Energy Bill [HL]

Lord Foulkes of Cumnock Excerpts

Tuesday 12th April 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, the Government remain committed to delivering our manifesto pledge to end new subsidies for onshore wind. To deliver on this commitment the Government are intent on bringing forward the closure of the renewables obligation to new onshore wind in Great Britain. It is the Government’s view that all the government amendments in this group are consequential on each other.

Commons Amendment 6 reinserts the early closure clause removed at Lords Report stage. It gives effect to the manifesto commitment to end new subsidies for onshore wind. As I set out during our earlier debates, the Government have engaged widely on their intention and have considered in detail each of the proposals that have been raised, not only by noble Lords and Members in the other place but by many valued industry stakeholders during the passage of the Bill. The Government are committed to protecting consumers from the rising costs of energy bills while also protecting investor confidence. It is the Government’s opinion that the new clauses presented here do exactly this.

To protect investor confidence, the Government have proposed a grace period for those projects, meeting certain conditions as at 18 June last year, as outlined in the Statement on that date by my right honourable friend the Secretary of State for Energy and Climate Change, Amber Rudd. The grace period conditions set out in Commons Amendment 7 are intended to protect those projects which already had the following as at 18 June last year: first, relevant planning consents; secondly, a grid connection offer and acceptance of that offer, or confirmation that no grid connection is required; and, thirdly, access to land rights.

In addition, and to address feedback from industry, certain projects which have been granted planning permission following a successful appeal will also be eligible for the grace period. This will include those projects which have, as a result of a judicial review or an appeal, had a negative planning decision which was made on or before 18 June last year subsequently overturned.

The Government have also taken on board concerns raised by industry about an investment freeze. Following industry engagement after the 18 June announcement last year, we have seen evidence that certain projects have been experiencing difficulty securing funding due to legislative uncertainty caused by the Bill’s passage through Parliament. We have, therefore, sought to address this through the investment freezing condition. This will ensure that projects which meet the approved development condition, and which would otherwise have been able to commission and accredit under the RO by the original closure date, 31 March 2017, are not frozen out of the process. This investment-freezing condition has been designed specifically to protect the projects that were intended to be able to access the grace period as proposed on 18 June last year but which have been unable to secure debt funding pending Royal Assent due to legislative uncertainty. Indeed, feedback from industry suggests that it supports and welcomes such a measure.

The Government want to take a consistent approach to all onshore wind projects eligible to accredit under the RO. The Commons amendments therefore also seek to ensure that an existing grace period for delays caused by grid or radar works will continue to apply. Let me reiterate so no ambiguity remains: this is a manifesto commitment based on plans which we signalled well before the election. The honourable Member for Coatbridge, Chryston and Bellshill, Mr Philip Boswell, said at Committee stage in the other place:

“We agree that swift passage of the Bill with clear and consistent RO grace period provisions is needed in order to provide certainty to investors in the onshore wind sector as quickly as possible. The renewables industry fears that the longer legislative uncertainty over RO closure persists, the greater the risk of otherwise eligible projects running out of time to deliver under the proposed grace periods”.—[Official Report, Commons, Energy Bill Committee, 2/2/16; col. 127.]

On Commons Amendment 8, the Government would like to see an equivalent approach to closure of the RO to onshore wind taken across the UK. Commons Amendment 8 gives the Secretary of State a power to make regulations, which, if made, would prevent suppliers in Great Britain using Northern Ireland renewables obligation certificates. These would relate to electricity generated by new onshore wind stations and any additional capacity added to existing wind stations after the onshore wind closure date. This power allows for circumstances to be specified in regulations when such Northern Ireland renewable obligation certificates may still be used, and for the setting of a later date than the onshore wind closure date. The power has been included with an intention to protect consumers in Great Britain from the costs of any additional support which Northern Ireland chooses to provide.

This is a backstop power; it would be used only if Northern Ireland does not close its renewable obligation to new onshore wind on equivalent terms to the rest of the United Kingdom. As my honourable friend the Minister of State Andrea Leadsom confirmed in the other place, this power would be used only in relation to new onshore wind stations and additional capacity in Northern Ireland that do not meet closure conditions equivalent to those in Great Britain.

I am pleased to say that renewable obligation in Northern Ireland has now closed to large-scale new onshore wind stations with a capacity above 5 megawatts with effect from 1 April 2016, and that Northern Ireland is currently consulting on closing stations at 5 megawatts and below on equivalent terms to the rest of the United Kingdom. The Government continue to engage with Northern Ireland with a view to effecting closure on equivalent terms to Great Britain through Northern Irish legislation, but this backstop power is included with a view to delivering on our manifesto commitment across the whole of the United Kingdom.

Amendment 10 seeks to ensure simply that the provisions set out in Commons Amendments 6, 7 and 8—that is, the early closure of the RO to new onshore wind in Great Britain, together with the related grace-period provisions, and the backstop power relating to the RO in Northern Ireland—will come into force on Royal Assent. As my honourable friend the Minister of State Andrea Leadsom set out in the other place, the Government intend the provisions implementing the early closure of the RO to come into force on the date of Royal Assent and do not intend to backdate these provisions.

Government amendments to Commons Amendments 6, 7 and 8 further clarify that the onshore wind closure date will be the date on which the Bill achieves Royal Assent. These changes are set out in government Amendments 6A, 6B, 7A to 7S, 7AJ to 7AL and 8A to 8C. The amendments also include a number of consequential changes to the investment-freezing condition, extending it by one month to account for the additional period of legislative uncertainty. The amendments further ensure that projects seeking to access the grid or radar delay condition would continue to have an additional 12 months to accredit where they satisfy the relevant eligibility requirements. The Government are making these changes to provide clarity and certainty for the industry, and our policy makes it clear that we are taking steps to protect consumer bills while also balancing the interests of industry. I beg to move.

[Lord Foulkes of Cumnock (Lab)]

I shall speak to Amendments 7U, 7V, 7W, 7Y, 7AC, 7AD and 7AE which are in my name. The Minister is a good friend of mine, and I have great respect for him. Before he became a Minister, he and I used to work together on the great issue of devolution of powers to Scotland and Wales. We worked very well together, so I want to reassure him that I have every interest in him continuing in his post. I do not want him to do anything that would threaten his future. That is why I want to reassure him that everything that I am suggesting is in line with the Conservative election manifesto pledge.

[Lord O'Neill of Clackmannan (Lab)]

That is a first.

--- Later in debate ---

[Lord Foulkes of Cumnock]

It is indeed. Absolutely. As my noble friend Lord O’Neill said, it is unusual—exceptional—for me to do that.

[Lord Hain (Lab)]

Unprecedented.

[Lord Foulkes of Cumnock]

It is unprecedented, as my noble friend Lord Hain says. I also want to reassure the Minister that no constituencies of English Conservative MPs will be affected by this because I know some of them are genuinely worried about the effect on their constituencies. What I am suggesting in my amendments and what others are suggesting in theirs deals with proposals principally in Scotland and with very important community projects in Scotland. Two categories are dealt with in my amendments. The first category is those covered by Section 75 which are unable to go ahead not because they do not have planning permission —they have managed to get that—but because of some technicality. We are suggesting that that technicality is creating huge problems for them. The other category is in relation to grid connections. There is a particular problem in Scotland with the transmission and distribution grids not necessarily being as easily available as south of the border and having different arrangements. Some projects have fallen foul of these regulations.

If we put the schemes together, they amount to only just under 90 megawatts of generation. It is not a huge amount we are asking for. It is a relatively small amount. They all have the democratic consent of the local council, which is one of the matters raised in the Conservative election manifesto. I shall give the House a couple of examples. There is a scheme in Sorbie, a working dairy farm in Ardrossan in north Ayrshire, that has full planning consent and for which bank finance has been secured, a turbine contract has been agreed and design work has been started. Nearly £1 million has been spent on the scheme by the people concerned. The family-run working dairy farm is already suffering because of the low price of milk. If this project were to be cancelled because of the Government not accepting the amendments being put forward today, it would be in real difficulty. That is the kind of problem that is being faced.