it not almost certainly the case that the more widely distributed the sources of renewable energy, the higher the natural limit? That seems to be an argument in favour of not simply having a small number of large-scale sources of any given renewable energy. There must be intrinsically an argument in favour of a fairly dispersed mixture of large and small, which I think is behind the amendment moved by the noble Lord.

Lord Davies of Oldham: If everything were uniform, the right reverend Prelate would be absolutely right in his contention, but it will be appreciated that a whole range of new renewables initiatives are seeking access to the grid. In Scotland, there is a veritable queue of applications, which presents significant issues for the grid operation as far as Scotland is concerned. I hear what the right reverend Prelate says. Of course, there are desirable advantages to the dispersal of generation, but we also need to ensure that we have this framework right as far as the grid is concerned. I am not sure of the precise terms of the analysis that he is after, but the renewable energy strategy consultation that we will publish this week will include an analysis of the relative contributions. He will have time to digest that before we reach Report.

Lord Redesdale: Perhaps I should have continued my story. Due to the difficulty that I had, I introduced the Renewable Energy Bill to this House, which then became the basis for the Climate Change Bill, a Private Member’s Bill that went through the other place. On the basis of that, the removal of the planning constraints on microgeneration came forward. I am well aware of all that, and I cannot give the Government credit for it. But on that basis, I realise how long these processes take.

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The Government are saying, “We need to review this and then we can go forward”. Anyone who has been involved in these processes realises that it takes for ever and that the bureaucracy is a nightmare. Therefore, of course I will take on board what is said by the review that is published this week, but I do not see why we could not act as a lead on this and why we could not go forward—we will adopt it anyway, because we have to try to meet our 2020 targets. The view of the noble Lord, Lord Jenkin, on renewable generation is somewhat different from the Government’s. Therefore, I hope that the Government will change their mind. I will bring this back at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees (Baroness McIntosh of Hudnall): Perhaps this is a convenient moment for a brief adjournment. The Committee will adjourn for 10 minutes and resume at 5.50 pm.

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