Electricity Generation: Local Suppliers

Wera Hobhouse Excerpts

Wednesday 14th October 2020 Commons Chamber

[Ben Lake]

I am grateful to my right hon. Friend for making that point. She anticipates a few of the arguments I wish to make this evening, but she is right to emphasise the role that batteries and improving storage will play in the future. If we are to balance local generation and local demand, being able to store a lot of this renewable energy will be key. These local, community-owned renewable energy projects support local skilled jobs and offer local economic opportunities, which will be very welcome in the face of the covid-19 pandemic’s impact on so many of our communities.

[Wera Hobhouse (Bath) (LD)]

Bath and North East Somerset Council is working closely with Bath and West Community Energy, and such partnerships are incredibly important for getting local buy-in. Does the hon. Gentleman agree that in order to get that local buy-in, this really has to work financially as well for the people?

[Ben Lake]

I am grateful to the hon. Lady for making that point. She rightly says that this has to be viable for these community schemes and partnerships if they are to fully realise the potential that so many of these schemes possess. I have put on record details of one local energy partnership in Cardigan in my constituency that I know is trying to grapple with some of these challenges.

--- Later in debate ---

[The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)]

Thank you, Mr Deputy Speaker; I was going to make very much the same point. I congratulate the hon. Member for Ceredigion (Ben Lake) on securing today’s debate, and I will make the same point: I have never seen an Adjournment debate with so many interventions. They were all extremely gracefully and graciously accommodated in his speech, so many congratulations to him.

The hon. Member has spoken eloquently about the need for local communities to be able to supply electricity, and I think there are strong arguments in its favour. I know that similar views have been expressed to me and the Department by many Members. I am fully aware that my hon. Friend the Member for Waveney (Peter Aldous) has also done his bit to try to drive the issue of local supply up the agenda.

I know that the hon. Member for Ceredigion supports a campaign for electricity generators to sell directly to local consumers, for all the benefits he suggested in terms of local employment. I think he or one of the many intervenors used the phrase “local buy-in”, and those arguments are fully appreciated.

In my remarks today, I will address the matter in quite a technical way and give the specific reasons why we as a Government feel that this particular provision is not something that we would adopt, but I suggest to him that local community participation has to be on the agenda. It is certainly something that I as the Energy Minister will be willing to engage with and have a discussion about.

With regard to the licensing—we will talk a little bit about that—changing the licensing framework to suit the business models identified by his campaign appears attractive, but the danger—and we always have to be mindful of dangers in government—is that it would create wider distortions elsewhere in the energy system. I will talk to those directly. Instead of the hon. Gentleman’s proposal, I would urge stakeholders and hon. and right hon. Members across the House to engage with the ongoing work that the Government are undertaking with Ofgem to support flexibility and innovation more generally. Then perhaps we can come to a view about how the local element can play its part in the solution.

[Wera Hobhouse]

Is the Minister not aware that the main problem is the lack of a level playing field? Basically, the smaller providers cannot compete with the bigger providers, and therefore we need this change.

[Kwasi Kwarteng]

I am fully aware of that, and I will come on to it. I have only 10 minutes, so I ask the hon. Lady to bear with me; I will address that point later in my remarks.

Electricity and gas supply licences, as I am sure everybody in the Chamber knows, are usually granted on a Great Britain-wide basis. However, Ofgem has powers to award supply licences for specified areas and specified types of premises, and that can allow licensees, once they have the licence, to specialise and offer more targeted and potentially innovative products and services. The holder of such a licence could supply customers only in the specified geographical area and specified types of premises, with the full terms and conditions of the licence applying otherwise. That means that there is already provision through this licence to have local provision. Electricity suppliers can apply to Ofgem for a derogation from a particular provision of the supply licence, and if it is granted, provisions of the supply licence will not apply to them. There is already some degree of flexibility.