draft Renewables Obligation order 2015

Alan Whitehead Excerpts

Tuesday 20th October 2015 General Committees

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Wilson. The order is not particularly controversial. Indeed, I thank the Minister for her exhaustive exposition of what is in it, because that saves me the task of attempting to go through its pages myself. I think the whole Committee is grateful for her guided tour of the main details.

However, the details give rise to one or two questions. In particular, there is the emergence in the order of a consolidation of not strictly previous regulations, but newer regulations that relate to the sustainability of biomass. I welcome that move. My understanding is that those changes will, among other things, ensure a genuine approach to sustainability throughout the chain of biomass procurement, transport and production. Will the Minister confirm that that is her understanding of what the order does? I would be grateful for that.

As the Minister outlined, certain biomass producers will now be able to opt to enter into the capacity market at a certain stage after the initial operation of their plant has commenced under the renewables obligation. I do not know whether she has investigated this, but I am slightly concerned about the extent to which that way of doing things affects the Department’s required estimates of the necessary capacity to be procured at the beginning of a capacity auction cycle. Will the opt-in process, described on the basis of coming into being at a certain period after the opting-in process has been decided, materially affect those calculations, possibly on a relatively unplanned basis, or are mechanisms already in place or being considered that will make that process more stable as far as capacity requirements are concerned?

Other than that, the order is essentially an updating and consolidation of regulations relating to the renewables obligation certificate. The previous serious consolidation, the 2009 regulations, have been comprehensively updated in that process. As the Minister pointed out, the order was subject to a consultation. It is good news that there was a consultation, and we might say that it was good rather than bad news that only 18 responses were received. They were dealt with in the response to the consultation and led to some minor corrections in the subsequent iteration of the draft order, which is before us today.

That is not the end of the matter. Since the consultation closed, material differences in the RO’s operation were announced, namely its closure to onshore wind a year earlier in March 2016, which was announced on 18 June. Since the order before us differs from that put to consultation only in respect of minor changes in the light of that consultation, to all intents and purposes it is as if onshore wind is still within the RO’s terms, at least until the closure of the entire RO in March 2017.

By and large, the order does not mention onshore wind, unlike some other technologies eligible for the RO. That is not because someone has gone through and airbrushed onshore wind out of the order. That would not be possible, because they would have had to do so before the alleged mandate for eviscerating onshore wind passed in front of the British electorate, and that would plainly point to the subsequent reasoning about the basis for the aforementioned evisceration being a little disingenuous—I am sure that that is not the case.

The 2009 order does not mention onshore wind either, but, as a defined generator, its presence is all over it. Therefore, does its soon-to-be-confirmed absence from 2016 mean that any part of the order will have to be rewritten? Onshore wind certainly featured strongly in the Renewables Obligation Closure Order 2014, to which this order makes minor amendments. The 2014 order established beyond doubt, by specifying a date, that the RO would come to an end in March 2017, or, to put it another way, it would continue with wind—both onshore and offshore—until that point.

This question is complicated by the events in another place, where the Government are seeking to place a similarly definite end date for onshore wind on the statute book in the Energy Bill. In the other place, however, Ministers are tabling fairly complex amendments to the Bill, including to end dates, which spare those plants that have gained accreditation and planning but are having difficulties in obtaining funding owing to, among other things, the understandable uncertainty caused by that whole dreadful farrago. They are saving those plants from the axe during a grace period—not the grace period of one year taking plants up to March 2017 as originally announced, but a new grace period of approximately nine months after assumed Royal Assent in March next year. I am not quite sure where the provisions of the order stand in relation to the shifting sands of projects buried, partly dug up—

[The Chair]

Order. Dr Whitehead, will you start to clarify why this is actually relevant to the order?

--- Later in debate ---

[Dr Whitehead]

Yes, indeed, Mr Wilson. I am coming to that in a moment but I felt it necessary to establish the circumstances under which it is relevant. I will, of course, go with your guidance on the matter.

The fact that the status of onshore wind is now off the order in reality but remains on the order in presentation may well make a difference to the structure of the order itself. For example, schedule 5 sets out which part of a ROC plants will receive—that is, how many ROCs make a ROC dependent on the type of plant deployed. Wind gets 10 ninths of stated energy in its ROC and for energy generated post-2016, which may well apply for continuing ROCs from earlier awards—after all, the ROC market will continue in ghostly form for a number of years—but now will not exist for the generation commenced in 2016. That has to make a difference to the overall calculation of the number of ROCs available and, hence, their value in the market during that period, although I would not know that by looking at the table or the entire order.

However, it might, to all intents and purposes, exist after all if the amendments moved in another place actually happen. Right now they have been withdrawn but I understand that they might come back next week. Will the Minister assure me that what we are asked to support today is the last word as far as the order is concerned? Will some parts of the order need to be rewritten in the light of the events in another place, soon to be coming to us? If there is any suggestion that changes may be needed, I would expect the Minister to do as her counterpart in another place has done in the light of some uncertainty about his proposals—lay the order on the table until such time as the uncertainty has passed and the definitive text can emerge.