Energy Bill [HL] — House of Lords, 2015-09-14
Topic: Energy
Bryony Worthington (Labour, Centre-left): My Lords, Amendment 35C would insert a new clause after Clause 60 to require that an allocation round should be held for the CFD—contracts for difference—process at least annually for each year that the UK is not on target to meet the 2020 EU renewable energy target. As is evident from the previous debate, there is some debate about how we measure that, but we still have to make quite a bit of investment to get to our targets, and we must ensure that we have a policy framework that is fit for purpose to enable that investment to be made In the Energy Act 2013, we undertook to transition from the renewables obligation to contracts for difference. There was cross-party support for the idea that contracts for difference would be a material improvement: they would give greater certainty for investors and enable us to move to a technology-neutral auctioning system, which would allow costs to come down. On that basis, the Energy Act received cross-party support and Royal Assent. However, things have changed; as has been pointed out, the Government have changed. Maybe we should not be surprised about what the Government are now doing but that certainly does not mean that we should agree with it. I feel that there is quite a degree of concern across the different parts of the House about the Government’s current trajectory We have been told that there will be a statement on whether there will be a contracts for difference round this year. My understanding is that if we were to be ready for an auction in the autumn, we should have already made announcements, so I would specifically like to hear from the Minister when we will have a statement on contracts for difference allocation rounds this year and what the likely date for the next round is. Here, we get to the nub of the interpretation of the word "new" and, indeed, of the word "subsidy". If the Government are going to stick to interpreting their manifesto commitment to mean that no new subsidies for onshore wind includes contracts for difference, we need to know that now, or sooner rather than later, because it will have huge implications. State aid clearance was gained for the contracts for difference system, but that was worded in such a way as to encourage the Government to move to technology-neutral auctions as soon as possible. It would be highly problematic if the Government ruled out one of the least costly forms of renewable energy from the CFD system; the European agreement to give it state aid clearance would need to be looked at again if there were to be such a substantial change. That would cause delay across the piece. Nobody wants to see yet more uncertainty introduced into this picture, and it worries me greatly that we are going to hear in the autumn that there will be no contracts for difference for onshore wind from now on. If that is so, we need to hear about it sooner rather than later. Onshore wind should continue to be considered, alongside all the other technologies, in those hopefully technology-neutral auctions and we should move towards that as soon as possible We need to see onshore wind continue within the CFD process, not least because there is possibly a misunderstanding that onshore wind will continue to keep producing for ever more once it is put into the ground. In fact, that is not the case. The commercial reality is that, once you have a wind farm, you are quite able to upgrade it: you can use the existing footfall and the existing site but then upgrade either the nacelle or the entire turbine to get more power out from the same land area. These sorts of recommissioning projects could be completely ruled out if onshore wind renewables do not survive into a contract for difference regime. That risks around 1.5 gigawatts that is currently being generated from onshore wind coming offline by 2025, with no ability to repower. For that reason alone, we need to see some clarity about the role of onshore wind in the CFD regime going forward. However, it is not just the repowering; there are definitely options for continuing cost-effective deployment of onshore wind in those communities that are happy to accept it.