Energy Bill

I thank the hon. Gentleman for his suggestion. I was going to put that point to my hon. Friend in almost the same words when I finish. It does not matter whether we have feed-in tariffs or ROCs, as this is not the only policy instrument that is necessary if we are to get the large-scale and rapid deployment of renewable energy that we need. That is not the sole secret of Germany's success—it is just one measure contained in the German Renewable Energy Sources Act, which also contains many other vital provisions. New clause 20 would carry out the proposed EU renewable energy directive, which is itself based on the German Act. The two most important provisions concern grid access. In this country, we have the bizarre situation whereby 15 GW of totally approved wind generation cannot get access to the grid, and will not get access for many years. That is a totally unacceptable situation that we must do something about if we are getting serious. New clause 20 proposes that there should be guaranteed access to the grid for renewable generators. If that means that the grid needs to be strengthened or reinforced or to have new lines laid, then so be it—the grid operators would have to do that. They would have to raise the capital in the normal commercial way, and Ofgem would have to approve it. That is what happens in Germany, and it works. The grid operators may grumble, but they do it. It is no good if the generator is installed and connected if its output is not maximally used. If we want to maximise renewable energy, the output of a renewable generator should have a priority call on the grid whenever it is generating. That is the provision in the renewable energy directive and the provision that holds good in Germany under the Renewable Energy Sources Act, and that is what new clause 20 would provide. Whichever financial incentive mechanism we use, whether multi-banded ROCs or feed-in tariffs, if we do not have the facility to take the electricity and use it, it is of no value. We need a comprehensive framework. New clause 21 is drafted with the Scottish situation in mind, as I am sure the hon. Member for Angus (Mr. Weir)—I am delighted to have his support—will remember from remarks made in the Committee considering the previous Energy Bill. When the British electricity trading and transmission arrangements were introduced in the Energy Act 2004, we got zonal transmission charges. The effect of zonal transmission charges is that a generator is penalised for its distance from a notional centre of consumption in the system. The further away the generator is, the more it pays in transmission charges. We are talking about incentives, and the incentivisation under that system would be to concentrate generation at some notional point about 50 miles north of Birmingham, where renewable resources are not at their strongest. I do not think that it is to be recommended. The most potent bits of our magnificent renewable resources, such as offshore wind, wave and tidal stream, happen to be geographically located a long way from a central point north of Birmingham. They are also technologies that at the moment are commercially difficult because they are expensive, because of their situation and, in the case of wave and tidal stream, because they are emerging new technologies—the first commercial tidal stream machinery has only just been installed. Naturally, such technologies cannot match the cost of other generating technologies at this time. Investment decisions, therefore, will have to be finely balanced. To add 2p or 3p per kW extra in transmission charges could be the straw that breaks the camel's back, and such investment does not happen. There is a real disincentive built in to the BETTA system. There is a mechanism for dealing with the matter in section 185 of the Energy Act, and new clause 21 would amend that. Section 185 provides for a power to cap transmission charges and the Secretary of State can do that by nominating one—only one, as the Act is currently drafted—specific zone for the production of renewable energy. However, it may be necessary to have more than one. Subsection (2) of the new clause would replace ““a”” with ““any”” so that the Secretary of State has freedom of choice. He can select any of several, or more, suitable areas to which to apply the capping powers. The other deficiency in section 185 is that it contains sunset provisions. The import of three of its subsections is that the capping protection cannot last for more than 10 years. That will not give investors any confidence in commercial stability either. I found that provision difficult to understand at the time, and equally difficult now.