Draft Renewables Obligation Closure etc. (Amendment) Order 2016

Callum McCaig Excerpts

Wednesday 2nd March 2016 General Committees

[Callum McCaig (Aberdeen South) (SNP)]

It is a pleasure to take part in this debate. The Minister spoke extensively in this and other debates on the renewables sector about how the Government are on track to meet their targets on solar deployment, which we are discussing today, and on onshore wind, which has faced a similar fate. I will read a quote:

“simply meeting the targets we have set ourselves will not be example enough for the rest of the world to follow.”

That is from the reset speech by the Secretary of State, and I agree wholeheartedly with the sentiment expressed there. If we simply focus on meeting the targets set some time ago, we will not be able to achieve what is required.

The UK proudly led the high ambition coalition at the Paris talks last year, but I wonder how we are to achieve that high ambition when we are deliberately curtailing our own ability to meet what is required. That will be damaging for industry, as we have heard from hon. Members, and will have an impact on jobs, but above all it will have an impact on our ability to reduce our carbon emissions in the most cost-effective way. Solar and wind are cheap forms of zero-carbon production, and to limit them in such a crass and blunt manner at a time when they are becoming even more cost-competitive is short-sighted, as a number of Members have said today.

I and my party believe that solar has an important role to play in the energy mix, and I very much agree with the comments made by the hon. Member for Southampton, Test and, in interventions, by my hon. Friend the Member for Na h-Eileanan an Iar, about the absolute requirement of transparency in the levy control framework, the impact that the order will have on it and how low-carbon producers will be able to have certainty going forward.

We cannot look at the costs of the proposal, which the impact assessment says are potentially £100 million, in isolation. We need to look at the costs of replacing the solar capacity that would have come online with something else, but those costs are not clear. Nor can we look at the levy control framework in isolation, because we need to consider the capacity market, the strategic balance and the reserves. We need to look at it in the round, and for far too long debates have been focused on individual smaller policy areas. It is easy to pick off solar or onshore wind in isolation, but for some reason it does not seem to be quite so easy to pick off nuclear in isolation. If it costs £100 million a year to produce 2 GW using solar, I ask the Minister how much the annual costs of Hinkley Point will be. By my reckoning, solar would be better value. That has not been made clear, and there are significant concerns about that.

There are costs to inaction, which have not been and will not be factored in, and some of them are intangible. The order is not a sensible way forward. There is a positive transition to solar—the costs are coming down and deployment is going up, exceeding our ambitions. Coming back to the Secretary of State’s speech, that should be seen as a good thing, not a bad thing, because it means that we have had the right investment framework. More needs to be done, and there are intermittency problems with all forms of renewables, but when we were discussing the Energy Bill—perhaps in this very room—we had debates about storage, which can help make renewables more of a reality and provide the base-load that is required.

Technologies such as solar have a strong part to play in the future if they have the right Government support. The proper support has not been put in place, and the order will further undermine and erode that support and the confidence in the industry that we need in order to deliver what we are requiring of ourselves. As such, the Scottish National party will oppose it today.

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[Andrea Leadsom]

No, the hon. Gentleman has had his say so many times and I am sick and tired of it. He needs to stop peddling that argument. The point of the Government’s policy is to support consumers and to decarbonise at the lowest price. We absolutely support subsidies for renewables. They have been so successful and their costs have come down so much. We have carefully consulted, and we have concluded that they no longer need the subsidies at the rate they were receiving them at and that the potential impact on consumer bills of continuing with subsidies at that rate is too great. That is the end of it. Those are the facts. I am sorry that Opposition Members want to play politics with that but we are on the side of the consumer.

The hon. Member for Southampton, Test specifically asked about the eligibility date and why we chose 22 July 2015. That is the date on which we announced the proposals and the grace period was designed to align with that. The significant financial investment grace period is designed to protect those who made such commitments before we proposed to bring forward the RO closure date for solar PV. Moving the date to enable other less advanced projects to meet the eligibility criteria would increase the risk of more projects deploying at greater cost to the LCF. We have tried to strike the right balance between the public interest, including protecting consumer bills and ensuring the right mix of energy, and the interests of solar developers and the wider industry.

The other thing I will say to Opposition Members is that, since our changes to the feed-in tariff, deployment has continued in the solar sector. They like to speak as if no subsidy somehow means that no solar or renewable projects are coming forward. That is blatantly not the case. A significant and decent amount of renewables are still coming forward. Under the Government’s policy, we believe that the feed-in tariff will enable up to another 1.1 GW of new solar installations between now and 2020, protecting the consumer while protecting and supporting the industry.

The hon. Member for Great Grimsby asked about job losses. The consultation period suggested that up to 23,000 jobs will continue to be supported by subsidy and, potentially, many others without subsidy. We are aware that large-scale solar projects are coming forward without subsidy, so it is simply not true to say, as she did, that there are thousands of job losses and that there will be thousands more. There is no evidence for that.

Other hon. Members asked about the LCF transparency. I will make a further point about that. We have been clear that we do not break down published information on components of LCF spend, because of the potential disclosure of commercially confidential information. In certain sites, that has to be the case and has to remain so.

Other hon. Members talked about our impact assessment not having sufficient data points. I can tell the Committee that there were 55,000 responses to the feed-in tariff review and, from that, we gained about 5,000 extra data points from which we were clearly able to target that policy to continue to support renewables, so it is simply not the case that the draft order has been ill-thought-through or that it is not seeking to strike a balance between the interests of the consumer and the interests of the industry.

We are confident in our policy on renewables. Those industries are superb and great British success stories. Hon. Members will be aware that 99% of all solar installations have taken place since 2010, when the Conservative-led coalition Government came to office. Today, still, the vast majority of solar deployments has taken place under a Conservative Government.

In answer to the specific point about nuclear made by the hon. Member for Aberdeen South, he must realise that solar and nuclear are not directly comparable. Solar is not dispatchable; it provides electricity when the sun is shining. Nuclear is dispatchable; as the hon. Gentleman is aware, most days we get 19% or 20% of our electricity, day in, day out, from dispatchable, reliable nuclear electricity. That cannot be the case from solar.

[Callum McCaig]

I accept that, but will the Minister likewise accept the point that I made, which is that if we are to be serious about storage, with investment and a proper mechanism for it to happen, solar can do that and, arguably, at a similar cost to nuclear, if not cheaper?

[Andrea Leadsom]

The hon. Gentleman did not make that point, but I entirely agree. As he well knows, in the Department we are looking closely at what exactly we can do to bring forward more storage. He also mentioned that nuclear in Scandinavia is asking not to be brought forward because it cannot compete with renewables. As he knows, what is meant there is hydroelectricity, which is dispatchable, so he makes my point for me. We cannot compare intermittent technologies with dispatchable electricity—it is simply not relevant to our discussion.

I thank members of the Committee for their contributions to this debate. It is very important to make it clear on the record that this Government are on the side of consumers. We will absolutely keep the lights on and decarbonise at the lowest cost to consumers, keeping the balance right between the interests of consumers and of developers.