Solar Industry

Antoinette Sandbach Excerpts

Tuesday 5th March 2019 Westminster Hall

[Antoinette Sandbach (Eddisbury) (Con)]

I beg to move,

That this House has considered the effect on the solar industry of the replacement of the feed-in tariff.

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased to have secured this important debate. The Minister knows that I have been focused on this issue for a number of months now. The solar industry is reeling from the announcement that the feed-in tariff scheme is to close. The scheme was a huge success, with solar panels installed on nearly 1 million homes since it was launched in 2010. However, the loss of such a successful programme has led to a substantial loss of confidence in the sector. Between 30% and 40% of firms are contemplating closure, and international figures are considering pulling out of the UK market.

The news about the scheme came on top of a business rates rise and caused a huge degree of apprehension in the sector. If that apprehension turns into something more substantial, the loss of firms on the scale suggested would be hugely damaging to the sector, the wider economy and our efforts to tackle climate change.

[Darren Jones (Bristol North West) (Lab)]

I thank the hon. Lady for securing this important debate. Does she recognise that this sector is not just about profit-making firms; it is also about charitable and community organisations? In my constituency, for example, they make money from solar farms to help fund youth centre services and other community outreach activities. This is also an issue for their funding sustainability.

[Antoinette Sandbach]

I absolutely agree, and I hope the Minister will say something about community schemes in her response, because there are many different ways of installing and making the best of solar power, as the hon. Gentleman has just indicated, and its flexibility has been one of the reasons why it has been taken up so quickly.

I was talking about the damage to the solar industry. One firm in my constituency, near the village of Malpas, closed once the restrictions on the existing feed-in tariff schemes were imposed. I hope that was a one-off and not a sign of things to come.

[Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)]

The hon. Lady is making a powerful speech about the benefits of the feed-in tariff scheme and why it ought to be maintained. However, does she recognise that there are flaws in the way it has been applied, particularly in relation to the green deal scheme, such that many people were mis-sold feed-in tariffs and have been severely financially affected by the issue, including many of my constituents and others across the UK? The Department for Business, Energy and Industrial Strategy still has to address that through the Green Deal Finance Company.

[Antoinette Sandbach]

I am aware of the issue. I think those people were misled at the point of signing, and then were trapped in contracts that they found very difficult to execute. I know there have been some very detailed radio programmes that have covered the position of the hon. Gentleman’s constituents and others.

In my area, however, solar has been a success and people are keen to get involved in solar projects. In fact, that is true not only of solar. In Church Minshull in my constituency we have a wonderful Archimedes screw. That is not a cocktail or anything salacious, but a hydropower project that produces enough electricity to power the equivalent of 77 homes. Nevertheless, despite the success of such projects locally, the prospects for solar power nationally are rather bleak. The UK was recently rated 20th out of 20 for global solar photovoltaics prospects between 2018 and 2022 by SolarPower Europe’s global market outlook.

[John Howell (Henley) (Con)]

When the scheme was closed down, there was a lot of talk about alternative technology. My hon. Friend just mentioned the Archimedes screw, and there are other alternative technologies such as batteries. Have they come to fruition at all?

[Antoinette Sandbach]

There are huge changes coming forward in battery technology. Of course, battery technology will be the key not only to solar energy, but to small-scale wind projects, particularly in relation to how we harness and store such power. There are a number of new and exciting technologies in renewable power. As someone who is keen to see as much of our power as possible coming from renewable sources, I know that the Government are committed to looking at how we can encourage those kinds of projects to go forward, and in the battery sector there is the Government’s Faraday battery challenge.

Given the prospects outlined by SolarPower Europe’s global market outlook, it is clear that the sector needs some positive news, and I hope that the Minister can deliver that today. However, businesses need reassurance more than anything. The Government have been consulting on the replacement to the feed-in tariff regime: the smart export guarantee. The consultation on that measure closed just over four hours ago. However, the export tariff, which is a key part of the FIT, ends on 31 March, which leaves just 18 days to resolve the questions surrounding a replacement before we risk falling into the void that will be created between the old policy closing and the new one beginning.

I welcomed the Minister’s reassurance last November that

“solar power should not be provided to the grid for free”.—[Official Report, 20 November 2018; Vol. 649, c. 701.]

However, there is a risk that that is exactly what will happen if there is a gap between the two schemes, so I would like her to give some reassurance that the replacement scheme will be fully operational in time. This should be a baseline to build upon, not a standard to live up to. What the sector really needs is a minimum floor price.

[Catherine West (Hornsey and Wood Green) (Lab)]

I thank the hon. Lady for her excellent speech. Does she agree that some schools and voluntary sector organisations are really getting involved in this kind of green initiative, and that small businesses in particular could be affected adversely if the scheme should fail and the recommendations are not taken up fully by the Government?

[Antoinette Sandbach]

The Minister will have heard the hon. Lady’s comments, and I hope that she takes account of them, because a minimum floor price would put the sector on the same footing as the offshore wind industry, which benefits from the certainty that contracts for difference provide, and fossil fuel investors, who benefit from the capacity market.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate my hon. Friend on securing this important debate. I note that the Renewable Energy Association has lobbied for a market-based solution, which this clearly is. However, I share some of her concerns that, without certainty on pricing, some people will be deterred from investing here in the first place, unless we can get the matter right.

[Antoinette Sandbach]

I agree with that assessment, which is why I argue that a minimum floor is needed. I am afraid that failure to extend that kind of certainty to small-scale prosumers will give the impression that the Government are more comfortable with big business than with small producer-consumers.

A fair minimum export price will ensure that consumers are not ripped off while the industry and the new regulation sort themselves out. It will also encourage suppliers to get their systems in place in readiness for market-wide, half-hourly settlement, which will help accelerate the smart energy transition. If a minimum floor price was to be informed by the system imbalance price, it would ensure that all other generators and prosumers could be treated equally, as required by article 21 of the renewable energy directive, without inhibiting innovative smart offerings.

Additionally, the commitment to a zero floor price, while welcome, is insufficient. No country in Europe asks prosumers to pay to put electricity into the grid. Likewise, in 2018 just 0.4% of daylight hours were a negative pricing period. Therefore, given the rarity of such an occasion, this is not what prosumers need. What is needed is the minimum floor price, which would have a transformative impact on the prospects for the sector, not simply a zero floor price.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

I thank the hon. Lady for securing the debate and for her eloquence in introducing it. I completely agree about the need for a minimum floor price. Before I entered this place, I was the lead on this issue at Leeds City Council, and we put 2,003 solar roofs on council properties. Without being a prosumer, we could not have a FIT reduction, which would allow us to fit more roofs. This is therefore not only about individual consumers; it is about social housing and housing associations, which cannot afford not to have a repayment scheme. The minimum floor price would enable such schemes to be brought forward.

[Antoinette Sandbach]

I completely agree. I know that councils and housing associations have certainly taken advantage of the ability to install solar power, which is a great development.

The decision needs to be made quickly, to meet the tight deadlines, but it would be a shot in the arm for a sector that has faced a series of difficulties. It would also help to deliver our climate change targets. Yesterday’s Carbon Brief analysis shows that the UK’s CO₂ emissions fell in 2018 for the sixth consecutive year—something we should celebrate—and if we are to continue that record-breaking trend, we must double down on investment in renewables.

[Matt Rodda (Reading East) (Lab)]

I would like to show my support for the hon. Lady’s initiative on this important matter, and to reinforce her point. Surely the issue is not that our carbon emissions are dropping, but how quickly they are dropping, and the need to accelerate that rapidly. I wholeheartedly support her very worthwhile potential initiative to help accelerate the speed of reduction. I have some experience in our local authority of the benefits, which she mentioned, of local authorities and charities working together to help install solar panels.

[Antoinette Sandbach]

I am grateful to the hon. Gentleman for that intervention.

Beyond the need to make the decision, there is a concern that the roll-out of the smart meter programme could have an impact on the deliverability of necessary infrastructure to facilitate the smart export guarantee. SMETS 1 meters, which are in 17 million homes, cannot yet relay export data to the Data Communications Company. What happens to those homes if they install solar? Not a single supplier has trialled export metering through the DCC. Does the Minister know how long the trials take? Will individual homeowners be the testing ground? What reassurance can she give?

The value of the renewables sector, and of solar specifically, is huge to the future of both our economy and our planet. All the sector asks for is to be treated fairly and to be given the reassurance that exists in other parts of the energy market.

[Douglas Ross (Moray) (Con)]

My hon. Friend makes a compelling argument on a subject that is important to many constituencies, including mine, where we have an extremely successful company, AES Solar. Does she agree that certainty is absolutely needed, because the deployment of solar photovoltaics fell by 94% in 2018 compared with 2015, which is a worrying statistic?

[Antoinette Sandbach]

I agree that is worrying. I would argue that small-scale renewables encourage our constituents to get involved in a whole green agenda and to look at their homes and their energy use in a completely different way. If we combined that with energy efficiency measures, we would start to get some dramatic change in the sector. There is a big opportunity for the Minister regarding energy efficiency, as well as in combination with renewables.

[Matt Western (Warwick and Leamington) (Lab)]

Will the hon. Lady give way?

[Antoinette Sandbach]

This will have to be the last intervention.

[Matt Western]

The hon. Lady is being very generous, and I commend her for bringing the matter before us. From 2012 to 2018 we saw an 80% reduction in installations. We were democratising energy; a powerful thing was going on in this country. It is so important that the sector has some certainty—such as a 10-year plan— to ensure that we deliver.

[Antoinette Sandbach]

The hon. Gentleman will have heard in my speech that I have been arguing for that certainty. The consultation closed four hours ago, so the Minister will not yet have had time to consider the responses, but I think that, from the debate, she will appreciate the urgency of doing so. I hope that she can offer answers to my questions and reassurance to those who have backed renewables. We are rightly proud of our position as a world leader in renewables technology and climate change, and I hope that the Government will take concrete steps to keep us in that positive position.

--- Later in debate ---

[Antoinette Sandbach]

One of my concerns is the gap that has been spoken about. I understand the Minister’s desire to get things right, but will she consider extending the FIT scheme to cover that gap, bearing in mind that, given her efficient work in her Department, it is likely to be a short delay?

[Claire Perry]

Sadly, in all honesty, probably not. We have been clearly signalling the closing of the FIT scheme for several years now, and the response from the industry has been, “We understand that. We understand that some schemes may be on hold, but we welcome the smart export guarantee, because our main ask was to ensure that the energy that was being generated had some value.”

My hon. Friend the Member for Eddisbury asked me another question about an issue that I was not fully aware of—namely, the concerns about testing the smart metering equipment technical specification 2 programme to ensure it interacts effectively with solar generation. I have instructed my officials to ensure that that testing is actioned, because that is an important point.