Energy: Onshore Wind

Baroness Worthington Excerpts

Monday 22nd June 2015 Lords Chamber

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for repeating the Statement received in the House of Commons today on ending new subsidies for onshore wind. This is quite a regrettable outcome from the election—but I would say that, wouldn’t I? But I say that for a number of reasons in this context.

It seems to me that this policy demonstrates quite how out of touch this Government are with the UK as a country. Onshore wind must be viewed as predominantly a Scottish and Welsh industry. On any metric, Scotland dominates it, yet here we have a Government with a wafer-slim majority trying to push through some dog-whistle policies to appease a very small, but very vocal, number of Back-Bench MPs. The net effect of that is to destabilise investor confidence in the UK’s renewables industry. It is not just the onshore industry that is now understandably upset by the Government’s moves in this direction. The deputy director-general of the CBI has said:

“Cutting the Renewables Obligation scheme early sends a worrying signal about the stability of the UK’s energy policy framework. This is a blow, not just to the industry, and could damage our reputation as a good place to invest in energy infrastructure”.

Those are serious allegations, and I am afraid that this policy, no matter how you try to dress it up as being in favour of consumer cost-cutting or enabling us to meet targets in more cost-effective ways, is simply a response to a very political problem which could and should be sorted out at local level.

The announcement about cutting the subsidies was accompanied by changes in planning laws which are incredibly restrictive. There is absolutely no need to go further and destabilise investor confidence in the way the Government have done. The new planning policies require that local plans identify sites suitable for wind farms and planning can go ahead only on those sites. This will severely limit projects coming forward and is sufficient on its own to ensure that people who want to rule out onshore wind in their local areas can do so. There is no need to introduce such a blanket, nationwide policy which will have serious repercussions for energy policy across the UK.

I have mentioned Scotland, and I am grateful that the Statement said that consultation is ongoing, but what is likely to happen as a result of this policy is the splitting apart of UK energy policy, as I am sure that Scotland and stakeholders within Scotland will not accept that the Government have authority to dictate that no more support can be given to this growth industry.

One of the defences is cost-effectiveness. It is simply not true that if you rule out one of the most cost-effective sources of renewable power you will save customers money. In fact, a hint about why that is not true is in the ministerial Statement. By ruling out onshore wind, we will be spending more money on less cheap technologies to meet our targets. In fact, the Government are encouraging this by saying that they need to protect offshore wind. In the latest auctions for contracts for difference—which we will come on to in a second, as there are implications in this measure for them too—it was clear that onshore wind came in at around £80 per megawatt hour and offshore wind at £120 per megawatt hour. That is not an insignificant difference. By ensuring that we rule out onshore wind, we will naturally see more money spent on offshore wind as we move to meet our targets.

On the subject of targets, I think that the Statement is breathtaking in its complacency. We are not on track to meet our targets. The target is that 20% of our energy should come from renewable sources by 2020. We are now approaching 5% of energy coming from renewable sources. It is important to note that there are three distinct policies that help us to meet that target. There is the electricity market reform package, which introduces a new system of support and which shut down the renewables obligations. That is the subject of this Statement. Two other polices are needed to get us to our target: the renewable heat incentive and the renewable transport fuel obligation. Both those policies are failing. They are not on track to get us to the target we need to reach. Electricity is the one area where we can say that we have seen success, yet here we are cutting off at the knees one of the most important contributors to success in that policy. Will the Minister please give me an undertaking that he will go back to ask his officials what will occur in the event that the renewable heat sector and the renewable transport sector fail to deliver? How will we compensate? Can we look again at the need for more electricity sources to help us meet those targets? In those circumstances, should we not look again at the most cost-effective sources of renewable electricity, which definitely include onshore wind?

We have touched upon the fact that another policy support beyond the renewables obligation offers support for onshore wind: the contracts for difference. Can the Minister confirm that there will be further auctions for contracts for difference between this Statement and the passing of the Bill, which will be needed to enact these new policies? Primary legislation and all the changes that it involves takes time. Will we see continued granting of contracts to onshore wind in that period, and can the Minister please endeavour to provide clear information to the industry should companies wish to switch from the RO to the CfD process to continue with their projects?

As today’s Statement says, around 250 projects which might have gone ahead under the RO are now unlikely to happen. It seems evident that a large number of those will already have had a significant amount of investment in them to get them to the stage of being ready to be built. We owe it to those developers who have done so in good faith to enable them to transition to a new support system before we rush to cut away the support that they were given not many years ago. In fact, we all debated the transition to cleaner energy in our discussions on the energy market reform proposals in the Energy Bill passed under the previous Government. That was not long ago and yet here we are, so soon after an election, radically shaking things up once again, creating uncertainty and dissuading people from seeing the UK as a place for inward investment.

Today it is onshore wind; tomorrow—who knows? Solar energy, offshore wind, biomass—you name it, everything seems to be in question. If there are enough Back-Bench Tory MPs who dislike something, it seems that it will be cut off at the knees. I am greatly disappointed by the Statement today.