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Energy Bill

I am most grateful to the noble Baroness, whose remarks have taken me completely by surprise. As it happens, I have a piece of paper in my hand that deals with that issue. We have always said that feed-in tariffs for microgeneration would be considered alongside other options as part of the consultation that we are running over the summer, which in turn will feed into our renewable energy strategy. By October, with the consultation closed and the responses in, we will be able to give an initial assessment of the responses on microgeneration and can have a more informed discussion of the issues concerning a feed-in tariff for microgeneration. We will be happy to discuss the issue, and our initial view of those consultation responses received, with interested Peers before Report. I hope that that satisfies the Committee and that it will generally be supported. I shall now respond to the noble Lord’s very interesting amendment. He wishes in his amendment to encourage the deployment of hydro-micro-generation and talks about a number of issues that have been raised by the British Hydropower Association. Microgeneration, including hydro-microgeneration, has an important role to play in delivering our renewable energy targets, which is why the noble Baroness’s intervention was appropriate for this amendment. We have already taken a number of steps to promote microgeneration and will be taking a serious look at what further action should be taken. The amendment would require the Secretary of State within one year of the passing of the Bill to make regulations relating to hydro-microgeneration defined as less than 100 kilowatts and provides for such regulations to deal specifically with regulatory issues relating to such generation. These regulations fall into two groups. The first group deals with the treatment of hydro-microgeneration under Sections 32 to 32M of the Electricity Act 1989—the part of the Act that sets out provisions on the renewables obligation. The second group deals with requirements set out by the Environment Agency. Let me deal first with the renewables obligation. The details of how the obligation is implemented are set out in a statutory instrument, the renewables obligation order, which already allows for differences between generating stations: differences between the treatment of large and small generators, or differences between the treatment of certain technologies such as co-firing with regular biomass and co-firing using energy crops, for example. In our view, it is overly bureaucratic to have a separate set of regulations that deal solely with the treatment of hydro-microgeneration under the RO, not to mention increasingly complex and confusing for the generators themselves. For example, a generator using a mix of technologies, such as a small wind turbine alongside their hydro plant, would need to have regard to two sets of regulations that both seek to implement the same system. We are aware that the BHA has concerns that current proposals do not provide the correct level of support to those hydro-microgeneration stations that fall just above the 50 kilowatt threshold that we use to define microgeneration for all technologies. The Committee will recall that at Second Reading my noble friend Lord Hunt mentioned that issue and was written to by noble friend Lord Jones of Birmingham. It is worth noting that wherever one sets a threshold, there will always be interested parties who fall either the right side or the wrong side of that threshold. But we are sympathetic to this issue and have been in discussions with the BHA to consider this further. We understand that the BHA is currently undertaking a scoping study on hydro-microgeneration. Any evidence from the study will be taken into consideration on the detailed arrangements for a banded RO as part of the statutory consultation due to be published later this summer. I now turn to the second part of this amendment; the proposal to make the installation of hydro-microgeneration exempt from the Environment Agency’s licensing requirements. Everyone would agree that it remains imperative that while we push for an increase in renewables we must not do so at the expense of the environment, particularly in this case the rivers and the wildlife associated with them. I am aware of the sector’s concerns about the perceived disproportionate regulatory burden that it feels is placed on it. I am happy to say that the Environment Agency and British Hydropower Association are working closely together to scope out guidance that aims to streamline the legislation through a good practice guide. The department is funding a guide for hydropower, which is in the process of being finalised and should be published shortly. The impacts on the environment from hydro-microgeneration, which may be in the form of effects on water resources, flood risk, fish, ecology or navigation, are not always easy to assess. In addition to the guide, I am happy for officials in my department to facilitate a meeting between the regulator and the hydro-microgeneration industry to discuss this issue rather than trying to deal with this through additional regulation. My officials have spoken to officials from the Environment Agency to arrange a meeting to discuss how best to take it forward. I hope I have given the Committee some reassurance that the Government are working with the industry on the promotion of hydro-microgeneration, and explained why we do not think the amendment is the appropriate way forward today.