Solar Industry

Claire Perry Excerpts

Tuesday 5th March 2019 Westminster Hall

[The Minister for Energy and Clean Growth (Claire Perry)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I know that you take a strong interest in these matters on behalf of your constituents in Kettering. I warmly congratulate my hon. Friend the Member for Eddisbury (Antoinette Sandbach) on securing the debate and putting forward, as always, an excellent, well-informed set of points, which have been responded to and added to by the knowledgeable group we have here today.

I will not do the usual context setting, which is that we are doing well on the whole agenda. Renewable energy is now up to more than 32%, and emissions continue to fall rapidly. In fact, the last time our CO₂ emissions were this low was in 1888, when Queen Victoria was on the throne. That is absolutely worth celebrating.

[Catherine West]

Will the Minister give way?

[Claire Perry]

I want to respond to the points made by my hon. Friend the Member for Eddisbury, but of course I will accept the intervention.

[Catherine West]

I thank the Minister for being so generous with her time. Will she also congratulate the Greater London Authority and the Mayor of London on the London community energy fund, which helps to promote this sort of initiative?

[Claire Perry]

I will touch on that good point about community. Many good schemes operate across various local authorities.

The feed-in tariff scheme has been an effective part of our great decarbonisation journey. Since 2010, the scheme has supported more than 830,000 installations, 99% of which are solar and are currently generating about 3% of total electricity consumption. Also, a few things have changed since that time, as the hon. Member for Hornsey and Wood Green (Catherine West) will know. We have seen a dramatic fall in the cost of solar installation—up to 80% in some cases—which is to be welcomed, as it makes that more accessible to many people. We have also seen a dramatic fall in the cost of other renewable energies.

I like the phrase the hon. Member for Warwick and Leamington (Matt Western) used: the democratisation of energy. We are all participating, and one of the great benefits is that the hugely important technology that is offshore wind now costs the same, effectively, as building a new gas-fired power plant. That is a benefit to us all and to all our bills.

The feed-in tariff scheme has cost us almost £6 billion to date, and over its lifetime it will continue to cost us all about £30 billion, on many of our bills. It was absolutely right, therefore, that the decision was taken—before my time—to close the scheme. As we move to a lower-cost solar environment, and to a world in which we are rapidly seeing price parity between renewables and non-renewables technology, it is important to think about the impact on bills.

[Matt Western]

With all the new build housing that is going up, does the Minister think the Government could be a lot more ambitious? There are hundreds of thousands of houses, which is terrific, but we are so unambitious in enabling people to have that democratisation of energy from within their own properties.

[Claire Perry]

The hon. Gentleman will be aware that we have some of the tightest energy efficiency standards for new homes, but I totally agree that we need to go further, and my right hon. and hon. Friends in the Ministry of Housing, Communities and Local Government are looking at that right now. Under this Government, we will build millions of homes; that is absolutely part of our ambition, and it is right that we make them as energy efficient as possible and that they contribute as much as possible to this revolution.

I want to focus on a couple of the challenges that my hon. Friend the Member for Eddisbury emphasised, one of which is the concern about jobs. We have seen a healthy supply chain build up and it is exciting that we are already seeing subsidy-free solar projects at scale being brought forward. One consultant’s estimates tell us that 2.3 GW of solar projects already in the system in the UK with, or awaiting, planning permission could be delivered without subsidy. Lightsource, which has just been bought by BP, says that it is developing 300 MW of subsidy-free projects backed by power purchase agreements, some of which will be delivered during 2019. So we are starting to see solar being delivered at scale without subsidy—indeed, I opened the country’s first subsidy-free solar farm in my first few weeks in the job. That is incredibly exciting, and I am very ambitious for the jobs that will be created over the next few years.

[Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)]

The Minister is making a very fair point: as the technology has moved forward, the cost of solar has dropped. That is certainly true for the businesses that are taking this agenda forward at scale, but for many individual householders, the cost of investing in panels is still prohibitive. Will she address the question of how the Government could support householders to invest in that technology?

[Claire Perry]

I am coming to that point. We have not said that the feed-in tariff is no more, and that there is essentially no value out there; there is huge value in having decentralised energy generation. My hon. Friend the Member for Eddisbury and others made some powerful points about the role of community energy, which I am passionate about. As she mentioned, it is often a way in which people drink the green Kool-Aid and realise that they can be part of this transformation; zero-carbon faith groups, for instance, are amazing movements. That is why we have continued to support communities.

I was pleased to extract from the Department for Environment, Food and Rural Affairs a commitment to the rural community energy fund, which will be reopening for bids later this year; it is an important part of delivering community schemes in many of our constituencies. We have invested £8 million in local energy hubs, which are helping some of the local authority-led schemes that the hon. Member for Hornsey and Wood Green mentioned, both in London and across the country. We have a local energy contact group, and we are working closely with communities through investments in energy efficiency, local energy schemes, and combined heat and power plants through the £350 million heat network scheme. There is a lot of support for communities that want to move forward.

The smart export guarantee is not just to provide a route to market for those who have installed, or will be installing, decentralised installations; it is intended to do a couple of things. My hon. Friend the Member for Eddisbury is quite right to say that this energy should not be provided for free, or indeed at negative prices, as is sometimes the case in other countries. She will be pleased to know that the consultation has not yet closed, although it closes at a quarter to midnight tonight, so hon. Members can make their representations.

The plan is essentially for this scheme—which, as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) pointed out, is a market-based approach—to help move us towards the smart energy system of the future that we all talk about, in which we have decentralised energy and people are able to do the energy balancing for their home or their community, plugging in their electric vehicles and doing peer-to-peer energy trading. The scheme is designed to support all those exciting things that are out there. I had a very effective meeting with suppliers of products and services who really support this, and who want to get to that decentralised energy future. They accept the points about tariffs needing to be fair and reasonable, and needing to provide an incentive, but they support creating those prosumers, as my hon. Friend the Member for Eddisbury has said. They support creating that aggregated demand side, meaning that all of us who install solar panels will have some power and some value in the system.

[Bill Grant (Ayr, Carrick and Cumnock) (Con)]

Is the Minister minded to ensure a fair minimum market rate for small-scale generators of exported electricity, to give them some incentive and some degree of confidence?

[Claire Perry]

That is an important question that will come out in the consultation. Frankly, I would ensure that the market rate was always greater than zero, but that it varied at different times of day, because many of us may have excess energy that we wanted to sell into the grid at a particular time. I want to see what proposals come forward for setting that market rate. There are ideas out there, including that the rate should be wholesale price minus, or that it should be entirely market led.

I take the point made by my hon. Friend the Member for Eddisbury about speed being of the essence when coming forward with a response, but I really want to get this right. I do not want this to be a scheme that we are debating in three years’ time because it has suddenly become unaffordable and has not delivered. My hon. Friend will be aware that installers are already scrutinising with care what we are saying and doing. We do not want to create a hiatus, but we want to produce a set of incentives that works for the future.

[Catherine West]

rose—

[Claire Perry]

I will come to the hon. Lady’s point in a second.

I talked about jobs and the opportunity for skilled workers to pursue careers in this sector. Not only is there ongoing growth in solar, but so many other opportunities are emerging: electric vehicles, charging infrastructure, smart appliances and battery technology are all working to decarbonise our buildings and our transport systems. The opportunity for green-collar jobs is enormous; we already have almost 400,000 people in the UK working directly in the low-carbon economy or in its supply chain, making it a bigger sector than aerospace. Those jobs exist in the here and now.

[Catherine West]

rose—

[Claire Perry]

I am going to take an intervention from the hon. Member for Ceredigion (Ben Lake), who has not spoken yet.

[Ben Lake (Ceredigion) (PC)]

Does the Minister also recognise the potential for the energy company obligation scheme to support innovation, particularly in renewable energy? Often, the challenges to securing a return on investment that developers face can be overcome through the certainty that some sort of support mechanism can offer.

[Claire Perry]

Indeed I do, and I am proud to have secured one of the largest increases in innovation research and development spending in the clean energy space. Of course, the ECO scheme, which we have recently pivoted to focus on fuel poverty in its entirety, includes an increase in the amount spent on innovation.

[Catherine West]

Will the Minister reassure us that when her officers are looking at the responses to the consultation, they will take into account the fact that for small schemes, such as the one that is putting solar panels on schools in my constituency, the overheads tend to be greater?

[Claire Perry]

That is a valuable point, and the hon. Lady is right to make it.

The consultation is closing in a few hours’ time. I know that it has been welcomed, including by the industry, which sees it as a bridge to a renewable, subsidy-free future. The comments that have been made today will be valuable in ensuring the details of the scheme are acceptable.

[Mr Philip Hollobone (in the Chair)]

The Minister may be under the misapprehension that she has to allow the mover of the motion time to sum up, but that does not apply in half-hour debates, so she has another four minutes if she wants to use them.

[Claire Perry]

Well, Mr Hollobone, you learn something every day in Parliament. It would perhaps be only courteous to allow my hon. Friend to sum up; is that permissible?

[Mr Philip Hollobone (in the Chair)]

It is impermissible.

[Claire Perry]

I will just keep going, then! If anyone else would like to intervene, the Floor is theirs.

[Antoinette Sandbach]

One of my concerns is the gap that has been spoken about. I understand the Minister’s desire to get things right, but will she consider extending the FIT scheme to cover that gap, bearing in mind that, given her efficient work in her Department, it is likely to be a short delay?

[Claire Perry]

Sadly, in all honesty, probably not. We have been clearly signalling the closing of the FIT scheme for several years now, and the response from the industry has been, “We understand that. We understand that some schemes may be on hold, but we welcome the smart export guarantee, because our main ask was to ensure that the energy that was being generated had some value.”

My hon. Friend the Member for Eddisbury asked me another question about an issue that I was not fully aware of—namely, the concerns about testing the smart metering equipment technical specification 2 programme to ensure it interacts effectively with solar generation. I have instructed my officials to ensure that that testing is actioned, because that is an important point.

[Catherine West]

Will the Minister give a brief account of what is happening with Government buildings? They are clearly low-hanging fruit, as it were; there should be more and more solar installations on Government buildings.

[Claire Perry]

I am sure that the hon. Lady will have read the clean growth strategy from cover to cover, and will have seen in there that we have set out ambitious targets for the central Government estate and the wider estate. As we have so many former representatives of local authorities here, I encourage all Members to look at the Salix scheme, which allows local authorities to green up their own activities and rely on an interest-free revolving loan. It has been a great success story, and one that we must do a lot more on.

I will mention another issue—briefly, as I only have two minutes. A question was asked about encouraging housing associations and others to be involved, and I have been encouraging housing associations and local authorities to think about issuing green financial instruments. There is a huge appetite for green bonds, either individually or collectively, and using that funding for some of the excellent energy efficiency work that is available.

[Matt Rodda]

On a related matter, will the Minister also consider the issue of the private rented sector, which in some parts of our towns and cities makes up a substantial amount of the homes in those local authority areas? In my experience as a former councillor, there is a serious issue with both fuel poverty—people living in poverty in private rented homes—and poor insulation linked to a lack of take-up of solar.

[Claire Perry]

I thank the hon. Gentleman for his intervention. I am pleased to tell him that one of the pieces of legislation we have introduced ensures that the least efficient homes in the private rented sector will no longer be allowed to be re-rented until those improvements have been made.

I thank my hon. Friend the Member for Eddisbury for an excellent and timely debate. I will just say something that is a tiny bit political: would it not be lovely if we could get through Brexit and vote for the deal so that we could bring all this collective knowledge together to solve these problems, which are about not the next three years but the next 30? If we do that, will my hon. Friend promise us that she will mix us an Archimedes’ screw cocktail, so that we can celebrate and focus on saving the planet, rather than saving our sanity in the Brexit negotiations?

Question put and agreed to.

[Mr Philip Hollobone (in the Chair)]

Will those Members not staying for the next debate please be kind enough to leave quickly and, importantly, quietly?