Energy: Feed-in Tariffs

Baroness Smith of Basildon Excerpts

Thursday 9th February 2012 Lords Chamber

[Baroness Smith of Basildon]

My Lords, I thank the Minister for repeating the Statement in the House today. I am grateful for the opportunity to debate some of these issues and to seek a few points of clarification on issues where I am not clear.

I welcome the Statement and the comments in the Written Ministerial Statement issued this morning about how the feed-in tariff scheme is an important instrument in meeting the Government’s commitments on the take-up of small-scale low-carbon technologies, particularly after the comments of the noble Lord, Lord Marland. I am sorry that he is not with us today because I could have teased him on this; when we debated this issue on 30 January, he declared this scheme as one of the most ridiculous schemes that had ever been set up, and said how bad it was to have a product that needed the sun to shine to produce electricity. I am glad to see that the Government did not take his advice and instead are being supportive in their Statement today.

I sometimes think that I am repeating myself and that this falls on deaf ears, but one of the great frustrations of the debate on the now regular changes that the Government have made to the feed-in tariffs scheme is how it has been caricatured by Ministers as between a Government who recognised that there needed to be changes to the scheme and everyone else who thought that no changes were needed. I would like to lay that to rest: neither we nor the industry have ever argued against change. Our concerns have been that the speed, the scale and the way in which the changes have been made have badly damaged investor confidence across the whole renewables sector and have cost jobs. The industry is in real danger of losing the momentum that it has worked so hard to achieve.

To clarify that, I put forward the principle of degression, which is referred to in the Statement and in the consultation, in a previous debate last November when I suggested that the Minister took the opportunity to look at examples from other countries including the German degression mechanism, which controls volume as well as returns. I also advised the Minister then that these would work in the UK only with a more ambitious approach to the amount of solar PV

There is a lot to digest in the consultations issued today. I hope that there will be much to support, and no doubt we will return to these, but today I would like to raise a few issues with the Minister. The department has said today, and this is confirmed by the Minister Greg Barker in the other place, that DECC commissioned an analysis on the costs of solar PV. My understanding is that the study was commissioned on 10 January but it had to report back just three days later. How many solar PV businesses were consulted as part of that analysis? I also ask for clarification of the community schemes referred to in the consultations.

The Minister may be aware that the previous scheme that was brought in by Labour provided for community schemes because we think that that is an important way forward, particularly for social housing. The Government’s first tranche of changes to solar PV and feed-in tariffs divided the market into schemes above or below 50 kilowatts. That not only ruled out the large-scale solar farms that the Government were seeking to take out of the scheme but made community schemes unviable. When I and my colleagues in the other place raised this back in November, Ministers agreed to look at it again and bring forward proposals, so we welcome consultation and will look at the new proposals on community schemes. What discussions have the Government had with housing associations and social landlords? They will be most likely to benefit from the proposals and take advantage of these schemes. I am particularly interested in discussions around the size of the community housing schemes that could benefit.

Many in the industry who have had an opportunity to look at the proposals this morning, albeit very briefly, have been alarmed by those that could see incentives for installations with less than four kilowatts of capacity cut by a further 35 per cent to 13.6p. Their fear is that it could lead to a significant contraction of the sector. What consideration have the Government given to the impact that this level could have on businesses, and has any consideration been given to the possibility of a further surge in applications before such a level is imposed?

Can I also seek information or clarification regarding the energy performance rating of homes that will be allowed to install solar under this scheme? The Government have changed the rating from C to D in response to the consultation, which should be welcomed. However, I am slightly confused about the figures on this. Can the Minister confirm that this still means that the 50 per cent of homes that are the least energy-efficient will not be eligible? Given that private rented properties are currently ineligible for the Green Deal to install energy-efficient measures, I am concerned that some of those who would most benefit from both schemes will be eligible for neither.

Can I also ask what weight the Government will give to the responses to the consultation? The noble Baroness will be aware that the previous consultation made huge cuts to the feed-in tariffs. Several consultations followed each other and around 80 per cent of the respondents opposed the Government’s plans. To be fair to them, many supported and some suggested other, less drastic alternatives to cutting the costs in that way. However, to ignore 80 per cent of respondents was quite shocking. Therefore, can I make a plea for the noble Baroness to discuss this with her colleagues, so that the Government work harder to discuss the plans with the industry, rather than just tell it what to do? I should like to avoid this constant merry-go-round of consultation, changes, consultation and changes. It would be great to work with the industry to get the changes right once and for all.

My next point is, again, a request for clarification from the noble Baroness regarding the cost of these ongoing legal actions over the Government’s changes to the solar feed-in tariffs. I was able to mention this to her, albeit briefly, just before we came in. I know she is aware of my concerns about this merry-go-round of legal actions when my belief is that the Government should negotiate with the industry, rather than go into court after court and lose in court after court. When I asked the noble Lord, Lord Marland, a Question in your Lordships’ House on 30 January about the cost to date of legal actions, I think he made a mistake in replying. He gave me exactly the same answer, of £66,400, as was given to my right honourable friend Caroline Flint a week earlier in the other place. In the time between her Question and mine, the Government lost the Court of Appeal case—so they must pay the other side’s costs as well—and decided to go to the Supreme Court. Therefore, the costs must now be at least twice that, if not more. Can the noble Baroness update the House on the cost to date?

Finally, we all want to consider and look in some detail at the consultation. I hope it will be an effective consultation exercise and that the contents of the documents will be discussed with the industry and others. I look forward to further dates. I appreciate that the noble Baroness may not be able to answer all my questions, but I would be grateful if she could write to me with the details.