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At last, we have the Government’s feed-in tariff amendment, which was promised by the new Minister, anxious to take the earliest opportunity to display his green credentials while committing this country to reducing its carbon-emission levels by 80 per cent by 2050, shortly after he took office in the middle of last month. His decision must have produced great strain in the department. I thought that I detected signs of that when he spoke on the subject on Report—he more or less acknowledged that today in different
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That paper contained a whole annexe devoted to the feed-in tariff and what form any such scheme might take. It posed multiple questions—evidence of the department’s yet-to-be-settled views on the subject—and said:
“In order to reach a balanced decision on whether we should introduce feed-in tariffs for small scale renewable generation, it is important to consider how such a system would work in practice. We welcome your views”.
“We have outlined here one example of how a feed-tariff might operate for small-scale electricity generation; and set out a number of issues on which we seek views. The information provided through responses to this consultation and ongoing discussions with industry and other stakeholders will inform our decisions on how best to support electricity generation at this scale, including whether a move to a feed-in tariff system would be advantageous”.
Yet, barely a fortnight after receiving the answers that they had so eagerly sought, the Government had impetuously committed themselves to the scheme and to an extremely tight legislative timetable for introducing it. It is not beside the point to raise this issue: first, because it will now be difficult for the Government to persuade those who co-operated with their inquiry and provided the replies that the Government sought that the Government paid any attention at all to what they said and that the whole consultation was not a waste of time; and, secondly, because this must go far to explain the sketchy nature of the scheme in the Bill and the amount of discretion that it leaves to the Secretary of State. The department is still groping its way.
I have some questions for the Minister. First, I asked on Report about cost. I did not expect an answer then, but I hope for one now. What might any scheme cost? Do the Government expect any such scheme to grow into the same order of magnitude as the cost of the renewables obligation scheme, which is currently running at some £1.1 billion a year and calculated to rise on present policies to £32 billion a year if we are to reach our 2020 target? Is it the Government’s idea that consumers will pay it all, just as they do for the renewables obligation, and will that include the costs of the bureaucracy to run the scheme and of providing the extra low-voltage grid wherever required? Have the Government worked out their views on those issues? What will that add to consumers’ bills?
Secondly, can the Government say anything on how any scheme might interact with the planning system? Is it their idea that microgeneration plants should be exempt from planning permission? Is the scheme to be open to occupants of terraced houses in urban areas, or only those living in detached houses?
I hope that the Government can explain, on the later amendments, why they have set the maximum specified capacity for a plant as high as 3 megawatts. For a wind turbine, that can mean it is 400 feet high: that is thoroughly unsuitable for domestic electricity generation and far above the limit of what would normally be considered “microgeneration”.
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Finally, I question whether wind should be included as an allowable energy source. An interesting and highly detailed study has just been published by the Builders Research Establishment Trust on microturbines in urban environments, including a study of Manchester as typical of a large inland conurbation. It found that, even under the most favourable assumptions, it was unlikely that microturbines would pay back their carbon emissions over the expected lifetime of the systems. It also found that no microturbine was likely to produce more than 150 kilowatts of electricity per year, compared to the 4,000 to 6,000 consumed by the average two-to-three bedroom house—in other words, not very much. I have presented the Library with a copy of this report in case noble Lords would like to consult it.
It is already plain that large-scale wind turbines will struggle to repay the carbon emissions produced by their manufacture, installation, maintenance, required backup and eventual decommissioning. If microturbines cannot repay their carbon emissions either, I cannot see a place for wind in this scheme, or in any policy whose avowed purpose is to mitigate climate change.
Lord Goodhart: My Lords, I speak briefly in my capacity as chairman of the Delegated Powers Committee. The amendments before your Lordships’ House today contain a number of important delegated powers that did not appear at earlier stages of the Bill. Amendment No. 47, in particular, contains some important powers, as do a number of amendments in other groups.
There is, unfortunately, no report from the Delegated Powers Committee on the amendments because of the short time between their publication and Third Reading. To obtain a report from the committee, it would therefore have been necessary to call an emergency meeting to consider them. After consultation with the legal adviser and the Clerk to the committee, I concluded that it was unlikely that the committee would have objected to any of these powers had it met, and it was therefore not essential to call such a meeting.
However, it is undesirable that that should have happened. Had the committee had the time to do so, it would certainly have considered these amendments. Therefore, while I understand the special circumstances applying to them, I make it clear that the committee regards this as neither desirable in principle, nor an appropriate precedent.
Lord Hunt of Kings Heath: My Lords, it has been an extremely interesting debate. We have heard rather different views, but they have been none the less helpful.
I welcome the opportunity that the amendments of the noble Baroness, Lady Wilcox, have given us to exercise proper scrutiny of the government amendments. I accept, as I said earlier, that a large number of amendments have been laid at a late stage. I welcome the intervention of the noble Lord, Lord Goodhart, and the work of the Delegated Powers Committee. I endorse his comment that this is not an ideal situation. Unusual circumstances have arisen but the Government’s actions have undoubtedly been a response to debates in your Lordships' House and the other place. In that sense it was appropriate for the Government to announce at Report a development of their policies and to bring
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The noble Lord, Lord Reay, is the only noble Lord who criticised the measure. He made some fair points, to some of which I can respond and to some of which I cannot. He said that the integrity of the consultation process on the renewables strategy is put into question because the Government have made an early decision on a matter which was in the consultation document. We believe that the consultation has been conducted perfectly properly. It set out a number of questions in relation to feed-in tariffs. Although this was part of the consultation process, the Government have taken note of the views of Parliament. I believe that the amendment I bring forward today reflects the view of Parliament and parliamentarians. That must override any consultation process. He asked whether respondents to the consultation had wasted their time. They have not. The consultation covers many areas and the responses on feed-in tariffs, which are still being carefully considered, will help us work out the details of the scheme to be implemented. He will understand that a lot of the questions he raises are matters that will have to be decided in the light of the discussions that will need to take place on the amendment, should your Lordships deem it wise to approve it. Therefore, the comments that we have received on the consultation are by no means wasted. They will be carefully considered, but in the context of a decision to introduce feed-in tariffs, which, as I said, clearly enjoy widespread support in your Lordships' House and in the other place.
The noble Baroness, Lady Young, wishes to ginger me up. I have known her for many years since her time in the health service and she has done nothing but press me to do things and ginger me up. I am grateful for her support in this area. I say to my noble friend Lord Campbell-Savours that I have had many invitations to visit premises, usually farms, as Members of your Lordships’ House seem to own rather a lot of farms. However, I shall add Woking to my list of potential places to visit over the next few months.
It is 11 years to the day since my noble friend Lord Puttnam was introduced in your Lordships' House and he has proven to be an extremely effective parliamentarian in terms of the number of changes that have been made to legislation as a result of his great efforts. However, I shall discuss the three megawatts issue when we reach the next group of amendments. My noble friend Lord O’Neill made the fair point that caution is necessary. I understand that. That is why we have to engage in serious work on the details of feed-in tariffs. He will know that by convention I cannot anticipate further legislation. However, I would not be surprised if further legislation were introduced at some stage.
I say to my noble friend Lady Corston that I was interested in what she had to say. She clearly spelt out the benefit of feed-in tariffs, and she made a point that is relevant to our decision about smart meters. Armed with the knowledge of what was happening in her own home to her bill, as a consumer she was anxious to ensure that she used that information to its best effect. Coupled with the decision on smart meters, that gives
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We come to the question of “may” and “shall”. I look at a number of distinguished Members on the Benches opposite who I am sure have dealt with these questions before as senior Ministers. They will know of the reluctance of Governments ever to substitute “may” for “shall”. While I understand why noble Lords want to do it in this case, because they wish to see tangible evidence of the Government’s good faith in this area, there are some significant reasons why I would not recommend your Lordships to go down that path. I assure noble Lords that we are committed to feed-in tariffs, but we have to ensure that we get the policy right. One has to reflect that the amendment—the noble Lord, Lord Reay, suggested this—is deliberately drafted to give us enabling powers to introduce the scheme.
That is analogous to the renewables obligation, which is similarly governed by a set of enabling powers rather than a duty. There are also some practical consequences of using “shall” instead of “may”. In the proposed new clause, that would limit the discretion, and it could lead to difficulties in implementing the power. For example, if we were to accept the amendment, we would be obliged to modify all documents maintained in accordance with the conditions of a licence, as set out in proposed new subsection (1)(c), rather than those documents that are relevant. Equally, requiring the Secretary of State to modify licences within one year of Royal Assent could present problems.
On the timetable, on the assumption that this might have been a probing amendment, I shall offer some information about when we think that we can implement the scheme. We intend to consult next summer on the proposed feed-in tariff mechanism to ensure that interactions with the existing licensing framework are fully considered, building on the work that was started in the renewable energy strategy concept. I say to the noble Lord, Lord Reay, that that is why I do not believe that the responses of those organisations and individuals who have responded to the consultation, even in relation to the feed-in tariffs, will be wasted. We clearly need to consult on proposed tariff levels for the scheme at that point. To ascertain the right levels, we will need to gain further evidence on cost predictions for the various technologies and develop uptake models, so that we can ensure that we introduce a scheme that can effectively encourage deployment at this scale.
We hope that following consultation, through further work with the authority, the supply industry and the electricity industry we will finalise implementation aspects of the system, such as arrangements for paying processes and registration. We will then be able to propose the necessary modifications to licences that the powers allow. We also need to allow for the parliamentary scrutiny specified in the proposed new clause.
Taking that into account, our hope is that a feed-in tariff scheme will be operational in 2010. Clearly, I have to say that that is a hope, and I cannot give that
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Lord Reay: My Lords, can the noble Lord say anything about the costs of any scheme and who would be likely to bear them? How will this interact with the planning system? How will the planning system be applied?
Lord Hunt of Kings Heath: My Lords, the noble Lord will know that we have already made changes to the planning system to help microgeneration, such as by extending permitted development rights to microgeneration technologies and putting local renewables and low-carbon strategies at the forefront of local planning authority thinking for new developments. Permitted development for most microgeneration technologies, including solar PV, solar thermal, biomass, ground source, heat pumps and combined heat and power, came into effect on 6 April 2008. That means that householders will not be required to go through the planning system to install those technologies, as long as installations meet certain requirements.
Obviously, we are keen to see the development of the microwind generation industry, building on expertise in this market. It is right that we ensure that permitted development is introduced in an appropriate way; to do so inadvertently might damage the industry. That is why further work is required to complete standards for microwind turbines and to link permitted developments to certification under the microgeneration certification scheme. One issue that needs further consideration regarding wind turbines is the point that the noble Lord raised about detached and semi-detached properties.
Costs will have to be looked at in considerable detail. There is a cost in general to meeting the EU renewables target, as is well understood, and some of that cost is passed on to consumers through higher energy bills. Obviously, we want to ensure that, at the end of the day, we have a cost-effective approach. However, I cannot answer the noble Lord’s point in any more detail because, although he does not agree with what we have done, the government amendment is an enabling amendment. We need to do a great deal more work. Frankly, that is why I very much resist the “shall”, as opposed to the “may”, and the tight timetable set out in Amendment No. 32. I hope that noble Lords might be persuaded by that argument.
Baroness Wilcox: My Lords, I beg leave to withdraw the amendment.
Amendment No. 30, as an amendment to Amendment No. 29, by leave, withdrawn.
[Amendments Nos. 31 to 33, as amendments to Amendment No. 29, not moved.]
Lord De Mauley moved, as an amendment to Amendment No. 29, Amendment No. 34:
34: After Clause 40, line 14, leave out “financial incentives to encourage” and insert “payment for”
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The noble Lord said: My Lords, we tabled Amendments Nos. 34, 36 and 38 to 43 in this group to explore the detail of a feed-in tariff. Some concern has been expressed that the government amendment gives too little detail about the final structure of the scheme. I should appreciate it if the Minister took this opportunity to go into detail about what he envisages the final tariff will look like. He has already highlighted the necessity for proper consultation and the need for some flexibility to incorporate the necessary details from further study and of course this afternoon I do not expect him to be able to give us the final details of exactly how much the tariff will be and so on. However, these amendments highlight certain areas of concern where we feel that the Government should be able to assure your Lordships that they have a proper feed-in tariff in mind.
First, can the Minister kindly explain exactly how the Government intend to interpret the financial incentives that the provisions allow for? I very much hope that he can confirm that, as in Amendments Nos. 34 and 36, he intends to introduce a scheme of regular payments set at a certain level over a certain period of time. I suggest that anything else will fail to provide the predictable level of income that any meaningful investment requires, as the Stern review made clear when it defined a feed-in tariff as a fixed-price support mechanism.
Amendment No. 38 would ensure that the Secretary of State could set a certain level of payment, as well as establishing the calculation method. Can the Minister confirm that the Government intend to guarantee that the tariff payment will not fluctuate unpredictably, as it may well do if calculated solely on the basis of market conditions?
Amendment No. 39 would ensure that the Government could not modify the level of payment arbitrarily. Any decrease in payment should be transparent, predictable and, above all, fully understood by any generator before it makes its initial investment. I hope that the Minister can confirm that the Government will not use the power in this paragraph arbitrarily to reduce the tariff to generators that, in good faith, expect to receive the higher tariff.
Amendments Nos. 40 and 41 probe a little further the Government’s intentions on different levels of support for different technologies and different scales of plant. Amendment No. 42 seeks to clarify how this tariff will operate with the renewables obligation system. Can the Minister explain a little further how the overlap will be managed and how the Government intend that the choice will be made in the case of an investor in a plant who might be eligible for both? There will also be a necessary transition from some projects from the lower end of the renewables obligation scheme on to this tariff. Perhaps the Minister can give us more information about how he envisages the transition being handled.
Finally, Amendment No. 43 was tabled to explore how the Government expect the connection costs to be handled. Do they intend to monitor the costs that suppliers impose on generators and do they have any plans to ensure that those costs are proportionate and fair? I beg to move.
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Lord Teverson: My Lords, I have added my name to these amendments. I want to talk, in particular, about Amendment No. 34, which strikes me as a way of turning Bill language and uncertainty into plain language and clarity; hence, I consider this amendment to be particularly important. It would delete the words “financial incentives to encourage” and replace them with “payment for”. What could be better than that? It would effectively provide a definition of what we all understand to be a feed-in tariff. That would be healthy for the Bill, healthy for the Government’s objective and healthy for the renewables industry and the individuals and communities that will take advantage of this scheme, as and when it happens.
Baroness Young of Old Scone: My Lords, I, too, support this group of amendments, particularly the ones that try to pin these measures down as a tariff scheme rather than something else. We have heard the saying that if it looks like a duck, walks like a duck and quacks like a duck, it probably is a duck. In this case, I am not sure whether “financial incentives to encourage” are “payments for”. If they are, I suggest that the Government should support the attempt to make this clearer in the Bill.
Amendment No. 34 would be controversial only if the Government were considering something other than a straightforward feed-in tariff. Perhaps we can press the Minister to confirm that we are talking about a straightforward feed-in tariff, as commonly understood. Now that I have pondered on Amendment No. 38, I think that it probably supersedes Amendment No. 37, also in my name. It is better because it has belt and braces: it specifies not only how a payment would be calculated but also the level. Amendments Nos. 40 and 41 are important in giving clarity to the feed-in tariff arrangements and will be particularly important when we discuss later amendments regarding the cap.
Lord Hunt of Kings Heath: My Lords, this has been a very interesting, if short, debate. I say to the noble Lord, Lord Teverson, that he should be wary of plain language in legislation, because it can end up causing some difficulty. I may sound like an old-fashioned record player, but we have to accept that we are where we are. Because of the late decision in the light of our debates, clearly there is not as much detail as noble Lords would like. We have to allow ourselves flexibility. I have already said why. That is part of the response that I shall make to this group of amendments.
Equally, I well understand why the noble Baroness, Lady Young, wants to pin down the Government. She wants assurance that the feed-in tariff scheme, which we shall eventually bring forward, is what she described as a true feed-in tariff. I understand that. I assure her that we want to learn from other schemes and take the best features of those schemes into our own. Our intention is that in the next few months we will work closely with stakeholders, looking at these schemes to see how to develop our own. It is interesting that the German feed-in tariff scheme, to which many noble Lords have referred in previous debates, has only recently been modified to provide support for the generation of electricity that is used where it is generated—for example, in households—and not just
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The provision in our amendment is sufficiently flexible to allow different levels of tariff payments to be made to different sources of technology as well as different scales of plant. We have included a power that will allow us to introduce what is called “degression”—a familiar concept with most feed-in tariff schemes. We expect that the level of payments for a given group of technologies may decrease year by year. That would apply only to plants that are newly installed. I do not think that that is at odds with the kind of certainties required by the noble Baroness, Lady Young.
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