Oral Answers to Questions

Debate between Alistair Carmichael and Lord Harrington of Watford

Tuesday 12th December 2017 Commons Chamber

[Richard Harrington]

I agree totally with my hon. Friend. I am very impressed by the way in which the finance industry generally is adapting to the clean projects ahead of us.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

Support from the Government will be required to get marine renewables such as wave and tidal power to the point of commercialisation. Renewables UK has come up with a proposal for innovation power purchase agreements. What is the Government’s view of that?

Renewable Energy Generation: Island Communities

Debate between Alistair Carmichael and Lord Harrington of Watford

Tuesday 4th July 2017 Westminster Hall

[Richard Harrington]

I can assure the hon. Gentleman that we are aware of that issue and we are fully on it. I am happy to meet him if he would like to discuss it separately, but I have only five minutes left now and I do not want to break into the time for the key points that I need to raise.

There is a range of options for overcoming the issues that I have outlined, and I hope that by taking a pragmatic approach we can do so quickly. We need to understand the costs of the projects and the impacts on consumers’ bills. My officials have begun the process of updating the evidence base to set an appropriate strike price—the maximum that these projects could get paid for each unit of electricity that they produce. We must not forget that any additional costs that arise as a result of awarding support contracts are ultimately paid by households and businesses in their electricity bills.

Our approach to supporting new renewables, of competitive auctions with limits on the maximum price that we will allow, ensures that we support only the more cost-effective projects. That approach is not new but has been applied very successfully to other technologies, such as offshore wind. The industry is confident that the renewables support auction currently under way, whose outcome is expected in the coming months, should lead to a significant further drop in price. Whatever approach we take will need to work in this context of quite rapid price changes, and we want to see the outcome of our current auction before making decisions regarding the remote Scottish islands.

We have been through very clearly the importance of local support. Not everyone in the islands will support the development of the wind farms, but I am told that the majority of residents do. I understand that a poll of 1,000 Isle of Lewis adults commissioned by Lewis Wind Power found that seven in 10 supported having wind farms on their island. That is encouraging, but such support should not be taken for granted. It needs to be rewarded in the way that has been discussed—through community benefit funds and other systems. The Scottish Government have informed my officials that all the developers on the islands have committed to pay at least £5,000 per megawatt of capacity per year into such funds for the lifetime of a wind farm. That means that the Viking wind farm on Shetland, for example, could provide up to £1.85 million every year to the community. That money could be used for all sorts of projects: schools, local support groups, scout groups—the list is endless. Developers are also offering communities the opportunity to own a stake in projects, which is something that the UK and Scottish Governments are keen to see more of. Beyond direct income, we should also acknowledge the other benefits that these projects could bring. For example, jobs will be created not just during construction but throughout the lifetime of the projects.

Wind energy can play an important role for the country as a whole in producing the electricity we all need to support the running of our economy and our daily lives and in helping to reduce the harmful emissions associated with our energy systems. We all appreciate the commitment that island communities will have to make to ensure that we have access to long-term clean power. That is why it is absolutely right that they should benefit from hosting the projects.

We recognise that there are different ways of delivering the benefits, but of course it is important that any commitments that developers make are real and go beyond warm words. The Scottish Government are considering this issue closely, and I very much welcome that work. I look forward to meeting the right hon. Member for Orkney and Shetland and a group of developers, which we discussed outside the Chamber. That is a very good idea, which I am keen to progress as soon as possible.

I hope that my response today, in the short time that I have had, provides some reassurance to Members, as well as to the constituents we all represent, that the Government will support the development of onshore wind projects in the remote islands of Scotland, where they will directly benefit local communities.

Another very good point made by the right hon. Member for Orkney and Shetland is that we are not starting from scratch. We know that, and I do not mean just the manifesto commitment, but everything that went before.

[Mr Carmichael]

I understood the Minister to say earlier that the Government would not come forward with firm proposals until after the conclusion of the current round of contract for difference auctions. Is that indeed the case? May I ask him to take that away and consider whether it is really necessary? At the very least, given the pressures of time on us here, we should have everything ready to go once we reach that point.

[Richard Harrington]

I am very prepared to consider that point as the right hon. Gentleman has asked me to do. I hope that hon. Members will bear with us as I and my officials tackle the issues that I have outlined. I hope to come back very shortly with a decision. I say “very shortly” because I want that on the record and because of the respect in which I hold the right hon. Member for Orkney and Shetland. In the meantime, I will shortly be meeting the hon. Member for Na h-Eileanan an Iar to discuss these issues further, and I would be happy to meet any other Members of this House.

Question put and agreed to.