Oral Answers to Questions

Alan Whitehead Excerpts

Thursday 12th July 2012 Commons Chamber

[Charles Hendry]

I assure my hon. Friend that we are always looking for measures that will simplify the structures, although I would draw attention to comments from EDF, a key investor, which says:

“The Contracts for Difference…which sits at the centre of the Bill, will be key to delivering investment that represents value for money, and protects consumers. It is a simple, transparent and proven instrument.”

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

Does the Minister accept that the contracts for difference impact study was undertaken when the idea was that the state would be the counterparty to the CFD? Now that is no longer the case, will he provide a new impact assessment that compares the relative costs and advantages of CFDs and premium FITs before the proposal is finalised in the energy Bill?

[Charles Hendry]

I am grateful to the hon. Gentleman for the work that he and his fellow members of the Select Committee on Energy and Climate Change have done on the proposal and on alternative counterparty models. The Government have made one approach clear in the draft Bill, but we have also made it clear that a single counterparty model could work separately. If we propose different models, we will publish a separate impact assessment.

--- Later in debate ---

[Mr Davey]

We are keen to hear from any LEP across the country. I know that my right hon. Friend the Secretary of State for Business, Innovation and Skills and his ministerial team work closely with LEPs. Across Government we want to support their work in promoting the green economy.

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

Has the Minister spoken with the developers of large-scale wind farms who have difficulties because their development periods straddle the end of the renewables obligation and the start of—if they come to pass—contracts for difference? Does he consider that the end of the RO, if that is necessary, should be in 2020, rather than 2017, in order to accommodate those problems?

[Charles Hendry]

We are not persuaded by that argument. We think that there needs to be a clear switchover date and are giving a long lead-in time, to 2017, so that there is certainty. Alongside that, we are giving people the choice of whether they go with the existing renewables obligation mechanism or move to the new contract for difference mechanism so that they have the best opportunity to decide what works for them in the longer term.