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I very much agree with the noble Baroness, Lady Wilcox, that we may need a different approach for different technologies. It is different for heat, but the implication is that any upper limit or cap in the Bill will have to be a maximum level, giving sufficient flexibility to set different tariff levels for different technologies, following consultation.

I accept the points raised by the noble Baroness, Lady Young, the noble Lord, Lord Teverson, and my noble friend Lord O’Neill about community generation, suggesting that the cap should not be set at too low a level. The noble Lord, Lord Redesdale, tentatively put forward 2.2 megawatts as where one might start the discussion. We will consider that. There is a danger of a kind of auction here, but next week we will have a discussion with noble Lords about where this level should be set. I suspect that we will not get utter uniformity on that view.

I have noted the concerns of the noble Lord, Lord Jenkin, about the implication for the local distribution network. This matter has not been reported to me, but I will look into it and will be able to respond to him in due course.

Lord Jenkin of Roding: My Lords, I am grateful for that. It is a very important matter which the noble Lord should discuss with those who operate these local distribution networks. It has been represented to me very strongly.

Lord Hunt of Kings Heath: My Lords, I have no hesitation in saying that we will do that.

The interesting issue of non-renewable microgenerators was also raised, and the noble Lord, Lord Jenkin, mentioned the capital-cost problem of such schemes. We will of course look at that. Amendment No. 41 suggests that the feed-in tariff should also cover small non-renewable combined heat and power systems and that non-renewable CHP systems should be restricted to limits not exceeding those in Section 82 of the Energy Act 2004. That is a sensible approach which we would hope to incorporate within the government amendments that we will produce at Third Reading.

Lord O'Neill of Clackmannan: My Lords, what role in this process does my noble friend envisage for Ofgem? One of the means by which moving targets can be addressed over time is through use of the

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statutory instrument mechanism for the setting of caps. As has already been made clear this evening, the technology is likely to change very quickly. If we were to chisel into legislative stone a figure that would require fresh legislation to change, it would put us in a very difficult position. Will he therefore consider use of the statutory instrument? With prior consultation and agreement, we can often get the kind of new consensus required to address changing circumstances even two or three years from now.

Lord Hunt of Kings Heath: My Lords, I readily agree that the statutory instrument is always an attractive option for Ministers standing at the Dispatch Box. It gives the Government a great deal of discretion in making changes and adaptations. There is always a debate in your Lordships’ House about the extent to which we use statutory instruments as opposed to primary legislation. It is certainly true that, as the noble Lord, Lord Redesdale, suggested, there may be further energy Bills down the road—though, as he knows, I could not possibly comment. I have discussed this matter with my officials and the issue comes back to investor confidence. The point that has been put to us is that we need a limit in the Bill in order to maintain investor confidence. That goes to the heart of the dilemma in our wanting sufficient flexibility to take account of developments that may take place in the future. We are very concerned not to do anything to undermine investor confidence in the ROC system.

Lord Whitty: My Lords, does my noble friend accept that investor confidence applies both ways? The kind of user that I was talking about also needs investor confidence, but the ROC system is not attractive to them because it is too bureaucratic and does not give them certainty. Investor confidence is therefore lacking. If in aggregate they add up to a large investor whose confidence is undermined, as a number of noble Lords are concerned, then that dimension of confidence, as well as the bigger project, needs to be addressed in whatever the noble Lord comes up with.

Lord Hunt of Kings Heath: My Lords, I cannot disagree with my noble friend on that point either. However, it suggests the challenge that the Government face in coming up with proposals that fit the bill and meet all the different viewpoints. We will have to work very hard in a short time in order to produce proposals that work and are encouraging to the microgeneration schemes that we want to encourage while ensuring continued investment. I do not pretend that this will be a particularly easy task.

When it comes to heat, we are looking very seriously at the options open to us. I very much take noble Lords’ point about ensuring that we embrace heat within any amendment that we bring forward. The complex and diffuse nature of the heat market makes a feed-in tariff for heat a much looser concept than it is for electricity. There are also fundamental differences between heat and electricity that will present challenges to delivering an effective and practical financial support mechanism for renewable heat alongside electricity. The Government will have to give further consideration to how to do it. I assure noble Lords that we wish to

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address the heat issue, but I think that we will have to do it in a way that gives us sufficient flexibility to formulate policy over the coming months. Given that noble Lords have been keen to give the Government flexibility on other issues, I hope it will be accepted that a lot more work needs to be undertaken on the heat issue.

My noble friend Lord O’Neill raised a very important consideration about the supply chain. We want every encouragement to be given to the supply chain. Part of providing that encouragement is the need to get absolutely right the issue of investor confidence regardless of whether it is large-scale or smaller-scale investment.

The noble Lord, Lord Reay, asked some pertinent questions on costs. We have to address those issues but, as I think he rather expected, I cannot give him any firm figures now. We will make those figures available as soon as we have them.

My noble friend Lord O’Neill made some important points about where the costs lie. There will be a knock-on impact on consumer bills, as the noble Lord, Lord Reay, and my noble friend suggested. However, my noble friend’s point was really about equity and a concern that poorer people should not be subsiding middle-class people in this area. He will know that there has been concern about prepayment meters. He will probably also know that, only a few days ago, as a result of the Ofgem probe, my right honourable friend met with the companies concerned to make it plain to them that we expect movement on the issue. The principle that he raises is very important indeed.

The Duke of Montrose: My Lords, the noble Lord was talking about the value of the feed-in tariff. Is there no hope that the feed-in tariff will be fixed at the same level as current electricity tariffs or slightly below them? Is it a matter of principle that the feed-in tariff will cost more than the current electricity tariff?

Lord Hunt of Kings Heath: My Lords, the point being raised here is that the feed-in tariff will provide both certainty and likely additional income to those who are able to feed in. There will be a knock-on impact on costs and, therefore, on prices. As we know in relation to renewables generally, there is a knock-on impact. I think that that is part of the balance and the price which has to be paid to meet our renewables target. However, we need to do more work on the actual costings, and we will try to do it as quickly as possible. The point that I was trying to make to my noble friend Lord O’Neill was that there is also a question of equity here. I think that it presents a real challenge to the companies—a challenge to which we will continually return.

7 pm

Lord Jenkin of Roding: My Lords, following the point raised by my noble friend the Duke of Montrose, will the Minister take notice of what Ofgem said in its response to the renewable consultation? It said:

“In terms of the mechanism, we see merit in seeking to rationalise the many different policy interventions, or at a minimum to achieve more consistency (for example between renewable heat and micro-generation electricity as each MWh of either has the same value towards the renewables target)”.

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That seems to me to be pretty wise advice. Ofgem has obviously given a great deal of thought to it. Perhaps the Government should adopt that approach.

Lord Hunt of Kings Heath: My Lords, I am most grateful to the noble Lord for that pertinent intervention.

Lord Whitty: My Lords, before the Minister leaves the equity point raised by my noble friend Lord O’Neill, and putting on my hat as chair of Consumer Focus, perhaps I may say that there are two aspects of this. The first is the one that we have been talking about: the cost to the generality of consumers of going down this road. However, in so far as some of the beneficiaries of a feed-in tariff pass on the use of that electricity to others, particularly in district heating schemes, does the Minister recognise that this is a lacuna in current regulation? Ofgem regulations do not protect the consumers of district heating schemes. Therefore, if such operators are to benefit from a feed-in tariff, a concomitant may well be an extension of regulation to establish equity for that group of consumers.

Lord Hunt of Kings Heath: My Lords, I am grateful to my noble friend. This has proven to be quite an education. These are all matters that fall to be considered.

I well recognise that there is a lot to be done and that noble Lords are anxious to see an amendment as soon as possible. We also have the benefit of a Select Committee report on Friday; I think that that was what the noble Lord, Lord Freeman, said. I will seek to ensure that early contact is made with all noble Lords who have an interest in this matter. I also accept that the earlier an amendment is laid, the easier it is for noble Lords to have it fully tested and to table their own amendments. I will not be so foolish as to guarantee when that will be, but I very much take the point that noble Lords want to see our proposals as soon as possible.

Lord Redesdale: My Lords, the whole purpose of examining the issue before the Summer Recess was to ensure that we had something in front of us for deliberation at this stage. I realise that it is a complicated matter and that views had to be sought. I also realise that the Minister has moved into the job since the Bill’s Committee stage. However, we believed that we would have something by this stage. I take on board what the Minister said about an early stage, but it is unfortunate that it has not happened yet.

Lord Hunt of Kings Heath: My Lords, I understand that. On the other hand, we are here because the Government came to a view on this matter, as reflected in the Statement, only last Thursday. We have to make the best of it. Noble Lords have generally very warmly welcomed the view that the Government now take. I simply re-emphasise that we want to work hard with all noble Lords to see the extent to which we can reach a satisfactory consensus.

Lord Jenkin of Roding: My Lords, I understand that the Bill’s Third Reading is currently scheduled for Wednesday, 5 November. One has been given to understand that there is a little flexibility between now and the date of the start of the next Session. If it

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would help, I should have thought that there could be discussions about perhaps giving the Minister a few more days to do the work that he has so eloquently said has to be done.

Lord Hunt of Kings Heath: My Lords, that is not the impression that I have been given by the usual channels. I shall for the moment work to 5 November, and work very hard to see what we can do to achieve a successful outcome.

Baroness Wilcox: My Lords, the Minster has had a master class for the past hour in all the departments of the Bill. I learn something new every time I stand up to say anything about an amendment to this Bill. We obviously look forward to my noble friend Lord Freeman’s report on Friday. The Minister has assured us that he will come back with amendments in such good time as we can talk with our colleagues, particularly those in another place where they will not have an opportunity to discuss this at all.

I thank all noble Lords who supported the amendment and spoke today. Yesterday the noble Lord, Lord Puttnam, telephoned me from Ireland—I am not quite sure why he was there—to say that he supports the amendment and would be looking carefully to see what the Minister came back with. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Whitty moved Amendment No. 6:

6: After Clause 41, insert the following new Clause—

“Permitted development for renewable energy

(1) The Secretary of State must make regulations within three months of the day on which this Act is passed for the purpose of granting permitted development status to specified microgeneration installations.

(2) In this section—

“specified microgeneration installations” means small wind turbines and air source heat pumps, and any such further technologies the Secretary of State may consider appropriate,

“permitted development status” means development for which planning permission is not required in the circumstances stated herein, and

“fixed specified period” means one year from the date on which the regulations made under subsection (1) came into force.

(3) The regulations shall specify that small wind turbines and air source heat pumps shall be permitted development in the circumstances and on the conditions stated in subsection (4).

(4) The circumstances and conditions referred to in subsection (3) and to be specified in the regulations are—

(a) that the design and installation of a specified microgeneration installation should not cause an external noise level, due to the specified microgeneration installation alone, in any mode of operation or wind speed that will not be exceeded more than 10% of the time on the given site, above 45db at the façade of the neighbouring building, and in the case of small wind turbines, measured in accordance with BWEA small wind turbine performance and safety standard,

(b) that permitted development status only applies to certified products,

(c) that permitted development status only applies to detached houses,

(d) that permitted development status only applies where a certified installer is used to install the equipment,

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(e) that a certified installer should be under a duty to ensure compliance with paragraphs (a) to (c) above in any installation carried out by him,

(f) penalties or sanctions that may be incurred by a certified installer who fails to discharge the duty specified in paragraph (e) above.

(5) The Secretary of State shall have the power to review, amend or suspend regulations made under subsection (1) for the fixed specified period specified in subsection (2) for the circumstances and conditions contained in subsection (6).

(6) The circumstances and conditions referred to in subsection (5) are—

(a) that there is evidence that a significant number of statutory noise nuisance complaints have been upheld for any technologies installed as permitted development in accordance with the regulations made under subsection (1),

(b) that the Secretary of State has consulted relevant parties on the evidence used to inform any decision he proposes to take to amend or suspend regulations in accordance with subsection (5).

(7) Regulations under this section shall not be made unless a draft of the instrument containing them has been laid before, and approved by a resolution of, each House of Parliament.”

The noble Lord said: My Lords, this relatively small amendment looks rather more complicated than it actually is. It deals with an apparent anomaly that the Government have on several occasions said that they were going to make right but have yet to do so. This is a nudge to try to get them to. It is arguably on the interface between the Planning Bill and the Energy Bill, but I have refrained from participating in the Planning Bill, so I am afraid that it is here.

The amendment relates to renewable energy and the fact that, while other forms of microenergy get permitted development status, small-scale wind turbines and air source heat pumps do not. This is not particularly logical. The then DCLG Minister, Yvette Cooper, said two years ago that this would be addressed. That was repeated by Iain Wright this year and, again, as I understand it—I am not sure that he was strictly the Minister’s predecessor—Jonathan Shaw at Defra indicated that he was prepared to do it provided that there was a limit to the noise effect of turbines.

Air source heat pumps are particularly important on this, because they are available, as somebody—probably the noble Lord, Lord Teverson—said earlier. They can play a major part in helping the fuel bills and the contributions to cutting carbon by those who are off the gas network. Other forms of so doing are much more expensive and difficult. On turbines, we are not talking about massive ones, but those roughly the size of a television aerial. We accept that there should be a limit to their noise impact, and that that should be set at the WHO-recommended level of 45 decibels.

In objecting to these various points, officials have told those who are advocating these changes that the noise was a real problem. However, as a result of a Freedom of Information Act investigation with local authorities, we discovered that, out of 4,500 such applications, there was only one complaint on the grounds of noise, and that was not upheld. Therefore, provided the decibel limit is within the regulations, there is no reason why these two extremely valuable bits of microgeneration should not receive permitted

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development status in planning policy. As the Government have said on several occasions that they will do this, I hope that it will be done and that it will be reflected in the Bill. If the Minister has an alternative, I hope that he will tell us what it is. I beg to move.

Lord Reay: My Lords, if I understand it correctly, the amendment of the noble Lord, Lord Whitty, seeks to place microgeneration installations outside the planning system. If this was to be accompanied by no cap or a high cap on the size of qualifying installations, I hate to think what the effect might be on certain landscapes. Under the amendment, if I understand it correctly, no planning permission would be required for small wind turbines on, or I suppose beside, or on the same ground as detached houses. Of course, one cannot tell how successful the feed-in tariff will be in securing take-up, but it is possible to envisage rural and suburban areas subjected to a rash of such development. The noble Lord no doubt wants this. The more successful the feed-in scheme, the more such installations there will be.

The amendment does not specify how large is “small”. Is this to be measured by height or generating capacity? As the noble Lord explained, installations would be restricted by the amount of noise they produce at the point of the façade of the neighbouring building, but not, apparently, on any other grounds, except for some technical requirements. Is he not concerned about the visual effect of this kind of wind turbine on the landscape? In some rural positions, neighbouring houses may be very long distances apart. It seems to me that in such cases a person could put up a windmill of more or less any size he wanted. I shall be interested to hear the Minister’s reply. I hope it will give a clue about what the government amendment on the feed-in tariff will provide on this aspect of the subject when it comes before us at Third Reading. After all, as I understand it, the Government are considering tabling an amendment to the Planning Bill which will record their commitment to respect landscape.

Lord Jenkin of Roding: My Lords, I read the amendment with astonishment. I have been debating the Planning Bill for some time. If, as my noble friend Lord Reay said, this amendment constitutes an extension to the existing permitted development regime in the Planning Bill, that is where the proposed new clause should be situated. The noble Lord, Lord Whitty, may have been otherwise engaged when we dealt with the Planning Bill. However, we have one more Committee day and then Report. On reading the amendment I could not understand how he could say that it is not complicated, given all the circumstances and conditions spelt out in proposed new subsection (4). It is extremely specific and goes into considerable detail. I have a question that no doubt he will be able to answer: what consultation has there been with bodies representing local planning authorities? Has he discussed this with the Local Government Association? Local authorities would certainly have views on this. Have they been consulted? Do they agree with the measure? Do they consider it reasonable? The noble Lord presented it on the footing that it was clearing up an anomaly which the Government have always recognised. With the greatest respect, it is a lot more than that.

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Lord Teverson: My Lords, we on these Benches look forward very much to hearing the Minister’s reply. Although we agree with the motivation behind the amendment of driving forward microgeneration and enabling households to take more control over their energy production as well as their consumption, this strikes me as an area where there might be all sorts of unintended consequences. However, as I say, we shall be interested to hear the Government’s response to the amendment.

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