Renewables Obligation Closure Etc. (Amendment) Order 2016

Debate between Lord Teverson and Baroness Byford

Wednesday 16th March 2016 Lords Chamber

[Baroness Byford (Con)]

My Lords, I shall comment on some of the points made by the previous speaker. This Government are certainly behind renewables of all sorts for the future. I hope the noble Baroness accepts that we are working towards the benefits of a low-carbon economy and—she did not refer to this in her contribution—that the costs of producing solar energy have come down. Therefore, one of my questions to her is: if those costs have gone down, is it really right that we should maintain the subsidies envisaged when the costs were higher and, if so, what implications does that have for the people who have to pay for them—that is, the consumers? Does she also accept that, as the Minister said in his opening comments, we ran the risk of exceeding the budgets that were originally planned because of the wonderful response we had and that up to four times more could well be envisaged by the end of that time?

For me, it is a matter of looking at projects as they come up, be they in green energy or any other energy. As far as I am concerned, subsidies have always been there to pump-prime—to help new industries take off and become established. In this industry, that has clearly worked very well, and solar is a huge success. I have one or two very small solar panels on my garage, which do not bring in a big income, but we try to do our bit because we believe in renewable green energy, so we have them.

By considering the grace period, the Government have responded. When we debated this before, a question was raised about it. However, I find this quite hard and I say to the noble Baroness in all sincerity: when the industry has become successful and those costs have come down so much, the question must be whether those subsidies should be continuously maintained when the response we have had suggests that they might not be. Therefore, is it right to expect the consumer still to be paying for that project? The Government recorded that £52 billion has been spent on the renewables sector since 2010. That is a huge amount, as the noble Baroness knows from when she was in coalition. However, unless things are tackled, a balance has to be struck. I suspect she and I will not agree on how that should be done. It is a realistic challenge that any Government must face. At the moment, we are in government, and the costs and the response from the industry have done really well. The question is whether the order before us tonight is fair and appropriate. On that, I think the noble Baroness and I will agree to disagree.

[Lord Teverson (LD)]

My Lords, I will be extremely brief. Perhaps I may reply to the noble Baroness, Lady Byford—whose expertise in all these areas I admire greatly —as well as comment on one of the Minister’s remarks.

First, these Benches absolutely want to reduce renewable tariffs and subsidies as the costs come down. That is a fundamental point. We have a track record of doing that, and that is what we do. However, we are not into executing a particular technology. The way that this has worked is that the Government—interestingly, a Conservative Government—have been moving down the road of choosing technologies. The whole strategy of the energy market reform was to move gradually to a more market-based, less technology-specific situation as time went on—but we are doing the opposite.

We absolutely agree on the levy control framework and lowering costs to the consumer, but what have the Government decided to do? They have decided to invest in the two most expensive low-carbon technologies, offshore wind and nuclear, both of which are hugely more expensive than onshore wind and solar, the technologies that cost the least. So I say to both the Minister and the noble Baroness that if that is what the Government want, they need to change the strategy. They can achieve another strategy at the same time as meeting the carbon emissions target and lowering costs to consumers. That is the way it works—it is arithmetic. So, please, let us go for that.

I return very briefly to the issue of investor confidence. As noble Lords will know, the Select Committee on Energy and Climate Change in the other place recently looked at investor confidence in the energy sector. I hate round numbers, because one often does not believe them, but DECC itself estimates that we need some £100 billion of investment up to 2020, not just in generation but in the distribution system as well. As my noble friend said, to achieve that we need real investor confidence. What was the Select Committee’s conclusion? It said:

“It is clear that the confidence of many investors has been dented by the Government’s actions since the election. The sudden, unexpected nature of many of the announcements has unsettled investors who had been used to receiving more forewarning of policy changes. There is a high risk that a hiatus in new developments has been created, pending further clarity on short- and longer-term policy. The Government removed support for renewables due to concerns about costs for consumers. But they have not set out the evidence base for this conclusion or for other decisions, and engagement with the investment community has been poor”.

That is an all-party conclusion in a report on the Government’s action in this area, and the conclusion is to condemn it. The need for investment is huge. We need to make sure that investment is right and that subsidies are low—and we are absolutely for reducing subsidies—but it has led to a hiatus. We no longer have carbon capture and storage or appear to have nuclear, and as far as I can see we do not have a workable strategy to bring in gas—so we have a huge energy problem. We need those investors but we have thrown away their confidence, and through the decisions we have made on renewable energy, by picking expensive winners, we have ensured higher energy costs for the future.

Electricity Capacity (Amendment) (No. 2) Regulations 2015

Debate between Lord Teverson and Baroness Byford

Tuesday 24th November 2015 Grand Committee

[Lord Teverson (LD)]

My Lords, it is the first time that I have spoken in any meeting of the House since the Secretary of State announced that coal was going to come to an end within 10 years, and I congratulate the Government and the Secretary of State on that announcement, which is a major step forward. I disagree with a great deal of government energy and climate change policy but that is an excellent move forward, and I would like the Minister to note that and pass it on.

I have a couple of questions about the capacity market, although I have no issues with this statutory instrument. Will the Minister update us on interconnectors and the capacity market? There have been plans to bring on demand reduction aggregators but in the short term rather than the long term. I would like to think that we can bring on institutionalised demand reduction and aggregation much more than we have done in the past, something which is very much in the Government’s interests. On the reduction of fossil fuels, I recall that quite a number of the successful tenderers for capacity payments were coal generators. Do the Government have any plans to exclude them as we move forward to auctions?

We are now down to a very low level of margin, yet the National Grid and the Government seem fairly relaxed. Does that mean that a 20% margin in the past has been a waste of expensive resource that was not needed and that we should have been managing on much smaller margins? I should be interested to hear the Minister’s response on those issues.

[Baroness Byford (Con)]

I should like to make two observations. The Minister has said that the vast majority accept the proposals, so which respondents did not? I have no difficulty with the proposed change from five working days to 15, but there has been a suggestion in the public domain that electricity supplies could be fairly fragile in the coming months, particularly if we have very cold weather. How has that been built into the system? I am glad that feasibility studies were done and were accepted, but what is the comfortable margin of security of supply in the months ahead? Those are my questions: who did not support these proposals, and what do the Government consider a comfortable margin of security supply?