My Lords, I thank the Minister for having this session, which is very helpful. I agree that it should be in Grand Committee because as the session unfolds there might be quite a lot of detail and I suspect that it may be easier to tease out some of that detail in this venue.
In these amendments, the Government have addressed a number of the issues that were raised by the industry about the grace period with regard to planning, lack of investor confidence leading to some projects being frozen, the grid and radar and aviation. In speaking to the amendments in my name and those of my noble friends, I shall probe some of them because although when these amendments were announced last Thursday the industry felt that a number of concerns had been addressed, as days have passed more and more anomalies seem to be coming to light. I wish to identify some of these anomalies and get the Government’s response to them. The purpose of the amendments we have tabled is to allow an opportunity to tease out some these anomalies. I am not saying they are all covered but I hope the Minister will be able to respond. I do not think we have covered everything comprehensively with our amendments, but there will be an opportunity to come back on Report in the light of what the Minister says.
As the Minister rightly indicated, the three conditions required for a project to fulfil approved development conditions are planning permission, grid connection agreement and land rights. Proposed new Section 32LJ(4) relates to the date on which planning permission was granted. The date chosen is the date when the Secretary of State made her announcement of the early closure of the renewables obligation for onshore wind projects. To some extent, it is an arbitrary date. No doubt the Downing Street grid said it would be done on that date and not the day before, the day after or the week after. So there is a degree of arbitrariness in all this and, in many cases, that has led to considerable unfairness.
Our first amendment probes whether there is any need for this planning permission rule, given that grid connection agreements and land agreements would already be in place. If the Government insist on having a cut-off date, there is a possibility that that date should be later. We have suggested that it should be the date of the publication of the Government’s grace period amendments or that all projects that were already in the planning system should be considered for eligibility. Those in the industry will tell you that submitting a planning application is not something you do on a whim when you wake up one morning. Considerable work goes into the application before then and considerable money has been invested in making it in the first place. In many cases, that investment will be for naught if what is proposed is so rigid.
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It has also been drawn to my attention—if you think about it, it is probably quite obvious—that there could not possibly be a worse date than 18 June. There was a period of April to May, during purdah, when councils were not processing in the run-up to elections. New planning committees were being formed after the
elections in the first week of May. I have been told that, in some cases, the last thing a new planning committee or planning chair would be given for their first meeting was a complicated wind farm proposal. Therefore, in many cases, there were a number of applications pending, not unreasonably, from the preceding weeks. After 18 June, the Government asked all developers for information about projects in the planning system that would not be eligible under the 18 June 2015 rule. The hopes of many developers were raised as a result of this, but these amendments dash those expectations.
I ask the Minister to consider this: given that Clause 65, which already stands part of the Bill, emphasises the Government’s desire for local determination, if in fact a local planning committee has considered and agreed to an application but has not had, because of the cycle of meetings, the approval of a full council, it seems really unfair, given that the planning committee has gone through all this, that that should not also be eligible for accreditation and fall within the grace period. It is the cycle of local government meetings that determines whether a project can go forward.
Another issue that has been raised with me—perhaps the Minister can clarify the position—is that, in many cases, the authority has said that it will consent or has consented to a planning application in respect of onshore wind, but there is a Section 75 agreement in Scotland, or a Section 106 agreement in England, that has still to be concluded. Those who deal with those agreements know that it often takes considerable time to bring them together and put them in place. It would be very helpful for the Minister to indicate whether, if there has been a consent, subject to a Section 75 or Section 106 agreement, before 18 June, the Government would accept that this complies with the grace period; or, if they do not, whether he will consider making a further exception for those who have been given consent subject to those agreements. More often than not, it will not be in the hands of the developer whether these agreements could have been concluded in time; rather, it relates to the nature of the bureaucracy. I do not mean that pejoratively: it is the nature of discussions that have to take place. I know there is a particular concern over the status of agreements with Section 75 or Section 106 requirements.
The Minister also indicated that what the Government have done here, in allowing a period of grace, is that, if a correct decision had been made before 18 June, that should be eligible for the grace period. The two reasons why it might not have been correct were that a wrong decision had been given and was successfully appealed, or that no decision had been given and there was a challenge because it was a deemed refusal. I ask the Minister to consider some of the points that arise from this. First, with regard to a deemed refusal, in many cases that have been represented to me, the good practice was to work alongside the planning department of the local authority, not to rush to flag up a deemed refusal. When you think you are making progress, it is in everyone’s interest that this comes out the other end with a grant of planning permission and that it is done co-operatively, involving communities and ensuring that concerns raised were properly taken into account. Very often that will not have been done within the statutory time period, but it is nevertheless good practice.
We are in the position whereby those who do not observe good practice, but rush straight away to claim a deemed refusal and put it into the hands of a local public inquiry or a ministerial decision, will benefit from this. However, those developers who have been trying to follow good practice will be penalised by this. Frankly, that does not seem fair. This morning Scottish Renewables sent me the details of a case regarding this matter. It said that its members are happy for their case to be mentioned as an example of the inequity of the current grace period criteria. We are told:
“The Binn Group initiated the Binn Wind Farm development as an integrated part of their waste and recycling and Binn Eco Park business in 2010 …The Planning Application was submitted to Perth and Kinross Council on 7th November 2014 and validated on 25th November with a statutory determination period of 4 months”—
that is, by 25 March. But in fact planning permission was not granted until after 18 June, and during that time considerable work was done between the developers and the planning department. We are told:
“None of the four surrounding community councils objected and a community benefit scheme with the full engagement of each of the four community councils has been agreed. The site has a grid connection and land agreement”.
The note also states:
“The energy produced by the wind farm would be used directly on the site to replace diesel generated power, enabling business growth with increased employment. Planning is also underway to develop a co-located hydrogen for transport project as part of the Sustainable Cities initiative and the Tay Eco Valley proposals initiated by the local authority making this a unique application of wind power for the future”.
That is all now prejudiced by the fact that the developers worked collaboratively with the planning department and did not seek a deemed refusal. That is the kind of case that seems inequitable. The proposals brought forward by the Government do not address that and I very much hope that the Minister will be willing to accept that some account should be taken of it.
Proposed new Section 32LJ seeks to extend the principle of the planning refusal gateway to the Section 36 process. Under that section, the equivalent of the refusal of a planning permission is the filing of a statutory objection by the local planning authority. Then, as with an appeal, there is an inquiry and a Secretary of State or Scottish Minister’s determination. For some reason, the provision as drafted by the Government deals with one approach but not the other. Small extensions of larger sites go through the Section 36 process, while isolated small sites remain with local planning, and it is unclear why extension should have less access to the renewables obligation with grace periods than standalone developments. The company that has raised this with me has 25 megawatts of extension projects in Scotland, which would be able to go ahead if a change were made in that regard.
With regard to the investment freezing conditions and the amendments that we have tabled in relation to those, the Minister accepted that these were complex matters. I want to explore with him the intention of specifying 1 May 2016. It is perfectly fair that he says that he has sought to put in place a period of grace that is roughly equivalent to the period from the Secretary of State’s statement to Royal Assent.
However, the documents sought under proposed new Section 32LK(4)(a) include,
“a declaration by the operator”—
the developer of the station—
“that, to the best of the operator’s knowledge and belief, as at 1 May 2016 … the relevant developer required funding from a recognised lender before the station could be commissioned or additional capacity could form part of the station … a recognised lender was not prepared”,
and so on. What has to be done as at 1 May 2016? There could have been a delay because of the investment freeze, but if—for the sake of argument—the Bill were to receive Royal Assent on 29 February 2016, in that intervening period funding might have been forthcoming. Does the developer or operator have to wait until 1 May so that the company can declare that on that date these beliefs were outstanding? That could lead to a loss of valuable time. I do not quite understand the importance of “as at 1 May”. Our amendments seek a date up to and including 1 May so that if at any time before that—say, at Royal Assent—there has been a delay because of an investment freeze, nevertheless the company can get on with the project by making a declaration.
One of the other concerns that has been raised is whether this is cumulative or separate. Proposed new Section 32LK(4)(a)(ii), which is on page 7 of the Marshalled List, refers to a declaration that,
“a recognised lender was not prepared to provide that funding until enactment of the Energy Act 2016, because of uncertainty over whether the Act would be enacted and its wording if enacted”.
Is that cumulative? Does it apply both whether there ever would be an Act and to the wording if it were enacted, or could it be either/or—that there was concern either as to whether the Act would ever get to the statute book or about its wording and meaning? It would seem much fairer if it was either/or rather than “both and”, so clarification on that point from the Minister would be welcome.
The other amendment in relation to investment freezing, Amendment 21B, relates to the definition of investors. We are proposing that there should be flexibility in this regard. It should not be banks exclusively but include those which are,
“managed by a Financial Conduct Authority registered manager”.
It is my understanding that many smaller projects make great use of equity players. Nevertheless, those equity players have to be managed by the FCA and in these circumstances it is again not clear whether they would qualify. It would seem inequitable if the equity managers are excluded and the funding is required to come from a bank. I ask the Minister to reflect on that because it would affect quite a number of potential projects.
I move on to the grid and/or radar conditions. The proposed new section refers to the,
“grid and radar delay condition”.
I know it sometimes seems to be dancing on pinheads to talk about “and/or” but, again, it is not clear whether it has to be cumulative. Does it have to be both grid and radar? What makes this particularly important is that the Guidance on the Transition Period
and Closure of the RO, published under the previous regime on 16 October 2014—almost exactly a year ago—referred to grace periods in Section 4 and to the,
“‘Radar or grid connection delay’ grace period”.
Lawyers are always keen to jump on the fact that if one government document says “or” and a subsequent one says “and”, there was intention to change it from “or” to “and”. They are two very separate things and it does not seem relevant to try to link the two together. It may well be that the intention was not to link them but, given how it appears in the government amendments, it would be helpful if the Minister could indicate that these are not to be taken together.
With regard to the grid, again, there is a potential for anomalies. I have been made aware of at least one case where there was a joint venture between an energy company and a private individual. The energy company carried the transmission entry capacity for a substation. What initially happened was that a substation was built for a grid connection of a much larger capacity than was consented to but subsequently there was consent for the additional capacity, for which that grid connection was already in place. But that joint venture ceased earlier this year and the energy company is no longer part of it. The transmission entry capacity was therefore lost and had to be reapplied for. It had had that connection for the past five years but the period of application for it to be renewed for the new, single person covered 18 June. So something that had been in place for five years was not there for about three or four months, including that critical date. That seems to be quite anomalous, especially when the capacity is there.
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It is clear that many projects now have radar delays. Our concern here is that the concession will not work. Most projects with radar delays are dealing with Ministry of Defence radar as opposed to civil civilian airport radar, and getting the MoD to agree to mitigation schemes has been very slow. I ask the Minister to look again at the situation involving the MoD, and to get the MoD to confirm how many projects out of all those blocked or delayed due to radar concerns it now expects to be able to assist or support. These are fully consented projects, they have grid connection agreements and they have land rights that will satisfy all the approved development conditions, but we seek some reassurance that the Minister is aware of these projects and the commitment that has been made to seek to resolve the objections.
The grace period proposals in relation to radar objections seemed reasonable when they were first published a year ago, but since then there has been very slow progress with the MoD and, of the roughly 12 to 14 projects affected, not one has had an agreement to implement a solution, far less any implementation and completion dates for the relevant radar works that might be required. Our “for the avoidance of doubt” amendment would make it clear that the radar works did not have to be completed by 31 March 2017, so long as the works were completed prior to the end of the grace period and so long as an agreement to do the relevant works had been entered into by 31 March.
That seems very fair. We also think it important that there is no expectation from either the Ministry of Defence or the relevant developers in any of the 12 to 14 projects that it would be possible to have the relevant radar works completed before the deadline set out in the Government’s amendment. It seems a bit perverse that the Government give with one hand but a different government department stymies it with the other. The Minister’s response to that would be welcome.
The other point is that it would appear here that in looking for an outcome—a set of radar works—it may be that, as a result of discussions, the objection is withdrawn. I would like confirmation that if the objection is withdrawn and there is no longer any radar issue, that too would satisfy the condition.
I am sorry that this has taken some time but these issues are complex. I think the Minister said in his opening remarks that they were very complex. I have tried to set out the concerns that have been raised but I am sure that these have not been exhaustive. I very much hope that the Minister will be able to address these issues.