Floating Offshore Wind and Contracts for Difference
Alan Whitehead Excerpts(7 months, 1 week ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this debate. It is sad, but understandable, that there are not more Members present in the Chamber to take part in or listen to it. I have to say that if more hon. Members had been present, they would have heard a comprehensive and substantive contribution from the hon. Member in support of floating offshore wind, as she has given on so many occasions. I could not disagree with much of what she had to say, and I and the Labour party could strongly support a great deal of it.
The potential of floating wind is now pretty much undisputed. It is a technology that can go where other offshore wind cannot. It is particularly adaptable for deeper waters, more difficult circumstances, and parts of the UK that otherwise would not have much in the way of floating offshore. Floating offshore’s ability to take the offshore wind revolution to its next stage is manifest in the Celtic sea, Scotland and the north-east of England. It will ensure that we take advantage of the wind speeds around the UK, which are such a national and international asset for our country, wherever we can.
Labour want to see at least 5 GW of floating offshore wind—I emphasise “at least”—deployed by 2030. Not only that, but we want to see the arrangements in place to properly support that deployment. We envisage Great British Energy playing a substantial role, taking stakes in future flow as it goes forward and supporting it all the way. We also propose establishing a national wealth fund. That fund will play a substantial role, along with other bodies such as the Crown Estate, in developing the necessary future infrastructure for FLOW.
As we know, at present the infrastructure is sorely lacking, as the hon. Member for North Devon mentioned. The assembly, erection and future servicing of floating platforms all require substantial upgrading of the port facilities. While it is a little bit encouraging that the FLOWMIS programme allocated some funding for port development, it is clearly by no means enough to get the infrastructure properly under way. As RenewableUK recently said, we need at least 11 ports to support floating offshore wind, not just Port Talbot and the port in Scotland supported by FLOWMIS.
We come then to the question of how we actually get at least 5 GW of FLOW installed by 2030. As the hon. Member for Glenrothes (Peter Grant) pointed out, if we do the sums on our ambitions for offshore generally and FLOW in particular, we have to move ahead far more quickly in allocation rounds than we have done in the past and are anticipated to do in the immediate future. That is against the backdrop of pretty total failure to fund and support either FLOW or offshore fixed wind in the most recent allocation round, and to a considerable extent in the allocation before that.
The figures for how much we must put in place per allocation round, in both fixed and floating offshore wind, over the next several rounds are compelling. We have to move far faster and far more extensively to secure those arrangements for the future.
For FLOW, moving into AR6, the prognosis appears pretty bleak. It looks like perhaps just one FLOW project will actually fit in the pot 2 budget—the budget FLOW sits in—despite, as the hon. Member for North Devon said, there being at least four shovel-ready projects, ready to go right now, that could easily fit within that allocation were it made available. I do not think that includes the Hexicon project—a really important project which needs enormous support, because it has twin-turbine capacity, which is a further step forward in FLOW technology and can take the whole FLOW arrangement forward.
We have the beginnings of a real breakthrough as far as FLOW is concerned, but it is probably directly hampered by what AR6 has in store for us. That should not be allowed to stand. Of course, we are in rather different circumstances than we were in yesterday morning. I might have been standing here today asking the Government to do various things over the summer to sort out some of the problems; what I will be doing is asking the next Government, whoever they are, to get on with it quickly, particularly because AR6 is already well through its various design iterations and there is a limited window for changing anything in it before the tendering for the various projects. Whatever party comes in after the election, this issue will pretty immediately land on the desk of the Government, and by “pretty immediately” I mean that the new Government will have to get AR6 and floating offshore wind right possibly within a month.
The problem for FLOW is not the uplift in administrative strike price. The Government actually did not do a bad job of looking at where the price was and where it should be for AR6. The problem is the budget that has been allocated to this particular pot. Were there to be a reasonable uplift in that budget, it is highly likely that a number of the shovel-ready projects would be successful in AR6 pot 2. Of course, I cannot specify what a new Government are likely to do, but the case for early action to put that right is compelling. Even today, I hope that the Minister will commit himself to getting that action under way in his Department, as far as he has any capacity in the few days before we all pack up and start knocking on doors—if he has not already.
This is a looming loss of opportunity for floating offshore wind, and there is a wider prospect that a technology in which we are world leader will almost immediately start falling away. As the hon. Member for North Devon said, if we do not get the projects under way early, there will be a chain reaction: people lose confidence in the investment, they take their investment elsewhere, the projects do not progress, the appetite for investment in infrastructure starts to fall away and the whole thing starts to disintegrate. We are at a vital juncture. In their last few days, I hope that the Government can grasp the opportunity of making investment in FLOW right.
Oral Answers to Questions
Alan Whitehead Excerpts(7 months, 1 week ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
The Minister and her colleagues have repeatedly said today that they care about cutting bills for families, but a recent report by the Resolution Foundation found that the onshore wind ban has hit the poorest households’ income six times harder than that of the richest. Such households have been forced to pay additional electricity bills as a result of the total failure to build onshore wind in England. How on earth can Ministers continue to sit there and claim that they stand up for working families when they continue to block the cheapest form of clean energy there is, which could cut bills for families who desperately need help? Before she leaves office, will the Secretary of State pledge to put this right so that onshore wind can be built again and customers can save money on their future bills?
Amanda Solloway
That is absolutely not the case. We stand here incredibly proudly as Ministers in the Department for Energy Security and Net Zero, and we have made a commitment. We are doing more than has ever been done on renewables and offshore wind, and we have done more to help people with the affordability of their bills.
Draft Carbon Capture Revenue Support (Directions, Eligibility and Counterparty) Regulations 2024
Draft Carbon Dioxide Transport and Storage Revenue Support (Directions and Counterparty) Regulations 2024
Alan Whitehead Excerpts(7 months, 2 weeks ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I ought to start by saying that we not only have no objections to these regulations but certainly plan to support them, inasmuch as they are a reasonably timely response to the Energy Act, which, as the Minister says, went through the House last autumn. One day, when the BBC gets round to broadcasting the episode of “The Reunion” about the Energy Act, the Minister and I will probably be hauled up to give our amusing anecdotes about the Bill’s riotous—and lengthy—passage through the House. But until then we will have to keep those secrets to ourselves.
These two statutory instruments stem from, as I have said, a pretty timely next stage in the business arrangements for carbon capture and storage and stem primarily from sections 59 and 60 of the Energy Act. I will not draw the Committee’s attention to what exactly is in the regulations, because the Minister has already set it out in a very straightforward and comprehensive way. I will just say that they establish the relationship of the contract-giving process to the counterparty, the circumstances under which those eligible for revenue support under those arrangements can or cannot receive it, and who is and is not an eligible transporter and storer. That is all very good and very straightforward.
By way of clarification, I have two brief questions, which are about the process rather than the validity or otherwise of the measures. Hon. Members will have noticed two things about the SIs. The first is that they talk about “a” counterparty; indeed, the consultation a little while ago indicated that the Government would probably designate the Low Carbon Contracts Company as the counterparty for these processes. The explanatory memorandum to the directions, eligibility and counterparty regulations sets out why the LCCC is a good fit as the counterparty, and noted that its costs will be no more than £350,000 a year, making it a good fit for the amount of work it is supposed to do.
What I cannot find anywhere is whether the Government actually have designated the LCCC as the counterparty. Section 59 of the Act states:
“The Secretary of State may by notice given to a person designate the person to be a counterparty for carbon dioxide transport and storage revenue support contracts”,
which are the subject of the carbon dioxide transport and storage revenue support regulations. Is that a secretly given notice that we do not know about, or is it a public action that we should know about? Is it an action that has not yet been taken but that may be taken in the not-too-distant future, or are there considerations still outstanding as to whether the LCCC should be designated?
That is not a completely academic point, because the SIs talk as if the LCCC has already been designated, but there appears to be at least a technical possibility that it has not been and that another person might be so designated, if the designation has not already, by notice, been finalised. It would be helpful if the Minister said whether that notice of designation has been given and I have missed it, or whether it is still to be given and there are issues outstanding in the issuing of it.
The second thing hon. Members may have noticed is the extent of the carbon dioxide transport and storage revenue support regulations. The explanatory memorandum states:
“The extent of this instrument (that is, the jurisdiction(s) which the instrument forms part of the law of) is England and Wales, Scotland and Northern Ireland...The territorial application of this instrument (that is, where the instrument produces a practical effect) is the United Kingdom. The activities of a carbon dioxide transport and storage company may take place in the United Kingdom, above or below the territorial sea adjacent to the United Kingdom, and waters in a Gas Importation and Storage Zone”—
and we have discussed gas importation and storage zones previously. The point is that it is not immediately apparent that all the activities of a carbon capture and storage transportation company will land within the UK’s territorial waters, inasmuch as it is widely anticipated that captured carbon will, at a fairly early stage in the development of CCS arrangements, be barged in from jurisdictions outside the UK for storage in UK territorial waters. Indeed, one ambition of a number of the hub-based storage arrangements is that they will attract custom from other European jurisdictions, outside the UK. The position of the hubs in the North sea makes that an enticing proposition for countries whose storage facilities are not as developed as those we are likely to have in the UK.
In those circumstances, the question for the Minister is: how do the draft regulations apply? When things come into the UK’s jurisdiction—things that do not originate from within the UK, but which still fall within the purposes of carbon capture and storage in general —what part of that is covered by the revenue support arrangements, or is it all covered? If there are problems with what part is in or what part is out, is it the Minister’s view that in general they should be outside the regulations? Or, does he intend to produce arrangements whereby what he sees as actions within UK territorial waters can be revenue supported as part of the whole process?
Those are a couple of minor questions to keep the Minister on his toes. Other than that, we have no objections to the arrangements.
Andrew Bowie
I thank the hon. Gentleman for his contribution; as ever, it was thoughtful and thought provoking. The two draft instruments we are discussing are broadly administrative in nature, as I am sure everyone will have judged, but they outline the vital operational procedures for enabling Government’s proposed business models for carbon capture, transportation and storage.
To respond to the hon. Gentleman’s first point, I, too, look forward to that episode of “The Reunion” on Radio 4. Indeed, to extend his analogy, if hon. Members were ever on “Desert Island Discs”, I am sure they would find the Hansard of our proceedings and discussions on the Energy Act an essential tool to take with them to the desert island. I would suggest that an audio version might be useful in getting some sleep on said desert island.
On the hon. Gentleman’s questions about a counterparty, as he said, the Low Carbon Contracts Company is expected to be the counterparty to the RSA. On his specific point about whether it has already been appointed, the LCCC is the existing counterparty for the contracts for difference for low-carbon electricity. It is the resource-efficient and cost-effective option to act as the RSA counterparty, and stakeholders can therefore be confident in the LCCC’s ability to carry out the counterparty functions.
Andrew Bowie
As I just said, it has already been designated as the existing counterparty for contracts for difference, and there is an assumption that it will be designated for the transportation and storage moving forward.
Draft Contracts for Difference (Sustainable Industry Rewards) Regulations 2024
Alan Whitehead Excerpts(8 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship, Ms Rees. The Opposition very much support the changes, which we hope will come in for allocation rounds 7, 8 and 9—it would be nice if they came in for AR6, but that is not in anyone’s gift to sort out right now. First, we think they will make a material change to the quality of the schemes supported by Government funding. Secondly, we think they will uprate the whole industry so that it is clear about what it is doing about UK-sourced materials for the schemes, arrangements for UK jobs and the sustainability of the whole supply chain and of the products themselves. So far, so good; we are fully behind the proposal to introduce SIRs as a replacement for the present arrangement, which is the sustainable supply chain declarations.
I ought to say before we proceed that my voice is not that great. I was also enthusiastically supporting my football team on Saturday, but unfortunately the result was not as positive as that for the Minister’s team, which I understand has now been promoted to the championship. If my team fails to get promoted through the play-offs this season, our two teams will play each other, so we will both have lost our voices if we meet again under those circumstances.
The problem with the regulations is one of potentially considerable detail. If I am wrong in my concerns, I would appreciate an explanation from the Minister of why I am wrong. Alternatively, if I am not wrong in my concerns, will she tell me what the Government are thinking of doing in the future to put right what I think is a potential problem for the process?
The problem is that both the allocation round and the new process that is to be introduced are competitive and have a budget, but one precedes the other, providing for the possession of a sustainable industry reward, or SIR, which essentially allows the company to go on to the full allocation round. If a company does not have an SIR, it cannot go into the main allocation bidding.
Once the SIR process is in place, companies bidding to go into the main allocation round have three possible outcomes. The first is that they have bid for an SIR and their bid has been ticked off—the Government have said, “Yes, your bid qualifies for SIR status, so you can through to the allocation round.” However, that company may not necessarily want to bid in that first round, prior to the allocation round, to get a funded SIR, because they may have ways of reaching what is in the SIR other than by going for a funded SIR. For example, a Danish offshore wind operator may be able to reach those arrangements through its own existing internal facilities. It may say, “Well, we are going to bid in without a funded SIR, but we have an SIR, so we can qualify for the eventual allocation round.” That is outcome No. 1. No. 2 is a straightforward process where a company bids for and gets a funded SIR, and then goes through to the allocation round with that funded SIR in its pocket.
The third possibility depends to some considerable extent on how the budgets are set, both for the SIR and the eventual allocation round. A company could have qualified for an SIR, with the Government having ticked off its proposals as SIR-qualifiable, but when it gets into the pre-allocation round competitive bidding, it may fail to get an SIR because of the budget constrictions in the SIR process—logically, because it is a competitive round, it is possible that some people will fail to get a competitively bid SIR to go into the allocation round. At that point, it is a company that had a bid process in at pre-qualifying, which allows it to be competitive against all those other bidders that have funded SIRs going into the actual allocation round. If a company has bid on the basis that it is likely to win some funding in the SIR allocation round, but it fails to win it, logically it has to readjust its bid, as if there was no SIR in place, in order to remain competitive in the actual allocation round.
As far as I can see, companies would not be denied access to the allocation round, because they did have a certified SIR in the first place. If they have bid and lost, as opposed to having decided not to bid, their bid will have to look different in the allocation round itself. Is it the case that the most advantaged people in the allocation round may well be those who have bid for an SIR and lost, and who have then readjusted their bid accordingly? Could it be that the smartest strategy for companies is to try to lose an SIR, while having indicated that they can, in principle, meet its terms? They can then bid more competitively than if they had had an SIR in the first place.
That is not to undermine the scheme as a whole, which is potentially very good, but there is a potential problem with the process of going between two separate competitive allocations to get to the eventual position of companies being in possession of a CfD, which is what we want to happen. That could distort the bidding process and could certainly lead to some lack of clarity about the principle of placing these additional requirements on bidders to secure the sustainability and so on of supply chains, which could potentially undermine the process.
Does the Minister therefore have any guidance she can give me to show that this is not really a problem, because of various issues that she can conjure up this afternoon, either on receiving inspiration or otherwise? Alternatively, if she cannot fully satisfy me that I need have no worries about this issue, which I quite understand, we could perhaps engage in correspondence subsequently.
Amanda Solloway
I thank the hon. Members for Southampton, Test and for Angus for their contributions. I will endeavour to answer the questions as fully as possible, but if I fail to answer them all, I am incredibly happy to have further meetings on the subject, as suggested, although this issue is not in my portfolio.
All companies need to meet a minimum standard of investment before they bid into the CfD, so there is a level playing field for everybody. Companies will know if they have been allocated an SIR before they bid in. If they fail to get a CfD, their budget will be reallocated to those who were successful. As I have indicated, however, if I have not fully understood the question, I am happy to clarify further.
On the point raised by the hon. Member for Angus, the UK does not manufacture all the components required to build a wind farm. We do not expect to make everything, and it would not be legal to mandate UK content. Where investment goes beyond the UK, we want that to go to cleaner, net zero-consistent firms that support our net zero commitments.
The contracts for difference are a key pillar for our energy security, but they need to adapt to changing market conditions. We are determined to make offshore wind deployment a success story and we are willing to take innovative steps to make that happen. Sustainable industry rewards have been deployed with industry input. They will provide much-needed support to an industry that has faced a tough economic environment and supply chain disruptions.
That support should trigger significant investment in expanding the supply chain’s capacity and capability in many deprived coastal areas around the UK and in new, cleaner manufacturing processes. The investment will help to deliver our levelling-up agenda and will positively impact communities that host large infrastructure projects by providing new, well-paid, high-tech manufacturing jobs, as well as by maintaining existing jobs. New offshore wind manufacturers from Britain and overseas are already looking at the UK, thanks to our package of supportive measures. It is true that the measures will have an impact on consumer bills, and we are talking to the Treasury to get the balance right between what realistic sustainable industry rewards can achieve, through targeted revenue support to get investment in the supply chain back on track, and the cost to the consumers.
These measures will also put us on an equal footing with our direct competitors in the EU and the US, who are investing heavily in their offshore wind supply chains. Considering how much deployment and potential we have, it is only right to try to attract and support as much of the supply chain as possible. It is key, though, that we provide the support in a targeted, proportionate way.
As many hon. Members will know, allocation round 6 of the CfDs is now live. The budget for allocation round 6 was announced as part of the Chancellor’s spring Budget. At over £1 billion, it is four times larger than for the previous round.
Dr Whitehead
The Minister is giving a good response to this afternoon’s debate, but I do not think that she addressed the detail of the particular point that I raised. It is not a question of reallocating CfDs but of how we go about a competitive allocation round if we have people in different circumstances, albeit with an SIR, leading up to that allocation round. I would appreciate an opportunity—outside this Committee, if possible— to get to the bottom of that particular problem.
Amanda Solloway
I would, of course, be delighted to facilitate that, either with me or the relevant Minister.
Although that budget does not include the SIRs, it is none the less a crucial step in our renewable energy deployment plans and demonstrates the Government’s commitment to ensuring that the UK remains one of the world’s leaders in renewables. The Secretary of State will decide in due course whether to increase the budget later this year. I commend the regulations to the House.
Large-scale Solar Farms
Alan Whitehead Excerpts(8 months, 1 week ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
Thank you, Mr Henderson, for your consideration of the time available in what has been a very useful and educational debate. I congratulate the hon. Member for Sleaford and North Hykeham (Dr Johnson) on securing this debate. I also congratulate hon. Members on the way they have put their cases. The contributions from the hon. Members for Redditch (Rachel Maclean), for Buckingham (Greg Smith) and for North Wiltshire (James Gray) and the right hon. Members for Gainsborough (Sir Edward Leigh), for Haltemprice and Howden (Sir David Davis) and for Suffolk Coastal (Dr Coffey) all added greatly to the tissue of the debate.
Let us get one or two canards out of the way first. This debate was not, to my mind, about a lot of people standing up and being nimbys, although I understand that hon. Members will quite rightly want to defend what they consider to be the best interests of their constituencies. We had an intervention from the right hon. Member for South Holland and The Deepings (Sir John Hayes), who said that he would stand by South Holland and The Deepings to the last; the right hon. Member for Gainsborough, who I think perhaps is producing evidence for the wrong side in the civil war, nevertheless made the point very strongly about what he felt he was here to do for the interests of his constituency. That is not about nimbyism, but about defending what one thinks is best for one’s own area of the country.
The problem we have is how we ally together a policy that, by and large, everyone in this Chamber is agreed on and the way we carry it out in practice. The policy, on which I think there is no real difference between the Opposition and the Government, reflects the strong view that we should move rapidly forward on the deployment of solar across the country. The Government have a target of 70 GW of solar to be deployed by 2035. In our plans for decarbonisation of the energy system by 2030, we want to see 50 GW installed by 2030.
That is, in part, because solar is now one of the cheapest forms of energy that can be deployed in an energy emergency, where we have to produce an enormous amount of additional capacity over the next few years, in addition to replacing what is going away, to ensure that our system is resilient, stable and homegrown for our future. The fact that solar has to play a central role in our overall energy economy in the future, and the fact that the targets for installation of solar are very similar between the Opposition and the Government, underline how central it is felt to be that solar should play that key role.
When we decide that it will play that key role, the next question is: how do we do it? That is what a lot of the debate today has landed on. Where do we put solar? How do we put solar in various places? What is the most beneficial way to do it, assuming we are going to do it for the country as whole?
Much as we might want to, we will not be able to deliver all the solar on roofs and brownfield sites—certainly not on roofs. But, as I will come to in a moment, the issue of what proportion we can install in particular areas relates to how the Government set out planning and other energy management arrangements that prevent or downgrade the possibility of putting solar panels on to roofs, buildings, industrial workplaces and so on. The Opposition very much want to see, if possible, the predominance of that solar development concentrated on brownfield sites, roofs and industrial buildings, but we recognise that there is an enormous amount of work to do to facilitate the planning and commissioning arrangements that will allow that to happen.
Hon. Members, particularly the hon. Member for Redditch, mentioned cost and remediation on brownfield sites. Solar treads very lightly on the earth. We can do things with solar on brownfield sites that we might not be able to do with other forms of development on a brownfield site, particularly if it needs some remediation, so that is not the key issue. The key issue is the value of brownfield sites in an urban context and the hope value that those sites have, often in contradistinction to the sort of value that the developers think they might get from land that is not going to change its value, on hope or otherwise, in terms of their developments.
Sir David Davis
I am listening with interest to the hon. Gentleman. Does he agree that if we increase the incentive, up to the point of mandating in some cases, for the use of brownfield sites and roofs and so on, that is likely to alter the economics, with people like Elon Musk and others investing in more cost-effective and more easily used photovoltaic cells for that purpose?
Dr Whitehead
Yes, indeed. As the right hon. Member will know, solar is now not looking for subsidy from the Government in the way that, as the right hon. Member for Suffolk Coastal mentioned, it was a number of years ago. It might be that we ought to look at how we can direct the best use of land and facilities for solar, by reintroducing incentives and disincentives that can go into solar development for the future. I would emphasise that that is all in the gift of Government to bring about, in terms of changes to how planning, underwriting and frameworks are organised. We mentioned the land use framework, which has still not come forward from DEFRA. All those things can play a much more substantial role in getting the balance right about where we put what is an imperative to develop for the future.
Some of the questions that have been raised are about not so much solar itself, but, among other things, the cumulation of particular sites in particular places. Of course, there is not anything in planning arrangements that can easily deal with the question of cumulation. Again, that needs to be put into the context of a wider land use planning arrangement for the future. I am from a constituency that has one farmer, although we are not allowed to recognise who that farmer is in the census because we are not allowed to record one farmer in the census return; it has to be two farmers or no farmers. However, I do understand that it is a real issue when there is a cumulation of a number of these things in rural constituencies, and they can see no benefit of that cumulation for their local populations.
Again, it may be within the gift of Government to mitigate that problem by enabling local communities to benefit from the output of the particular farms in their area. Notwithstanding that, it is certainly the case that cumulation has come about not just because of developers’ lust for very large schemes, but because at the moment those are some of the only places where they can get decent connections in the near future. For example, Lincolnshire was the site of two power stations—Cottam and West Burton—which have now closed, but it still has good, high-level grid connections.
Therefore, there are schemes that might come forward in other parts of the country that do not have such good connections, which are being put on the backburner just because developers can get particular connections right now. That is also in the gift of the Government to sort out. They should get the connections in the country on a regularised basis so that the people bringing forward their solar developments actually have a choice of where to put their connection based on the best site for their development, rather than just looking at the economics of getting a connection right this minute.
James Gray
There is a perversity here, of course, which is that the further away a site is from the input into the grid, the bigger it has to be. Because Lime Down, the one in my constituency, is 30 miles away from a link into the grid, it has to be at least 2,000 acres, probably more, in order to pay for the connection.
Dr Whitehead
That is certainly true, but a much wider issue is the fact that connections in this country are pretty much available on a lottery basis. At the distribution network operator level, most of the capacity in most DNOs is taken up, and at the national grid level, the connections are entirely dependent on where the lines go. They do not necessarily go to where people want to connect up, and they are also very much at the limit of their capacity at the moment. A national plan to enable those connections onshore to be distributed equally across the country would go a long way to facilitating much better distribution of the wind and solar projects that we want to see for the future.
Although I do not represent a rural constituency myself, I have great sympathy with the problems of accumulation with solar development. The solution, however, is not to throw solar out; it is to do a number of the things that I have mentioned this afternoon—to reach our target and secure the equitable deployment of solar across the country to manage our electricity future positively.
Dr Johnson
The hon. Gentleman is talking about equitable distribution. I understand to some extent the point he is making, but surely there is some sense in saying that areas such as Lincolnshire, which have such high-quality farmland, should not have massive solar farms at all, because we will simply reduce our food security.
Dr Whitehead
I was intending to go into the 3a and 3b debate, but I do not think it will add anything greatly to what I have to say. Again, it is in the gift of Government, for schemes above the 50 MW level, to look at what the overall planning guidance suggests we should do. I am personally a little sceptical of the overall case about food production and land use because after all it was recently estimated that if we did produce the 70 GW target, that would take about 0.3% of UK land area, up from 0.1% today, compared with 69% of the land that is farmed. That does not add anything to the debate on Lincolnshire itself, but the point is that the actual land take of solar overall will be pretty minimal compared with what is in agriculture currently. As a matter of interest, the land taken by solar already is one fifth that taken up in the country for golf courses.
Dr Whitehead
I think the hon. Lady will forgive me for not being the Government right at this minute. It is not my responsibility to set out what the Government would do for the future; it is my responsibility to respond to this debate as the Opposition.
I have already said what we want to do in terms of planning land use and arrangements for the deployment of solar in a much more methodical way, and bringing forward arrangements that can, for example, make rooftop and brownfield solar much more achievable, to alter the balance of advantage and disadvantage for deployment across the country. That is probably all the hon. Member for Sleaford and North Hykeham can expect me to say about what we will do in government, but I would add that the Government could do that today, so I hope the Minister will tell us what he will do in terms of that balancing to get solar deployed in the future.
James Gray
I am most grateful to the hon. Gentleman for giving way a second time. I have been listening very carefully to his extremely interesting speech, but I must admit to being a little confused about what Labour party’s policy is on these matters. Let me ask him straightforwardly: will the incoming Labour Government —if there is one—be in favour of large-scale solar farms in the countryside or against them?
Dr Whitehead
That is a really interesting question. It is not necessarily the case that there will be an incoming Labour Government, but it is nice to hear the hon. Gentleman declare that there will be; that is really helpful. Should there be an incoming Labour Government, we will want to ensure we reach our targets of solar deployment equitably for the country as a whole. If that means bringing in new legislation, guidance and rules to allow that distribution to take place equitably, that is what we will do. As I am sure he will understand, the detail would take about three quarters of an hour to unpack, so we will have to leave it for now. I am very happy to have a cup of tea with him in the not-too-distant future and set all that out in some detail if he would find that interesting.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)
It is a pleasure to serve under your chairmanship, Mr Henderson. I congratulate my hon. Friend the Member for Sleaford and North Hykeham (Dr Johnson) on securing this incredibly important and timely debate on large-scale solar and the impact of the plans on rural England.
It has been fantastic to hear the passionate and well-informed speeches of my hon. Friends the Members for Redditch (Rachel Maclean), for Buckingham (Greg Smith)—he talked about the benefits of small modular reactors, which was music to my ears—and for North Wiltshire (James Gray).
My right hon. Friend the Member for Gainsborough (Sir Edward Leigh) talked about the positive benefits of further investment in nuclear power, which is why we unveiled the civil nuclear road map earlier this year—the biggest investment in nuclear in 70 years. He would struggle to find a bigger advocate of the benefits of our domestic oil and gas industry than me. I assure him that, despite my Scottish Presbyterian upbringing, I associate myself much more with the cavaliers than the roundheads. We also heard from my right hon. Friends the Members for Haltemprice and Howden (Sir David Davis) and for Suffolk Coastal (Dr Coffey). I think I have engaged with just about every one of them individually on various energy infrastructure projects, not least recently on solar.
It was also good to hear the concerns of communities raised in the interventions of many other Conservative Members, including my right hon. Friends the Members for Newark (Robert Jenrick), for South Holland and The Deepings (Sir John Hayes), for Ludlow (Philip Dunne) and for Staffordshire Moorlands (Dame Karen Bradley) and my hon. Friends the Members for Devizes (Danny Kruger), for North East Bedfordshire (Richard Fuller), for Sedgefield (Paul Howell) and for Cleethorpes (Martin Vickers).
I represent a vast rural constituency that encompasses some of the best farmland north of the border, which is itself looking at significant energy infrastructure build over the next few years, so I completely understand those concerns and have heard them myself from local communities worried about what that build will mean for the countryside in which they live and of which they are so fond.
Three years ago, the Government adopted our sixth carbon budget with the world’s most ambitious climate change goal—to reduce emissions by 77% by 2035, compared with 1990 levels. We also committed to fully decarbonising the electricity system by 2035, subject to security of supply. Renewables such as solar and wind, alongside other low-carbon technologies such as nuclear, will underpin the UK’s transition from a reliance on fossil fuels to a new, secure, clean energy system. Solar is an important part of the energy mix, and its deployment is a key part of the Government’s strategy for energy independence and clean growth.
As set out in the British energy security strategy and the energy security plan, we are aiming for up to 70 GW of solar capacity by 2035. To achieve that, we need to deploy both rooftop and ground-mounted technology. Ground-mounted technology is one of the cheapest forms of electricity generation and is readily deployable at scale. As such, the Government consider that there is a strong need for increased ground-mounted solar deployment, as reflected in the recently published energy national policy statements.
However, the Department and I recognise that, as with any new development, solar projects may impact on communities and, indeed, the environment. The planning system must allow all views to be taken into account when decision makers balance local impacts with the national need.
Because of the quasi-judicial role of Ministers in determining planning applications, I hope that Members will appreciate that it would not be appropriate for me to comment on any specific matters in relation to specific projects in the planning system. Nor can I comment on the merits or harms of any particular proposals, as that could be perceived as prejudging the subsequent outcome. However, the Government recognise that solar projects can impact on land use, and I can speak to that. It is important that the Government strike the right balance between those considerations and securing a clean energy system for the future. Again, the planning system must take those issues into account.
As the recently published national policy statement for renewable energy infrastructure sets out, solar developers
“should, where possible, utilise suitable previously developed land, brownfield land, contaminated land and industrial land. Where the proposed use of any agricultural land has been shown to be necessary, poorer quality land should be preferred to higher quality land avoiding the use of ‘Best and Most Versatile’ agricultural land where possible.”
If it is proposed to use any land falling under Natural England’s best and most versatile agricultural land classification—grades 1, 2 and 3a—developers are required to justify using such land and to design their projects to avoid, mitigate and where necessary compensate for any impacts.
It is clear to me and to the Government that concerns remain about the scale and volume of projects that are being applied for on BMV land in specific areas of the country, particularly in areas with historic and established grid connections. We have concerns that not all developers are properly considering those requirements. That is something that needs to be rectified. We want to see that, following the new EN-3 publication. Although I can say little of detail in this Chamber, I want to assure hon. Members that we are listening and that work is ongoing to see what can be done to ensure that balance is met.
Reference has been made to the fact that there are no Liberal Democrat Members in the Chamber this afternoon. My hon. Friend the Member for Redditch described their policy as “bananas”, which means, “Build absolutely nothing anywhere ever.”
Andrew Bowie
Near anybody—sorry. However, that is not actually the case. The Lib Dems’ proposal, which was voted on at their conference last year, is to remove restrictions on new solar and wind to accelerate deployment of renewable power. It is quite clear why there are no Liberal Democrats in the Chamber today; they would ride roughshod over the views of rural communities around the country to increase the deployment at pace and scale of solar and other technologies.
The reason why there are not many Labour Members in the Chamber is, as the hon. Member for Southampton, Test (Dr Whitehead) suggested, that not many of them represent rural communities, and they are not seeing the impact of the applications. I am now of the opinion, however, that they are just as confused about the Labour party policy on this issue as we all are, following what was a very interesting speech from the Opposition spokesperson.
Solar and farming can be complementary, supporting each other financially, environmentally and through shared use of land. Analysis shows that even in the unlikely scenario that all additional solar needed to meet the British energy security strategy ambition of 70 GW were to come forward as ground-mounted solar, which is not going to be the case, it would be less than 1% of all types of UK utilised agricultural land that was needed to accommodate it. However, as I have referred to, the concentration of so many of those projects in specific areas is concerning, and UK-wide analysis cannot take that into account. Again, although I am unable to say anything specific at this time, I can assure colleagues that we are listening.
The Government consider that improving our energy security is urgent and of critical importance to the country. I do not think that there is any disagreement on that, but it must be achieved together with maintaining food security for our United Kingdom. Solar projects and agricultural practice can co-exist. For example, the science of agrivoltaics is developing, in which solar is integrated with arable farming in innovative ways. That is coming on in leaps and bounds. Solar energy can also be an important way for farmers to increase their revenue from land less suited to higher-value crop production. Again, on that there is very little disagreement.
What we ultimately want to achieve is protecting our environment, backing British farmers and delivering long-term energy security with more low-carbon energy. I guarantee that this Government and this Department will not countenance the industrialisation of our green and pleasant land. It is possible to maintain and increase our food production in a more sustainable way in some areas and to see land use changes in others.
I turn briefly to the issue of cumulative impacts, which has been brought up multiple times. The planning system sets out how applicants and decision makers should consider cumulative impacts. When preparing an application for a development consent order, applicants for solar deployments and developments under the NSIP regime
“should consider the cumulative impacts of situating a solar farm in proximity to other energy generating stations and infrastructure.”
It is then a matter for the examining authority to consider cumulative in-combination effects with the other solar farm proposals and other developments in a locality when conducting an examination of a particular NSIP solar project. During the examination, the views of interested parties, which will include advisory bodies and local planning authorities, will be taken into account in the examining authority’s recommendations. Again, I assure colleagues that we are looking at that issue.
The Department and I appreciate the concerns raised about the clustering of projects around grid connections in some areas. As we bring more new energy infrastructure online to meet the demand for clean, secure electricity, so too must we increase grid capacity. As set out in the spring Budget, the Government are working with Ofgem and network companies to release more network capacity and prevent speculative projects from obtaining and retaining network capacity. That should result in more capacity across the country and help to reduce the clustering of projects.
Community engagement has also been raised. It is vital—this is where Conservative and Labour party policies differ dramatically—that communities have a voice in decisions about their local areas. There are established routes in the planning system to consider the impact of solar projects and to enable communities to raise concerns about developments. I know that there are concerns about how effective those routes are, but I will set out the policy as it stands.
The national planning policy framework, which underlies the planning system for projects below 50 MW, encourages developers, including those proposing solar projects, to engage with local communities before submitting an application. Local authorities will consider a range of factors when assessing applications, including visual and environmental impacts. Members of the public can submit their views to the planning authorities, and significant concerns will be taken into account as part of the local decision-making process. Developers taking larger projects through the NSIP regime must complete considerable community engagement before any approval is granted, giving communities ample opportunity to feed in their views. The level and quality of community engagement, among other factors, will be taken into account by decision makers.
Andrew Bowie
My right hon. Friend knows that I am no longer the Minister responsible for the network or the national grid, but I will ensure that her concerns are passed on to the relevant Minister. Ofgem and the electricity system operator are engaged in a considerable review of how connections are offered across the country, because there is a problem with that system. That is recognised and is being addressed.
Let me briefly touch on community benefits, which have also been raised. It is important that communities can participate in and benefit from the deployment of new low-carbon energy technologies in their local area. However, the Government do not have a formal role with regard to community benefits for solar and other large-scale renewable energy projects. We believe that those are best agreed at a local level, between the renewable operator and the local communities, so that they can be tailored to each community’s individual needs. They cannot be taken into account and, I am afraid, are not relevant to the planning decisions. A number of solar developers already provide community benefits on a voluntary basis. We are working with Solar Energy UK, the industry body, to provide further guidance and advice on community benefits for solar developers and communities and to develop a more consistent approach across the country that is fair to all parties.
Dr Whitehead
Does the Minister accept that under the present trading arrangements for energy, a developer cannot provide a trading benefit for a local area only and has to treat it as though it were a national benefit? Is the Minister interested in changing that so that benefits can come to local areas, rather than simply being spread across the national grid, as hon. Members have said?
Andrew Bowie
As I said, we are working with the solar industry now to develop proposals and give guidance and advice on how best to support local communities and deliver community benefits, so that communities that host these projects on behalf of the wider nation see a benefit. We are not closing our minds to any suggestions that might benefit such communities moving forward. This is a wholesale change in how we deliver energy across the UK, so we should be open to thinking about how we do that in the most appropriate fashion.
I assure right hon. and hon. Members that we are deploying rooftop solar. It remains a key priority for the Government, and continues to be one of the most popular and easily deployed renewable energy sources. We want to see more rooftop solar on industrial and commercial properties, such as warehouses, factories and buildings, to make maximum usage of the available surfaces for business as well as for the environmental and climate benefits. There will be more on that in the solar road map, which will be published in the next few months.
The issue of forced labour was raised. I addressed that in the Chamber just the other evening in response to a debate that was secured by my hon. Friend the Member for Rutland and Melton (Alicia Kearns). However, as it has been brought up again, I reassure Members that the Government are committed to tackling the issue of Uyghur forced labour in supply chains, including in the mining used for the manufacture of solar panels, and are taking robust action. Over the past two years, we have introduced new guidance on the risks of doing business in Xinjiang, introduced enhanced export controls and announced the introduction of financial penalties for those who fail to report as required under the Modern Slavery Act 2015. That followed our announcement in September 2020 of the package of changes to section 54 of the Modern Slavery Act. These changes will require large businesses and public bodies to report on specific areas within their modern slavery statements, including their due diligence processes in relation to modern slavery. There will be yet more on that within the solar road map on what the industry is doing to ensure that it is not reliant on forced labour anywhere in the world, but particularly in China.
We need an increase in ground-mounted solar alongside rooftop solar over the next decade to meet our energy security and net zero goals and to reduce the cost to consumers. But it is clear to me, the Secretary of State for Energy Security and Net Zero and His Majesty’s Government in general that this growth must be sustainable and enabled by a robust planning system that balances the wider benefits with the local impacts, that local communities are listened to and that food security concerns are addressed. That is what we are committing to do. I look forward to the publication of the solar road map, which is the result of the solar taskforce’s work. The document will set out deployment scenarios as well as key actions needed to address challenges in several priority areas, including the grid, rooftop supply chains and skills.
Once again, I thank my hon. Friend the Member for Sleaford and North Hykeham for bringing forward this debate—
Andrew Bowie
I assure my hon. Friend that it is imminent. We will see the publication within the next few weeks.
Andrew Bowie
Spring. I close by thanking my hon. Friend the Member for Sleaford and North Hykeham for bringing forward this important debate. The contributions have been enlightening and well informed, and show the passion with which Members, who I am proud to serve with, have for the local communities that they are honoured to represent in this place.
Oral Answers to Questions
Alan Whitehead Excerpts(8 months, 2 weeks ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I am sure the Secretary of State does not want a repeat on her watch of the failure of allocation round 5, when her Department managed to crash the offshore wind market. However, the industry is already warning that the parameters set for floating wind in the next round, AR6, could mean that only one sub-gigawatt project succeeds in getting contract for difference support: way off the Government’s recently trumpeted target of 5 GW of floating offshore by 2030. What steps is she taking to ensure that we do not see another failure and lose the global race for this emerging technology?
Claire Coutinho
If people want to ensure that we win the global race for renewable technology, they should, frankly, vote Conservative. Under the Conservatives, world-leading mechanisms have been introduced. The only country that has built more offshore wind capacity than the UK is China. We have an enormous and very successful track record, and continue to work with industry to ensure that AR6 will be a success.
Dr Whitehead
I am not sure that answer gives much reassurance to industry or this House. The truth is that uprating our port infrastructure is critical for deploying floating offshore wind and for reaching a zero carbon power system, but Government support is so inadequate that they are funding only two ports, dropping viable projects on the way, when, according to the floating offshore wind taskforce, to reach floating offshore wind ambitions we need infrastructure upgraded in at least 11 ports. Is this not another example of the Government failing to invest for the future and failing to back British industry?
Claire Coutinho
The only failure on renewable energy is the record Labour left when they were in power, when 7% of our electricity was generated from renewables whereas now that figure is 50%. On ports, not only have we got our world-leading freeport agenda but we have put forward projects such as FLOWMIS—the floating offshore wind manufacturing investment scheme—which is also helping to build our port infrastructure.
Cavity Wall Insulation
Alan Whitehead Excerpts(9 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate my hon. Friend the Member for Halifax (Holly Lynch) not only on securing this important debate but on making the detailed case that needs to be made about his scandal. The contributions of hon. Members from across the Chamber have added to her exemplary presentation, and have underlined the urgent need to do something about the issue. My hon. Friends the Members for Blackburn (Kate Hollern) and for Bradford East (Imran Hussain) and the hon. Members for Tiverton and Honiton (Richard Foord) and for Strangford (Jim Shannon) all made first-class contributions to the debate.
Cavity wall insulation has played, and will continue to play, a tremendous role in keeping people’s homes warm, reducing bills, fighting fuel poverty and uprating homes so that they are fit for a low-carbon future. Indeed, the vast majority of cavity wall insulations work perfectly well and do a good job for the homes where they are fitted. Of course, cavity wall insulations need to be done with the right materials, by the right people, in the right places and according to the right standards. I regret to say that there are circumstances—rather more in the early days than now—where those criteria were not adhered to, and problems arose with properties in which cavity wall insulation had been placed.
Dr Whitehead
I am sorry, Mrs Latham. One would think that, in a reasonable world, there should be speedy recognition that the problem has arisen and an equally speedy arrangement whereby the person in whose home the problem has arisen can get restitution for what has happened, in terms of both compensation and putting right what has gone wrong with the cavity wall insulation.
The Cavity Insulation Guarantee Agency came into being in 1995. As hon. Members have mentioned, it provides guarantees for cavity wall insulation. There have been 6 million since it was set up, over a 25-year period. The agency has a good record of ensuring that redress is carried out speedily and properly, where problems have arisen.
Unfortunately, not everybody knows about the agency or has had their wall insulations guaranteed through CIGA. Indeed, they might have had cavity wall insulation installed before guarantees came into place. The picture today is quite good regarding guarantees, but that does not remotely address the problem before us this afternoon. As my hon. Friend the Member for Halifax said, this is essentially a scandal on a scandal. It is the problem of cavity wall insulation going wrong in a certain area. When it does go wrong, several cases often appear in certain areas because the installer—
Mrs Pauline Latham (in the Chair)
Order. Could the Opposition spokesperson address the Chair?
Dr Whitehead
Yes, I am sorry; I keep doing that. The appearance of a number of problems in a particular area might relate to a particular company carrying out faulty insulations or using the wrong material, whereas in other areas no such events will occur.
Scandal one is that a relatively high number of deficient cavity wall insulation arrangements came to light in a particular part of the country. Scandal two is that a parasitic law firm decided to make a good living by zealously pursuing people it thought might conceivably have a claim for failed cavity wall insulation, and tried to push those people down a path to restitution in a wholly cynical and unacceptable manner. I am pleased to hear from my hon. Friend the Member for Halifax that the Solicitors Regulation Authority is investigating that company, SSB Law, but that does not address the fact that other firms also pursued that practice. Ironically, SSB Law took over a number of claims from a company that had pursued this model and gone bust in the process. One might say, therefore, that it is a scandal, upon a scandal, upon a scandal.
The way this worked is set out in a letter from CIGA to my hon. Friend the Member for Halifax, which describes how the model operated.
“Claims lead generator often unqualified promises large payouts if homeowner signs up to pursue a claim for failed cavity wall insulation.
Details passed to a RICS surveyor who does not visit the property but prepares a claim schedule based on detail provided by the lead generator.
Claim is handed to a claims solicitor”.
SSB Law, as mentioned, was a claims solicitor that took on a number of these cases, including those of another company operating this model, Pure Legal, having apparently been offered the opportunity to do so by the Solicitors Regulation Authority itself.
The claims solicitor then sends a letter to the installer and
“informs them to put their insurer on notice and that the claim will be in the order of 60k for damages caused by poorly installed insulation—schedule of costs does not reflect the property and damage is often not evident.
Homeowners are actively discouraged from notifying the guarantee provider”
—in this instance, CIGA—
“and instead promised a large pay out.
Just before the claim goes to court, the Claims solicitor drops the compensation amount to just over 10k (They do this to encourage the installer or insurer to pay out and also so that they can still claim costs through the fast track legal route). Costs are typically around 70k at this point”.
That is the model, and it is a scandalous model. No one should be allowed to operate that kind of arrangement in this country, in this age. Solicitors’ companies are supposed to be protecting the interests of their clients and not just trying to make a living parasiting on the distress of homeowners dealing with cavity wall insulation problems. The Solicitors Regulation Authority has a substantial job to do in not just investigating this particular company, but hopefully broadening this out to investigate how solicitors are able to get away with this kind of arrangement, in this kind of way. As we have heard this afternoon, when that arrangement does not work out very well, they go bust and leave all those householders facing those huge bills.
Are the Government able to pursue any form of intervention to assist householders protecting themselves from the claims coming back against them? In a number of instances, those claims are from the installers that have basically been attacked by these particular law firms. The installers have defended themselves, but then the law firms went bust. They have put in a lot of money, and naturally they want some of it back. It is an almighty mess as to who is really responsible for all this, although we know that overwhelmingly the responsibility lies with the dodgy law firms that have pursued this kind of practice and given false guarantees and false promises to householders. Perhaps the Ministry of Justice could look at what sort of practices make this sort of arrangement possible.
We all want to see confidence in cavity wall insulation for future programmes, although we differ among ourselves on the extent of those programmes. The hon. Member for Tiverton and Honiton suggested that it was the Liberal Democrats, in alliance with the Government, that really pursued cavity wall insulation. That was true, but it was based on the programmes of the previous Labour Government, under the cert and assess programmes that carried on until about 2012 and 2013. That produced an enormous number of generally very good cavity wall insulation programmes, but it has crashed since that date. Certainly, the Opposition hope to revive those publicly funded and sorted-out retrofit measures under a future Labour Government.
I think there is agreement on all sides that we want the general public to see that cavity wall insulation is a good thing for their homes and for them, and indeed will be a good service for the nation in making our homes warmer and more liveable. It is important that everybody has confidence that that system is going to work as well as it should and, if it does not work as well as it should, that there is proper redress. I ask the Minister to pursue seriously whatever can be done to seek additional redress for the householders who find themselves in this difficult situation. I also ask the Minister —perhaps working in conjunction with the existing guarantee agencies—to ensure that, for the future, the public have the best level of protection they can get when cavity wall insulation goes wrong: a guarantee that, under most circumstances, people undertaking cavity wall insulation can rest easy that their cavity wall insulation should work rightly for them, but that they need not worry if it does not because help will be at hand to put it right.
Draft Strategy and Policy Statement for Energy Policy in Great Britain
Alan Whitehead Excerpts(9 months, 1 week ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
The power to designate a strategy and policy statement, as the Minister has set out, has been in place since the passing of the Energy Act 2013. That Act envisaged, among other things, that a strategy and policy statement would be an essential tool in aligning the actions of Government and of Government agencies and bodies, such as Ofgem, and ensuring that they were marching in lockstep as far as the development of strategic priorities was concerned. Indeed, this strategy and policy statement is very important in making sure that, with the designation of a net zero mandate for Ofgem, which took place in the recent Energy Act 2023, the alignment is complete with the issue of the strategy and policy statement. However, I point out that these strategy and policy statements are supposed to last for five years and to be reviewed at the end of a five-year period—or, significantly, should an election take place in the meantime.
The strategy and policy statement power, therefore, has not been used since the introduction of the 2013 Act. We should have had one almost immediately after the Act, and we should be revising the second one now. The fact that one is not in place is a theme of this Government because we other publications have been long delayed, including a new national policy statement for energy and a national policy statement for nuclear.
The document necessarily acts at a very high level, and there is a lot that we agree with, particularly the strategic overview and priority that has been put forward with this policy statement. As I have mentioned, having an SPS is a great improvement on not having one in this area. However, it is clear that the document will not stand for five years, which is the time at which the legislation says it should be reviewed. For one, there is an election coming this year. While there are several points of substance on which Labour plans would differ from the Government’s, the most important is our commitment to clean power by 2030, which is a clear differentiation from the strategic view set out in the document. Certainly, should there be an election shortly and should Labour be fortunate enough to win, we will revise the policy statement at a very early stage in the next Labour Government.
Alan Brown
If Labour gets in and if the policy document is revised, how will it be funded to get to zero carbon by 2030? Surely, that was a key component of the £28 billion a year pledge, which has now been scrapped. The two are surely incompatible now.
Dr Whitehead
I am tempted by the hon. Member to go down the lengthy path of discussing how the move to clean power by 2030 will be financed. I can assure him that that is fully set out and sorted out as far as Labour policy statements are concerned. However, he makes the important point that a number of things that Government have done recently run against not only the idea of clean power by 2030 but their own strategy and policy statement as it is now being put forward —for example, putting back the mandate for the end of the sale of internal combustion engine vehicles to 2035 when it was originally 2030.
Regardless of the results of an election, I do not think the document can stand for five years because it leaves so much undefined. The Minister has mentioned the issue of the National Energy System Operator and its relationship to Ofgem, but that is completely undefined in the document because that has not yet been worked out. NESO itself is not yet established and, indeed, the strategy and policy statement makes frequent reference to unpublished interim steps, such as an interim strategic spatial energy plan, which we think is a good thing and long overdue. As NESO is established in the various plans that the SPS hints are in place, we need a much more substantive update to the policy statement, including what is to happen on the question of regional energy system planners, which the document mentions but does not discuss further, as far as their operation and organisation are concerned.
Can the Minister tell us when she hopes to issue an update to the strategy and policy statement? Perhaps, when we are clearer about what the National Energy System Operator will actually do and how its relation to Ofgem will pan out, she will be able to say to the House that a revision of the strategy statement will be forthcoming and will put things into place in a much clearer way regarding the new arrangement for energy systems.
There are also one or two drafting errors in the statement that I will point out. Twice, the document refers to plans that are due for completion in 2023. We are now in 2024, and it is not that the plans have not been completed or addressed; it is just that the document is referring to, I assume, something that has not been updated in terms of where we are now. It would be a shame if the document went out with factually inaccurate material on dates.
There are other commitments for 2024, on which we are not convinced the Government are making sufficient progress and which are mentioned in the document as if they were. One example is developing a plan for long-duration energy storage. Indeed, other areas bear little relationship to reality; for example, the Government reaffirm their commitment to the 2030 fuel poverty target, but National Energy Action says that they will miss it by over 90%. The SPS also talks about the roll-out of smart meters, but as we all know, that too is well off-track. I would question the value of a strategic overview that does not take proper account of the real state of the policy landscape it is summarising.
This strategy and policy statement is clearly going to need to be revised in the near future. However, as I said, it is better than having no statement at all, and it provides for some useful new processes such as Ofgem reporting annually on how it is meeting the requirement to have regard to the Government’s strategic objectives. For that reason, and because of the fact that we finally have a strategic policy statement, we will not be voting against the measure this morning.
Gas-fired Power Stations
Alan Whitehead Excerpts(9 months, 2 weeks ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
I am little puzzled about what all this is about. The Committee on Climate Change and all credible energy experts have said that we will need a small residual of unabated gas in the system for the medium term, and that is consistent with a fully decarbonised power system. No one disputes that, and it is barely worth an announcement. We should extend the lives of existing plants to meet that need. If new-build plants are needed in the short term to replace some of those retiring gas-fired power stations, there is no disagreement, provided they are capable of converting to hydrogen or carbon capture, as the Government say they must be.
However, that is not what the Secretary of State said yesterday at the Chatham House meeting. The Government’s own analysis published yesterday shows that 24 GW of existing gas capacity could be maintained via life extension and refurbishment, and 9 GW of new capacity is already in the baseline under existing capacity market arrangements. That is an uncontroversial position and analysis, and hardly something worth making a huge fuss about. But again, that was not what the Secretary of State talked about at yesterday’s Chatham House conference.
Given that analysis, could the Minister enlighten us with the number of new gas plants that the Government are hoping to build, given there is no mention of that in the 1,500 pages of documents that were published yesterday? That is an important point, because it appears to show the Government’s intention to go beyond what is already in the analysis and build a large number of new gas-fired power stations for the future.
There is a great deal in the review of electricity market arrangements published yesterday that is worth discussing, not least the Government’s glaring failure to bring forward low-carbon flexible technologies such as long-duration storage, which everyone knows we will need. It is a shame that the Minister has not properly addressed that. Will he give us clarity on whether this is a meaningless announcement within existing policy arrangements? Or, as has been said, is it an attempt to conjure a culture war out of climate and energy policy, with announcements with no substance or value that show that the Government have no serious plan for energy in our country?
Graham Stuart
The hon. Gentleman asked whether new power plants will be hydrogen or carbon capture, utilisation and storage ready; we will legislate to make that a requirement. He asked how much there will be; around 5 GW, but that is dependent on so many interrelated things, such as the growth of low-carbon and flexible storage, which, as he referred to we are a world leader in developing and supporting both in innovation and through the capacity market. He suggested that none of that was clear yesterday, but it was made crystal clear.
We are a world leader, having announced £20 billion for CCUS. The hon. Gentleman will remember, because he has been around a long time, that in 2003 the then Labour Government said that carbon capture, utilisation and storage was urgent and that there was no route to 2050 without it, but then they proceeded to do nothing about it. This Government are getting on with it. We are putting our money where our mouth is and developing technologies such as carbon capture and hydrogen, in a way that the Labour Government failed to do—as they did with renewables, to boot. All they do is talk about climate, but the truth is that the greatest climate risk to this country is if the right hon. Member for Doncaster North (Edward Miliband) destroys the market and starts some state-run quango, which will wreck the renewables growth that we have seen.
Draft Energy Bills Discount Scheme (Amendment) Regulations 2024
Alan Whitehead Excerpts(9 months, 3 weeks ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
As the Minister has explained, the draft regulations make a lot of sense administratively and in respect of future costs to the Government. The explanatory memorandum sets out the cost of keeping units in place essentially forever, because there was not originally a cut-off date for applying for the scheme or for being liable for the consequences of registration. The explanatory memorandum mentions a sum getting on for £6 million as the administrative consequences of not doing something. From that point of view, the draft regulations make a lot of sense.
From the point of view of consumers, and indeed of justice, the draft regulations make rather less sense. Does the Minister have any thoughts on that? Is there anything she would consider doing to mitigate the negative consequences? I address that question to her because I know that as the scheme has progressed she has always been keen for customers to get the full discounts to which they are entitled. She and I have discussed methods of ensuring that that happens. I completely exempt her from my criticisms of the problems that we are likely to see, because I know that her intentions are absolutely in the right place.
Let us go back to the introduction during the energy crisis of the methods by which discounts could be applied. As the Minister says, there were two schemes: the energy bills discount scheme for commercial and business interests, and the energy price guarantee for domestic customers. The energy price guarantee went straight to customers, because there was a direct relationship between the issuer and the receiver of the discount. However, although a substantial majority of customers were in that position, some domestic customers were not in a position to receive any direct discounts, because, as far as the scheme was concerned, they were not direct consumers of energy. They were people in park homes, people in shared properties in which a landlord had responsibility for the energy supply, or—as in this case—customers of a heat network. It was the intermediary, the heat network operator, that took the discount on the commercial energy bills discount scheme, not the customers themselves.
What happened after that was established as part of the overall discount scheme. I feel that some of the thinking on who got what and through which instrument was not pursued fully when the schemes first came in. Because of the speed at which they came in, the problem of pass-through to customers who would not receive the discount directly was not properly investigated in the first instance.
In an attempt to rectify that, a number of statutory instruments then made provision that, although the heat network operators would get the discount through the EBDS, they were essentially required to pass through the discount to customers. Indeed, because they had to apply for the discount, they were required to register to apply. The discount would not automatically come to them, as was the case in some other aspects of the energy bills discount scheme; they were effectively required to apply and register that they had applied.
The Chair
Order. I am following the Opposition spokesman’s comments very carefully. He is making an argument that the two schemes to which he has referred are related. He is entitled to make that argument, but strictly speaking it is not within the scope of the statutory instrument before the Committee. He has made his point clearly, but if he could move on to issues within scope of the statutory instrument, that would be helpful.
Dr Whitehead
I completely accept your guidance, Sir George, but I thought it essential for the elucidation of hon. Members to state the position as it actually was, as the discount scheme progressed.
The draft regulations relate specifically to combined heat and power companies required to give a discount to customers. When the Joint Committee on Statutory Instruments considered the original statutory instrument, it was concerned that it imposed an obligation on intermediaries to provide certain information to end users without a mechanism for enforcing it. There was no sanction on those bodies—in this case, energy networks as the intermediaries—to ensure that they would face legal consequences for failing to do so. In other words, if they did not apply to receive a discount or they did not pass it on to their customers, nothing would happen to them.
When I made that point in a debate at the time, the Government said, “We don’t think it necessary to have any kind of sanction in place, because most people will comply, on the basis that we have published a piece of secondary legislation that they will comply with.” However, it is apparent from the draft regulations that in many instances those people have not complied with the requirements. They either did not apply for the discount in the first place or have not passed it on to their customers; we do not know which, because there was never a sanction.
Now, at the end of the scheme, we are saying—perfectly reasonably for administrative purposes—that we should no longer require those people who have not applied to receive a discount to do so in future. As the Minister said, there is a brief period after 31 March when they will be able to do so, but after that it will stop. Effectively, the potentially large number of companies and organisations that have not applied the discount or passed it on will just get away with it. They will just continue with their business and have no liability after that to do anything for their customers. They will probably never know just how many of them have been disadvantaged as a result.
The explanatory memorandum indicates a range of customers and an amount of money of which customers may have been deprived, one way or another. It states:
“Based on data from existing applications, we estimate the value of lost discounts could be up to £1,200 per customer. This lost benefit would disproportionately affect disadvantaged groups—namely the elderly and ethnic minorities—who are significantly more likely to be on a Heat Network.”
There is a essentially a mini-impact assessment in the previous paragraph, which states that between zero and 3,000 quality heat suppliers
“have not applied for the scheme, representing £0-66m of support.”
That is the effect on customers.
The Minister has said that civil sanctions will continue to apply. It may well be that in many instances customers can still take their supplier to court if they think that the supplier has received a discount but it has not been passed through. However, it is very difficult for customers even to know that, and they certainly will not know it after the scheme comes to an end.
According to the impact assessment, there are a large number of customers who should have received a discount of £1,200 but have not, either because the company did not apply for the scheme or because it applied but did not pass anything through. Again, we do not know which is which, because we have no records. There were no sanctions relating to who was doing what with the scheme.
Although the Opposition do not intend to vote against the regulations today, I want to register substantial disquiet about how we have ended up here with the scheme. I know that the Minister is very keen on ensuring that everyone gets their discount. Are there any methods of reaching a more satisfactory ending, other than offering people the option of going to the energy ombudsman or the courts to get their discount? Most people would rather fly to the moon. I would value the Minister’s thoughts.