Energy Bill [Lords]

Debate between Chris Skidmore and Alan Whitehead

Consideration of Lords message
Wednesday 18th October 2023 Commons Chamber

[Dr Whitehead]

That is not quite the subject of our debate, but the right hon. Member can see that we envisage an energetic and far-reaching proposal to develop the grid in such a way that those grid shortages are overcome, so that the grid is able to service the low carbon economy in the way we would all want it to do. In the context of what we are discussing, I remind the right hon. Member that this would be about distributed grids at a local level, rather than the national high-level grids. We need to take further action to strengthen and sort out grids at that level.

The Lords clearly continue to feel strongly about this issue; as we can see, they have sent back to us today a modified version of the original amendment, requiring the Government to consult on changes to assist community energy and, importantly, to set a timeline for proposals to be brought forward to remove barriers to the development of community energy.

Of course, there are others in this House who feel strongly about this issue. The proposals that the Lords have now twice tried to have inserted into the Bill are essentially the wording of a group called Power for the People, which suggested wording for a community energy enabling Bill for which it campaigned to secure signed-up support from parliamentarians. It did indeed secure substantial support from parliamentarians who feel strongly on the issue of community energy. Some 325 Members signed up in support, including 130 Conservative Members and, perhaps most remarkably, 22 members of the Government, including six Treasury Ministers, the present Chancellor and the Minister himself, as I often seek to remind him. There is no lack of support in the House for the principles and practice of community energy.

The Lords amendment seeks to acknowledge and further that support by putting forward very reasonable and, one might have thought, pretty non-contentious wording to add to the Bill. It is inexplicable to me that the Government should seek to resist these proposals in the way they have. Yes, they will say, as the Minister has said, that they have set up a community energy fund of £10 million over two years, which is welcome, and they have verbally indicated that, at some stage, there will be a consultation on barriers to supply, but there are no timelines for that and no commitment to move positively forward from it. That is what this amendment seeks to put right.

As I have said, the Minister appears already to be a signed-up supporter of community energy action, and I would fear for his own emotional wellbeing if he were forced today to perform another policy backflip and acquiesce in yet another Government repudiation of themselves in rejecting this latest Lords amendment. Instead, let us end the extended passage of the Bill on a high note, and all around the House agree on both the importance of community energy and the measures we will need to take to ensure it thrives in the future.

[Chris Skidmore]

I rise in support of the amendment. It is very similar to an amendment that I tabled during the previous stage of the Bill in the Commons. I echo the comments that have been made about the amendment being uncontentious. It calls for additional consultation—if the Government want me to do that, I will do it myself for the community energy groups.

The net zero review held several roundtables with a number of community energy groups across the country. Indeed, they were one of the reasons why pillar 4 in the final report, “Mission Zero: Independent Review of Net Zero”, was

“Net Zero and the Community”.

One of the key findings of the review was that over half of all net zero decisions will need to be taken not by Government or Parliament, but outside this Chamber. We can turbocharge our transition towards net zero if we can empower and support more community energy groups to take the action that needs to be taken.

Indeed, the only single wind turbine that has been built in the United Kingdom in the past year has been delivered through community energy. I am proud that it is in my home city of Bristol. Ambition Lawrence Weston has seen its 4.25 MW turbine built and it will now power 3,500 homes for the community energy project. The £4 million to pay for the project was raised by the group—it did not come cap in hand to Government—and now it will see an economic return of £140,000 a year as a result of the energy that will be sold to the grid. That is just one example of the myriad examples of net zero projects that demonstrate the economic opportunity that net zero can provide.

In Bristol, we also have the Bristol City Leap, which is a result of a £7 million investment from Bristol City Council. There has been £424 million of inward investment from the American company Ameresco Ltd to decarbonise the city’s district heat network. Community energy points the way for demonstrating that net zero is not a cost, despite what some may say, but an opportunity. We must seize that opportunity now, not just to tackle the climate crisis or reach our nationally determined contribution for 2030, because net zero is about 2030 not just about 2050. We cannot keep kicking the can down the road, somehow suggesting we are going to meet our carbon budgets. Meeting them now, today, is absolutely vital to ensure we can meet our climate commitments in future carbon budgets.

Community energy is here and now. We can get on with delivering net zero with the tools and technologies we have, and, above all, with the people we have—individuals and communities across the country. Community Energy England has 220 groups, a third of which would like to build onshore wind turbines, like Ambition Lawrence Weston. They want to get on with it. They are not often being paid to do this; they do it because they recognise what they can return to their communities. As a Conservative who believes in the power of local communities, we as a Government should be supporting local communities to the hilt to deliver on energy action.

When we look at the future of the grid, everything points to the fact that creating flexibilities on the edge of the grid enhances our energy security, allows us to return energy to the grid, frees up energy capacity elsewhere, and frees up our demand on oil and gas elsewhere. This is a no-brainer. I shall support Lords amendment 274B if it is pushed to a vote, although I will not push it to a vote myself. Nevertheless, it is vital that we send a clear message not just that we are committed to the net zero pathway—because it is the right and the economically important thing to do—but that we recognise that, when it comes to net zero, we need a big bang moment. We need to create little platoons of individuals and communities that are going out there writing their own net zero narratives and stories. For that reason, I will be supporting this Lords amendment today.

Oral Answers to Questions

Debate between Chris Skidmore and Alan Whitehead

Tuesday 16th July 2019 Commons Chamber

[Chris Skidmore]

Boosting local and national content is a key issue, and, taking up the point raised by the hon. Member for Salford and Eccles (Rebecca Long Bailey), the Government are determined to ensure the delivery of local green jobs. The offshore wind sector deal has obviously committed to 60% content by 2025 or 2030. I cannot remember the exact date, but I am happy to come back to the hon. Member for Glasgow North East (Mr Sweeney) on that.

It is important that, as we go forward with the contract for difference proposals, we make sure that we bring local suppliers with us. That is a key part of the Government’s industrial strategy.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

If the Minister had an opportunity to look at today’s report from RenewableUK on onshore wind, he would see that there has been a complete collapse in planning applications for onshore wind, in Scotland and in the UK as a whole, yet the report indicates that customers could have substantially saved on their future energy bills if that collapse had not happened.

Does the Minister agree that the policy of banning onshore wind in England, through planning restrictions, and in the UK as a whole, through discrimination in support, is now completely indefensible? If he does agree, what is he doing to reverse this policy?

[Chris Skidmore]

When it comes to renewables, we now have a record high of 52% of our electricity being generated from low-carbon sources, with 33% from renewables. We have seen with offshore wind that, actually, the reduction in our prices demonstrates that we can move towards effective renewables for the future. As I mentioned, we have 13.8 GW of onshore wind delivering for 7.6 million households. We have the local planning processes in place for the future, which was a commitment in the 2015 Conservative manifesto, but we want to make sure that we take local communities with us. That is also the case with net zero. It has to be a transition on which we have the confidence of the entire population. There is no point trying to impose green technology on local communities if they do not support that technology for the future.

Oral Answers to Questions

Debate between Chris Skidmore and Alan Whitehead

Tuesday 30th April 2019 Commons Chamber

[Chris Skidmore]

The Government are firmly committed to the renewables industry, and Scotland has benefited proportionately more than the rest of the United Kingdom under existing policies. It will continue to benefit from future investment. Fifteen Scottish projects have been awarded contracts for difference with a total capacity of 2.57 GW, and the Government and numerous other public sector organisations have provided £15 million to fund the European Marine Energy Centre in Orkney, which is one of the world’s leading wave and tidal demonstration centres.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

The truth of the matter right now is that, far from expanding the source of renewables, the Government have narrowed the use of renewable energy in recent years. Of course we should strongly support the development of offshore wind, but the Minister must acknowledge that marine and tidal power has been almost strangled at birth by the Government’s indifference and even active hostility, and that onshore wind and solar PV have been severely hampered by adverse Government decisions on support and planning. On lack of support, will the Minister answer a specific question? Why is he sanctioning a VAT rate rise to 20% on solar power while at the same time maintaining a rate of just 5% on coal and fuel oil?

[Chris Skidmore]

The industry has invested more than £92 billion in clean energy since 2010. As I have stated, renewables now generate 33% of our electricity, and 52.8% comes from low-carbon sources. As for the VAT issue, we are working with organisations and companies to ensure that we can get the best possible deal when it comes to renewables. I am sure that my right hon. Friend the Minister for Energy and Clean Growth will be happy to discuss the matter with the hon. Gentleman in further detail, but we are committed to ensuring that we have a wide range of renewables, including marine energy and offshore and onshore wind, to make sure that we can continue to drive up our renewable capacity.

Draft Electricity Capacity (No. 1) Regulations 2019

Debate between Chris Skidmore and Alan Whitehead

Tuesday 2nd April 2019 General Committees

[Chris Skidmore]

I thank the hon. Members for Southampton, Test and for Kilmarnock and Loudoun for their considered contributions today. It is evident that they have spent a lot of time thinking about the policy perspectives when it comes to the capacity market.

The Government continue to believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. My Department is working closely with the European Commission to ensure that state aid approval in the capacity market can be reinstated swiftly. Meanwhile, the judgment of the General Court prevents the UK Government from making capacity payments unless and until state aid approval is obtained.

However, we do not consider that the judgment prevents other aspects of the capacity market from continuing to operate during that standstill period. The delivery body and the assessment body continue to operate aspects of the capacity market during the standstill period, facilitating ongoing compliance with the scheme and helping to limit that uncertainty following that General Court judgment, to which the hon. Member for Southampton, Test referred. It also ensures capacity in a way that promotes security of electricity supply and demonstrates that a provider should be entitled to back payments. It enables the scheme to restart full operations as quickly as possible after state aid approval.

The T-1 auction, referred to by the hon. Member for Southampton, Test, will ensure that successful bidders in replacement T-1 auctions will be eligible to receive capacity payments covering the entire delivery year if state aid approval is obtained before October 2020. We believe that this enables bidders to have confidence in the revenue they can expect to receive through the auction if it is approved by the European Commission, providing better value for bill payers and reducing the risk premium that might otherwise inflate auction bids.

The Government do not consider that holding this T-1 auction, or awarding additional capacity agreements in that auction, amounts to state aid. Conditional capacity agreements convert into capacity agreements only if there is state aid approval to make payments, meaning that any aid under the agreement awarded is entirely conditional on state aid.

I turn to the judgment of the General Court. We are clear that it was based on the procedure followed by the European Commission. The General Court gave examples of where the Commission should have had doubts and investigated them, but did not rule that the design was wrong. We are confident that the design of the capacity market is now compatible with the state aid requirement. We have carefully considered each of the issues raised through the Court judgment.

We cannot pre-empt the outcome of the Commission’s investigation, but we remain confident that the scheme will be approved by the Commission following investigation —not least because it has approved six other capacity markets since 2014.

The Commission has also appealed the judgment of the General Court to the European Court of Justice. The Commission might require policy changes to the design of the capacity market scheme when granting state aid approval, in which case the Government would seek to respond swiftly to consider and bring forward the required changes. My Department has been in regular discussion with the Commission since the judgment to better understand the process they are following to ensure that we can support the investigation in the most effective and timely way possible. It is for the Commission to establish its own timetable, but we expect it to make the final decision later in the year.

I turn to the general points made on the necessity of the capacity market. The Government continue to believe that the capacity market is the right mechanism for delivering security of supply at the lowest cost to consumers. This view was supported by the majority of stakeholders that responded to our call for evidence in September 2018 as part of the proposed five-year review.

The capacity markets have a direct and indirect impact on new-build capacity. Around 4GW of new resources were cleared in the most recent 2018 T-4 auction, leading to the point made by the hon. Member for Kilmarnock and Loudoun: when it comes to the transfer away from fossil fuels towards renewable and nuclear fuels, the capacity market provides a cost-effective mechanism for bringing forward new capacity as and when needed. Recent auctions have supported a wide range of new-build resources, and the capacities of the market have had an impact on new builds.

[Dr Whitehead]

On the particular point of the capacity market providing new build, will the Minister agree that the only combined cycle gas plant supported by the capacity market is one 400MW plant during the entire period of the auctions? The capacity that has been procured more recently has either been open cycle gas plants, which are more polluting than combined cycle gas plants, or diesel set generators, which are more polluting than coal. Does the Minister consider that that is a good method of procuring capacity for the future through the capacity market arrangements?

[Chris Skidmore]

I would also point to the fact that we have seen 150 MW of battery storage through the recent T-4 auction; 1.1GW of DSR and 2GW of new interconnectors. There is obviously a variation. When it comes to the capacity market, this technology is based on delivering the most cost-effective mechanism, but we have demonstrated the need to introduce new capacity as and when needed.

When it comes to the Government’s record on switching away from coal, I should say that we have invested £92 billion in clean energy and quadrupled the renewable electricity capacity since 2010: the share of electricity from low-carbon sources is now 56%. In quarter 3 of 2018, 33% was from renewables, an increase from 6.9% in 2010.

If the Minister of State for Energy and Clean Growth were here, I am sure she would expound on the recent offshore wind sector deal, which was published two weeks ago. We now have the ability in offshore wind to exceed 30GW of installed operational capacity—more than we expected. We have already met the 2020 renewable targets. That is the same for solar capacity: in 2013, we estimated it would reach between 10GW and 12GW by 2020. The latest figures indicate it has reached 30GW, enough to power more than 3 million homes.

Important progress has been made. In terms of the five-year review of the capacity market that the hon. Gentleman mentioned, in line with the requirements set out in the Energy Act, we intend to publish a report that summarises our five-year review of electricity market reform this summer. One chapter of that will cover the five-year review of the capacity market.

On the hon. Gentleman’s specific point about meeting the Minister for Energy and Clean Growth, I should say that she will be delighted to discuss the opportunities for reform of the capacity market and to look at how we can deliver the best capacity market in the future.

When we look at the issue of agreements, the hon. Gentleman is right that the majority of capacity types can only access one-year agreements. An exception is obviously made for new and refurbished plants because investors require more certainty when investing in large capital projects; those agreements are for up to four years. However, we believe that longer-term agreements, where not needed, risk needlessly locking consumers into paying a long-term price, while there are challenges to encouraging business to engage in demand-side response. The same capital costs do not apply there. No clear evidence suggests that longer-term agreements are necessary to ensure demand-side response can compete effectively.