Energy Bill

Moving as rapidly as we would want from the position that the UK was in, for particular reasons relating to the source of its energy supplies and the choices that it made historically about those sources—and therefore the mechanism by which those supplies would be delivered—to where we know we have to get to in the near future with regard to the proportion of energy supply that comes from renewables sources, has been a considerable challenge, and will remain so. It is true that the planning environment has not helped in that process. The Planning Bill will address some of the issues of larger-scale renewable power stations and the Marine Bill, which will be introduced later this year, will provide a single permission regime for offshore generation. So things are changing, and so will the circumstances in which large-scale renewable sources operate. It is true that if we take all the investment proposals for both onshore and offshore installations that are in the pipeline, that are consented but awaiting build, or that have everything in place but no date yet for connection, the total amount of electricity generation represented is getting on towards filling the gap in power supply that we need to fill over the next few years. That represents a substantial change in large-scale electricity supply. There are therefore several different factors affecting the development of large-scale renewable installations, one of which is the nature of the incentive for investment in the first place. The renewables obligation has generally worked relatively well to bring those investment decisions forward. However, the renewables obligation has barely touched microgeneration. As I have demonstrated, it is not a particular incentive for those who are developing microgeneration. A feed-in tariff would be a much better incentive in that area. The issue that we would then have to address, which is central to my concerns, is that we are not in a position to build incentives on a tabula rasa. We have a series of existing arrangements for developing power and the importation of renewable electricity that are based on the renewables obligation. If we chucked all those arrangements out of the window and went for a universal feed-in tariff tomorrow, that would fundamentally disrupt a number of the investment decisions on larger scale electricity generation. In fact, large-scale electricity generation would be put in reverse. It is important not only to get the feed-in tariff right, but to get the tariff's application right. If we are thinking along the lines of introducing such a tariff, it is important to get its nature right, particularly as regards microgeneration. Should a feed-in tariff be based on the total production undertaken by a microgenerator? Should it be a net tariff based on what the microgenerator exports? Should it be an estimated tariff as a proportion of the total invested? A number of different instruments could be used depending on what is decided. The way in which the feed-in tariff works in Germany has led to a few perverse consequences, although I agree with my hon. Friend the Member for Nottingham, South that it has been immensely positive in terms of drawing through microgeneration. However, those who install solar photovoltaic panels export all the electricity generated from those panels into the grid, take a feed-in tariff for that and then buy all their domestic electricity from the grid. The perverse consequence of that is the lack of interchange between what those people produce from the panels on their roof and what they consume in their houses. It seems to me that one of the purposes of engaging in the development of microgeneration, particularly microgeneration that is locally sourced and distributed, is that there should be a relationship between the electricity consumed in the house and that produced by the roof panels. If the system does not connect the two, part of the purpose of such microgeneration is missed. That might be an accidental consequence, but it results from the design and operation of the feed-in tariff. It is important that we get any feed-in tariff right, because I agree with my hon. Friend the Member for Nottingham, South that such a tariff is almost inevitable. It seems that there is no better way to move microgeneration to the next phase of implementation than some form of feed-in tariff. However, we need to consider different incentives, for example on renewable heat and gas, and to be clear about how they apply. After I moved my clause in Committee, I was encouraged to hear my hon. Friend the Minister suggest that the idea of a microgeneration feed-in tariff in particular would be one of the subjects of a review this summer. It is fair to say that he has developed that policy since the Committee sat. The question for the House, as it was in Committee, is whether the amendment or a similar one should be left on the table or whether we should go for a vote. In order to ensure that we get things right and undertake the consultation over this summer that was suggested by my hon. Friend, the amendment should remain on the table—it should not be withdrawn and never heard of again. There should be an understanding that we will have to go in this direction, so it is important that we get that direction right, that the review is completed quickly and that the mechanism for getting microgeneration right in the UK is implemented. I hope that the review will be the subject of a further energy Bill next year, as has been widely suggested. That Bill should deal with questions such as how we obligate and implement action on renewable heat and make sure that the present escape into the air of heat that has no energy output is covered by an obligation system. Energy companies should be obliged to do something with that heat, or suffer a penalty for not doing so.