Monday 19th December 2022
(2 years ago)
Grand CommitteeEnergy Act 2023 View all Energy Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 39-V Fifth marshalled list for Grand Committee - (15 Dec 2022)
The Deputy Chairman of Committees (Lord Haskel) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 165: Relevant heat network
Amendment 161AA
Lord Callanan
Member's explanatory statement
This amendment amends the definition of “heat network” to include any appliance connected to a heat network where the main purpose of that appliance is to provide heating or cooling for the network.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Committee will note the large number of amendments tabled in my name on heat networks. These amendments are needed to ensure that Ofgem can operate effectively as the heat networks regulator. A large proportion of them ensure that Ofgem’s enforcement powers will replicate those that it has as gas and electricity regulator. These amendments also ensure that the Bill reflects the approach to regulation which the Government committed to in their response to the heat networks market framework public consultation. The majority of these amendments are minor and technical in nature. Some are a little more substantial, and I will address those first.
Amendments 162C and 162YYI will ensure that any price cap introduced through regulations in future can apply to non-domestic as well as domestic heat network consumers. They also widen the scope of the regulator’s power to conduct pricing investigations into instances where non-domestic heat network consumers are receiving disproportionately high prices.
The Government are committed to introducing consumer protection rules that ensure that heat network consumers receive a fair price for their heating. Regulations under the Bill will provide Ofgem with powers to investigate and intervene where consumer prices appear disproportionate, compared with heat networks with similar characteristics or compared with alternative and comparable heating systems.
Non-domestic heat network consumers, particularly micro-businesses, can be vulnerable to receiving disproportionately high prices from heat suppliers. We therefore consider it appropriate to make this amendment so that the regulator’s price investigation powers extend to non-domestic consumers, in addition to domestic consumers. The Bill also provides the Secretary of State with powers to introduce various forms of price regulation, including a price cap, should it be necessary to protect consumers while growing and decarbonising the market.
The Government have committed to using any future powers to set price caps cautiously to avoid undermining investment in this nascent sector and putting at risk the supply of heating to consumers. Should a price cap be appropriate in future, we want to ensure that it could apply to both domestic and non-domestic consumers. In particular, we found in our public consultation in 2020 that micro-businesses supplied by heat networks share similar characteristics with domestic consumers. We therefore consider that these two consumer groups should have similar protections. This amendment would enable any future price cap to also apply to non-domestic consumers such as micro-businesses.
Amendments 162YYV to 162YYY serve to ensure that the full extent of heat network regulatory activities performed by Ofgem in Great Britain, the Utility Regulator in Northern Ireland, consumer advocacy bodies and other entities are funded by heat networks and holders of gas or electricity licences. Last year, the Government ran a public consultation on a mechanism for recovering the costs of heat network regulation. The nascent state of the sector and small consumer base means that recovering these costs solely from heat networks would amount to an extra £10 or more on each heat network consumer bill per year. This would be too high and create risks to the competitiveness of the market and, of course, issues of affordability for heat network consumers.
The Government consulted on heat network, gas and electricity regulatory costs being spread evenly across heat network, gas and electricity consumers in Great Britain. The Government have estimated that this approach would amount to less than £2 added to each heat network consumer bill per year, and an additional 10p per gas and electricity consumer bill per year. Most consultation respondents agreed that this approach was the fairest and crucial to supporting the growth of the heat networks sector. The Northern Ireland Executive conducted an equivalent public consultation for cost recovery in Northern Ireland and determined this a desirable approach.
This amendment sets out for transparency purposes the full extent of the regulatory activities in scope of this approach to cost recovery. The amendment also includes Ofgem’s role as a licensing authority under the Heat Networks (Scotland) Act 2021 in the cost-recovery regime. The Scottish Government passed this Act to introduce their own heat networks regulatory framework. By ensuring a funding route for Ofgem to perform this role, the Government are helping to ensure that Scottish heat network consumers receive robust protections and that heat networks regulation is coherent across Great Britain.
The remaining amendments are minor and technical, so I will not detain your Lordships for too long with them. In summary, these amendments, first, ensure that the provisions relating to heat networks regulation are accurate; secondly, allow for regulations and authorisation conditions to be made about the connection of premises to a heat network; and, thirdly, relate to Ofgem and the Utility Regulator in their role as heat networks regulator in Great Britain and Northern Ireland respectively.
I hope, therefore, that noble Lords will agree that these amendments are necessary to enable a fair and consistent heat network market across the United Kingdom. The one non-government amendment in this group is in the name of the noble Baroness, Lady Worthington. I thank her for her thoughtful contributions—actually, I should do that at the end, after she has spoken. Oh, she is not here. I beg to move Amendment 161AA.
Lord Ravensdale (CB)
My Lords, first, I declare my interests as a project director working in the energy industry for Atkins and as a director of Peers for the Planet. I will speak to Amendment 162 in the name of the noble Baroness, Lady Worthington, who cannot be here today.
To give some context to this amendment, I welcome paragraph 14(3) of Schedule 15, in that it provides for all the conditions which may be attached to a heat network authorisation. All of this is welcome—in particular, paragraph 14(3)(f) refers to
“conditions about limiting emissions of targeted greenhouse gases in relation to relevant heat networks”.
However, it is noteworthy that the schedule does not include any conditions about the actual heat source for the emissions, and that is what Amendment 162 focuses on. It is a probing amendment, seeking to determine whether the Secretary of State or Ofgem already have the power to control the heat source using the heat networks and whether they are minded to use them.
There are some fuels which it may be in the public interest to restrict using in a heat network. For example, the UK Government are currently establishing carefully controlled trials for hydrogen for heating. Presumably, the Government would not want to be powerless to prevent a heat network provider using green hydrogen for heating if they had concerns about, for example, safety or the cost effectiveness of hydrogen as a power source. If the hydrogen trials are not taken forward, the Government may not want someone to use hydrogen in a heat network without effective oversight from Ofgem.
In another example, it may be appropriate to restrict the use of biomass, which is ostensibly low or zero-carbon. However, the Minister will have heard concerns from the noble Baroness, Lady Boycott, and other Peers last week, and there are concerns about whether the Government would have the powers to restrict biomass for local heat networks to the sustainable practices the Minister outlined in his response to that question. Can the Minister confirm in his summing up whether the Government have powers to restrict the source of heat input as applied to heat networks? If so, where? If not, would he consider taking these powers?
Baroness Bennett of Manor Castle (GP)
My Lords, I shall speak chiefly to Amendment 162. tabled by the noble Baroness, Lady Worthington, although I take the opportunity to welcome the government amendment on help for micro-businesses and say that it is great to see that happening. The noble Lord, Lord Ravensdale, has already introduced this very clearly; I shall make just one additional point and apologise to the Committee for my absence last week when a number of amendments that I had either tabled or supported were debated. I was in the Chamber with the genetic technology so-called precision breeding Bill. If we have two environment Bills running in exact parallel, it creates some difficulties. I particularly want to thank the noble Baroness, Lady Worthington, for some excellent support for some of my amendments last week.
On Amendment 162, I want to make the point that it is crucial here that we are talking about local networks; what may be appropriate in one place may be inappropriate in another. I am thinking, for example, of areas where air pollution is an issue and the kind of fuel used will be a particular issue in that area. It may, indeed, be appropriate for the regulator to take action on the basis of local conditions as well as of national polities, in terms of either the nature crisis or the climate emergency.
Lord Whitty (Lab)
My Lords, noble Lords may have noticed that I extracted my amendments to the second group, when they were originally suggested to be tabled in this group. They relate to the protection of consumers.
I am grateful that the Minister emphasised protection, for both domestic and non-domestic consumers, of the commitments to district heating, decentralised energy and community energy. I am strongly in favour of that move, but I do not think the Bill, as first drafted, or as I read the amendments proposed in the Minister’s group, entirely meet the need to protect consumers of district heating et cetera to the same extent that consumers of other suppliers are protected. I was gratified by some of the Minister’s words this afternoon, but I still do not feel that this combination of what is in the Bill and the Minister’s own amendments will deliver for consumers of district heating the protections, that have been absent for so long, which are supplied via Ofgem to consumers of other forms of electricity supply. I think it will need a bit of tweaking and I shall come to that in the following group.
I do, however, want to register my appreciation for the role of decentralised energy being recognised here. We have some tidying up to do, but I welcome the Government’s commitment to extend support both for consumers in this sector and for the sector itself.
Lord Lucas (Con)
My Lords, I wonder whether rounds one to three of the green heat network fund are throwing some light on the potential for expansion in this sector. Are the Government viewing heat networks as something that we will see a lot of, or just little bits and pieces? Coming back to the amendment spoken to by the noble Lord, Lord Ravensdale, if we are going to see a lot, are we seeing green heat sources coming into play in this area? If we are to see a lot of networks, and since the ones I am familiar with, at least, require serious street works, is there a possibility of combining those street works with separating sewage from storm water?
Lord Teverson (LD)
My Lords, I want to reflect the comments of the noble Lord, Lord Whitty, in welcoming the fact that the Government really are concentrating on this area and giving it the attention that they have. We are one of the lackeys on heat networks, certainly in comparison with the rest of Europe.
One thing that struck me, though, was that on the occasions when I meet the Minister before a Bill goes through, he normally asks me to keep the number of Liberal Democrat amendments to a minimum. I think he has broken the record on this occasion, but I will keep my side of the bargain.
Lord Lennie (Lab)
My Lords, I thank the Minister and others who have spoken in this brief debate for bringing forward these amendments, as they represent necessary but foreseeable conditions for what is already a doorstep of a Bill. As the Minister said in his introductory statement, these amendments collectively show why and how heat networks and heat zones will be regulated and established.
In response to the noble Lord’s query, my understanding is that there are currently 14,000 heat networks, which represent 480,000 customers—about 2% of the total energy network. However, that percentage is predicted to rise to just under 20% by 2050. They will be a huge and significant part of the future energy market, and thus crucial in meeting net zero as they can unlock otherwise unobtainable and inaccessible large-scale renewable and recovered heat sources, such as waste heat. They are especially important for built-up areas, as they are the most effective way of accessing waste heat from industry and heat from rivers and mines.
There are currently no specific protections for customers of heat networks. A recent Competition and Markets Authority report said that while the majority of heat networks customers received a service comparable to that for other traditional customers, a significant minority did not. Higher prices and more frequent outages were just a couple of the highlighted issues. The CMA recommended regulating the sector, with Ofgem announced as the regulator and Citizens Advice and the energy ombudsman named as alternative dispute resolution bodies.
I have some questions for the Minister. First, on non-domestic customers, what steps do the Government envisage will be taken to draw the line between which of them will receive these protections and which will not? Secondly, while protecting these provisions, why have they come to us so late and to what extent were Scottish heat network customers not receiving equivalent protections under the initial drafting of the Bill? Finally, does this come into play only in a case where the powers in Clause 171 to designate GEMA as the licensing authority in Scotland are used?
Lord Callanan (Con)
I thank all noble Lords for their contributions to this brief debate. I acknowledge the point made by the noble Lord, Lord Teverson: it will be difficult for me to ask him in future to limit the number of Liberal Democrat amendments after tabling all these. I quite take his point there; all I will say is that I flagged up to noble Lords at Second Reading that these amendments would be coming forward. There will be more on other subjects, as I also flagged up at Second Reading, which are still being drafted and will be tabled as soon as possible.
I first remind noble Lords, in acknowledging the point made by my noble friend Lord Lucas, that heat networks will play a crucial role in the UK reaching its net-zero targets, as they are one of the most cost-effective ways of decarbonising heating, particularly in built-up areas, where it would be more difficult to have individual property solutions. Noble Lords will probably be aware that the Climate Change Committee estimated that around 18% of UK heat will potentially come from heat networks by 2050—up from around 2% currently—to support the cost-effective delivery of our carbon targets. However, the sector is currently unregulated.
The Bill will provide regulation for that sector and give Ministers a power to introduce, among other things, consumer protection rules and carbon emission limits on heat networks. The majority of heat networks are performing perfectly well and often run by local authorities, housing associations and others, but one or two small, private networks are abusing their customers. Of course, once you are connected to it, that is effectively a monopoly. You have no choice but to take your business elsewhere, so regulation is required in the sector.
I will now talk to Amendment 162. The Bill already allows the Government to control heating sources by providing for authorisation conditions to contain emissions limits; this is contained in paragraph 14(3)(f) of Schedule 15. By gradually lowering emissions limits, authorisation conditions will drive changes in the types of fuels and technologies used to power various heat networks.
Using emission limits allows for dynamic, ongoing regulation. I submit that mandating specific heat sources is a more limited approach that risks the Government and this House picking winners. The exact approach for implementing emission limits will of course be subject to further consultation with industry and stakeholders. Settling on a pathway ahead of that consultation would, at this stage, be unwise.
Removing whole fuel types risks ignoring other factors that will come into play, such as technological improvements, system efficiencies, varying fuel costs, the replacement cycle of generation assets, and the need for flexibility in a system to provide separately for back-up or peak demand.
The Government are of course committed to net zero by 2050, and we see heat networks playing a vital role in this. The Government wish for the Bill and its secondary legislation to ensure that the heat network sector thrives and expands and is not held back in this goal. Therefore, I hope that the noble Lord, on behalf of the noble Baroness, Lady Worthington, will feel able not to press the amendment.
Lord Lucas (Con)
My Lords, I am delighted that my noble friend is so optimistic and shares the Climate Change Committee’s optimism about the future of heat networks. Will he therefore encourage his colleagues to support deep geothermal which, if we are to need that volume of energy, must be a serious contender as it is on the continent. However, in this country, since we have not had the exploration, there is a lot of uncertainty about whether the particular strata will behave in a way that allows heat extraction. It would be a real help to that industry if the Government were to take an interest in how to reduce that first well risk, so that we can get going in the way that the Netherlands and Germany have to take advantage of the deep heat that we all believe—or the British Geological Survey at least believes—is down there and available.
Similarly, is my noble friend content that the regulations governing tidal rivers—such as the one just outside—are such that we can use those as a source of heat for heat networks?
Lord Callanan (Con)
My noble friend makes some good points. There is tremendous potential from deep geothermal, and we are funding some exploratory projects. However, the performance is mixed: some projects have drilled and not found any rocks hot enough to power the network. What is perhaps more viable, particularly in mining areas, is the use of waste mine water for powering heat networks. There are a number of exciting schemes that I have visited, particularly in the north-east of England, where they can extract the warm water from existing mine workings, put it through heat exchangers and use it for heat networks. There are a lot of promising developments in this area.
I will get a more detailed answer for my noble friend on his question about tidal waters, but I know that there are some concerns in the industry about over-regulation from the Environment Agency in some of these areas—they have been flagged up to me. I wrote to Defra about a year ago on this subject but, to be honest, I cannot remember what reply I got—if any—at the time. I will write to him on that subject.
Lord Callanan
Member's explanatory statement
This amendment (together with the amendment in the name of Lord Callanan at page 139, line 35) widens the provision made by Clause 165(3) about the treatment of heat pumps so that it applies in relation to communal heat networks (as well as district heat networks).
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 139, line 34.
Lord Whitty
“(3A) The central role of the Regulator in relation to heat networks is to ensure that customers of heat networks have at least equivalent consumer protection to customers of other forms of energy.(3B) The Regulator must have regard to the need for ensuring regulations are supportive of, and compatible with, the United Kingdom’s climate change commitments.”
Lord Whitty (Lab)
My Lords, I cannot hope to compete with the Minister, who took six minutes to speak to about 40 amendments, which I think is a record even for this Committee Room. I took out my amendments from the previous group, as I mentioned, because the combination of the Bill at present and the amendments to which the Minister and I just referred does not clearly put the consumer of heat networks on the same basis as the consumer of other forms of energy supply.
I confess that, for part of my career 10 or 12 years ago, I was a little schizophrenic about this, because I was both the honorary president of the CHP Association, which is the predecessor of the Association for Decentralised Energy, and the chair of the statutory energy consumers protection body, which was the National Consumer Council and then Consumer Focus, until the coalition Government unfortunately abolished it. I was both a champion for consumers and for this technology, and I still am. The problem is that the consumers of this technology, the households and commercial or industrial elements that depend on district heating and other forms of heat network, are the least protected of all consumers. While I agree with the amendments the Minister spoke to just now—they are a significant improvement—I do not yet feel that the new wording makes that clear.
My Amendments 161B and 161C propose to put in the Bill, eventually in the Act and the Schedule associated with it, a clear and unequivocal commitment that the regulator’s main and central role will be to ensure that consumers of energy supplied through heat networks have the same rights, protections and regulatory authority as other consumers. If you put that centrally, the role of regulation will be clear. I was gratified when the Government committed to extending regulation in this area and, by and large, I was in favour of the consultative document they put forward. I was slightly more equivocal about giving Ofgem the job, but it is logical that it should be done by Ofgem. My equivocation on that issue was that Ofgem’s record in protecting consumers over the last two or three years has not been that great. Nevertheless, I accept that Ofgem should undertake this role.
The situation at present is that the majority of customers of heat networks are in social housing run by local authorities or organisations subcontracted by local authorities. While there are a lot of private heat networks and some commercial heat networks, the majority are in that category. The consumers are therefore tenants and leaseholders of local authorities on what were once local authority estates. Therefore, they are probably among the lower incomes and have a higher proportion of vulnerable consumers.
This makes it doubly worrying that, for years, there has been no equivalent protection for those who receive their energy from the big six or big eight—whatever it is now—energy suppliers. My amendments are intended to make clear that the main role of the regulator is to protect those consumers. They relate in part to the amendments moved by the Minister relating to the price cap, but they are not just about the price cap. They are also about the price support schemes and the whole range of requirements placed on energy supply companies in relation to customer service for consumers, recognition of the problems of vulnerable consumers in particular and the need to ensure that supplies are continuous for such consumers.
Baroness Blake of Leeds (Lab)
My Lords, I rise to address the amendments in this group. My noble friend Lord Whitty outlined clearly the reasons for his amendments. I will speak to Amendment 161CA in my name and that of my noble friend Lord Lennie. At this stage, it is appropriate for me to declare my interest as a vice-president of the Local Government Association because it comes up in subsequent groups.
I want to refer to my experience when I was the leader of Leeds Council. Leeds PIPES is one of the most successful district heating schemes in the country and is expanding. It aims to take more than 16,000 tonnes of carbon out per year. It is already securing reductions in fuel bills of between 10% and 25%. The other element, which we have not addressed, is that, by working locally through these schemes, we have been able to bring training and employment to the local community. Indeed, 60% of the project spend is by local businesses in the community, making it a win-win scenario.
Social housing and council housing are not the only beneficiaries of the schemes, although they are an important aspect as there are more than 2,000 such homes already on the system. The system has started to be installed and expanded into the city centre, including in council buildings, ensuring that it is a sustainable project. I look forward with interest to the Minister’s response to the specific concerns raised by my noble friend Lord Whitty about consumer protection. The third amendment in his name, on the contribution to net zero, is valuable; it highlights how these networks need to be taken seriously. We need to make sure that they are sustainable and that their future is secure on behalf of the consumers that they supply.
Amendment 161CA in my name and that of my noble friend Lord Lennie refers specifically to ensuring
“that regulation covers systems that are operational but are operating inefficiently to the detriment of customers.”
As one of the heat network providers, Switch2, explains, a 2018 study by the CMA found that,
“although heat networks provide customers with a cost effective, efficient supply of heat compared to alternatives, some customers experience poorer outcomes in terms of price and service.”
That provider has contributed to the thinking on why heat network efficiency is so important. It says:
“The efficiency of your heat network is the crux of effective operation. Before the energy crisis and regulatory requirements, heat network efficiency was often seen by operators as a ‘nice to have’, rather than a necessity, despite significant cost saving benefits to both residents and operators.”
I think we have moved forward a great deal on that consideration.
Although we are focused on the incredibly high cost of gas at the moment, I hope that we can do everything in our power to improve efficiency and take this issue forward. It is clear that the Government are aware of this issue and are acting on it to a degree. Would it not be sensible to ensure that the regulatory remit also covers inefficiencies and that consumers are protected from the issue, rather than just requiring operators to apply for grants voluntarily?
Lord Callanan (Con)
I thank the noble Lord, Lord Whitty, and the noble Baroness, Lady Blake, for their comments and amendments. As I said on the previous group, the Government are committed to introducing protections for heat network consumers that ensure that they receive a fair price and a reliable supply of heat, and are not disadvantaged compared to other consumers. Ensuring that heat network consumers receive comparable protections to gas and electricity consumers is the primary reason for agreeing to the CMA’s recommendation to regulate heat networks.
We also recognise the vital contribution that heat networks will ultimately make in decarbonising heat in buildings. I highlight to the noble Lord that the Bill already provides for the heat networks regulator to prioritise protection of consumers and the decarbonisation of the sector. The Bill provides for Ofgem to be the heat networks regulator in Great Britain, with the Utility Regulator taking on the equivalent role in Northern Ireland.
Schedule 15 to the Bill provides for regulations making provision about the objectives of the regulator. This includes its principal objective to protect the interests of existing and future heat network consumers. This is equivalent to Ofgem’s principal objectives to protect the interests of existing and future gas and electricity consumers. We intend for this principal objective to be set out in the regulations.
Schedule 15 also provides for regulations specifying the interests of existing and future heat network consumers that are to be protected. This includes consumers’ interests in the reduction of greenhouse gas emissions generated by heat networks. Schedule 15 also provides for the introduction of carbon emissions limits on heat networks in England and Northern Ireland. We intend again for this to be provided for in the regulations.
The regulations will also give Ofgem powers to investigate and intervene on networks where prices for consumers appear to be disproportionate compared to systems with similar characteristics or if prices are significantly higher than those consumers would expect to pay if they were served by an alternative, comparable heating system. Ofgem will also be able to set rules and guidance on how heat networks recover their costs through their heat tariffs.
Amendment 161CA tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, is on ensuring the efficiency of existing heat networks. I thank them for highlighting the importance of ensuring that regulation facilitates the improvement of technical standards on heat networks. This will ensure efficient heat networks that provide fair prices and reliable heat to consumers at the same time.
I reassure noble Lords that the Bill, more specifically paragraph 14(3)(d) of Schedule 15, already provides measures for ensuring heat network efficiency. Schedule 15 provides for the introduction of technical standards, which will protect consumers from being supplied by inefficient networks. The regulator’s compliance activity in relation to new and existing heat networks will include work on any standards mandated in authorisation conditions under this power.
I therefore submit that the intentions behind the noble Lords’ amendments are already provided for in the Bill, so I hope that they do not press them.
Lord Whitty (Lab)
My Lords, I thank the Minister for that reply. I will clearly want to look at these clauses and the Schedule once all these amendments have been agreed and adopted. I am still not absolutely convinced that all aspects of consumer protection will be covered by this and by Ofgem’s role, but I welcome the Minister’s reassurance.
The key issue is whether all interventions will treat the consumers of district or decentralised heating the same as they would consumers of other forms of energy supply. That also applies to the Government. The Minister referred to the price cap, but the price subsidies or support that we agreed the other week has not found its way to consumers of district heating. That may be a matter of time or it may be that the entity that supplies the heat is obliged to pass that on, but that is not clear at the moment. Things like that need to be tightened up before the final version of the Bill is agreed. I therefore look forward to seeing what the clauses look like following the Minister’s amendments to see whether any further amendments are needed to meet my concerns in this respect. In the meantime, I withdraw my amendment.
Lord Callanan
“(2A) The provision made in Schedule 15 is without prejudice to the generality of subsection (1).”Member’s explanatory statement
This amendment makes it clear that the breadth of the power under Clause 168 is not affected by the detailed provisions made by Schedule 15.
Lord Callanan
Member’s explanatory statement
This amendment omits a definition that is no longer needed as a consequence of the amendments in the name of Lord Callanan at page 292, line 6 and at page 303, line 35.
““enforcement undertaking” has the meaning given by paragraph 39(2);”Member’s explanatory statement
This amendment inserts a definition signposting the definition of “enforcement undertaking” in paragraph 39 of Schedule 15.
““relevant requirement” has the meaning given by paragraph 38;”Member's explanatory statement
This amendment inserts a definition signposting the definition of “relevant requirement” in paragraph 38 of Schedule 15.
Lord Teverson (LD)
Is there a way in which we can just say yes to the government amendments here? There are hundreds of them—well, about 50—so it would make a lot of sense.
The Deputy Chairman of Committees (Lord Haskel) (Lab)
I am applying the usual convention. Okay?
Lord Callanan
Member’s explanatory statement
This amendment limits any requirement on a Regulator of heat networks to keep under review the carrying on of activities connected with heat networks to those activities carried on in the part or parts of the United Kingdom for which that Regulator is responsible.
Member’s explanatory statement
This amendment (together with the amendment in the name of Lord Callanan at page 290, line 33) enables regulations made under Clause 168 to provide for the Regulator to specify information that must be provided by an applicant for a heat network authorisation.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 290, line 32.
“(2A) The regulations may, in particular, provide for conditions to be included in a heat network authorisation requiring the person who holds the authorisation—(a) to comply with the provisions of a particular designated document;(b) to enter into governance arrangements with the person who is from time to time the licensed code manager for that designated document and to comply with those arrangements;(c) to provide funding for the person who is from time to time the licensed code manager for that designated document.”Member’s explanatory statement
This amendment enables regulations to provide for conditions to be included in heat network authorisations requiring their holders to comply with designated documents for purposes not limited to those concerning technical standards.
“(za) conditions about the terms on which premises are connected to a relevant heat network (whether for the purpose of supplying heating, cooling or hot water to premises, or supplying thermal energy to a relevant heat network);”Member’s explanatory statement
This amendment enables heat network authorisations to include conditions about the terms on which premises are connected to a relevant heat network, whether a connection is for the purpose of supplying heating, cooling or hot water to premises, or for the purpose of supplying thermal energy to a relevant heat network.
Lord Callanan
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
Member’s explanatory statement
This amendment clarifies the drafting of a reference to the sorts of condition that regulations may provide may be included in heat network authorisations.
Member’s explanatory statement
This amendment enables regulations to provide for a price cap in relation to the charges imposed on any heat network consumer, whether domestic or not.
Member’s explanatory statement
This amendment clarifies the drafting of a reference to the sorts of condition that regulations may provide may be included in heat network authorisations.
“(6) The regulations may, in particular, provide for conditions to be included in a heat network authorisation that—(a) in relation to England and Wales or Scotland, impose on the person who holds the authorisation a requirement of a kind that may be imposed under section 7(3) of the Electricity Act 1989 on the holder of a licence under section 6(1) of that Act;(b) in relation to Northern Ireland, impose on the person who holds the authorisation a requirement of a kind that may be imposed under Article 11(3) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)) on the holder of a licence under Article 10(1) of that Order.”Member’s explanatory statement
This amendment enables regulations to provide for heat network authorisations to include conditions imposing any requirement of a kind that may under section 7(3) of the Electricity Act 1989 (or under Article 11(3) of the Electricity (Northern Ireland) Order 1992) be imposed on licence holders under that Act (or that Order).
Member’s explanatory statement
This amendment removes provision duplicated by the amendments in the name of Lord Callanan at page 291, line 14 and at page 292, line 20.
Member’s explanatory statement
This amendment clarifies the drafting of a reference to the sorts of condition that regulations may provide may be included in heat network authorisations.
Member’s explanatory statement
This amendment clarifies the drafting of a reference to the sorts of condition that regulations may provide may be included in heat network authorisations.
“(3) In sub-paragraphs (1) and (2), a reference to the modification of a condition includes a reference to the revocation of a condition.”Member’s explanatory statement
This amendment ensures that regulations may provide for the Regulator to revoke conditions included in heat network authorisations.
“(4) The regulations may provide for the conditions of a heat network authorisation—(a) to have effect or cease to have effect at such times and in such circumstances as may be determined by or under the conditions;(b) to be modified in such manner as may be specified in the conditions at such times and in such circumstances as may be so determined.”Member’s explanatory statement
This amendment ensures that regulations may provide for conditions included in heat network authorisations to come into effect, cease to have effect or be modified in accordance with the conditions.
“(a) for the revocation of a heat network authorisation by the Regulator;(b) for a heat network authorisation to cease to have effect in circumstances specified in or determined under the authorisation.”Member’s explanatory statement
This amendment enables regulations to provide for a heat network authorisation to be revoked by the Regulator or to cease to have effect in accordance with the terms on which it was conferred.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 293, line 30.
Member’s explanatory statement
This amendment (together with others in the name of Lord Callanan in relation to Schedule 15) ensures that the purposes for which a document may be designated are not limited to those concerning technical standards.
Member’s explanatory statement
See the explanatory statement to the first amendment in the name of Lord Callanan at page 295, line 2.
Member’s explanatory statement
See the explanatory statement to the first amendment in the name of Lord Callanan at page 295, line 2.
Member’s explanatory statement
See the explanatory statement to the first amendment in the name of Lord Callanan at page 295, line 2.
“(ba) conditions about functions of the Regulator in connection with the modification of a designated document;”Member’s explanatory statement
This amendment enables regulations to provide for a code manager licence to include conditions about the role of the Regulator in the modification of designated documents.
“(4) The regulations may, in particular, provide for conditions to be included in a code manager licence that—(a) in relation to England and Wales or Scotland, impose on the person who holds the licence a requirement of a kind that may be imposed under section 7(3) of the Electricity Act 1989 on the holder of a licence under section 6(1) of that Act;(b) in relation to Northern Ireland, impose on the person who holds the licence a requirement of a kind that may be imposed under Article 11(3) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)) on the holder of a licence under Article 10(1) of that Order.”Member’s explanatory statement
This amendment enables regulations to provide for code manager licences to include conditions imposing any requirement of a kind that may under section 7(3) of the Electricity Act 1989 (or under Article 11(3) of the Electricity (Northern Ireland) Order 1992) be imposed on licence holders under that Act (or that Order).
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
“(3) In sub-paragraphs (1) and (2), a reference to the modification of a condition includes a reference to the revocation of a condition.”Member’s explanatory statement
This amendment ensures that regulations may provide for the Regulator to revoke conditions included in code manager licences.
“(4) The regulations may provide for the conditions of a code manager licence—(a) to have effect or cease to have effect at such times and in such circumstances as may be determined by or under the conditions;(b) to be modified in such manner as may be specified in the conditions at such times and in such circumstances as may be so determined.”Member’s explanatory statement
This amendment ensures that regulations may provide for conditions included in code manager licences to come into effect, cease to have effect or be modified in accordance with the conditions.
(b) for a code manager licence to cease to have effect in circumstances specified in or determined under the licence.”Member’s explanatory statement
This amendment enables regulations to provide for a code manger licence to be revoked by the Regulator or to cease to have effect in accordance with the terms on which it was conferred.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 297, line 14.
Member’s explanatory statement
This amendment enables regulations made by the Regulator about applications for installation and maintenance licences, so far as relating to England and Wales, to include provision about the information that must be provided to the Regulator by a person making an application.
Member’s explanatory statement
This amendment omits a reference to “road” that is not necessary in light of the meaning “street” has in paragraph 33.
Member’s explanatory statement
This amendment omits the definition of “road”, which is not necessary in light of the definition of “street” for the purposes of paragraph 33.
Member’s explanatory statement
This amendment broadens the definition of “transport land”, in relation to rights that may be conferred on a person by an installation and maintenance licence, to include waterways other than canals.
Member’s explanatory statement
See the explanatory statement to the amendment in the name of Lord Callanan at page 299, line 23.
Member’s explanatory statement
This amendment corrects a reference in paragraph 34(2)(d) to the wrong type of licence.
“(4) The regulations may, in particular, provide for conditions to be included in an installation and maintenance licence that—(a) in relation to England and Wales or Scotland, impose on the person who holds the licence a requirement of a kind that may be imposed under section 7(3) of the Electricity Act 1989 on the holder of a licence under section 6(1) of that Act;(b) in relation to Northern Ireland, impose on the person who holds the licence a requirement of a kind that may be imposed under Article 11(3) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)) on the holder of a licence under Article 10(1) of that Order.”Member’s explanatory statement
This amendment enables regulations to provide for installation and maintenance licences to include conditions imposing any requirement of a kind that may under section 7(3) of the Electricity Act 1989 (or under Article 11(3) of the Electricity (Northern Ireland) Order 1992) be imposed on licence holders under that Act (or that Order).
“(3) In sub-paragraphs (1) and (2), a reference to the modification of a condition includes a reference to the revocation of a condition.”Member’s explanatory statement
This amendment ensures that regulations may provide for the Regulator to revoke conditions included in installation and maintenance licences.
“(4) The regulations may provide for the conditions of an installation and maintenance licence—(a) to have effect or cease to have effect at such times and in such circumstances as may be determined by or under the conditions;(b) to be modified in such manner as may be specified in the conditions at such times and in such circumstances as may be so determined.”Member’s explanatory statement
This amendment ensures that regulations may provide for conditions included in installation and maintenance licences to come into effect, cease to have effect or be modified in accordance with the conditions.
“(a) for the revocation of an installation and maintenance licence by the Regulator;(b) for an installation and maintenance licence to cease to have effect in circumstances specified in or determined under the licence.”Member’s explanatory statement
This amendment enables regulations to provide for an installation and maintenance licence to be revoked by the Regulator or to cease to have effect in accordance with the terms on which it was conferred.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 300, line 23.
Member’s explanatory statement
This amendment (together with other amendments to Part 6 of Schedule 15 in the name of Lord Callanan) provides that regulations under Clause 168 may make provision about the enforcement of requirements contained in regulations, as well as about the enforcement of conditions contained in heat network authorisations and other licences.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 300, line 32.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 300, line 38.
Member’s explanatory statement
This amendment clarifies that regulations making provision for the Regulator to make orders for the purposes of securing compliance may impose requirements to take such steps as the Regulator considers appropriate.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 300, line 32.
“(aa) in a case where it appears to the Regulator that a relevant person is contravening or is likely to contravene a relevant condition or requirement, to make a provisional order requiring the person to take such steps as the Regulator considers appropriate for the purpose of securing compliance with the relevant condition or requirement;”Member’s explanatory statement
This amendment clarifies that regulations may provide for a lower standard of proof to apply to provisional orders made by the Regulator.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 300, line 32.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 300, line 32.
Member’s explanatory statement
This amendment corrects a typographical error.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 300, line 32.
Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 300, line 32.
““relevant requirement”, in relation to a relevant person, means a requirement imposed on the person by or under the regulations or by regulations made by the Regulator by virtue of any provision of this Schedule;”Member’s explanatory statement
This amendment defines “relevant requirement”, for the purposes of paragraph 38 of Schedule 15, as any requirement imposed by regulations made under clause 168 or by regulations made by the Regulator by virtue of any provision of Schedule 15.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 300, line 38.
Member’s explanatory statement
This amendment omits provision superseded by the amendment in the name of Lord Callanan at page 300, line 38.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 300, line 38.
“(f) make provision enabling the Regulator to accept an enforcement undertaking from a relevant person and about the consequences of accepting such an undertaking.(2) An “enforcement undertaking” is an undertaking to take, within the period specified in the undertaking, such action as may be so specified to secure compliance with a relevant condition or requirement.”Member’s explanatory statement
This amendment (together with the amendment in the name of Lord Callanan at page 302, line 21) gives the Regulator power to make regulations allowing it to accept enforcement undertakings instead of taking enforcement action.
“(3) Except as provided by the regulations, the validity of an order made by virtue of paragraph 38(2)(a) or (aa) is not to be questioned in any legal proceedings.”Member’s explanatory statement
This amendment provides that the validity of an order made by virtue of paragraph 38(2)(a) or (aa) of Schedule 15 may not be challenged in legal proceedings except as provided by regulations.
“(ea) make provision about payment of a penalty (and any interest) in instalments;”Member’s explanatory statement
This amendment provides that regulations under Clause 168 may provide for payment of a penalty in instalments.
“(g) make provision enabling the Regulator to accept an enforcement undertaking from a relevant person and about the consequences of accepting such an undertaking.”Member’s explanatory statement
See the explanatory statement for the first amendment in the name of Lord Callanan at page 302, line 5.
“(3) Except as provided by the regulations, the validity of a penalty imposed by virtue of paragraph 38 is not to be questioned in any legal proceedings.”Member’s explanatory statement
This amendment provides that the validity of a penalty imposed by virtue of paragraph 38 of Schedule 15 may not be challenged in legal proceedings except as provided by regulations.
Member’s explanatory statement
This amendment corrects a typographical error.
“(ea) make provision about payment of compensation (and any interest) in instalments;”Member’s explanatory statement
This amendment provides that regulations made under Clause 168 may provide for payment in instalments of sums under a consumer redress order.
“(g) make provision enabling the Regulator to accept an enforcement undertaking from a relevant person and about the consequences of accepting such an undertaking.”Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 302, line 5.
“(3) Except as provided by the regulations, the validity of a consumer redress order is not to be questioned in any legal proceedings.”Member’s explanatory statement
This amendment provides that the validity of a consumer redress order (imposed by virtue of paragraph 38(2)(c) of Schedule 15) may not be challenged in legal proceedings except as provided by regulations.
Member’s explanatory statement
This amendment ensures that the language of paragraph 43(1) is consistent with that used in paragraph 14(4)(b) in order that regulations may make provision about how the Regulator is to determine whether charges payable by any consumer are disproportionate, rather than only domestic consumers.
“(1) The regulations may make provision conferring powers on the Regulator or imposing requirements on any person, for the purposes of or in connection with enabling the Regulator—(a) to monitor and secure compliance with relevant conditions or requirements;(b) to make an order in respect of the contravention of a relevant condition or requirement;(c) to enforce relevant conditions or requirements;(d) to make a determination under provision made by virtue of paragraph 43(1).”Member’s explanatory statement
This amendment (together with the amendment in the name of Lord Callanan at page 304, line 24) allows regulations to confer powers on the Regulator or to impose requirements on any person for purposes connected to the enforcement of relevant conditions or requirements.
“(3) Regulations made by virtue of sub-paragraph (1) may, in particular—(a) confer powers to enter premises for the purposes of exercising powers conferred by the regulations;(b) make provision about the circumstances in which a warrant is required to exercise a power conferred by virtue of paragraph (a);(c) make provision for the issuing of such a warrant where conditions specified in the regulations are satisfied.”Member’s explanatory statement
This amendment clarifies that regulations made by virtue of paragraph 44(1) may confer powers to enter premises and make provision about circumstances in which a warrant is required.
“(5) Regulations made by virtue of sub-paragraph (1) may, in particular, impose requirements relating to—(a) the keeping of records by relevant persons;(b) the provision of information by relevant persons and others;(c) the audit and verification of that information.”Member’s explanatory statement
See the explanatory statement to the amendment in the name of Lord Callanan at page 304, line 5.
“(1A) Regulations made by virtue of this paragraph may make provision relating to the connection of premises to a relevant heat network whether a connection is for the purpose of—(a) supplying heating, cooling or hot water to premises, or(b) supplying thermal energy to a relevant heat network.”Member’s explanatory statement
This amendment enables regulations to make provision about the connection of premises to relevant heat networks whether a connection is for the purpose of supplying heating, cooling or hot water to premises, or for the purpose of supplying thermal energy to a relevant heat network.
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
“(1A) The regulations may provide for sections 24 and 25 of the Consumers, Estate Agents and Redress Act 2007 (provision of information to consumer advocacy bodies) to apply in relation to relevant persons as they apply to regulated providers within the meaning of section 25 of that Act, with such modifications as appear to the appropriate authority to be appropriate.”Member’s explanatory statement
This amendment provides that requirements relating to the provision of information to consumer advocacy bodies, imposed by sections 24 and 25 of the Consumers, Estate Agents and Redress Act 2007, may be imposed on holders of heat network authorisations and others by regulations under Clause 168.
“(a) to apply in relation to heat network consumers in England, Wales or Scotland as it applies in relation to gas or electricity consumers, with such modifications as appear to the Secretary of State to be appropriate;(b) to apply in relation to relevant persons in England, Wales or Scotland as it applies in relation to regulated providers within the meaning of that Part, with such modifications as appear to the Secretary of State to be appropriate.”Member’s explanatory statement
This amendment provides that requirements relating to complaints handling and redress schemes, imposed by Part 2 of the Consumers, Estate Agents and Redress Act 2007, may be imposed on holders of heat network authorisations and others by regulations under Clause 168.
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
Member’s explanatory statement
This amendment ensures consistency with the reference to costs in the amendments in the name of Lord Callanan to Clause 170.
Lord Callanan
“(ba) regulations under section 168 which create an offence or provide for an increase in the penalty for an existing offence;”Member’s explanatory statement
This amendment provides that regulations made by the Department for the Economy in Northern Ireland that create an offence, or provide for an increased penalty for an existing offence, may not be made unless a draft has been laid before and approved by a resolution of the Northern Ireland Assembly.
Lord Callanan
Member’s explanatory statement
This amendment (together with the amendment in the name of Lord Callanan at page 142, line 37) clarifies the heat network-related costs that can be charged to holders of gas or electricity licences in England, Wales and Scotland.
“(1A) The costs within this subsection are—(a) costs of the GEMA—(i) under regulations made under section 168, or(ii) in its capacity as the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021 (asp 9), if the GEMA is designated as such under section 171(1) of this Act,(b) costs of a person other than the GEMA in carrying out, by virtue of section 166(2) or paragraph 5 of Schedule 15, functions of the Regulator,(c) costs of holders of licences issued under Part 4 of Schedule 15 (code manager licences),(d) costs incurred by the Secretary of State in giving financial assistance under regulations made by virtue of paragraph 51 of Schedule 15 (special administration regime),(e) costs incurred by a person or body in providing, or arranging for the provision of, consumer advocacy and advice in relation to heat network consumers, and(f) costs not within any of paragraphs (a) to (e) incurred by a person in exercising a function in relation to heat networks in England, Wales or Scotland (whether by virtue of regulations under section 168 or otherwise).”Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 142, line 36.
Member’s explanatory statement
This amendment (together with the amendment in the name of Lord Callanan at page 143, line 2) clarifies the heat network-related costs that can be charged to holders of gas or electricity licences in Northern Ireland.
“(3) The costs within this subsection are—(a) costs of the NIAUR under regulations made under section 168,(b) costs of a person other than the NIAUR in carrying out, by virtue of section 166(3) or paragraph 5 of Schedule 15, functions of the Regulator,(c) costs incurred by the Department in giving financial assistance under regulations made by virtue of paragraph 51 of Schedule 15 (special administration regime),(d) costs incurred by a person or body in providing, or arranging for the provision of, consumer advocacy and advice in relation to heat network consumers, and(e) costs not within any of paragraphs (a) to (d) incurred by a person in exercising a function in relation to heat networks in Northern Ireland (whether by virtue of regulations under section 168 or otherwise).”Member’s explanatory statement
See the explanatory statement for the amendment in the name of Lord Callanan at page 143, line 1.
Lord Lennie
Member’s explanatory statement
This amendment would ensure that the GEMA may be designated as the regulator for heat network zones.
Lord Lennie (Lab)
I shall speak to just this amendment and be fairly brief. It would ensure that the Gas and Electricity Markets Authority was designated as the regulator for heat network zones. Those zones are fundamental to the scale of expansion necessary to achieve net zero. As we heard before, this in turn depends on local authorities having the right resources to deliver their responsibilities effectively. The amendment would ensure that the Secretary of State delegates to GEMA its authority status to act as regulator in this regard, as already described for heat networks. Essentially, they should expand them in the most efficient manner possible if we are to achieve net zero. Given Ofgem’s regulatory responsibility for zoning, as well as for the networks themselves, this would ensure a joint approach to get the best out of heat networks.
While the devil may be in the detail of the regulations themselves—we have heard about some of that already—the Opposition support the proposals in this group of amendments. Essentially, they are adaptable to changes. Monitoring and adapting to market changes will be vital, and we support the amendments in the names of the noble Lords, Lord Teverson and Lord Ravensdale, to which they will speak shortly. I beg to move.
Lord Teverson (LD)
My Lords, we move on to the zoning regulations. I very much agree with the amendment moved by the noble Lord, Lord Lennie. When I read through this section, I must admit that I found it extremely opaque in many ways. I will come to my own amendments in a minute, but perhaps the Minister can explain a few things to me. Clause 174(2) says:
“A heat network zone is an area in England”.
I presume that means that this is just English legislation, not for the rest of the United Kingdom, but it is very unspecific about what a network zone would be. I had assumed that it would be a single zone or single heating system, but it obviously is not. I am interested to hear from the Minister what a zone is likely to be in practice.
We then have a zone authority. Clause 175(1) states:
“Zones regulations may designate a person to act as the Heat Network Zones Authority”.
Again, as the noble Lord, Lord Lennie, pointed out, we have very vague ideas as to who this should be. I am interested to hear again from the Minister who the authority is expected to be.
Then we move on to zone co-ordinators. Who are they and what exactly do they do in comparison with the zone authority? Of course, in Clause 175(5), we have a list defining local authorities. I was delighted to see the Council of the Isles of Scilly, which I have represented in the past, there—all 2,000 souls are represented in that list. I would be really interested to understand from the Minister how all this works. Clause 175(4) says that the
“Regulations … may make provision for the Authority to require a local authority, or two or more local authorities”,
so it seems to me a very complicated landscape. I would be interested to understand how that jigsaw fits together.
Two of my amendments would change “may” to “must”; I just cannot see how it could remain “may” in those two places. The main thrust of my arguments is in Amendments 165 and 166. They are about making sure that the regulations are in line not only with the strategy and policy statement—which we have referred to many times already regarding the text of the Bill—but with, in particular, local authorities’ net-zero plans. A huge number of local authorities, as I know the noble Baroness, Lady Bennett, has pointed out, now have net-zero objectives and plans to back them up. We should give credit to that and include it in the Bill. My Amendment 166 is very much on the same area of the delivery of heat networks within zones and how they fit in with local net-zero energy systems.
As I said, it would be really useful to everybody to understand how this geography is meant to work. I suppose my question is: is this just too complicated or is there some logical method here that does not get in the way, and does not create a bureaucracy that gets in the way, of these systems?
Lord Ravensdale (CB)
My Lords, I again declare my interests as set out in the register. I speak to Amendment 167 in my name, which really builds on the amendments that the noble Lords, Lord Lennie and Lord Teverson, have put forward to better set out the role of local authorities in this picture.
There is a great opportunity here to extend the zoning powers that we have in the Bill beyond heat networks into other areas. Ensuing that the Bill better defines local authority roles is really very applicable to the delivery of heat, because it is local authorities that know best about their housing stock and its condition and how they can deliver clean heat in their areas.
Lord Callanan (Con)
Let me first remind the Committee of the broader ambitions of this section of the Bill, which covers heat network zoning, which is a key policy to deliver the scale of expansion of heat networks that will be required to meet net zero. This process brings together local stakeholders and industry, to identify and designate areas where heat networks are expected to be the lowest-cost solution for decarbonising heating. The clauses will enable the Government’s commitment to introduce zoning by 2025.
Amendments 162YYYA, 162YYYB, 162YYYC, 162YYYD, 162YYYE, 162YYYF, 162YYYG and 165A—who gives these numbers to amendments?—are in my name. They will permit regulations to allow the heat network zones authority, which I will refer to as the authority, to directly designate zone co-ordinators and heat network zones in cases where these functions have not been performed by the relevant responsible bodies. This will deliver a more efficient process for establishing heat network zones.
More specifically, Amendment 162YYYA permits regulations to enable the authority to designate a person as zone co-ordinator. This may be necessary in scenarios where, despite directing it to do so using the powers in Clause 176(4), a local authority does not establish a zone co-ordinator. This could prevent the heat network opportunity that has been identified from being realised. Similarly, Amendments 162YYYB to 162YYYG provide for areas to be designated as heat network zones by the authority, in addition to zone co-ordinators as already provided for in Clause 177(1)(b). They also ensure that this expanded role for the authority is reflected elsewhere in Clause 177. This mirrors existing powers for identifying areas as heat network zones and reviewing areas designated as such. The authority or zone co-ordinators may undertake each of these activities. These amendments will therefore ensure that the authority may designate zones directly, avoiding unnecessary delays to the rollout of heat networks.
Amendment 165A concerns low-carbon heat sources. A range of heat sources could potentially be used by heat networks, including heat from thermal power stations, industrial processes or cooling and refrigeration. Clause 180 gives the Secretary of State powers to require heat sources in zones to connect to a heat network. This amendment will allow regulations to ensure that heat sources that are required to connect do not abuse their monopoly position and charge disproportionate prices for the heat that they provide. Equally, it will allow the regulations to ensure that the requirement to connect does not unduly disadvantage heat sources themselves. This will help to support fair pricing, which will give investors greater security and confidence and help to accelerate the delivery of large-scale heat networks in zones.
I now turn to Amendment 162YYYZA in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake of Leeds, regarding designating GEMA as the heat network zones authority. The authority will be a national body responsible for zoning functions that require national-level standardisation or are most efficiently or effectively carried out at a national level. This approach will allow for national standards and consistent rules to apply in the initial identification of a potential heat network zone.
In terms of who could fulfil the authority role, Clause 176(3) is explicit that the Secretary of State may but need not be designated as the authority. The clause as drafted therefore already provides that regulations may appoint GEMA as the authority. We will be specifying the authority’s functions and responsibilities in the regulations; this will therefore be the subject of further consultation.
The authority will fulfil a different function from the heat network regulator, which, as set out in Clause 166, we propose will be fulfilled by GEMA in relation to Great Britain. This role will cover all heat networks, both within and outside heat network zones. We do not envisage a separate regulator for heat network zones in England. We will be specifying the authority’s functions and responsibilities in the appropriate regulations; we intend for the body to undertake functions on behalf of the Secretary of State and be accountable to the Secretary of State.
Detailed considerations regarding roles and responsibilities in zones will of course be subject to further consultation as we continue to develop our policy proposals. Consultation on these issues will take place in due course. Appointing the authority in regulations will allow for amendment should this be required as and when its functions change over time as the networks become more developed in the UK. I hope that this has helped to clarify our proposed approach and the scope of the powers already provided.
I thank the noble Lord, Lord Teverson, for his thoughtful Amendments 163 and 164, which would make the provision of the zoning methodology mandatory and require the methodology to include certain details. As always, we want legislation to be flexible and future-proofed. In this context, this means that the regulations can adapt to developments in the heat network market. The Government are clear that a national methodology for identifying zones will be necessary to enable a robust and transparent approach that increases overall efficiency and drives consistency. To this end, a pilot to support the development of the methodology is under way in 28 English cities and towns. The outputs from the pilot will help to inform policy design and future consultation on the methodology and its contents. Accepting these amendments now would, in effect, tie the Government’s hands at this stage to the potential cost of industry, stakeholders and, ultimately, consumers.
Next, I turn to Amendments 165 and 166, also from the noble Lord, Lord Teverson, which concern interactions between the national methodology and the co-ordination and delivery of heat networks at a local level. Accepting Amendment 165 would mean that the methodology was no longer nationally determined and would have to vary according to each local authority’s requirements. A national methodology will minimise the duplication of effort at the local level and instead ensure that local input is applied at the most appropriate stage: the refinement and designation of the zones themselves.
Heat network zoning will support local net-zero goals by unlocking the lowest-cost pathway to heat decarbonisation in built-up areas. As we expect that zoning co-ordinators will work with the local authority, their work will be brought into local net-zero plans. Therefore, Amendment 166 risks creating unnecessary bureaucracy at a local level, reducing zoning co-ordinators’ capacity to focus on the effective delivery of zones.
The final amendment in this group, Amendment 167 tabled by the noble Lord, Lord Ravensdale, would extend the Bill’s heat network zoning provisions to individual heat pumps. As noble Lords will be aware, various factors, including building density and availability of heat sources, mean that certain localised areas are particularly suited to heat networks. This is why we are introducing a framework to identify where heat networks can provide the lowest-cost low-carbon heating solution.
The noble Lord’s amendment would apply zoning to heat pumps. Our strategic approach, set out in the heat and buildings strategy, is to work with the grain of the market and our policy levers are aligned to natural trigger points to create optionality for consumers regarding their various heating options. For clarity, such trigger points include appliance replacement and change of tenancy or property ownership, among many others of course. An approach where more technologies are zoned risks removing choice for consumers and could cause early appliance scrappage and additional disruption.
I thank noble Lords for this debate and for their amendments. I ask them not to press their amendments.
Lord Teverson (LD)
Could I ask the Minister for some clarification? I apologise if I have not got my head around this. What is a zone: a council estate, a county, a region or a combined authority? I am trying to get from the Minister a mental picture of what a zone could be and what determines that boundary.
Lord Callanan (Con)
No specific boundary is set out in the proposals. It can vary from authority to authority. It is very unlikely to be a whole region; it is much more likely to be an inner-city area, an industrial estate or something like that. It will very much depend on the local circumstances and what heating sources are available. Crucially, it will depend on local support, which is why local authorities are crucial to this process. Many local authorities around the country are already in discussions and are very keen to get on with these zoning proposals, presumably including Leeds. Although I know that the noble Baroness, Lady Blake, does not speak for Leeds any more, I know that it is one of the pioneers in this area.
Lord Ravensdale (CB)
I thank the Minister for his response. He set out the reasons why district heating is particularly well suited to a zoning approach. Could he expand a little on why, for example, heat pumps or urgent retrofits are not suitable for zoning in the same way?
Lord Callanan (Con)
They could be, but we do not want to designate a particular technology because it will vary from area to area and locality to locality. It is to be expected that heat pumps will play a part in heat network zoning. That would be the case but we do not want to be particularly specific.
Lord Lennie (Lab)
I thank the Minister and the noble Lords, Lord Teverson and Lord Ravensdale, for their contributions. I will assume that their questions have at least been addressed, if not fully answered. We might come back to them later; we shall see. On Amendment 162YYYZA, which would designate GEMA, the Minister said that there will be further consultation on who will ultimately become the designated body for network zones. Once that decision is made, will we hear about it? Will whoever has been designated that role be regulated or will it just be announced?
Lord Callanan (Con)
It will be set in the appropriate regulations. The bottom line is that we have not made a final decision at this stage.
Lord Callanan
“(b) to designate a person as a zone coordinator where a local authority (or local authorities) fail to comply with a requirement imposed by virtue of paragraph (a).”Member's explanatory statement
This amendment enables the Heat Networks Zones Authority to designate a zone coordinator where a local authority (or authorities) fail to comply with a requirement to make such a designation.
Lord Callanan
Member's explanatory statement
This amendment enables zones regulations to provide for areas to be designated as heat network zones by the Heat Network Zones Authority as well as by zone coordinators.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 146, line 5.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 146, line 5.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 146, line 5.
Member's explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 146, line 5.
Member's explanatory statement
This amendment enables regulations made by virtue of Clause 177(1)(c) to impose requirements as to consultation on the Authority as well as on zone coordinators.
Lord Callanan
“(ga) make provision about the terms on which thermal energy is supplied to a district heat network in pursuance of regulations made by virtue of paragraph (f) or (g) (including in particular provision about the amount that may be charged);”Member's explanatory statement
This amendment enables regulations to make provision about the terms on which thermal energy is supplied to a district heat network where the supply is enabled by a requirement imposed on a person by a zone coordinator or where the thermal energy is generated by machinery or other equipment of specified types.
Lord Ravensdale
“PART 7ALocal Area Energy PlansDuty to provide guidance(1) The Secretary of State must publish guidance for local authorities on local area energy planning within 12 months of this Act being passed.(2) The guidance in subsection (1) may include, but is not limited to, guidance on—(a) contributing towards meeting the targets set under—(i) Part 1 of the Climate Change Act 2008 (UK net zero emissions target and budgeting), and(ii) sections 1 to 3 of the Environment Act 2021 (environmental targets);(b) adapting to any current or predicted impacts of climate change identified in the most recent report under section 56 of the Climate Change Act 2008 (report on impact of climate change);(c) the data and assumptions used in creating a local area energy plan;(d) the roles and responsibilities of those involved in creating a local area energy plan;(e) the minimum standards for a local area energy plan.(3) Local authorities must have regard to the guidance produced under subsection (1) when developing local area energy plans.(4) In this section, “local authority” has the meaning given in section 176.”Member's explanatory statement
This amendment provides guidance for local authorities to help them produce Local Area Energy Plans. It aims to widen the roll out of Local Area Energy Plans among local authorities and help better define the role of local authorities in delivering the future energy system.
Lord Ravensdale (CB)
My Lords, Amendment 168 in my name would put a duty on the Secretary of State to
“publish guidance for local authorities on local area energy planning”
and clarify some of the criteria that should be included in the guidance. This is based on Energy Systems Catapult’s guidance and includes how local area energy plans can contribute to meeting our net-zero environmental and adaption targets.
As I said on Amendment 167, local authorities will be crucial to delivering our net-zero targets, particularly on decarbonising heat from buildings, yet the Energy Bill makes only limited reference to the vital role of local authorities in heat networks. That is a particular gap in relation to local area energy planning, which is not mentioned in the Bill, and I do not believe the Government have made a firm commitment to create this mechanism.
The Government should ensure that local authorities are given powers and mechanisms to enable local area energy planning, which is a whole-system approach and methodology to discover the locally preferred and most cost-effective means to decarbonise local transport of heat in any given place. Ofgem commissioned the Centre for Sustainable Energy and Energy Systems Catapult to develop the local area energy planning methodology and, under the pilot, local area energy plans were prepared in three areas—Newcastle, Bridgend and Bury in Manchester. Other local authorities are also in the process of developing plans, but these are piecemeal, often without funding and are taking too long.
It is worth giving a bit of context around the pilots. They divided each area into zones suitable for different types of low-carbon heating technologies. The balance of technologies across the three areas shows how different each area can be. For example, the local area energy plan in Newcastle found that roughly half the homes could be heated by a heat network, whereas it was less than 30% in Bury and only 15% in Bridgend. In Bridgend, a far higher proportion of homes would need to be heated with high-temperature heat pumps to save on the extra expense of retrofitting insulation in its poorer-quality housing stock. That illustrates how different areas can be and the benefits of this local area energy planning approach.
As I have said, local authorities have the best view of their local areas and the state of their housing stock. A joined-up, co-ordinated approach to local area energy planning, led by government and providing local authorities with the support they need could, according to the Energy Systems Catapult, save £252 billion between 2025 and 2050 compared with organic, unco-ordinated approaches to energy planning. There is real value in such an approach.
In its independent review of the heat and buildings strategy, the Climate Change Committee said that local area energy planning,
“If done well … will ensure a coordinated approach for rolling out different low-carbon heating solutions in different areas.”
It also said that,
“The government acknowledges the value of Local Area Energy Planning … but is yet to bring forwards strong policy proposals that would set a direction here.”
This is a real opportunity. My amendment is really to explore what plans the Government have to develop the institutional framework to empower and fund local authorities to roll out these plans.
As a final note, I originally considered tabling an amendment that puts a duty on local authorities to prepare a local area energy plan, but we were advised by the LGA that mandating this would be very daunting for some local authorities that may be unable to achieve this without committed government funding and support. I would be grateful if the Minister could expand on the Government’s plans to develop local area energy plans in the future. I beg to move.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Lord, Lord Ravensdale. I declare my position as a vice-president of the Local Government Association in offering my support for his Amendment 168, which I would have signed had I seen it. He has clearly set out the arguments for this. I just add that this would be a significant step forward for energy democracy, with decisions not being centralised in Westminster but made in local areas, by local people.
I think back to an event I attended with Gina Dowding, who was then the MEP for North West England, which dates the event rather precisely. There was work going on by a wide range of organisations in the north-west, looking at renewables across the region. With this kind of plan, different local authorities would be able to band together in different ways, according to what worked for the geography and the energy supply systems. That would be a flexible and effective way of doing that.
I have one more point to make on Amendment 168. Last month I was in Kyiv, talking to energy managers who had suffered as much of a shock as one could possibly imagine any energy manager having to receive, which was half of their systems being destroyed by vicious Russian attacks directed by people who had actually built the systems, so knew exactly where to hit hardest and worst. The Ukrainians were holding their system together, and one of the things they stressed to me was the importance of decentralised, local systems that were holding up and helping to support the national system because the local system was able to function effectively. So, we know we are in the age of shocks and, in terms of resilience, having that local basis is crucial.
That brings me on to my Amendments 237 and 238, which together form an attempt to deliver the potential of something that we saw flowering a decade ago but was then cut off in its prime, and that is community energy schemes, where community groups come together to provide cheaper, greener power and to distribute the benefits locally. The Government have made us all very familiar with the phrase “world-leading”, but I am afraid that when it comes to community energy, it really is impossible for the Government to claim any kind of leadership in clean, home-produced energy schemes at a local level. What we saw a decade ago was a real explosion of community-owned and run renewable energy generation projects that were driven by the feed-in tariff. Indeed, I recall visiting Berwick solar farm in Sussex with the sadly late Keith Taylor, then MEP for South East England, in 2015. They said, “This is now dead. This has been killed”, by the cutting of the feed-in tariff, which of course entirely disappeared in 2019.
These two amendments reflect what is contained within the Local Electricity Bill, started in the other place. That has the backing of 314 MPs from all the major parties and aims to help community groups sell the electricity they generate to local customers. That Bill is also supported by more than 100 principal authority councils and more than 80 national organisations, including the National Trust, WWF, Greenpeace, Friends of the Earth and CPRE. These two amendments offer a chance to take that Bill forward; this is the obvious opportunity to act now. Noble Lords will note that both amendments have been kindly backed by the noble Baronesses, Lady Boycott and Lady Young of Old Scone, and the noble Lord, Lord Teverson, so it has full cross-party and indeed non-party support, and I believe we will also be hearing other noble Lords speaking in support.
Similar Amendments, Amendments 242F and 242G have, been tabled by the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake of Leeds. I have a list setting out the differences, but in the interests of time, I will leave it to those noble Lords to set out the details of how they differ. They are very much differences of detail, rather than of the main content and intent. The Environmental Audit Committee has looked into community energy and it says that the sector could grow between 12 and 20 times by 2030, powering 2.2 million homes and saving 2.5 million tonnes of CO2 emissions every year. That could take community renewable energy generation to 10% of the UK’s electricity generation, around 6,000 megawatts. At the moment, however, it is less than 0.5% of total UK electricity generation capacity: 331 megawatts in 2021. It is not, of course, because of the cost of generating, which has fallen very rapidly over the past decade, but is due to insurmountable costs in selling the electricity they generate and providing the operational requirements to become a licensed energy supplier. Initial costs are put at £1 million, which of course is far beyond the scale of most community energy projects.
To make it worse, community energy schemes receive no guaranteed price certainty for the electricity they generate. They knew what they were going to get under the feed-in tariff, but that scheme closed to new applicants in April 2019, at which point many schemes that were already on the drawing board and well advanced just fell apart. It is not that the Government have not been trying to encourage community energy—that is clearly their intention. There was the Licence Lite scheme route to market, but it did not put reasonable limits on costs and there was no obligation on fully licensed energy utilities to partner with community groups. More recently, we saw the smart export guarantee. That also places a requirement on larger suppliers to purchase the power, but with no guaranteed purchase price or length of contract, again making the lack of certainty killing.
Baroness Boycott (CB)
My Lords, I am very pleased to support Amendments 237 and 238, along with the noble Lord, Lord Teverson, and the noble Baroness, Lady Young. The noble Baroness, Lady Bennett, set out so many of the reasons why we should support this. As she said, the rollout of community energy has ground to a near halt in recent years for reasons related to the withdrawal of the feed-in tariffs and the surely well-intentioned but hopelessly ineffective smart export guarantee, which has given community energy generators either prices which are inadequate or, where they are adequate, no confidence that they will remain so. This has been distressing for volunteers and community energy generators who have put down roots in the community and are supplying valuable services for their community, including energy efficiency—a significant omission from the Bill, which we will hear more about—and skills.
The Government effectively banned onshore wind in 2015 and are now, after seven lost years, belatedly unbanning it in rather curious circumstances. Some communities are up in arms about solar farms, and the Government have recently wobbled somewhat awkwardly between permitting and restricting them, only to now be talking about the need for a balance between farmland and solar PV. This is odd, given that meeting the Government’s own energy security strategy, published in April this year, of reaching 20 gigawatts of installed solar by 2030 would occupy only 0.5% of UK land, which is half of that occupied by golf courses. As noble Lords know, I am very passionate about food production, but I know that we can also produce a level of energy. As I said, I am not so sure that there really is a great tension when the land needs of solar are so limited.
These bannings and unbannings and restrictions and relaxations are really just the policy manifestations of community concerns about energy installations being done to them, rather than with them. The point about the vast majority of large-scale generation in people’s areas is that there is actually very little community benefit. If the Government were willing not just to see the benefits of community energy—as I am sure the Minister does—but to put in place the policy measures to support it, it would make things so much easier for all of us.
I sit on the Environment and Climate Change Committee, which has been taking evidence about boiler upgrade schemes and the like lately. One of the things about community energy is that one or two people within a community are capable of finding their way through the quite complicated government documents to obtain the subsidies, and they in turn can empower a load of residents who otherwise might not be so minded to install insulation and take up new means of energy. There are multiple benefits to this, and I find it hard to see any drawbacks. I am sure the Minister agrees.
Baroness Young of Old Scone (Lab)
My Lords, I also support Amendments 237 and 238, to which I have added my name, and Amendments 242F and 242G in the names of the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, which, with some variations, aim to achieve the same outcome. Previous speakers talked about the role of community energy generation, which is an important one in future energy supply. It was a small but growing effort in this country and a contribution to the development of renewable energy on a local scale.
However, when the feed-in tariff disappeared for new applications that really put the nail through the head of that growth, and nothing that the Government have done in the last few years to try to reignite it seems to have worked. People have talked about Licence Lite and the smart export guarantee, but neither of these has really produced an uptick in that trend of community energy generation. We need to find a way to get around that. This depends quite substantially on reducing the barriers of upfront capital and the regulatory effort of getting a connection to the system, on making sure that there is a key partnership between the big boys and the small community energy generators, and on some sort of guarantee of purchase price and length of contract. If we do not have those, we will not get any security into the community energy generation sector through investment.
These amendments put forward simple solutions. I shall not go into any detail, because the noble Baroness, Lady Bennett, has gone through them, suffice it to say that the whole issue is about how local energy generators can sell the power they generate locally through a community scheme to local communities. That is the magic bit in this area of community generation. Local schemes are developed and owned by local people, and they have local benefits in the form of cheaper and cleaner energy. They also provide other benefits for local communities.
When I was thinking about a way of describing this, it came to mind that the Labour Party used to talk about Arthur Scargill in a particular way: “He may be a bastard but at least he’s our bastard”. There is a difference between “damn windmills” and “our damn windmills”, so there is a real attraction in local support. I thought that the Government were keen on improving the popularity of locally determined schemes—I am sure that they are—which gives me huge confidence that the Minister will take these four amendments and do the job that the noble Baroness, Lady Bennett, suggested some of the rest of us do: draw out the best cherries from among them.
However, I do not intend to do that. I would rather like the Minister to do it and come forward on Report with a government amendment that meets the key needs of obligating the big boys to buy from the small-scale generators; setting a predictable, fair price; and setting a minimum contract period.
Lord Teverson (LD)
My Lords, I was pleased to put my name to both of the amendments in the name of the noble Baroness, Lady Bennett. Most of what needs to be said has been said. I guess I need to declare my interests: I am a fairly insignificant shareholder of St Ewe community energy, which I have not heard a lot from recently—probably because of the reasons that we outlined here.
The one point I want to make is that this is exactly one of the areas that has been left out of this Bill, as the noble Baroness, Lady Boycott, said. It should be in here. However, to me, although community energy is about generating power, the real importance of it is in allowing communities to come together and be a part of the national and global march forwards to net zero. When there were feed-in tariffs, there was an enthusiasm for people coming together and being part of this essential journey towards a clean economy, a clean society and the environment that communities, families, households and small businesses wanted to see in their local areas. It is not about participation in that big COP 27 or whatever; it is about the local contribution that allows people to participate in one of the most important journeys and fights that we face at the moment, which is about climate change and all the benefits that come from net zero.
Let us have this issue in the Bill. Let us ignite this sector again. Let communities participate in one of the most important objectives that we have on this planet.
Baroness Meacher (CB)
My Lords, I rise to add my strong support for Amendments 237 and 238, so ably introduced by the noble Baroness, Lady Bennett of Manor Castle, and her strong team of cross-party supporters. I thank Steve Shaw of Power for People for his briefing. I will speak only briefly, principally to ask a few questions of the Minister; I hope that he will be able to respond to them—if he heard what I just said.
As we face the existential threat from climate change, it cannot be right for small-scale community renewable energy schemes to be rendered unworkable by disproportionate regulatory burdens and costs. Other countries are promoting small-scale energy production, apparently often by community groups, far more effectively. It must be possible for the UK to do the same. I hope that, today, the Minister will agree in principle that this Bill must remove the barriers to community energy production.
As somebody else—I think it was the noble Lord, Lord Teverson—said, if the Government can come up with improved amendments on Report to achieve this objective, I for one will welcome them. Does the Minister accept that the community renewable energy sector has the potential, as claimed by its advocates and the noble Baroness, Lady Bennett, to provide 10% of the UK’s electricity generation? I hope that the Minister can respond to this question because it is incredibly important. If the Government can really do that—come on—surely we have to enable them to do it.
Does the Minister accept that it is perfectly feasible to reduce significantly the financial, technical and operational requirements to become a licensed energy supplier, and thus to reduce significantly the initial £1 million start-up cost involved? Of course, that makes the whole idea of developing these community energy schemes quite out of the question. Can he assure the Committee that the department will work to resolve these issues before Report?
Baroness Blake of Leeds (Lab)
I shall speak to the amendments in the names of my noble friend Lord Lennie and myself. Before I get to that point, though, I want to stress that the contributions made in this debate have been so strong that I cannot see how the Government can continue not to take this aspect of the debate with the seriousness it deserves, because at the end of the day we have very serious obligations and commitments to make. We are not going to achieve what we have set out to do if we do not focus on delivery, and the importance of how we take our communities and people with us on that journey. I really do not think that has been stressed enough.
The noble Lord, Lord Ravensdale, put it very well when he stressed the importance of involving local authorities in setting up local area energy plans, particularly something that has to be repeated again and again when we talk about this: the bringing-in of powers that need to go down to local authorities and then into the communities. The important aspect of this is that the resources must be there to accompany those powers. Frankly, we are in a situation where local authorities across the country have lost over 60% of their budgets. This needs to be taken into account when we consider how local areas can contribute to the important work that needs to be done in this space. The noble Baroness, Lady Boycott, expressed it exceptionally well by highlighting the current contradictions in government policies that are holding us back in so much of what we need to do.
Going through the debate, I commend the contributions that have been made from our partners coming in. They have brought such important evidence as to what we could be doing, and about the huge potential that could be unleashed if the Government were able to put the necessary measures in place.
In this group, we have focused specifically on setting up a community electricity export guarantee programme. Our amendments relate to community energy and would bring in new clauses between Parts 7 and 8 and Parts 12 and 13. We have done this because, as we have heard, community energy covers aspects of collective action to reduce, purchase, manage and generate electricity. Projects obviously have an emphasis on local engagement and local leadership and control. I firmly believe that that action can often tackle challenging issues around energy with communities, which are well placed to understand their local areas, and bring people together with common purpose. As we have heard, it often takes only a couple of experienced and committed people at a local level to unlock some of the issues we have faced that have been holding us back, and to advise government on what needs to be changed and done to bring this forward.
I do not know whether others picked up a significant amount of interest in the different media outlets over the weekend about community energy projects and initiatives that are being brought forward. We have heard that those projects are significant and cover a whole range of different aspects and ways of coming forward. I do not want to go over all the contributions that have been made, but I hope that we are all looking for some very specific measures and some movement from the Government that we can take forward to Report to examine how we can make the difference that we need.
Running all the way through this is the cruel impact of energy bills on our communities and local people. The response communitywide is because people have to work across so many different areas. That key element of behaviour change is absolutely essential if we are to bring the necessary partners together.
Our amendments would require the Secretary of State, within six months, to
“require licensed energy suppliers with more than 150,000 customers (‘eligible licensed suppliers’) to purchase electricity exports from sites generating low carbon electricity with a capacity below 5MW, including community energy groups … Licensed energy suppliers with fewer than 150,000 customers may also offer to purchase electricity exports from exporting sites … including community owned energy groups”.
Eligible licensed suppliers must
“offer a minimum export price set annually by OFGEM”,
offer a minimum five-year contract and allow
“the exporting site to end the contract after no more than 1 year.”
These steps are important to make sure that the benefits come to community energy projects and that they have a guaranteed stable market to operate in.
A community smart export guarantee is supported by Community Energy England. It would increase investor certainty, especially for larger-scale ground-mounted projects where most of the energy is exported. I am interested to hear what consideration the Government have given to such a scheme and whether we can look forward to progress to ensure that we can deliver.
Lord Callanan (Con)
I thank all noble Lords who contributed to this important debate. Let me start with Amendment 168, moved by the noble Lord, Lord Ravensdale. It seeks to ensure that guidance is published for local authorities regarding local area energy planning. Although the amendment is well-intentioned, in my view, it is not necessary. The Government already have work under way to consider the role of local area energy planning in delivering net zero and supporting efficient network planning, including heat network zoning policy. Through the Government’s Local Net Zero Forum, we are working with local authority representative bodies to discuss the roles and responsibilities of local government, and how we will work with local government to reach our targets.
I am sure the noble Lord agrees that local authorities are already well placed to undertake local area energy planning given their established relationships with many key stakeholders. Guidance to help develop local area energy plans was already published earlier this year and the Government directly supported this activity through the £104 million “prospering from the energy revolution” programme. This included co-funding for the development of guidance for local areas developing local energy plans and the subsequent delivery of those plans. This has so far seen plans produced for Peterborough, Pembrokeshire, Stafford, Cannock Chase and Lichfield. Given that this activity is already under way, I hope the noble Lord agrees that his amendment is unnecessary and will therefore feel able to withdraw it.
I thank the noble Baronesses, Lady Young, Lady Boycott and Lady Blake, and the noble Lords, Lord Teverson and Lord Lennie, for Amendments 238 and 242G, which seek to enable community renewable generation schemes to sell electricity generated to local consumers. I also thank the noble Baroness, Lady Meacher, for her contribution. The Government believe that community groups have a role to play in our efforts to eliminate our contribution to climate change. However, it is our view that encouraging or introducing obligations on licensed electricity suppliers to mandate them to offer local tariffs would be a disproportionate intervention in the market. Local tariffs are better left as commercial decisions for suppliers.
There are already examples of suppliers offering local tariffs through the market. Octopus Energy offers customers in Market Weighton, Caerphilly and Halifax a tariff with discounted prices at times when electricity is generated locally. Any new obligation in this area is likely to be complex and burdensome, particularly if it interferes with suppliers’ existing services and processes already used to serve their customers.
It is therefore more appropriate to allow market-led solutions to continue to develop, rather than us trying to make commercial decisions on behalf of suppliers. As we set out in the British energy security strategy, the Government are developing local partnerships in England that will enable supportive communities to host new onshore wind infrastructure, for example, in return for benefits including lower energy bills. The Government are separately considering wider retail market reforms that deliver a fair deal for consumers, ensuring that the energy market is resilient and investable over the long term.
As I am sure noble Lords are aware, the Government are undertaking a comprehensive review of electricity market arrangements in Great Britain, which considers options that encourage generation and demand to consider location. It also asks how markets can better value the role of small-scale, distributed, renewable electricity. The department is currently looking at the responses to the review of electricity markets consultation, which closed in October.
Amendments 237 and 242F would enable community renewable generation schemes to receive a guaranteed minimum price for the electricity that they export to the grid. Small-scale, low-carbon electricity generation should be brought forward through competitive, market-based solutions, which will help to encourage innovation and investment. We introduced the smart export guarantee in 2020 to provide exactly that: small-scale, low-carbon electricity generators with the right to be paid for the renewable electricity that they export to the grid. It ensures that these generators, which would otherwise struggle to find a way to sell electricity, can have guaranteed access to the market and a choice of options following the closure of the feed-in tariffs scheme.
To enable the SEG to be truly market-based and encourage innovation, however, suppliers must be in a position to set both the tariff levels and structure for themselves. We should allow the small-scale export market to develop with minimum intervention and not introduce a support scheme that specifies minimum prices or contract lengths for generators.
I say without much optimism that I hope noble Lords are reassured that the Government recognise the role that community-owned and locally owned renewable energy schemes can play in supporting the UK’s national net-zero targets. I hope that noble Lords will feel able to withdraw or not press their amendments.
Baroness Bennett of Manor Castle (GP)
Before the Minister sits down, can he tell me—either now or in writing later—what is the Government’s estimate of the amount of local community energy generation that would be arrived at by 2030 under the market-led approach?
Lord Callanan (Con)
I am happy to give the noble Baroness a detailed answer in writing but we do not see any particular limit on it. It is what the market will develop. The problem with the noble Baroness’s amendment is that she is seeking, in effect, to get every other customer to subsidise a relatively uncompetitive form of energy production. If community energy schemes are low-carbon and competitive, they will be able to take their place in the generation mix. Many of these community energy schemes are already supported and will continue to be.
Baroness Young of Old Scone (Lab)
I wonder whether, in writing to the noble Baroness, the Minister could also write to us on a couple of other things, including the number of schemes that have gone through the two mechanisms that were introduced subsequent to the feed-in tariff changes. This would let us see how trends are operating in the market situation that he is describing at the moment; my perception is that it is not producing growth in the uptake of community schemes. The Government must be clear: are they keen on community schemes, seeing them as a real attribute, or are they keen on only commercially competitive ones? If it is the latter, I am almost certain that we will not see many come forward.
Lord Callanan (Con)
We are keen on these schemes but, as always, the question comes down to cost. How much we are prepared to subsidise an essentially uncompetitive scheme that is leveraged on the bills of everyone else who is not benefiting from these schemes? That is the fundamental question. I am of course happy to write with the clarification that the noble Baroness asks for.
Baroness Bennett of Manor Castle (GP)
I am sorry but I really have to come back on that. Does the Minister acknowledge that there are advantages to these schemes other than on cost? They include, for example, insulation, bringing communities together and increasing acceptance and understanding of net zero, as many noble Lords have outlined.
Lord Callanan (Con)
If the noble Baroness is asking me whether I think that there is an advantage to insulation schemes, the answer is of course yes. I am not sure what her question is, but insulation is a great thing.
Baroness Meacher (CB)
Finally, if the Minister can bear it, can he tell us in writing whether he feels that these small community schemes could in fact deliver 10% or so of the UK’s electricity energy; and what estimate he has made of the feasibility of reducing all these technical regulatory constraints, which cost so much at the very beginning? He will understand that, if you are going to make a profit, you have to invest up front. Small schemes are unlikely to be able to make that initial investment but it may well be a tremendous bonus to the country in the longer term if the Government were able to help them reduce all these costs at the outset. It would be helpful to have all that set out in a letter if the Minister is able to do so.
Lord Callanan (Con)
I am of course happy to set out to noble Lords the details of our position in writing. We want to reduce bureaucracy as much as possible but we have an overriding need to ensure the stability of the energy system. Certain technical requirements need to be met by these schemes. We want to encourage them as much as we possibly can, but that comes with limits. We will certainly write with as many details as we can provide.
Lord Lucas (Con)
My Lords, my noble friend has been very helpful, but I am none the less fairly disappointed by the replies he has been able to give. To illustrate, I live in Eastbourne and, if you stand on the hills above Eastbourne—Britain’s sunniest town—and look down at hundreds of acres of industrial and retail estates and car parks, about the only solar panel you will see is on the local college’s eco training hub. That is because the ownership and commercial benefits of these areas are extremely complicated. No one is in a position to get a cost-effective, reasonable-scale scheme going on their own; it needs something that will work as a whole.
A decent feed-in tariff need not be subsidised—it can be below market rate—but there needs to be something so that there is a base on which you can build. My noble friend’s department was kind enough to send a representative to our recent solar summit. One of the main things that came out of a gathering of local businesses, energy suppliers and so on was the need for a basis on which local collaboration can be built, not to create something that requires a subsidy to produce electricity at a greater cost than would otherwise be the case, but to enable a very complicated situation to come together and be supported into commerciality, allowing local virtuous circles of electricity generation and consumption to emerge. That is not happening in our system at the moment, which is ridiculous. Something needs to happen to enable us to move from 200 hectares of white roof to 200 hectares of black roof, and to get the benefits of that.
Lord Callanan (Con)
As I said, a number of suppliers already offer competitive tariffs in the market. They will provide long-term certainty on pricing. There are many examples of industrial units that have already put solar panels on. Obviously, the most cost-effective way is for them to use that power themselves and export any surplus power to the grid using the smart export tariff guarantees. I will answer that question again: the Government are supportive of community energy schemes. We want to see more of them, but we think that is best delivered through the market framework. I will happily provide noble Lords with more detail in writing.
Lord Teverson (LD)
Can I remind the Minister that it is government policy to decarbonise the electricity system within 12 years and one week? That is no time at all. I am absolutely a defender and promoter of market forces, but in some places they just do not act quickly enough. We have a very short period of time in which we must decarbonise the electricity system. I cannot see why the Minister would not be in favour of ease of movement into this market. As the noble Lord, Lord Lucas, said, it does not necessarily require subsidy. To use a Borisonian term, it would unleash the real will of communities in this country to help in that target of decarbonisation by 2035. I cannot see why the Government do not grasp this and make the most of it.
Lord Callanan (Con)
As I said, we are supportive of proposals. We accept the target for decarbonising electricity production and we are moving ahead full-scale with our sails erected—which is no doubt a Borisonian term—towards that goal. Community energy will play probably a small role, but it will play a role. Obviously, larger-scale generators will supply the majority of the nation’s electricity.
Lord Ravensdale (CB)
My Lords, I thank all noble Lords for participating in this very informative debate. I was very encouraged by what the Minister had to say in response to my Amendment 168 and the work already ongoing in government. I come back to the fragmented nature of local area energy plans: some local authorities have the resources and others perhaps do not. I look forward to fleshing out the detail on that as we go towards Report.
The noble Lord, Lord Teverson, and the noble Baroness, Lady Blake, put it really well. The key theme running through all this is the participation of local authorities and local groups in our energy transition and about defining the part they have to play. We have these big, top-down targets—50 gigawatts of offshore wind by 2030 and 24 gigawatts of nuclear by 2050, as well as heating targets—which are all of course very necessary. But we need that bottom-up view and a better definition of the role of local authorities and local groups in supporting this huge engineering challenge, and I say that as an engineer. It is about stitching together all that local data to better inform how we respond nationally. I look forward to further discussions leading up to Report but, with that, I beg leave to withdraw my amendment.
Member's explanatory statement
This amendment amends the reference to electrical energy in the definition of “energy smart appliance” that applies for the purposes of Part 8.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I beg to move Amendment 169 standing in the name of the Minister, my noble friend Lord Callanan, and will also speak to Amendments 170 to 172. This group of amendments considers the definitions set out in Chapter 1 under Clause 186 on “Energy smart appliances and load control”. Clause 186 sets out a number of definitions that are used in other clauses of the Bill relating to load control. These include permitting the creation of new licensable activities, the modification of licence conditions and industry codes for load control purposes, and the making of regulations for energy smart appliances.
Amendments 169 to 171 have two combined effects. First, by removing the reference to the “use, discharge and storage” of electricity, the definition broadens the potential scope of appliances captured. This is because the definition is now agnostic to the way in which the appliance interacts with electricity. Instead, we are now concerned only that there is a flow of electricity into or out of the appliance which can be controlled by a load control signal. The original formulation does not clearly capture local generation of electricity by an appliance—for example, solar panels—and we wish to capture this.
For the purposes of licensing load control, the relevant factor is the sending of a load control signal to an energy smart appliance, regardless of whether that signal is then received by the appliance. Therefore, the amendments make it clearer that the signal needs only to be sent to an energy smart appliance, not necessarily received, to be regarded as a load control signal.
Amendment 172 clarifies that a load control signal may not only be a signal that directly affects electricity usage by an appliance but one that affects the electricity flow into or out of an appliance, based on additional information that is available to the appliance. This means that the improved definition also captures a signal which can configure a device to change electricity usage, depending on additional information available to the appliance. For example, an appliance could be configured to increase its electricity usage if the price of electricity drops below a certain level.
I hope the Committee will agree that these are important amendments that deliver additional clarity in the definitions used.
Member’s explanatory statement
This amendment, together with the amendment in the name of Lord Callanan at page 154, line 25, amends the definition of “load control signal” that applies for the purposes of Part 8 so that it includes a digital communication sent to an energy smart appliance even if the communication is not received by the appliance.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Lord Callanan at page 154, line 24.
“(4A) For the purposes of subsection (2) an adjustment to the flow of electricity into or out of an appliance is made in response to a load control signal whether it is made in response to—(a) the sending of the signal, or(b) the sending of the signal and one or more additional factors.”Member’s explanatory statement
This amendment glosses the definition of “energy smart appliance” that applies for the purposes of Part 8 to make it clear that a load control signal may be one of a number of factors in response to which an adjustment is made.
Member's explanatory statement
This amendment, together with the other amendment in the name of Lord Callanan at page 155, line 6, amends the list of purposes of energy smart appliances about which regulations may be made so that it includes appliances for cleaning tableware and washing or drying textiles but not other cleaning appliances.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, in moving Amendment 173, I will also speak to Amendments 174 to 176, 178 to 180 and 182 in the name of the Minister, my noble friend Lord Callanan.
Amendments 173 to 176 provide clarification and consistency to the definitions of the appliances to which the energy smart regulations will apply. These definitions focus on the purpose of an appliance. Amendments 173 and 174 ensure that energy smart regulations can be made only for cleaning appliances that are most appropriate for demand-side flexibility. This includes, for example, a dishwasher or a washing machine. Amendment 175 allows battery storage to be captured in a manner consistent with the definition of electricity storage in Clause 162. Amendments 176 and 182 clarify that the regulations capture heat pumps, which are essential to the Government’s policy objectives for decarbonising heat.
Next, Amendments 178 and 179 indicate that the Secretary of State may make provision about the recall of non-compliant appliances and may issue guidance about the prohibitions and requirements imposed by these regulations. These amendments therefore provide further safeguards to address serious cases of non-compliance and will support industry to comply with its obligations, aided by guidance.
Lastly, Amendment 180 makes a minor amendment to ensure that the regulations cover additional methods other than ordinary selling for making energy smart appliances available to consumers, such as hire purchase agreements.
Energy smart appliances will play an essential part in the transition to a smarter energy system, enabling consumers to save money on bills and contributing to cost-effective decarbonisation. These amendments provide important clarifications on the scope of these regulations and make certain that they can be implemented effectively in a way that maximises the benefits of smart functionality for consumers and the electricity group.
I will respond to the non-government amendments in this group when we have heard noble Lords’ contributions. I beg to move.
Baroness Randerson (LD)
My little Amendment 177 seems to have intruded on this group of government amendments. I tabled it because I was concerned about the practical implications of the Government’s reliance on smart regulations and smart appliances. I am certainly not arguing with the technology but I am seeking to tease out exactly how this will impact on us and the people of Britain as ordinary consumers.
If you read Clause 187, you will see that it is very dictatorial and centralised in its approach. Yet if you look at paragraph 438 of the Explanatory Notes you will see that, in practice, the Government’s intentions are going to be carried out by retailers and manufacturers, and they will face penalties if they do not get it right. My concern is that one size does not fit all. For example, the noble Baroness just mentioned washing machines and so on, but my example would be electric vehicles. We are told to charge electric vehicles at times when electricity usage is low, and we are promised that this will become an automatic default position. The Government are relying on smart usage, in effect, to expand limited national grid capacity. At the weekend, when I was reading some background material, I noticed that there are only two regions where there is currently said to be any level of surplus national grid capacity. The rest of the country is in a very stretched position.
I have been asking these questions for some years. I have been asking how a reliance on telling people when they can wash their clothes or charge their cars will impact on consumers and the way we use our gadgets and run our daily lives. There is a current experiment, not using smart technology but with a voluntary agreement, to get people to opt in to using their washing machines, dishwashers and so on at low-demand periods, with a financial incentive to do that. That is great if it is convenient for these people and they are opting in to do it. I am pleased that the experiment is taking place, as I am sure it will produce some useful information, but I want to float past everyone a couple of potential issues.
First, I do not want to bore noble Lords for long with the details of my domestic life but I have solar panels and an electric car. I want to use my washing machine and dishwasher and charge my electric vehicle when the sun is out; sometimes, that is at a time of peak demand. I am saving myself money, which I regard as a good thing, but, more importantly, I am limiting the amount I draw down from the grid because my solar panels provide my electricity. I am minimising my call on the grid. There are lots of people like me with solar panels; let us hope that there are heaps more in the coming months and years. This issue needs to be taken into account.
Secondly, more importantly, there is a host of people whose working patterns require them to charge their cars and do their washing at peak times. A care worker working nights has to fit their domestic life around those daily patterns, which might be peak demand times. This is not just about just care workers; it is about health workers, district nurses or anyone working on shifts—the police, firefighters and taxi drivers. We want taxi drivers to drive electric vehicles but they are going to run out of electricity half way through the day; they must be enabled to carry on their work.
We have all, I am sure, experienced a situation where we have had to take our phone or laptop to the technical experts because it is doing something strange, behaving in a way that is beyond our understanding. We are normally told that it is the factory settings or an automatic download. I am now aware that, because they are so automated, electric vehicles adopt patterns that one might not necessarily understand fully because they have downloaded a new program and so on. As the technology becomes more sophisticated, in reality, consumers will find it more difficult to understand what it is doing, why and to override it when they need to.
My big question is that any reliance on smart charging and smart usage must be able to be adapted for that large body of people for whom it is not convenient. In days of high energy prices, most of us can probably be relied on to know what is best for us financially and, therefore, what draws least from the grid. I am concerned that the way in which this is expressed allows no latitude, judgment or option for consumers to make that decision for themselves.
Lord Teverson (LD)
My Lords, I will speak to Amendment 181 in my name, which follows on from what my noble friend Lady Randerson was talking about.
The whole area of smart appliances is really important. It is in fact where demand management starts to creep into this Bill; it is about the only place that it does. The popularity of their potential has, I think, been shown by National Grid’s call for people to offer to manage their energy usage over particular times in the winter; the Minister may give us the figures but I think that more than a million people have shown an interest in it. I would be interested to know where we are with that.
There is a risk here, however. We have seen it with smart meters. I will not go back to the smart meters argument but one barrier to rollout has been the fear of people sharing information. Clearly, data is core to smart technology; data is personal so there is the question of how that data will be used.
My Amendment 181 is really a probing amendment; it is not in the form that would finally go into a Bill. It seeks to understand how the Government are going to communicate what is a really important thrust in terms of demand management and the way we use dispersed energy systems in a smart grid. How are they going to explain and deliver the strategy outlined so that we do not have the consumer reaction that we have had in other areas, including smart meters—very much media-driven, I should add? I want to avoid that.
The other area on which I want to tackle the Minister is concerns Clause 187(3)(d). It is one sub-paragraph of just three lines about security of information—indeed, the whole area of security. This is a core, important area: we know that, wherever smart systems or information technology are involved, there are all sorts of threats regarding the use of personal information. There is also the threat of external hacking, with state actors or others going into these systems and making them unusable.
It is easy and right to say that personal and other data used with smart technologies are secure or otherwise protected, but who is actually going to do that? I am talking about security or communication software systems. I would like to know from the Minister who will be responsible for the protection and security of these systems. I believe that it is important from the bottom up in terms of personal information but also in terms of smart grids and external, less favourable people towards the United Kingdom intervening here. I am sure that the Government have this under control and consideration but it is a really important area. We need to understand that it is being taken seriously and that, whoever the person or authority, they are going to make sure that these particular three lines in Clause 187(3)(d) are delivered.
Baroness Blake of Leeds (Lab)
I will be brief, but I will continue the comments made by the noble Lord, Lord Teverson, on security. I do not have a sense of confidence when we are told that the Government are going to be responsible for these specific areas. Could we have some more detail from the Minister about how this will be put in place and regulated? As we have heard in this discussion, exposure to cyberthreats could be enhanced by the very nature of smart technology. Therefore, we need a great deal of reassurance that this is being dealt with appropriately, and we know who is ultimately responsible for that reassurance.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank the noble Lord, Lord Teverson, and the noble Baronesses, Lady Randerson and Lady Blake, for their contributions. I was going to cover enforcement in group 7, but I have now catapulted some of those remarks back into this group so that we can cover that at the same time.
Turning first to Amendment 177, tabled by the noble Baroness, Lady Randerson, the Government have published both the smart systems and flexibility plan of 2021 and the July 2022 public consultation on developing a smart and secure electricity system. Both documents set out how consumers can provide flexibility to the system and reduce their energy bills via the deployment and use of energy smart technologies and flexibility services. Consumer interests and considerations are at their heart. However, we believe that this amendment would place an unreasonable and inappropriate expectation that regulations could determine or pre-empt how and when consumers choose to use those smart technologies and appliances. It is unnecessary as the Energy Bill is already clear on the importance of protecting and providing benefit to consumers.
First, Clause 187 already allows for regulations to be made which impose requirements on energy smart appliances—in particular, to ensure that the appliance can operate in response to load control signals; to ensure the protection of end-users; and to impose technical requirements, including the requirement to display or provide information about the appliance. Secondly, in taking these primary powers, the Government are also clear that energy smart appliances should always benefit consumers in line with their preferences and choices. The detail of how appliances may be operated is for manufacturers and product designers, and for consumers when they make their product choices. No one will be forced to use their appliances at particular times, and consumers should decide how they want to utilise smart functionality to best meet their individual needs and lifestyles.
The noble Baroness referenced EV charge points. The Government anticipate implementing these measures in a phased approach over several years, recognising the EV charge point sector is already working hard to implement existing regulations. We will work collaboratively with industry as our policy develops, building and learning from the experience of the EV charge point regulations to deliver necessary protections for the energy system and for consumers. To reiterate, consumers will remain in control. This legislation is aimed at facilitating exactly the sorts of exemplary behaviours the noble Baroness is referring to. So, while I welcome the intention of her amendment, I hope she recognises that the Bill sufficiently commits future regulations to maximising the benefits of smart energy technology to deliver the best outcomes for consumers and the wider system.
Turning to Amendment 181, tabled by the noble Lord, Lord Teverson, the Government have already set out how consumers could reduce their bills and be rewarded for the value they provide by using smart appliances in a flexible way. I refer noble Lords again to the smart systems and flexibility plan and the public consultation on developing a smart and secure electricity system. However, this amendment would place an impractical and inappropriate expectation on the Secretary of State to make a statement on exactly how individual consumers can derive maximum value from their smart appliances.
This value is highly variable, depending on how flexible consumers can be with their energy use, their location and the type of smart service and appliances they wish to use. Manufacturers and flexibility service providers will be best placed to inform consumers about the best available benefits and value from their products and services. So, while I welcome the intention of the noble Lord’s amendment, I hope that he can recognise the impracticality of his suggestion and appreciate the wider government actions in train to maximise the benefits of smart energy technology for consumers and the wider system.
The noble Lord also spoke about security, a concern also raised by the noble Baroness, Lady Blake. Regulations made under these enabling powers will ensure that smart devices in scope are secure by design, and that economic operators that play a critical role in delivering load control services to consumers are meeting minimum standards of cybersecurity and data privacy. BEIS is working very closely with the National Cyber Security Centre as well as industry experts to implement measures we intend to take to achieve this. So I beg to move the amendments in the name of my noble friend Lord Callanan and ask noble Lords to withdraw their amendments.
“(ba) washing or drying textiles;”Member’s explanatory statement
See the explanatory statement to the other amendment in the name of Lord Callanan at page 155, line 6.
“(c) storing energy that—(i) was converted from electricity, and(ii) is stored for the purpose of its future reconversion into electricity;”Member’s explanatory statement
This amendment amends the list referred to in the amendment in the name of Lord Callanan at page 155, line 6 so as to refer to electricity storage using language consistent with that used in Clause 162 of the Bill.
“(d) heating;”Member’s explanatory statement
This amendment amends the list referred to in the amendment in the name of Lord Callanan at page 155, line 6 to remove unnecessary words from the entry referring to heating.
“(ca) make provision about the recall of appliances to prevent, or in response to, non-compliance with the regulations;”Member’s explanatory statement
This amendment enables energy smart regulations to make provision about the recall of appliances.
“(cb) make provision for the Secretary of State to issue guidance about prohibitions or requirements imposed by or under the regulations;”Member’s explanatory statement
This amendment enables energy smart regulations to provide for the Secretary of State to issue guidance about prohibitions or requirements imposed by or under the regulations.
Member’s explanatory statement
This amendment amends the list of persons on whom energy smart regulations may impose prohibitions or requirements so as to include persons who supply energy smart appliances by means including but not limited to selling them.
“(3A) The reference in subsection (3)(b)(ii) to electrical heating appliances includes a reference to heat pumps.”Member’s explanatory statement
This amendment glosses the definition of “relevant appliance” so as to clarify that heat pumps without the energy smart function, or that are not compatible with the energy smart function of another appliance, are relevant appliances about which provision by virtue of Clause 187(4)(c) may be made.
“(iii) take specified steps to remedy non-compliance;”Member’s explanatory statement
This amendment enables energy smart regulations to make provision about steps that must be taken to remedy non-compliance (without an enforcement authority imposing a requirement under provision made by virtue of Clause 189(5)).
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, this group of amendments seeks to strengthen the enforcement powers of the energy smart regulations. This would enable an enforcement authority to investigate and take action swiftly and effectively against non-compliance, and to provide support to industry to comply with their obligations. First, these amendments enable the regulations to place obligations on economic actors to take steps to remedy non-compliance, and to provide evidence of their compliance to an enforcement authority.
Secondly, the amendments allow an enforcement authority to test and make test purchases to assess and to ensure that appliances comply with the regulations. This is an essential requirement, given the necessarily technical requirements the Government will impose to protect consumers and the energy system. If severe non-compliance is identified, Amendment 186 grants a power to an enforcement authority to issue a recall notice to withdraw appliances from the market, if necessary.
Thirdly, Amendment 187 permits an enforcement authority to accept enforcement undertakings. This allows authorities to work constructively with industry to ensure appliances are brought into compliance with regulations, without the need for costly corrective enforcement action being taken.
Finally, Amendment 188 allows an enforcement authority to issue guidance about the enforcement of the regulations and how any authority would exercise its role. This will support industry to comply with their obligations. The market for these appliances is expected to grow rapidly and will play an essential part in the transition to a smarter energy system. These appliances will help consumers save money on bills and contribute to cost-efficient decarbonisation. I hope noble Lords will agree that this is an important group of amendments to enable an appropriate and proportionate enforcement regime to develop, which is consistent and compatible with existing product safety legislation. I beg to move.
Lord Teverson (LD)
My Lords, I just want to probe the Minister so that I understand how this works in practice. What are the Government enforcing? Is it an operating system? Is it the design of a chip? Is it the company that makes them? Will they be type-approved in the UK? Will there be compatibility across different domains? All producers of white goods are international, I think. Will we have our own standards here? I am trying to understand how this will work practically. I absolutely agree with the Minister that this is a key area.
Enforcement authorities are mentioned in the Bill. I just want to understand who they are. Are they the thought police? The Minister mentioned an organisation—the UK cyber headquarters or whatever—so is it that? Is it the Department of Trade, as we would have understood it? Is it the police? Who are those enforcement agencies and how will they work?
I have one last request for clarification. Clause 189(2)(f) refers to
“conferring functions, including functions involving the exercise of a discretion.”
I cannot work out what that means so I would be pleased to understand it.
Baroness Bloomfield of Hinton Waldrist (Con)
I agree that the language in that particular paragraph is quite legalistic. I might need to come back to the noble Lord on that one unless I can get an instant answer.
As I have said, the detailed enforcement regime will be set out in legislation. The enforcement powers underpinning these regulations will provide an appropriate toolkit to allow an enforcement authority to work with industry to ensure that appliances are both compliant with the future regulations and proportionate to the risks that non-compliant devices could pose to consumers and the grid. The Government have aligned the enforcement powers underpinning the regulations with other product regulations that have similar enforcement powers, such as the Electrical Equipment (Safety) Regulations 2016 and the Electric Vehicles (Smart Charge Points) Regulations 2021.
We are in conversation with regulators on our measures. We are confident that we will have the right knowledge and expertise to resource and regulate this market as it develops. I think that is probably as far as I can go at this stage.
“(ba) requiring persons to supply evidence of their compliance to enforcement authorities;”Member's explanatory statement
This amendment enables energy smart regulations to make provision requiring persons to supply evidence of their compliance to enforcement authorities.
“(ea) conferring powers to enable the testing of energy smart appliances by enforcement authorities, including powers to require the provision of sample appliances and powers to make test purchases;”Member's explanatory statement
This amendment enables energy smart regulations to confer the powers necessary to enable enforcement authorities to test energy smart appliances.
“(d) recall appliances to prevent, or in response to, non-compliance with energy smart regulations.”Member's explanatory statement
This amendment enables energy smart regulations to allow enforcement authorities, by written notice, to require persons to recall energy smart appliances.
“(7A) Energy smart regulations may make provision to enable an enforcement authority to accept an enforcement undertaking from a person where the authority has reasonable grounds to suspect that the person has failed to comply with any prohibition or requirement imposed by or under the regulations.(7B) An “enforcement undertaking” is an undertaking to take such action to secure compliance with the regulations as may be specified in the undertaking within such period as may be so specified.(7C) Provision made by virtue of subsection (7A) must include provision that unless the person from whom the undertaking was accepted has failed to comply with the undertaking or any part of it—(a) that person may not at any time be convicted of an offence in respect of the act or omission to which the undertaking relates, and(b) the enforcement authority may not impose on that person any penalty which it would otherwise have power to impose under the regulations.(7D) Provision made by virtue of subsection (7A) may include any provision of a kind mentioned in section 50(5) of the Regulatory Enforcement and Sanctions Act 2008.”Member's explanatory statement
This amendment enables energy smart regulations to make provision enabling an enforcement authority to accept enforcement undertakings.
“(9) Energy smart regulations may provide for an enforcement authority to issue guidance about the enforcement of the regulations and the exercise by the authority of its functions under the regulations.”Member's explanatory statement
This amendment enables energy smart regulations to provide for an enforcement authority to issue guidance about the enforcement of the regulations and about the exercise of its functions.
“(1A) Energy smart regulations may make provision about the sharing of information between an enforcement authority and the GEMA for the purposes of their functions in relation to energy smart appliances and load control.”Member's explanatory statement
This amendment enables energy smart regulations to make provision to facilitate information sharing between any enforcement authority designated under the regulations and the Gas and Electricity Markets Authority (and vice versa).
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, the Government have tabled two amendments relating to the licensing of load control. The activity of load control here refers to the control of electricity flow to an energy smart appliance by a load controller.
The first of these amendments, to Clause 192, will ensure that the information-sharing between enforcement authorities for energy smart appliance regulations and load-control licensing is explicitly provided for in legislation. The energy smart appliance regime and the load control regime may be regulated by different authorities, so it is imperative that they are able to communicate effectively and share information where necessary. The second of these amendments also relates to the effective delivery of the load control licensing regime. It relates to Schedule 16 and ensures that the provision for consequential amendments to be made to existing legislation, in practice to support the amending of licence conditions, also applies to Acts of the Scottish Parliament or instruments made under them.
In practice, it is unlikely that amendments will be required to Acts of the Scottish Parliament or instruments made under them. However, the load control market is a nascent market. We cannot rule out the possibility that future categories of licence could interact with devolved matters in Scotland. This amendment will ensure that that scenario is provided for, should it ever be needed; should this scenario arise, the Government would of course work with the Scottish Government and adhere to the appropriate processes.
These two amendments will help to provide clarification and explicit provision to support the effective delivery of a load-control licensing system. I beg to move.
Member's explanatory statement
This amendment omits a provision that is superseded by new Clause (Section (Modifications of licences etc): supplementary).
Member's explanatory statement
This amendment enables provision made by regulations under section 56FBA of the Electricity Act 1989 (inserted by the Bill) to include amendments to Acts of the Scottish Parliament and Scottish Statutory Instruments (which are not within the meaning of “enactment” given by the Interpretation Act 1978).
Lord Ravensdale
“National Energy Demand Reduction Strategy(1) The Secretary of State must, before the end of the period of 12 months beginning with the day on which this Act is passed, publish an Energy Demand Reduction Strategy, to include but not limited to the following—(a) achieving a low-carbon heat target, of 100% of installations of relevant heating appliances being low-carbon by 1 January 2035;(b) achieving an energy-efficiency target, of all UK homes and buildings attaining a minimum EPC C rating by 2028;(c) interim targets relating to the targets in paragraphs (a) and (b), and the development of skills to achieve them, at not less than three-yearly intervals;(d) a programme of public engagement and a single source of advice provided by the Government to raise awareness of and encourage energy demand reduction.(2) The Secretary of State must, in developing the Government’s strategy on reducing energy demand, consult the Climate Change Committee and its sub-committee on adaptation.”Member's explanatory statement
This is a new Clause which requires the Secretary of State to publish a National Energy Demand Reduction Strategy to provide for delivery of low carbon heat and energy efficiency targets for all UK homes and buildings.
Lord Ravensdale (CB)
My Lords, I shall speak to Amendment 192 in the name of my noble friend Lady Hayman, which is supported by noble Lords across the House, some of whom cannot be here today, including my noble friend. Amendment 192 is quite simple in that its sole purpose is to require the Government to produce an energy demand reduction strategy. It would require the strategy to be in line with the Climate Change Committee’s recommendation for all buildings to be EPC C by 2028, and in line with the Government’s own non-statutory commitments for all heating appliances to be low carbon by 2035. The strategy would have to include interim targets, including on the development of the necessary skills needed for the strategy to be achieved, and a public engagement element.
Since my noble friend Lady Hayman tabled this amendment at the end of the summer, we have seen some welcome movement from the Government. Last month they announced an £18 million public awareness campaign, with an overall target of reducing energy demand by 15% by 2030. To do this the Chancellor, in his Autumn Statement, announced £6 billion of funding—but not for this Parliament. I believe that while the Exchequer is footing our energy bills to the tune of billions of pounds a year, it would perhaps make sense to bring forward this investment. A new energy efficiency task force was also announced, which will be charged with delivering energy efficiency across the economy to realise that 15% reduction.
The government announcements on demand are most welcome, but what is lacking is that golden thread of a strategy to weave it all together. In that sense, the amendment is highly complementary to what the Government are aiming to achieve with demand reduction. A strategy such as this would link together all the areas which need to coalesce to ensure we can reduce the energy consumption of our buildings: strategic leadership by government, providing certainty to the sector; a plan for how and where efficiency will be achieved; importantly, the jobs and skills which will be required to deliver the energy efficiency improvements; and engaging with the public so that they are fully aware of the necessity of doing this and of the benefits to them that can be realised.
The final strategy would be up to the Government to decide, as is correct, but it could include and outline who will receive government support and through what means; what the expectations will be for those who are able to pay for it but perhaps are not doing so at the moment, because they are waiting to see whether they will receive support from the Government; and what non-financial incentives the Government will use to achieve the overall target. The strategy could also outline in what order improvements to efficiency could or should be made, while it should include provisions for skilling the workforce that will be needed. As I said, the Government have already implemented or are planning to implement things which are included in this amendment, but it would be helpful for the sectors which will carry out the work, for households and building managers and, no doubt, for civil servants to have this all in one place.
I have an example: I went to visit a heat pump manufacturer a few weeks back. It made the point that we have the target of installing 600,000 heat pumps per year by 2028, which is very good, but that the dots need to be joined—for example, having the skills available to install those heat pumps and incentives for households to install them. The dots need to be joined between the production of heat pumps, demand, skills and all those other aspects. That is one of the things this strategy could provide.
Reducing energy consumption in the near term does not require every household to do an urgent retrofit or install a heat pump next year. There are small and relatively cheap improvements, such as installing loft and cavity wall insulation, draught-proofing, thermostatic radiator valves and smart thermostats. It would cost around £1,100 on average to install these in a typical semi-detached house, which would cut energy bills by £273 annually. Under current energy prices, these costs would pay for themselves in just five years. The earlier we take action, the bigger the aggregate savings will be.
I also note that this approach would be popular with the public. Various organisations have come out in favour of a strategy like this. In a recent briefing, UKSIF, E3G and Carbon Tracker stated that improving the efficiency of the UK housing stock could lead to bill savings of at least £500 every year per household, and around £1,000 per year for the least efficient homes—an aggregate annual saving to the economy of £10 billion. Insulated buildings are also less damp and healthier to live in. I beg to move Amendment 192.
Baroness Young of Old Scone (Lab)
My Lords, I rise to support Amendment 192 in the name of the noble Baroness, Lady Hayman, which has been so ably introduced by the noble Lord, Lord Ravensdale. The crux of it is that it calls for joined-up policies around energy demand management, low-carbon heat and energy efficiency by requiring a national energy demand reduction strategy.
I have the privilege of sitting on your Lordships’ Environment and Climate Change Select Committee, and our current inquiry, as noble Lords have already heard, is into the boiler upgrade scheme. Indeed, we had an interesting session with the Minister last week. We have been hearing evidence from the UK and internationally, particularly those countries which are further ahead on air and ground-source heat pump adoption than we are. Both national and international witnesses have confirmed the importance of the key elements of this amendment.
The first is joining up policies by having multiple instruments clustered together and working to maximise uptake of grants and loans. Regulatory bars on old technology should be signalled in advance, but not too far in advance. There should be public information campaigns and effective campaigning for the positive promotion of energy demand reduction.
The second feature that comes clearly in this amendment is that low-carbon heat is not enough. Our housing stock is among the worst in western Europe. Low-carbon heat needs to be linked much more closely than it currently is with effective energy efficiency programmes, and both need interlinked targets so that progress can be co-ordinated and measured. The whole issue of rising energy prices has brought this into sharp focus. We expect to see nearly 11 million households in fuel poverty this winter. Many of those households live in houses that typify the UK as having the worst-insulated housing stock in western Europe.
There needs to be huge progress in energy efficiency as part of the mix but I caution an overreliance on EPCs as a means of judging that, because they are very imprecise instruments. In fact, they can have some peculiar outcomes: if you have an air source heat pump installed in your building you will not necessarily get a higher rated EPC as a result. We have to be sure that we are not inadvertently placing a trap for ourselves for buildings, particularly old and heritage buildings, that will never reach EPC band C.
The third element of the integrated strategy the amendment calls for is the issue of skills in installing and maintaining low-carbon technologies, and in installing energy-efficiency measures. Energy-efficiency skills are much more timeworn and easier. Skills for installing low-carbon technologies are more complex and we are only at the beginning of the road. NESTA has estimated that there were around 3,000 heat pump engineers as of July. It projects that we will need around 27,000 heat pump engineers if the Government are to meet that target of 600,000 installations a year by 2028. There has to be a really big investment in skills programmes. I had a figure that I have now lost, but the German Government have put about €28 million towards skills improvement. We need to be in that ballpark.
The fourth thing is public engagement. I commend the Government for, at long last, having lurched into action with their “It All Adds Up” campaign, but that is rather late in the day and very much short term in the face of price rises. It needs to be sustained and not overly to rely on social media and the public being left to seek out digital sources. I am glad that it will contain a couple of TV ads, but you do not get much television advertising for an £18 million budget these days.
The national energy demand reduction strategy that the amendment proposes would be well worth while in bringing these issues together in a co-ordinated way.
Lord Foster of Bath (LD)
My Lords, I will speak to Amendments 197, 198A, 198B and 212. While I acknowledge that there are some differences between the targets referred to in Amendment 192 and my own, I nevertheless support the principles behind the amendment from the noble Baroness, Lady Hayman, which was so ably introduced. The main purport of my amendments, and part of her Amendment 192, relates to energy efficiency and the important, urgent need to improve that in some 19 million homes across the UK. which are currently classed as energy inefficient—those rated below EPC band C. I say in passing to the noble Baroness, Lady Young, that I entirely agree that we urgently need to address the way we take the measurements that we currently use in our very out-of-date EPC system.
I have raised the issue of energy efficiency on numerous occasions in your Lordship’s House and have arguing for a crash programme of energy efficiency to reduce fuel consumption and fuel bills for years to come. Yet, sadly, even in the past year, work on home energy efficiency has plunged by 50% and is now at its lowest level since 2018. A decade ago, 2.3 million homes had energy-efficiency measures being installed; now it is nothing like that.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a great pleasure to follow that tour de force from the noble Lord, Lord Foster of Bath, who is your Lordships’ House’s acknowledged expert in this area. I will add just a couple of small points to what he said. In case anyone is wondering, all those withdrawn amendments to the noble Lord’s original amendments were me saying, “Please, Government, can we have some more?”, because that is the Greens’ role in life.
The arguments just presented by the noble Lord for the Government putting their own existing targets into the Bill are overwhelming. I would be very happy to come behind his amendment on Report, if needed, although I should note that I will also be speaking in favour of Amendment 192, tabled by the noble Baroness, Lady Hayman. It has full cross-party support, including from the Conservative noble Lord, Lord Bourne of Aberystwyth, so there was no space for my name.
I shall make just a couple of points and point to a couple of sets of stats that I think are quite useful here. One is a study by Friends of the Earth, which found that nearly 9,000 neighbourhoods in England and Wales—just over a quarter of all neighbourhoods—have less-than-average incomes but higher-than-average energy bills. This picks up the point made by the noble Baroness, Lady Young of Old Scone, that EPCs take us only so far and can be misleading. It is looking at actual energy figures that really shows us where some of the greatest need lies. These neighbourhoods are occupied by 15 million people. Although it is not explicitly written into Amendment 192, it could be in the strategy to target help at those who need it most and fastest. We could make that a priority area, which would certainly seem to be a logical part of an energy strategy and, again, very much in line with the Government’s levelling-up agenda.
One other point to make is that we tend to feel that we have done all the easy stuff and now we have to think about ground source heat pumps and high levels of insulation. We still have an estimated 4.4 million homes in England that do not have cavity wall insulation but could have it, and 4.8 million homes without the absolute basic of loft insulation. There is a lot of basic stuff to be done.
Coming back to Amendment 192, I will spare the Minister another debate on video advertising screens but it is worth stressing—I see this in my social media feeds all the time—that we are now subsidising business energy use. Surely the Government want to cut government spending as much as possible. It may not be the biggest scandal in the world but, boy, it annoys people to regularly drive past an unoccupied building site and see it, or unoccupied or barely occupied office buildings, lit up like a Christmas tree 24 hours a day—and we are all paying for it. Surely this is something that the Government would want to tackle in an energy strategy to make sure that we are not subsidising unnecessary energy use.
I probably will not make myself very popular with the Government by saying this, but I want to point to a report, which came out at the weekend, by Another Europe Is Possible and the Friedrich Ebert Foundation, a well-respected group in Germany. The report points out that the EU already has a much higher rate of home energy efficiency measures, so is starting from a much better base, and is aiming to double its annual rate of renovation and reduction in energy use over the next eight years to 2030. If the EU can do it, why can we not?
Baroness Sheehan (LD)
My Lords, so much has already been said that there is little for me to add. I have put my name to Amendment 192.
The only thing I want to say is that the Government need to understand the strength of feeling across the Committee on the complete lack of emphasis in this Bill on something that is doable, that is within our grasp and that the Government have recognised needs to be done but have done nothing whatever to implement it. Noble Lords are trying to help the Government here by tabling what I think are very sensible amendments; I hope that the Government will take note of them.
We have had lots of briefings on this issue. There is huge depth of feeling in the communities of Britain on this. One of the NGOs that we received some briefings from, the UK Green Building Council—sorry, it is not an NGO; it is, however, a body that knows an awful lot about this matter—published a scorecard assessing the Government’s progress since they published their Heat and Buildings Strategy in October 2021. The council concluded that
“most of the Government’s proposals or plans fail to deliver progress towards—or even actively hinder—a net zero carbon built environment.”
In its Review of Energy Policy 2022, the UK Energy Research Centre is equally scathing.
I hope that the Government will take note of these telling criticisms and do something in the Bill to rectify that.
Lord Lennie (Lab)
My Lords, I thank noble Lords who have spoken in this debate so far. We on the Labour Benches certainly welcome Amendment 192 in the names of the noble Baronesses, Lady Sheehan and Lady Hayman, and others, which would create a requirement to publish a national energy demand reduction strategy. It seems an obvious point to make.
We received some information from Energy UK. It says that, although we cannot deal with the current crisis in this Bill, it can ensure that long-term strategies are put in place to tackle the energy efficiency of the UK’s housing stock. This powerful point was made by the noble Lord, Lord Foster. If we do not have targets to measure it against, we cannot really manage it; we just have—I do not quite know what—a sort of wish list, I suppose. We support the targets suggested by the noble Lord, Lord Foster.
The Bill outlines its intention to create powers to remove the European energy performance of buildings directive, or EPBD, requirements in the UK. Those requirements are not perfect, but they have been in place in the supply chain, effectively delivering energy efficiency measures and low-carbon technologies. How will the Government safeguard against the potential for the UK to roll back on energy performance of buildings regulations when we remove the European energy performance of buildings regulations? We risk falling behind the rest of Europe, if we have not done so already, in this space.
We also need to see the detail regarding how the Government will safeguard against the potential for the UK to fall behind the rest of Europe. We need clarification on what measures the Government will take to ensure that all buildings are fit for the future, given the lack of measures in the Bill to reform planning and building regulations. The latter requirement could also be backed by the introduction of a net-zero test, as previously set out, but what measures will the Government take to ensure that all buildings are fit for the future, given the lack of measures in the Bill to reform planning and building regulations or set specific targets for delivery?
Finally, in relation to what the noble Lord, Lord Foster, said about the 19 million homes requiring energy efficiency measures to be put in place pretty quickly, I recommend to the Government Labour’s warm homes plan, which will deliver fully costed upgrades to 19 million homes, cutting bills and creating thousands of good jobs for the future.
Lord Callanan (Con)
I thank everyone who has contributed to this debate on energy efficiency, which is very much a matter dear to my heart. Noble Lords may have noticed that I was delighted to launch the Government’s £18 million “It all adds up” energy saving campaign on Saturday—it is almost as if it was designed especially for this debate—with advice that could help UK households cut hundreds of pounds off their bills. The campaign features tips on simple, low or no-cost actions that households can take to immediately cut energy use and save money while ensuring that people are able to stay safe and warm this winter.
We know that warmer homes and buildings are key to reducing bills and will create jobs along the way. That is why the Government are committed to driving improvements in energy efficiency, with a new ambition to reduce the UK’s final energy consumption from buildings and industry by 15% by 2030. Existing plans that we already have in place are expected to deliver around half of this new ambition. To go further, we will need to work together as a country to reduce waste and improve the way we use energy. As has been referenced in this debate, a new energy efficiency task force is being established to lead this national effort.
First, Amendment 192, in the names of the noble Baronesses, Lady Hayman and Lady Sheehan, and the noble Lord, Lord Whitty, requires the Secretary of State to publish a national energy demand reduction strategy to provide for the delivery of low-carbon heat and energy efficiency targets for all UK homes and buildings. Again, while I understand the reasoning behind this amendment, we do not consider it necessary to ensure that our commitments to improve the energy performance of buildings and our net-zero targets are met.
We already have a heat and buildings strategy which sets out the actions the Government need to take to increase the energy efficiency of buildings in the near term and provides a clear long-term framework to enable industry to invest and deliver the transition to low-carbon heating. Just having another strategy document does not make the policy decisions that are required any less difficult. As I have already mentioned, the Government are launching the energy efficiency task force with the key objectives of developing a long-term strategy to drive improvements in energy efficiency and reduce national energy demand.
As I have repeated many times in the House, we are investing £6.6 billion over this Parliament on clean heat and improving energy efficiency in buildings, reducing our reliance on fossil fuel heating. As I think the noble Lord, Lord Ravensdale, referenced, the Autumn Statement also recently announced a further £6 billion of funding to become available from 2025. In the context of spending reductions and a difficult economic environment, I was delighted to see that announcement from the Chancellor. The Government also recently announced—and we are now consulting on—a further energy efficiency support scheme through ECO+. The scheme will be worth about £1 billion and shall deliver an average household saving of around £310 per year through a broad mix of affordable insulation measures, including loft insulation, cavity wall insulation, draught-proofing and heating controls.
Amendment 197, in the name of the noble Lord, Lord Foster, requires the Secretary of State to set an average energy performance certificate target for mortgage lenders of EPC C by the end of 2030. It also gives the Government the power to make regulations that relate to the disclosure of energy performance information on properties in their portfolio. I have met with many of the lenders, and I agree that they have an important role to play in improving the energy efficiency of the UK’s housing stock. However, as we highlighted in our consultation on improving home energy performance through lenders, the Government are concerned that the amendment may have unintended consequences for the mortgage and housing market. I am sure that this is not the noble Lord’s intention, but there is a danger of disincentivising mortgage lenders from lending to energy-inefficient properties. We would then end up with a load of unmortgageable homes in the UK, which I do not think anybody wants to see.
It is imperative that mortgage lenders are not disincentivised from lending to any particular group while home owners are under unprecedented financial pressure. The Government are using the feedback from the consultation to refine the policy and will publish a response once the policy matters have been resolved.
The noble Lords, Lord Ravensdale and Lord Foster, and the noble Baroness, Lady Young, all mentioned the importance of skills. If anything, that is key to this area, probably even more so than the availability of funding. We understand that scale-up requires consistent long-term deployment streams via government funding and regulation, which is what we are attempting to do, so that companies working in these markets can make the investments needed and individuals can choose to upskill.
To grow the installer supply chain, we are investing in skills and training. In 2021, the Government invested £6 million in the BEIS skills training competition, resulting in almost 7,000 training opportunities being provided across heat pump installation and wider retrofit skills. In fact, we have another training competition out for bids at the moment.
Amendment 212 in this group from the noble Lord, Lord Foster, would require the Secretary of State to collect and publish a list of those public buildings that hold display energy certificates, commonly referred to as DECs, and those that do not. I really do not believe that it would be cost effective for the Government to identify and inspect all public buildings that require a DEC, nor to record this information. The energy performance of buildings report published in 2020 cited an estimated DEC compliance of about 83%. We currently publish DEC data as part of our register. I hope noble Lords agree that this demonstrates that the existing system, which we intend to continue and keep under review, is working well in respect of DEC compliance.
Finally, Amendments 198A and 198B from the noble Lord, Lord Foster, would require the Secretary of State to ensure that all households achieve an energy performance certificate band C by 2035, with specified exemptions, and require regulations relating to energy performance in existing premises. The Government remain committed to our aspiration of improving as many homes as possible to reach EPC band C by 2035 where practical, cost effective and affordable. That is why, as I mentioned, we are investing £12 billion during this Parliament into the various Help to Heat schemes, some of which the noble Lord referenced, to make sure that homes are warmer and cheaper to heat, including £1.5 billion to upgrade around 130,000 social housing and low-income properties in England. However, we need to retain flexibility to choose the best approach, rather than being restricted to the regulatory requirement.
Regarding existing premises, the Government have consulted on raising the minimum energy-efficiency standards for the domestic and non-domestic private rented sectors. We are in the process of considering our responses to both consultations. However, it is important to stress that improving existing buildings is a complicated issue and requires striking a balance between improving standards and minimising impacts on the housing market, and, for the private rented sector specifically, ensuring that the final policy is fair to both landlords and tenants. That is a particular dilemma that we face with the PRS regulations.
Similarly, regarding the social rented sector, the Government have committed to consult within six months of the Social Housing (Regulation) Bill receiving Royal Assent. By prescribing specific targets without any opportunity for landlords to offer views, the proposed amendment would be at odds with this commitment.
I thank all noble Lords who contributed during this debate, but given what I have set out and the Government’s long-term commitment to drive improvements in energy efficiency, I hope that they will not press their amendments.
Lord Foster of Bath (LD)
Before the Minister sits down, could he clarify whether the Government believe that the 2017 Clean Growth Strategy, which talks about achieving EPC band C by 2035 for all homes where this is feasible, affordable and cost-effective, is a target or now just an aspiration? Could he be clear on the language? He used “aspiration” a minute ago. In the documentation, and in every letter he has written to me and in every answer, it has been described as a “target”. I just want to be clear.
Lord Callanan (Con)
I think we are getting into semantics here. I am not sure there is a huge difference between them. My point is that it is not helpful to embed it in primary legislation. It is a target; it is an aspiration; it is something we are working towards that we want to try to deliver, but it is a complicated area with a lot of difficult policy choices and potentially a huge amount of expenditure.
Lord Foster of Bath (LD)
In the light of that, if “aspiration” and “target” are the same and the Minister is not therefore resiling from the 2017 document, could he tell me why the noble Lord, Lord Greenhalgh, and, more recently, the Secretary of State for Environment, Food and Rural Affairs have argued that there is merit in putting environmental targets into legislation? I do not understand where the problem comes. The Minister says the Government need flexibility in the way this is delivered. I do not disagree with that. I am sure that new technology will come along that will perhaps help to do this more efficiently, effectively and quickly. I hope that is the case, but the way in which a target is achieved is totally different from having that target. The industry has been absolutely clear that it is very keen to see a statutory target to give it the confidence it needs.
Lord Callanan (Con)
I disagree with the noble Lord. I have had many discussions with businesses and companies in this area, and we are providing the policy certainty they need. It is clear what direction the country is going in. We have listened to a lot of the feedback, have set out longer delivery programmes for the various schemes that we fund directly and are giving the certainty that people need. It does not make any difference to the industry, in terms of the policy landscape, to enshrine a target in primary legislation as opposed to it being an aspiration, a target or whatever other language the noble Lord prefers.
Lord Ravensdale (CB)
My Lords, I have listened to everything the Minister said in response and, as I said earlier, it is great that the Government are moving strongly on this and all these matters, particularly skills and many other areas. However, there is still a need for a joined-up strategy and for some of these targets to be in statute. We have learned from the green homes grant, for which one of the issues was the lack of the long-term thinking that a strategy would provide.
The real issue here, as noble Lords have powerfully articulated, is that we have picked all the low-hanging fruit—the decarbonisation of our electricity system, and vehicle and transport electrification—and now we have to move much higher up the tree to more difficult matters, such as the decarbonisation of heat. The noble Lord, Lord Foster, powerfully articulated the challenges in that area. We will have many more discussions on this leading to Report but, with that, I beg leave to withdraw the amendment.
Lord Callanan
“Part 9AEnergy Savings Opportunity SchemesEnergy savings opportunity schemes(1) The Secretary of State may by regulations (“ESOS regulations”) make provision for the establishment and operation of one or more energy savings opportunity schemes.(2) An “energy savings opportunity scheme” is a scheme under which obligations are imposed on undertakings to which the scheme applies for one or more of the ESOS purposes.(3) The ESOS purposes are—(a) enabling or requiring the energy consumption for which an undertaking is responsible, or the greenhouse gas emissions resulting from that consumption, to be assessed, audited, reported and published;(b) enabling or requiring possible energy savings or emissions reductions to be identified and recommended;(c) enabling or requiring the costs and benefits of possible energy savings or emissions reductions to be assessed;(d) encouraging or requiring undertakings to produce plans or set targets for achieving energy savings or emissions reductions;(e) encouraging or requiring undertakings to take action for the purpose of achieving energy savings or emissions reductions;(f) encouraging or requiring undertakings to achieve energy savings or emissions reductions.(4) An energy saving is a reduction in the energy consumption for which an undertaking is responsible.(5) An emissions reduction is a reduction in the greenhouse gas emissions that result from the energy consumption for which an undertaking is responsible (whether or not that consumption is also reduced).(6) ESOS regulations may make provision about determining—(a) the energy consumption for which an undertaking is responsible;(b) the greenhouse gas emissions resulting from that consumption.(7) ESOS regulations may—(a) impose requirements on any person;(b) confer functions on any person;(c) provide for a person to exercise discretion in dealing with any matter.(8) The provision made by this Part is without prejudice to the generality of subsection (1).(9) For the purposes of this Part—(a) the scheme established by the Energy Savings Opportunity Scheme Regulations 2014 (S.I. 2014/1643) is to be treated as having been established by provision made under subsection (1);(b) a reference to a scheme administrator includes a reference to a compliance body within the meaning given by those Regulations.”Member's explanatory statement
This new Clause is the first Clause in a new Part 9A of the Bill (also containing the 12 other new Clauses inserted after Clause 201 by amendments in the name of Lord Callanan) making provision about Energy Savings Opportunity Schemes. The new Clause gives the Secretary of State the power to make regulations about Energy Savings Opportunity Schemes.
Lord Callanan (Con)
My Lords, for the benefit of the noble Lord, Lord Teverson, I have some more government amendments for his delectation. I will also speak to Amendments 200 to 211, 243 and 244, 246 and 247, which all stand in my name.
Amendment 199 introduces a new Part 9A to the Bill which relates to the existing energy savings opportunity scheme, commonly referred to as ESOS. I committed at Second Reading to table these new clauses regarding improvements to ESOS. For those noble Lords who do not know, ESOS is a mandatory energy audit scheme for large organisations, covering their buildings, transport and industrial processes. ESOS provides businesses with cost-effective recommendations on energy efficiency measures. The existing scheme is estimated to lead to £1.6 billion of net benefits to the UK, with the majority of these benefits applying to participating businesses as a result of reduced energy costs.
The power in the amendment would replace the repealed power in the European Communities Act 1972 under which the UK established ESOS in 2014. Without this, ESOS is a frozen scheme and cannot be updated. The changes are aimed at encouraging businesses to take action on recommendations to increase their energy and carbon savings.
Lord Teverson (LD)
Can the Minister clarify: did he say that this Bill revokes that EU legislation? Is that what he just said?
Lord Callanan (Con)
The power in the amendment would replace the repealed power in the European Communities Act 1972, which I presume was repealed after Brexit, or rather the end of the implementation period.
The changes are aimed at encouraging businesses to take action on recommendations to increase their energy and carbon savings. The benefits to existing participating businesses are estimated to be savings of £1.12 billion from 2023 to 2037 through reduced energy bills. The savings would of course help to support businesses to keep the costs of their products and services affordable for consumers.
Amendments 200 to 202 outline some of the details of the ESOS regime and associated powers to make regulations. They include provisions regarding which undertakings ESOS should apply to; provisions regarding when, how and by whom an ESOS assessment should be carried out; and ESOS assessor functions and requirements.
Amendment 203 enables regulations to introduce a requirement for ESOS participants to publish an ESOS action plan covering intended actions to reduce energy use or greenhouse gas emissions. This requirement aims to increase participants’ engagement with ESOS and stimulate greater uptake of energy efficiency measures. Amendment 204 enables regulations to impose requirements for ESOS participants to take actions that directly or indirectly support the reduction of energy use or greenhouse gas emissions.
Amendments 205 to 207, 209 and 210 concern the administration and enforcement of the scheme. They enable regulations to make provisions about the appointment of scheme administrators and their functions, including compliance monitoring and enforcement, provisions on penalties and offences, and rights of appeal. These amendments also enable the Secretary of State to provide financial assistance and to give directions to a scheme administrator, with which it must comply.
Amendment 208 concerns procedures for making regulations. It requires the Secretary of State to consult appropriate persons considered likely to be affected by the regulations and, where provisions relate to devolved matters, the respective devolved Administrations. It describes where affirmative procedure would be required, for example if extending ESOS to smaller businesses, mandating action by ESOS participants or creating offences.
Amendments 211 and 243 define certain terms used in the ESOS provisions, explain where provisions fall within devolved competence and set out the extent of the ESOS provisions to be England and Wales, Scotland and Northern Ireland. Amendments 244 and 246 clarify when the amendments will come into force. Amendment 247 inserts into the Title of the Bill a reference to the new clauses on ESOS, introduced by Amendments 199 to 211. With that, I beg to move Amendment 199 in my name.
Baroness Bennett of Manor Castle (GP)
My Lords, given the hour I will ask one very simple and direct question on government Amendment 210, which is about financial assistance. The second part of it says:
“‘Financial assistance’ means grants, loans, guarantees or indemnities, or any other kind of financial assistance”.
Can the Minister give us any indication of what the Government’s intentions are here? That is a very broad range and we know, for example, how wrong loans have gone in the past and how schemes based on loans have really not worked out. Given what interest rates are now, that is obviously a challenge. To tackle the kind of issues I raised earlier about the most disadvantaged areas having particular problems with the quality of housing, do the Government intend to look towards grant-type schemes?
Lord Callanan (Con)
The clause enables the Secretary of State to provide financial assistance to scheme administrators and ESOS participants. It does not, of course, compel us to do so but we are taking a power to have that option. If we decide to provide financial assistance, I will inform the House accordingly.
Lord Teverson (LD)
My Lords, there was a reason for my question. I absolutely agree that the Minister warned us that we would have these amendments coming down the track, and on ESOS I welcome that fact because it has been a very good scheme. Although companies occasionally bitch about it, as he says, it has caused actual change.
As the Minister will know, being a former MEP and so on, the ESOS scheme at the moment is based on the energy efficiency directive of 2012, which was updated in 2018. It came into force in the UK in 2014 and, as the Government’s website says:
“Government established ESOS to implement Article 8 (4 to 6) of the EU Energy Efficiency Directive (2012/27/EU).”
The reason I asked him for a clarification on his opening statement is that nowhere in his amendments could I see anything that repealed the existing directive or regulations that related to the energy efficiency directive.
Is this a sort of parallel scheme to the one that still exists, or is it still based on the original EU directive? If it is still based or relies upon the original EU directive, what happens if ever the retained EU law revocation Bill becomes a statute? Does all this fall away because it still relies on that EU legislation? If it is a parallel scheme, when does the existing one stop under the EU directive and this one actually start? That is what I am trying to understand. The Minister may well have explained this—forgive me if he has—but I do not get a flavour for what the big difference is between this one and the existing one. What would he see as the big positive change?
My last question is a more general one. I have not counted the non-government amendments that have come forward, yet—despite having on this side, and even part of that side, combined brains the size of a planet, excluding mine—the Government have not seen one amendment worthy of thinking, “Yes, that could be useful and might be something that could improve the Bill.” I just ask the Minister before the end of the year—and I wish him and the Bill team a very enjoyable Christmas and break—why has none of the brainpower on this side has been worth taking notice of in terms of the Bill going forward?
Baroness Blake of Leeds (Lab)
I shall be very brief. There are many aspects of this that are to be welcomed, but I am just intrigued. The Minister mentioned the section on finances. I am concerned about the capacity of the lead assessors and professional bodies to do this work, with particular reference to the intention to expand the scheme to, I think he said, small and medium-sized enterprises. I understood that it was medium-sized: I do not know quite where the definition lies, which would also be interesting. That is a major expansion, and I wonder whether an assessment has been made of how many additional businesses we could be talking about, and how the work is going to be done in those circumstances.
Lord Callanan (Con)
Let me respond first to the final point of the noble Lord, Lord Teverson. He and I know each other well; I have taken a number of Bills through this House, and I think that if he talks to the Official Opposition as well, he will find that I have a reasonable record of listening carefully throughout Committee on Bills and, where I can, within the confines of government policy—he will know how the process works within government—I try to take on board, where possible, the concerns of the Committee. On some Bills, that does mean accepting opposition or Back-Bench amendments directly, and I have done so on a number of occasions.
I am not giving any commitments on some of the amendments we have been debating in this Committee but, as always, I will take careful note of comments, discuss them with the Bill officials and other departments where it is required to do so and, if there are matters on which we can move, then of course we will do so. We will seek to discuss these matters before Report and, as always, I am listening to comments that noble Lords are making and trying to assess the will of the Committee.
ESOS is an important scheme that was originally implemented on the back of the energy efficiency directive, but there were specific parts of it that were UK legislation. We did not directly copy the energy efficiency directive and we will seek to do the same with the new scheme as well. The BEIS Select Committee made recommendations on energy efficiency, including that ESOS should require reports to be made public and should mandate participants to take action to reduce energy review. There was also a post-implementation review of ESOS in 2020, which found that it was largely achieving its original aims and that businesses were unlikely to carry out energy audits unless mandated to do so, but that the scheme could be helpful in producing that. I think that covers most of the points that were discussed and I thank noble Lords for their attention.
Baroness Blake of Leeds (Lab)
The Minister did not respond to my question about the capacity and extent of extending the scheme.
Lord Callanan (Con)
It is not our intention to extend it to small businesses at the moment. We are obviously always concerned about the impact on small businesses in particular but, if these amendments are accepted, we would have the regulation-making powers to extend it to businesses of different sizes. I think it is very unlikely that we would ever extend it to small businesses but that would be the subject of secondary legislation, which would, of course, be debated in the House.
Baroness Blake of Leeds (Lab)
I raised that because I may have misheard what the Minister said in referencing small businesses. I understood that this extended to medium-sized businesses but, even so, that is a significant increase. Have the Government taken on board the additional workload and whether the capacity will be there, assuming that the work is taken on?
Lord Callanan (Con)
We are not proposing to extend it to medium-sized businesses at this stage. We would want to work with stakeholders on the detail of any potential future implementation, which would be subject to a further consultation and, ultimately, a cost-benefit analysis. This is a complicated area and there are a number of different views. We have had a couple of consultations on this. With these amendments, we are taking the powers to implement the scheme. Of course, the regulations would be subject to further debate in the House.
Lord Teverson (LD)
I just want to check something with the Minister. Are we saying that, if the retained EU law Bill became an Act, with its sunset clause of 2023, this scheme would still remain in force and there would be no legal ambiguity about it? Also, I believe that the next deadline for reporting is December 2023. Can I check that this still holds?
Lord Callanan (Con)
The noble Lord is asking for commitments on a different piece of legislation. When that Bill arrives in the House, we will no doubt have a full discussion on it. My understanding is that it is at Report stage in the House of Commons now. The sunset date is still set at 2023 although there are powers in that Bill to exempt particular pieces of legislation and Ministers have the option of extending the sunset date for pieces of retained law that it is not possible to update or review in the short time available. I am sure that we will have a long, involved discussion on the retained EU law Bill when it arrives in the House and that I will get déjà vu from the Brexit withdrawal Act, with many of the same people no doubt making many of the same points they made during that time.
Lord Callanan
“Application of energy savings opportunity schemes(1) ESOS regulations may provide for—(a) an energy savings opportunity scheme to apply to specified descriptions of undertakings;(b) specified descriptions of undertakings to be excluded from the application of the scheme.(2) ESOS regulations may make provision about circumstances in which—(a) two or more participants are to be treated for the purposes of the regulations as if they were a single participant;(b) an obligation imposed under the regulations on one participant is to be treated as if it had been imposed on a different participant.(3) The provisions of this Part relating to energy consumption apply to energy consumed by assets located, or activities carried on—(a) wholly or partly in the United Kingdom;(b) wholly or partly in an offshore area;(c) where subsection (4) applies, elsewhere.(4) ESOS regulations may make provision about circumstances in which the energy consumption for which a participant is, for the purposes of the regulations, responsible may include energy consumed by—(a) assets located elsewhere than in the United Kingdom or an offshore area, or(b) activities carried on elsewhere than in the United Kingdom or an offshore area.(5) The provisions of this Part relating to greenhouse gas emissions apply to the emissions resulting from energy consumption to which this Part applies whether such emissions occur in the United Kingdom, in an offshore area or elsewhere.(6) ESOS regulations may make provision about the attribution of energy consumption to participants, including in particular provision about the treatment for the purposes of the regulations of—(a) a participant’s consumption of energy generated by that participant;(b) energy consumption by a person over whom a participant has control or influence;(c) energy consumption shared between a participant and one or more other participants or other persons;(d) energy consumed by assets held on trust by or for a participant.(7) In this section, “offshore area” means—(a) waters landward of the seaward limit of the territorial sea adjacent to the United Kingdom,(b) any designated area within the meaning of section 1(7) of the Continental Shelf Act 1964, and(c) any area for the time being designated under section 41(3) of the Marine and Coastal Access Act 2009,and includes the places above those areas and the bed and subsoil of the sea within those areas.”Member's explanatory statement
This new Clause makes provision about the application of regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201.
“Requirement for assessment of energy consumption(1) ESOS regulations may require the carrying out of assessments of—(a) a participant’s energy consumption;(b) the greenhouse gas emissions resulting from that consumption.Such an assessment is referred to as an “ESOS assessment”.(2) The provision that may be made by virtue of subsection (1) includes in particular provision about—(a) the frequency of ESOS assessments;(b) the period or periods to which assessments must relate;(c) how assessments are to be carried out;(d) the information that must be provided or obtained for the purposes of an assessment;(e) the matters that must be taken into account in an assessment;(f) record-keeping in relation to an assessment.(3) ESOS regulations may make provision requiring an ESOS assessment, or specified parts of an ESOS assessment, to be carried out, approved or audited by a person appointed by a participant (referred to as “an assessor”).(4) Regulations made by virtue of subsection (1) may include provision enabling or requiring an ESOS assessment to include recommendations relating to energy savings or emissions reductions.(5) The provision that may be made by virtue of subsection (4) includes in particular provision about—(a) the matters about which recommendations may, must, or must not be made;(b) the matters that must be taken into account in making a recommendation;(c) the carrying out of a cost-benefit analysis before including a recommendation in a report.(6) “Cost-benefit analysis”, in relation to a recommendation or requirement to take action, means—(a) an estimate of the likely costs to a participant of acting in accordance with the recommendation or requirement;(b) an estimate of the energy savings or emissions reductions likely to result from such action;(c) an analysis of the costs referred to in paragraph (a) together with an analysis of the savings or reductions referred to in paragraph (b) and of any other benefits likely to arise.(7) ESOS regulations may make provision about the reporting of ESOS assessments, including in particular provision—(a) about the production of written reports;(b) about the form and content of such reports;(c) about the dissemination of such reports within an undertaking and between related undertakings.(8) ESOS regulations may make provision requiring a participant to notify a scheme administrator of specified matters relating to the participant’s compliance with requirements imposed by virtue of this section and may in particular include provision—(a) about the procedure for giving such notice;(b) about the form and content of notices;(c) about the publication of certain information contained within a notice;(d) requiring a participant to justify its choice of assessor.(9) ESOS regulations may provide for any requirement imposed by virtue of subsection (1)—(a) to be treated as having been complied with by a participant in specified circumstances, or(b) not to apply to a participant in specified circumstances.”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to make provision about the assessment of the energy consumption of participants in an energy savings opportunity scheme and of the greenhouse gas emissions resulting from that consumption.
“Assessors(1) ESOS regulations may confer functions on an assessor in relation to assessing, monitoring and reporting on compliance with requirements imposed by the regulations.(2) ESOS regulations may provide that a participant may only appoint as an assessor a person of a specified description.(3) A description may be specified for the purposes of subsection (2) by reference to any criteria, including by reference to—(a) a person’s competence, qualifications or experience;(b) a person’s inclusion in a designated list or register;(c) a person’s membership of a designated body;(d) a person’s participation in an designated accreditation scheme;(e) a person’s relationship to a participant.(4) For the purposes of this section, “designated” means designated by the Secretary of State or a scheme administrator in accordance with ESOS regulations.(5) A body may only be designated for the purposes of this section if the body is willing to be so designated.(6) ESOS regulations may make provision about—(a) the giving of designations for the purposes of subsection (4);(b) reviewing such designations;(c) circumstances in which such a designation may be removed;(d) maintaining and publishing a list of such designations.(7) ESOS regulations may make provision enabling a list or register of persons who may, or who may not, be appointed as an assessor for the purposes of subsection (2) to be maintained by—(a) a designated body;(b) a scheme administrator;(c) the Secretary of State.(8) ESOS regulations may confer functions or impose requirements on a person responsible for maintaining a designated list or register and may in particular include provision—(a) about the process for including a person in a list or register;(b) about the details to be included in a list or register;(c) for ensuring those details remain up to date;(d) about the publication of a list or register;(e) for the purpose of ensuring that a person included in a list or register continues to meet the criteria for appointment as an assessor;(f) for the purpose of ensuring the quality of ESOS assessments;(g) about the temporary or permanent removal of a person from a list or register in specified circumstances.(9) The regulations may make provision authorising a scheme administrator to share reports, notices or other information relating to an energy savings opportunity scheme with a designated body for the purposes referred to in subsection (8)(e) or (f).(10) ESOS regulations may make provision—(a) enabling the Secretary of State or a scheme administrator to give a direction relating to the maintenance of a list or register;(b) requiring a person responsible for maintaining a list or register to comply with such a direction.”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to make provision about the persons who may be required to carry out, approve or audit some or all of an assessment carried out for the purposes of an energy savings opportunity scheme; and about the maintenance of lists of persons who may be appointed for those purposes.
“ESOS action plans(1) ESOS regulations may require participants to produce ESOS action plans.(2) An “ESOS action plan” is a written statement of—(a) any action a participant proposes to take for the purpose of achieving energy savings or emissions reductions;(b) any energy savings or emissions reductions targets a participant intends to achieve.(3) Where an ESOS action plan does not include any proposals for taking such action or any such targets, provision made by virtue of subsection (1) may require that a participant include an explanation in the plan.(4) ESOS regulations may make provision about the production of ESOS action plans, including in particular provision about—(a) when a participant must produce a plan;(b) the period to which a plan must relate;(c) the form and content of a plan;(d) the matters that must be taken into account in producing a plan.(5) ESOS regulations may make provision about the publication of ESOS action plans.”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to make provision about action plans for achieving energy savings or emissions reductions.
“Action to achieve energy savings or emissions reductions(1) ESOS regulations may make provision—(a) imposing requirements (other than the requirements referred to in paragraph (b)) on participants so as to encourage them to—(i) take specified action for the purpose of achieving energy savings or emissions reductions, or(ii) achieve specified energy savings or emissions reductions, or(b) requiring participants to—(i) take specified action for the purpose of achieving energy savings or emissions reductions, or(ii) achieve specified energy savings or emissions reductions.(2) The kinds of action that may be specified for the purposes of subsection (1) are—(a) taking action in accordance with a recommendation made in an ESOS assessment;(b) taking action in accordance with an ESOS action plan;(c) taking any other action of a specified kind;(d) taking action to achieve a target included in an ESOS action plan;(e) taking action to achieve any other specified outcome;(f) adopting processes, practices or systems of a specified kind;(g) conforming to specified standards.(3) The provision that may be made by virtue of subsection (1)(a) includes in particular—(a) provision requiring a participant to report—(i) on whether the participant has taken the specified action, or on the steps taken by the participant towards doing so, or(ii) on whether the participant has achieved the specified energy savings or emissions reductions, or on the progress made by the participant towards doing so;(b) provision requiring a participant to provide an explanation for any of the matters mentioned in paragraph (a).(4) Provision made by virtue of subsection (1)(b) may include a requirement for a participant to report on action taken or energy savings or emissions reductions achieved.(5) Regulations made by virtue of subsection (1) may make provision—(a) requiring participants to produce and retain evidence;(b) about the verification of matters about which the participant has reported;(c) about the publication of reports.(6) ESOS regulations may—(a) specify the requirements imposed on a participant by virtue of subsection (1) by reference to a cost-benefit analysis;(b) specify circumstances in which a participant is required to take action;(c) impose a requirement to take a specified action on all participants in an energy savings opportunity scheme, or on all participants of a specified description.”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to require, or to impose requirements to encourage, participants in an energy savings opportunity scheme to achieve energy savings or emissions reductions.
“Scheme administration(1) ESOS regulations may appoint one or more public authorities to carry out functions with respect to—(a) administering an energy savings opportunity scheme;(b) monitoring compliance with, and enforcing requirements imposed by, the regulations.(2) A person appointed by virtue of subsection (1) is referred to as a “scheme administrator”.(3) The regulations may make provision for a scheme administrator to authorise another person to exercise specified functions of the scheme administrator.(4) Regulations made by virtue of subsection (1) may in particular include provision about—(a) the obtaining of information by, and the provision of information to, a scheme administrator;(b) the determination by a scheme administrator of information in default of its being provided;(c) the auditing and verification of information;(d) the keeping, production and inspection of records;(e) the determination by a scheme administrator of whether an undertaking is a participant in an energy savings opportunity scheme;(f) cooperation and information sharing between scheme administrators.(5) ESOS regulations may make provision imposing requirements on a participant relating to the provision of such facilities and services, including transport and accommodation, as may be necessary to facilitate the carrying out of any of the scheme administrator’s functions.(6) ESOS regulations may confer functions on a scheme administrator in relation to the publication of information relating to an energy savings opportunity scheme or its participants.(7) ESOS regulations may make provision—(a) about the giving of guidance by a scheme administrator or the Secretary of State in connection with the operation of an energy savings opportunity scheme;(b) requiring specified persons to have regard to such guidance.(8) ESOS regulations may make provision requiring the payment by participants to the scheme administrator of fees for or in connection with the carrying out by the scheme administrator of the scheme administrator’s functions.(9) ESOS regulations may confer a power on a national authority to require a scheme administrator to provide the authority with such information—(a) relating to an energy savings opportunity scheme, and(b) relevant to the exercise of the authority’s functions,as the authority requests.(10) In this section—“national authority” means—(a) the Secretary of State;(b) the Welsh Ministers;(c) the Scottish Ministers;(d) the Department for the Economy in Northern Ireland;“public authority” means a person with functions of a public nature.”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to make provision about the administration of energy savings opportunity schemes.
“Enforcement, penalties and offences(1) ESOS regulations may authorise a scheme administrator—(a) to require the production of documents or the provision of information by any person;(b) to question the officers of an undertaking;(c) to enter premises with a warrant;(d) to inspect premises and anything on premises and when doing so—(i) to take measurements, photographs, recordings or copies;(ii) to seize documents or records;(iii) to require any person at the premises to provide facilities and assistance to the extent that is within that person’s control;(e) to issue a notice requiring a participant to take steps specified in the notice for the purpose of—(i) demonstrating compliance with requirements imposed by or under ESOS regulations, or(ii) remedying a failure to comply with such requirements.(2) ESOS regulations may make provision requiring a participant to give notice to a scheme administrator where the participant is unlikely to comply, or has failed to comply, with a requirement imposed by or under the regulations.(3) ESOS regulations may provide that a person is liable to one or more penalties in respect of—(a) a failure to comply with a requirement imposed on the person by or under the regulations;(b) making a false or misleading statement in connection with an energy savings opportunity scheme.(4) The provision that may be made by virtue of subsection (3) includes provision—(a) for the publication of specified information relating to the failure to comply;(b) authorising a scheme administrator to impose a financial penalty.(5) Where by virtue of subsection (3) ESOS regulations provide for the imposition of a financial penalty, the regulations—(a) must provide for the penalty to be paid to the scheme administrator or such other person as the regulations may specify;(b) may specify the amount of the penalty or provide for the amount to be determined by the scheme administrator in accordance with the regulations;(c) may provide for the payment of a further penalty (of an amount specified by or determined in accordance with the regulations) for each day on which the failure to comply is not remedied;(d) may specify how the penalty may be recovered.(6) ESOS regulations may create offences relating to energy savings opportunity schemes.(7) Regulations made by virtue of subsection (6) may provide for an offence created by the regulations to be triable—(a) only summarily, or(b) either summarily or on indictment.(8) Regulations made by virtue of subsection (6) may provide for an offence created by the regulations to be punishable with a fine.(9) Regulations may—(a) provide for defences against offences;(b) make provision about matters of procedure and evidence in proceedings relating to offences;(c) include provision about the liability of a director, manager, secretary or other officer of a body corporate, or a partner of a Scottish partnership, or of a person purporting to act in such a capacity, where an offence under the regulations—(i) is committed with the consent or connivance of such a person, or(ii) is attributable to neglect on the part of such a person.(10) References in this section to a scheme administrator include references to a person authorised by a scheme administrator in accordance with provision in ESOS regulations made by virtue of section (Scheme administration)(3).”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to make provision for the enforcement of those regulations.
“Appeals(1) ESOS regulations may confer rights of appeal against—(a) decisions made in relation to an energy savings opportunity scheme, and(b) penalties imposed or enforcement action taken for failure to comply with the requirements of the regulations.(2) The regulations must specify the court, tribunal or person who is to hear and determine an appeal.(3) The provision that may be made by virtue of subsection (1) includes, in particular, provision about—(a) the grounds on which an appeal may be made;(b) the procedure for making an appeal (including any fee which may be payable);(c) suspending the effect of any decision, penalty or enforcement action pending determination of the appeal;(d) the powers of the court, tribunal or person to which an appeal is made.”Member's explanatory statement
This new Clause enables regulations made under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201 to make provision about appeals.
“ESOS regulations: procedure etc(1) Before making ESOS regulations, the Secretary of State must consult—(a) such persons likely to be affected by the regulations as the Secretary of State considers appropriate;(b) to the extent that the regulations contain provision within Welsh devolved competence, the Welsh Ministers;(c) to the extent that the regulations contain provision within Scottish devolved competence, the Scottish Ministers;(d) to the extent that the regulations contain provision within Northern Ireland devolved competence, the Department for the Economy in Northern Ireland.(2) Subsection (1) may be satisfied by consultation before this section comes into force (as well as by consultation after that time).(3) ESOS regulations may make consequential provision including provision amending or repealing primary legislation.(4) ESOS regulations may create exceptions to any requirement imposed by the regulations.(5) ESOS regulations may—(a) make provision about application to the Crown;(b) to the extent that they bind the Crown, restrict or modify the application of the regulations.(6) ESOS regulations containing any of the following (with or without other provision) are subject to the affirmative procedure—(a) provision extending the descriptions of undertaking to which the regulations apply;(b) provision made by virtue of section (Action to achieve energy savings or emissions reductions)(1)(b) of a kind not previously provided for in ESOS regulations;(c) provision conferring on a scheme administrator enforcement powers of a kind not previously provided for in ESOS regulations;(d) provision creating penalties;(e) provision increasing the amount of financial penalties by more than is necessary to reflect changes in the value of money;(f) provision creating an offence or increasing the fine for an existing offence;(g) provision for the payment of a new fee;(h) provision amending or repealing primary legislation.(7) Any other ESOS regulations are subject to the negative procedure.(8) In this section,“primary legislation” means—(a) an Act,(b) an Act of the Scottish Parliament,(c) a Measure or Act of Senedd Cymru, or(d) Northern Ireland legislation.”Member's explanatory statement
This new Clause makes provision about the procedure for making regulations about Energy Savings Opportunity Schemes under the first of the new Clauses in the name of Lord Callanan inserted after Clause 201.
“Directions to scheme administrators(1) The Secretary of State may give directions to a scheme administrator.(2) The power to give directions under this section includes a power to vary or revoke the directions.(3) A scheme administrator must comply with any direction given to it under this section.”Member's explanatory statement
This new Clause enables the Secretary of State to give directions to a scheme administrator under an Energy Savings Opportunity Scheme.
“Financial assistance to scheme administrators and participants(1) The Secretary of State may give, or arrange for the giving of, financial assistance to—(a) scheme administrators;(b) participants.(2) “Financial assistance” means grants, loans, guarantees or indemnities, or any other kind of financial assistance.(3) Financial assistance under this section may be given subject to such conditions as may be determined by, or in accordance with arrangements made by, the Secretary of State.”Member's explanatory statement
This new Clause enables the Secretary of State to provide financial assistance to scheme administrators under, and participants in, an Energy Savings Opportunity Scheme.
“Interpretation(1) In this Part—“assessor” has the meaning given by section (Requirement for assessment of energy consumption)(3);“cost benefit analysis” has the meaning given by section (Requirement for assessment of energy consumption)(6);“emissions reduction” has the meaning given by section (Energy savings opportunity schemes)(5);“energy consumption” has the meaning given by ESOS regulations;“energy saving” has the meaning given by section (Energy savings opportunity schemes)(4);“energy savings opportunity scheme” has the meaning given by section (Energy savings opportunity schemes)(2);“ESOS action plan” has the meaning given by section (ESOS action plans)(2);“ESOS assessment” has the meaning given by section (Requirement for assessment of energy consumption)(1);“ESOS regulations” means regulations made under section (Energy savings opportunity schemes)(1);“greenhouse gas” has the meaning given by section 92 of the Climate Change Act 2008;“participant” means an undertaking to which an energy savings opportunity scheme applies;“related undertaking” , in relation to a participant, means a fellow subsidiary undertaking of, or a group undertaking in relation to, that participant;“scheme administrator” has the meaning given by section (Scheme administration)(2);“specified” means specified in ESOS regulations;“undertaking” , “group undertaking” and “fellow subsidiary undertaking” have the meanings given by section 1161 of the Companies Act 2006.(2) For the purposes of this Part, provision—(a) is within Welsh devolved competence if it would be within the legislative competence of Senedd Cymru if it were contained in an Act of the Senedd (ignoring any requirement for the consent of a Minister of the Crown imposed under Schedule 7B to the Government of Wales Act 2006);(b) is within Scottish devolved competence if it would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament;(c) is within Northern Ireland devolved competence if that provision—(i) would be within the legislative competence of the Northern Ireland Assembly if it were contained in an Act of that Assembly, and(ii) would not, if it were contained in a Bill in the Northern Ireland Assembly, result in the Bill requiring the consent of the Secretary of State under section 8 of the Northern Ireland Act 1998.”Member's explanatory statement
This new Clause makes provision about the interpretation of the new Clauses in the name of Lord Callanan to be inserted as a new Part 9A after Clause 201.