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Energy Bill

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 42A to Lords Amendment No. 42. As noble Lords will know, an upper-capacity cap for the feed-in tariff scheme has been defined in the Bill to give clarity and certainty to investors in large-scale projects under the renewables obligation. Our original amendment set an upper cap in the Bill of 3 megawatts. As I said when I first introduced the feed-in tariff clause, we want the upper cap to be high enough to give us sufficient flexibility to ensure that we are able to direct support to small-scale projects at the right capacity. Since the debate we have reflected more on the arguments put forward by noble Lords and other interested parties that the upper limit on this power gives enough flexibility for us to ensure that appropriately sized smaller-scale projects are effectively incentivised to come forward. We still believe that setting this limit as high as 10 megawatts, which was the subject of an amendment tabled by the noble Baroness, Lady Young, would be too disruptive to larger-scale renewable investments under the renewables obligation. Having listened to the debate in your Lordships’ House and to other considerations in which we have taken part, we think that it would now be prudent to set the upper limit at 5 megawatts. If further analysis and evidence gathers support, this higher upper limit would give us the flexibility to implement a feed-in tariff to support smaller-scale projects up to a possible maximum capacity of 5 megawatts. Noble Lords will be aware that we have a power in the Bill to set the upper cap below this maximum level. As part of the process for consulting on the details of this scheme we will undertake further analysis to determine the limit at which the feed-in tariff should be set below the 5 megawatt cap. Our guiding principle in following the capacity cap has been to preserve the investment being successfully delivered by the renewables obligation. This is very important since the renewables obligation will remain the key mechanism for supporting large-scale renewable projects. I reassure noble Lords that 90 per cent of onshore wind capacity to date is delivered by projects above the 5 megawatt limit that is now proposed on the feed-in tariff. I should also say that as part of the Pre-Budget Report this week, we announced our intention to strengthen the renewables obligation by extending the scheme by 10 years beyond its previous end date of 2027. This is to ensure that investors can plan with confidence for the future, making renewable electricity investment more viable and helping us to achieve our renewable energy targets. I hope that noble Lords will consider that this amendment moved by the Government in another place is sensible. It reflects listening to the views of noble Lords in this House and in the other place. I believe that it gets the balance right between the renewables obligation and feed-in tariffs. Clearly a considerable amount of work now needs to be undertaken on the practicalities, but we think that this is a sensible amendment which I commend to noble Lords. Moved, That the House do agree with the Commons in their Amendment No. 42A to Lords Amendment No. 42.—(Lord Hunt of Kings Heath.)