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(1) The Secretary of State shall make regulations within one year of the day on which this Act is passed for the purpose of introducing a renewable energy tariff for a specified fixed period to specified producers of renewable energy.
(a) are used wholly or mainly for the generation of electricity and the production of heat from sources other than renewable sources;
(b) have a capacity not exceeding that mentioned in section 82(8) of the Energy Act 2004 (c. 20); and
(c) are specified in the regulations.
(a) set the tariff at different levels, taking into account the type of renewable source;
(b) apply the tariff to different sizes or classes of renewable sources;
(c) make different provision for different classes of energy, such as electricity, heat or gas; and
(d) provide for a tariff level to be varied as specified in the regulations.
(a) Great Britain;
(b) England and Wales;
(c) Scotland; or
(d) Northern Ireland,
(a) each renewable source in respect of which a renewable energy tariff shall apply;
(b) a renewable energy tariff applicable to each renewable source, or to any type, size or class thereof;
(c) the maximum level of energy production capacity in respect of which a renewable energy tariff shall apply, having regard to the benefits of increasing future, and not damaging existing, investments in renewable energy production;
(d) whether a renewable energy tariff is payable in respect of energy production or only in respect of that proportion conveyed, or to be conveyed, into a distribution system;
(e) the descriptions of which persons and installations producing energy from renewable sources shall be eligible for the renewable energy tariff and provisions to exclude generating stations accredited under the Renewables Obligation;
(f) the contract period for which a renewable energy tariff is payable and the payment level is fixed;
(g) how the amount of energy in respect of which the renewable energy tariff is payable shall be measured, determined or deemed;
(h) the right of specified producers of renewable energy to have their production conveyed into a distribution system as a priority;
(i) the description of persons, such as energy suppliers, required to pay the renewable energy tariff and how such persons shall recover the additional costs thereof, dividing such costs, where the Secretary of State deems it appropriate, equitably between such persons;
(j) how any costs of connecting to, and of any reinforcement or extension of, the distribution system necessary for the purposes of conveying renewable energy production hereunder are to be borne;
(k) provisions for the regulation of renewable energy tariff arrangements by a specified body;
(l) provision for the Secretary of State to review and report periodically on the effectiveness of the regulations made hereunder, and to consider such amendments as he considers appropriate;
(m) any necessary amendment to distribution licences or supply licences held by any person; and
(n) such other provisions as may be required for the efficient, cost-effective, environmentally sustainable and transparent operation of the renewable energy tariff.
(a) the Authority;
(b) the energy suppliers to whom the proposed regulations may apply;
(c) representatives of renewable energy producers to whom the proposed regulations would apply;
(d) representatives of suppliers subject to the Renewables Obligation; and
(e) such other persons, if any, as he considers appropriate.
(7) Regulations under subsection (1) above may extend to introducing a tariff for a specified fixed period for electricity and heat generated from specified non-renewable combined heat and power systems, in which case the other provisions of this section shall apply to that tariff as they apply to a renewable energy tariff.
The noble Baroness said: My Lords, we come now to possibly the most important amendment that we will discuss on Report. Not only does it have strong support from a remarkably diverse group of outside stakeholders, but Members from all sides of this House, including from the Labour Benches, have signed up to it. Even in another place, an EDM has been tabled with an impressive number of Labour MPs signatures attached.
In Committee, a slightly different version of this amendment received an extremely cool reception from the then Minister for BERR, but I am pleased to note that the Government have moved from their position in June. We are fortunate to be facing a new Minister, from a new department, with a new Secretary of State. The Statement we heard last week gives us hope that the situation has changedindeed, a Damascan road conversion seems to have taken place somewhere along the line. From that Statement, it appeared that our arguments on the important role that a guaranteed price for small-scale electricity generation should play in our energy policy were finally being listened to, and we were promised a government amendment to the Bill that would ensure a renewable energy tariff.
In meetings with officials following that Statement, we have been informed that the Government intend to bring forward this amendment on Third Reading. That is certainly not ideal timingsuch important provisions should ideally be laid in time to undergo proper scrutiny by both Houses. Nor am I overly optimistic about just how far the Government are willing to go voluntarily on this issue. But I think that the Government, through the Minister, have given us enough hope that I am prepared to withdraw the amendment today. I make it clear that I reserve the right to reintroduce it at Third Reading and press it to a vote in the event of the government amendments being found to be inadequate.
Even if those amendments are significant, I imagine that the House might wish to lay several further amendments in order to ensure that this issue is dealt
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First, one of the most contentious aspects of this amendment is the level at which eligible energy sources should be capped. Too high a cap and there is an unwelcome clash with the renewable obligation contribution scheme; too low a cap and potential microgeneration schemes are frozen out. The final decision about where the cap is set is therefore critical to eventual success or failure. We chose, after much deliberation, to allow for complete flexibility in order to accommodate such concerns. Our amendment would allow the Secretary of State to adjust the cap in response to the more precise information that will become available as the tariff is rolled out. It is also possible that different energy sources will require different caps, and provision must be made for that too.
Secondly, any concession should make provision for the inclusion of heat. The Minister said in the Statement last week that he recognised the importance of renewable heat, and followed that up with a coy hint of future announcements in this area. Rather than yet another vague initiative, policy aim or broad strategy thrust, heat needs to be specifically included in the government amendment. To do otherwise would continue the Governments policy of marginalising that critical area. The Government themselves have identified combined heat and power as one of the most cost-effective carbon abatement technologies available. To exclude it would be incomprehensible. With system losses of up to 70 per cent with centralised power generation, we do not need any more legislative barriers to the development of micro-combined heat and power.
Finally, there is the question of implementation. Your Lordships will already have noted a later amendment to the Bill on the question of the implementation of smart meters. There are similar concerns here. Any government concession must contain a clear indication of how soon the tariff will become operational. Without that, there is simply no guarantee that it will ever happen. I am sure that other Peers will mention other points in this amendment that they hope to see supported by the Government at the next stage; my list is certainly not exhaustive.
I end with a request that we are given sight of the government amendments as soon as possible. It is unfortunate that the Government have started to move only now, when there is no chance for those in another place to scrutinise any amendments carefully. In this place, we in this House need to give any new provisions as much careful consideration as possible. I beg to move.
Lord Whitty: My Lords, my name is also attached to this amendment and I strongly support what the noble Baroness has said. I was pleased to hear, in last Thursdays announcement by the Secretary of State, that the Government are minded to move substantially in this direction, which requires that the noble Baroness withdraw the amendment today. Nevertheless, part of
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First, it is important to recognise that this is about a lot of technologies, not one specific technology. Certain uses have not been brought on as quickly as we at one stage anticipated. They range from relatively small-scale wind through to biogas and solar power of various sorts.
Secondly, this is not an attack on the ROC system. There are arguments about that system but it is clear that it is now working. There is a lot more in the pipeline that has been stimulated by the ROC operation, and most of the delays in that are due to the planning system rather than to the ROC system itself. Also, the gradation and banding of ROCs will help some of these technologies.
It is therefore not intended that the system covered by the amendment would in any way undermine the ROC system for those who are in the market for ROC certificates, such as multiple-site operators, and who understand and can run with the ROC trading system. The issue here is a whole range of different potential users. There are an enormous number who are not attracted at all by the ROC system, either because of the uncertainty in the trading dimension of it or because of the bureaucracy of it. These range from single-site operators, maybe quite large operators, who are interested in only one installation, possibly quite a major installation, to farmers who are looking for sites for biogas facilities or for anaerobic digestion on their farms or in a collection of local farms, through to quite significant district heating schemes with possible uses in individual buildings, schools, potentially university campuses and small industrial estatesall of whom are one-off arrangements who do not wish to enter into the ROC situation but would be attracted by the certainty of a renewable energy tariff along the lines of the feed-in tariffs on the Continent.
There has been quite a lot of congratulation that we have now surpassed Denmark in volume of wind power, but in Denmark, in terms of this market, 60 per cent of wind power users are actually small-scale firms, small businesses, local community projects, district heating and co-operatives. Those are exactly the people who are not attracted by the ROC market but are attracted by developing green energy and could be incentivised so to do by the certainty of a tariff system.
The noble Baroness is correct that there is a lot of argument about whether we put a cap on it. The original proposition, if the Government were to move at all in this area, was for a very low cap50 kilowatts was proposed at one stage, which was a very tight definition of microgeneration. That is not what I am talking about; clearly single household stuff could be covered, but we are talking about significantly more. Some of the instances I have mentioned would be much bigger than that. We therefore have to allow for a pretty high threshold, if there is a threshold at all. I would argue that, since the argument is about not the size but the nature of the user, it is not logical to have any cap. If the Government are insistent that anything without a cap would undermine the market, then the cap needs to be pretty high.
I also go along with the noble Baroness in saying that much of the benefit of this would relate to heating systems. Here I must declare an interest as the honorary president of the Combined Heat and Power Association. It is clear that, although the Government have now promised but not delivered a whole range of other support for heating systems, unless there were a much higher threshold for renewable CHP systems and heating systems that relied on renewable feedstock, that development would be greatly inhibited and some of the applications to which I have referred would therefore not benefit from this amendment.
I hope that the Secretary of State, in coming forward with his amendment, and the Minister, in arguing for it next week, will take these considerations into account. The amendment as it stands gives pretty broad scope to the Minister in drafting the detailed regulations, but it is important that in the Bill we do not inhibit any of these applications. I repeat that it is important that we do not fall into the trap of arguing that this is in contrast to the ROC system; it is in addition, it is congruent and it could run in parallel to that system for an entirely different range of potential users who, in aggregate, would make a huge contribution towards the achievement of our renewable energy targets. I see in the Chamber the noble Lord, Lord Freeman, who is chairing the Select Committee which is looking at the achievement of that target. We have all recognised that it will be difficult enough, but if we exclude the market and the potential that a feed-in tariff, or something of that nature, would provide, we will not hit the 20 per cent target for 2020. If we do include them, we will have a good chance of achieving it. I therefore support the amendment and hope that the Minister will take these points into account when coming forward next week.
Lord Freeman: My Lords, perhaps I may make a brief contribution directly following the noble Lord, Lord Whitty, and as a courtesy to the Minister and to my noble friend Lady Wilcox on our Front Bench. As chairman of your Lordships Select Committee looking at the renewable energy targets for 2020 for the United Kingdom and the European Union, I can tell the Minister that we intend to publish our report this Friday. We spell out in some detail why we believe in feed-in tariffs for renewable energy sources and spell out our reasons. As the noble Lord, Lord Whitty, a distinguished member of your Lordships Select Committee, explained, that is compatible with the existing renewable obligations certificate programme.
I also want to take this opportunity to thank the noble Lord, Lord Oxburgh, for his significant and substantial contributions to our deliberations. I hope that our report will be of value to the Government and to the Ministers department.
Lord O'Neill of Clackmannan: My Lords, the tariff is, in many respects, welcome, but I want to strike a note of caution. It will have to be paid for by consumers, many of whom cannot afford to pay the existing charges. Ultimately, it will be reflected in peoples bills, as are renewable tariffs already. That point must be borne in mind.
As with the pay-through tariff for the smaller scale generating capability, we must make sure that we can have available to the companies, the individuals and the co-operatives the kind of kit which is capable of benefiting them. We have seen in Germany, where there have been attractive programmes for such work, that already there are difficulties supplying the kit to individuals. There has been a stickiness in the market because there is an overdemand and the supply is not great enough. It is therefore incumbent on Government not just to give the nod to this welcome step, but also to ensure that even as we approach a recession we create some means of assisting the establishment and development of supply chains for that kit. They must also ensure that we are able to protect our most vulnerable and least-well-off consumers, who will ultimately be paying exactly the same part of the bill as everyone else. They may not be the people most likely to benefit from the scheme. I know that in certain circumstances, it could be attractive in rural areas which are off the gas mains and where such renewable facilities could be establishedcertainly in hamlets, small groups of houses and small rural villages that could be done. However, the kit must be availableand it must be available much more quickly. We hear that the technology is not ripe. It is ripe in a number of northern European countries which are benefiting from the scheme, and there is no reason why the UK cannot get into those supply chains and perhaps produce under licence in the United Kingdom. If we get the kit we want and a greater degree of protection for the fuel poor, we will be going some way to being in a real win-win situation of helping consumers while at the same time reducing our CO2 and meeting our European commitments.
Lord Jenkin of Roding: My Lords, I want to follow one or two of the points that have been made and say at once to my noble friend Lord Freeman, who is chairing the Select Committee, that it is a pity we are having this debate before we have his report. It would have been a valuable addition to our armoury of arguments, but there we are: these things do not always come in the right sequence.
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