Renewables Obligation (Amendment) Order 2021

Baroness Bowles of Berkhamsted Excerpts

Tuesday 23rd March 2021 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I also welcome the noble Lord, Lord Kamall, to his place. It is not the first legislature in which he, the noble Lords, Lord Kirkhope and Lord Hannan, and I have sat, and indeed worked, together, albeit in our respective groups; I look forward to that happening again.

I turn to the order. It is good to see that renewable incentives have worked, as other noble Lords have said. It is also good to see that, in the wider scale of things, we can soon look forward to the tapering off of the schemes, as it becomes no longer necessary to keep on introducing incentives as renewable energy takes its place as a competitive source of energy.

This instrument will reset the balance of the cost of mutualisation so that it is shared between supplier and generator, broadly as it was when the scheme was introduced in 2005. I suppose I can also identify with the comments of the noble Lord, Lord Kirkhope, about how it was perhaps left a bit too long to rebalance and, therefore, it comes as a bigger shock when it happens. Since that time, costs have moved on and the balance is now falling more heavily on suppliers, so, if the cost balance is changed in the manner suggested in this order, suppliers are the winners and generators the losers.

The consultation was predictable, I suppose: the winners were in favour and the losers against. However, adding up the numbers, more seemed to agree with the Government: one supplier disagreed and five generators agreed, and, of the neutrals, three agreed and two disagreed, meaning that, by a net five, the ayes have it.

At the end of paragraph 7.6 of the Explanatory Memorandum, there is a suggestion that, by reducing cost to the suppliers, there will be less to pass through to customers. As the noble Baroness, Lady McIntosh, has indicated, what is passed through to customers is obviously of concern. This raises a question: where does the cost to the generators end up? Part of me cannot help but think that it somehow ends up with households, but could the Minister enlighten me about the effect of costs that now have to be absorbed by the generators?

I have no further pearls of wisdom to dispense on this, and I will not spend any more of the more than adequate time limit to say that, all things being equal and in the absence of any other information, it seems reasonable to restore the cost balance to that which was originally struck. I have no objections to this instrument.