Renewables Obligation Closure Etc. (Amendment) Order 2016

Baroness Featherstone Excerpts

Wednesday 16th March 2016 Lords Chamber

Moved by

[Baroness Featherstone]

As an amendment to the above motion, at the end to insert “but this House regrets that the draft Order will close the Renewables Obligation to solar photovoltaic installations smaller than 5MW on 1 April; notes that this will have a detrimental effect on rooftop solar and community energy schemes, which will be left with no support, and that the date for closure is much earlier than expected by the industry, causing a significant reduction in investor confidence across the industry; and calls on Her Majesty’s Government to reinstate the Renewables Obligation for solar under 5MW and guarantee that existing solar projects will not be affected by future changes to policy”.

[Baroness Featherstone (LD)]

My Lords, I fear that the Minister and I are not going to agree on this. However, it is not very long since we debated the ending of the feed-in tariff order, and I am sad to be here again so soon to enable a debate in which we on these Benches can express our dismay and alarm at the destruction being visited on what was a thriving world-leading industry in renewables—in this particular case, the ending of the renewables obligation for solar PV under 5 megawatts.

I shall not rehearse all the arguments that I made in that debate. I failed to get the Government to publish the calculations on the levy control framework, in which they prayed in aid a projected overspend as the rationale for their harsh and unforgiving bonfire of the renewables. Nevertheless, I appeal to the Government once again for transparency in relationship to the LCF, and ask that the figures are made public, so that the credibility of the Government’s case can be properly assessed.

We lost the battle against the extraordinarily steep and abrupt removal of the feed-in tariffs for solar, wind and hydro. We have tried to get this Government to understand not only the seriousness of this in terms of moving towards a low-carbon future that allows us to meet our legally binding targets, but also the depth to which investor confidence has been undermined in the renewables sector and the long-term, negative impact on the economy that this has caused. It is very disheartening to see so much of the good work achieved by the coalition Government unravelled by this one.

What is clear is that this work, which saw the tripling of electricity from renewable sources and made Britain the fastest-growing green economy in Europe, was clearly led by only one side of the coalition, the Liberal Democrats, and not embraced at all by the other. It was galling to listen to the Prime Minister at Prime Minister’s Question Time today claim that 99% of solar on roofs came under a Tory-led Government. That sticks a little bit in the craw. Since the end of the coalition, this Government are ending support for onshore wind power; sharply reducing support for other renewable technologies, including solar PV and anaerobic digestion; ending renewable energy’s exemption from the climate change levy; reducing the incentives to purchase low-emission cars; privatising and selling off the Green Investment Bank; scrapping the Green Deal with no replacement; weakening the zero-carbon homes standard; adding community energy to the list of sectors excluded from receiving tax relief; ditching the £1 billion budget for pioneering carbon capture and storage; ending the renewables obligation early—the subject of today’s debate—and on and on and on. It is a litany of destruction.

When the Secretary of State announced, following the 2015 election, that she would “unleash a solar revolution”, we on these Benches naively thought that she meant a revolution that supported solar—but each action that has been taken has proven the opposite. That takes us to the statutory instrument before us today, which closes the renewables obligation to solar PV installations smaller than 5 megawatts on 1 April 2016. It will have a detrimental effect on rooftop solar and community energy schemes, which will be left without support, and will cause a significant reduction in investor confidence across the industry—solar and beyond.

Rooftop solar, the cornerstone of the solar strategy produced in April 2014, is now in dire straits. The tariff that has been set for the 1 to 5 megawatts solar band is much too low to incentivise rooftop deployment in that size range, leaving larger rooftops with essentially no route to market. The large-scale rooftop market is potentially the most significant and cost-effective solar market. This market is dominant across Europe and is expected to reach grid parity first, yet the UK is not taking it seriously. The rooftop renewables obligation for solar at less than 5 megawatts must be reinstated to allow these commercial projects to go ahead until March 2017 with the forward visibility they require.

Also marched up the hill by the last Government and then abandoned by this one were community energy groups. Many opportunities were created for local communities to share in the economic benefits of local renewable projects, and yet the rug on larger solar power projects is being pulled from underneath them. It is vital that ground-mounted renewable obligations should remain open to community groups and to developers doing shared ownership or community investment schemes.

Another crucial aspect is the need for strengthening of the grace periods, to which the Minister referred. They are indeed a bone of great contention. Let me give the Minister one example from a leading UK solar company setting out the practical effect of the 22 July 2015 grace period qualification deadline. It was unknowable to the industry even 24 hours in advance: 22 July was the first anyone knew about it. This company had a project that was 95% ready to submit as a full planning application but was not intending to submit it until about a week after the consultation was published. When the 22 July consultation was published, it scrambled like mad to submit it, but the application now straddled 22 and 23 July because some key documents could not be sent in until the morning of 23 July.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, of course investor confidence is an issue. In the department we meet the industry on a frequent basis—I met representatives of the solar industry just this week. Some of the concerns that are being expressed tonight were not expressed to me on that occasion. Of course there is a healthy dialogue, but I do not recognise some of the wilder statements being made about the lack of investor confidence. Industry will always take a particular view, and there will be some in industry who will not want to see an end to subsidies—I understand that; why would they? However, as a Government, we have to see how money can be well spent.

It has been a good debate, but I urge noble Lords to reject the amendment and support the order, which is a necessary part of ensuring that we get value for money, do not overdeploy in this area and end subsidies that are not needed.

[Baroness Featherstone]

I thank all noble Lords for their contributions; I thought that serious and considered points were made on all sides. The Minister said that I did not address the issue of subsidy. I took it as read that we all want to see the end of subsidies, but the issue is the methodology for delivering that. As I explained that at great length during the debate on the fatal Motion that I tabled to annul the feed-in tariff, I did not want to rehearse all those arguments. However, again, as the levy control framework calculations are still not before us, we cannot examine the evidence of the case.

Arguments were made about the costs to consumers. We are all concerned about the cost to consumers, but I laid out the price range involved in the cost of risk. The £1 per annum that would be saved feels a very poor argument in terms of reducing costs when, at the same time, the Government are so willing to invest in those energy sources that are so much more expensive, such as nuclear and diesel.

Lastly, on the overdeployment of solar, until the Government come forward with a plan illustrating how they are going to reach their renewable targets, we may be reliant on extra electricity because renewable heat and renewable transport are in so much trouble. Therefore, although I appreciate the arguments and agree with the noble Baroness and the noble Lord, we are not going to see eye to eye on this issue. I am very grateful for the support of the Labour Benches on this, and for the arguments of the noble Lord, Lord Grantchester, which were well made. I seek to test the will of the House.