Renewables Obligation Certificate Scheme

Jenny Riddell-Carpenter Excerpts

Wednesday 5th March 2025 Westminster Hall

[Jenny Riddell-Carpenter (Suffolk Coastal) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Murrison. I congratulate my hon. Friend the Member for South West Norfolk (Terry Jermy) on securing this important debate.

My hon. Friend told us about the role biomass that plays in delivering energy in the UK and specifically in the east of England. I will not repeat what he said, but I will emphasise the valuable role that biomass energy production plays in the UK’s poultry and agriculture sectors, particularly from the perspective of my constituency of Suffolk Coastal. Biomass energy production not only helps to support farms and food security, but plays a crucial role in environmental protection, helping to manage farm waste, preventing the spread of avian diseases and preventing toxic pollution from entering our rivers.

In Suffolk Coastal, our rivers are the jewel in our crown. If biomass energy production were to cease, poultry litter would otherwise be sent to landfill or spread on the land. If it is spread on the land, it causes significant nitrogen run-off into fragile local waterways. That is already happening across the country and is responsible for much of the pollution in our rivers today. In the River Deben, phosphates and nitrates are already a cause for real concern about the river’s water quality, and those nitrates emanate largely from agricultural run-off. If we reduce nitrogen, we reduce the impact of eutrophication, which is visible each summer in the excess growth of algae such as duckweed. Therefore, although biomass energy production plays a role in the UK’s energy creation and in helping to prevent avian diseases, it also plays a critical role in improving the water quality in our rivers.

Biomass operations rely on the ROC scheme, which starts expiring in 2027. It is critical that we support the continuation of biomass energy production to ensure that we not only deliver on our net zero ambitions, but continue to support water quality improvement in our rivers in Suffolk by tackling nitrate run-off.

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[Kerry McCarthy]

I understand that the hon. Member asked the Secretary of State that question at the last DESNZ orals and I think he also raised it when we were opposite each other in a statutory instrument Committee. I refer him to the answers that were given then. I think we should get on—I am going to try to talk about the renewables obligation for a while and not be distracted.

The scheme played a fundamental role, as already noted, in getting the UK to where we are now on renewable energy generation. Combined, the UK-wide RO schemes support nearly 32% of the UK’s electricity supply, providing millions of UK households and businesses with a secure supply of clean energy. The scheme is now closed to new capacity, for reasons I will come on to.

Thetford power station, in the constituency of my hon. Friend the Member for South West Norfolk, has been accredited since the first day of the RO, back in April 2002, so it has so far received Government support for nearly 23 years. Over that time, it has generated more than 5.8 TWh of low-carbon baseload generation. That has been a valuable contribution to our transition to net zero. It has also increased our security of supply by generating home-grown energy. As he said, the station has provided 100 jobs in his constituency and co-benefits in handling poultry litter.

The station has another two years of support before its time under the RO ends, in March 2027. We are aware of the concerns about the future of the station once that support ends and my hon. Friend has done an excellent job in outlining those concerns today. My officials have repeatedly engaged both with the owners of the Thetford plant, Melton Renewable Energy, and with DEFRA officials to discuss those concerns.

To explain the overall context, as I have said, the RO has done sterling service in bringing forward the successful large-scale renewable energy sector that we see in the UK today. That has paved the way, as my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn) said, for the cost reductions that we have seen over the last few years under the contracts for difference scheme, but its time has passed. The energy landscape has evolved since the scheme was launched in 2002 and it no longer provides the market incentives or the value for money that the transition to clean power requires.

The RO was designed to support renewable energy-generating stations during the early stages of development and generation, and to allow the recovery of high capital costs. For that reason, RO support is often significantly higher than that provided under successor policies such as contracts for difference. We must always bear in mind that consumers pay for the scheme through their electricity bills, and delivering value for money for them is essential. For that reason, we do not plan to extend RO support.

As I said, support under the RO for the early adopters, such as Thetford power station, lasts for 25 years. Stations accredited later in the RO’s life receive support for up to 20 years. All support will end in March 2027, when the last assets fall off the scheme and the RO finally closes, so Thetford—as I am very aware—has two years to run. The limits on the length of support were imposed to balance the need to provide investors with important long-term certainty—for 25 and then for 20 years—with the impact on consumers.

Although we do not consider extending the RO to be a viable option, I assure my hon. Friends that I understand their concerns. In some cases, generating stations may be able to continue generating electricity on merchant terms once their RO support ends, and continue until the end of their operational life. However, some generators have told us that their stations will not be economically viable without Government support.

We are conducting further analysis and assessment to better understand the issue, including the implications for consumer bills and the clean power mission. My officials are working with DEFRA to consider whether there is a case for intervention for biomass-fuelled stations, taking into account the electricity system and the supplementary environmental benefits that some stations provide. That work is in addition to the robust value for money assessments that we undertake to ensure any possible support is in the interests of bill payers.

I appreciate that Melton Renewable Energy and my hon. Friend the Member for South West Norfolk are looking for early answers, but I must stress that no decisions have yet been made and we are happy to continue the conversation with him.

[Jenny Riddell-Carpenter]

Is a potential bridging loan being considered by the Department for the replacement of the ROC?

[Kerry McCarthy]

I am not aware of the detail of what has been discussed as an option, so I am afraid cannot comment on that. I think it would be wrong to speculate on what the solution will be, but those conversations will continue.

To conclude, renewable energy is critical to our mission to make the UK a clean energy superpower. We understand the concerns of some generators coming to the end of support under the RO and we are looking at ways to maximise the output and potential of those RO sites, while also considering the impact on consumer bills.

I again thank my hon. Friend the Member for South West Norfolk for securing this important debate. I am happy to continue the conversation in the weeks and months to come.