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Green Energy (Definition and Promotion) Bill

I am encouraged by the Government's commitment to renewable energy in general in the range of recent new instruments to incentivise renewable energy and small-scale renewable energy output, and the commitments that have been made and are being made to the development of renewable and sustainable heat and the role of energy efficiency in the development of a sustainable renewable energy strategy. A number of the issues that have arisen from private Members' Bills are being addressed by such commitments. It is unlikely that the Minister will give a blanket undertaking this morning that every clause of every private Member's Bill relating to heat, energy and renewable electricity will be implemented tomorrow, but it is fair to say, without any hint of partisan discussion on the issue, that there is a sea change in ensuring that the impediments to the development of renewable and small-scale sustainable energy, which have existed over a period of time and which hon. Members have through, among other measures, private Members' Bills, sought to overcome, are by means of such devices and commitments being substantially addressed. However, it is true that substantial impediments remain, which come in a number of shapes and sizes. We have the impediment of the fact that renewable energy devices are, unlike traditional forms of energy delivery, up front capital intensive. Substantial capital is required to install them and thereafter the revenue consequences are slight. Once installed, the earning capacity of such devices, are significant, and the introduction of the feed-in tariff and the renewable heat incentive, will, I hope—I remain optimistic on this matter—ensure that the certainty for the capital investment that is required in those devices can be enhanced. Nevertheless, it is still true that to suggest to a small business or a household that they put up front between £4,000 and £12,000 to install such a device on the understanding that, eventually, there will be a payback, when they have been used to paying a quarterly electricity or gas bill for their heating supply, represents a considerable turnaround in how people view their arrangements with their energy suppliers. That impediment might be overcome by the introduction of leasing arrangements for microgeneration devices, so that the capital cost can be avoided and the cost of the running those devices can be rolled up in the revenue stream that is generated as those devices are used over time. A second impediment relates to the connection of such devices to the grid and, in particular, to the distribution network. Indeed, it would be rather a good idea if Ofgem and the grid operators had a good look at the extent to which the theoretical backwash of energy that should enter the grid from, in particular, renewable electricity devices, in practice never gets near the transmission network but simply goes around the distribution network. If we end up with billing arrangements under which small-scale energy generation, as part of the energy mix, is rolled up with the total cost of transmission and distribution, a significant impediment to microgeneration development will remain. In the past, such impediments were considered fairly insignificant, because, then, it was thought that microgeneration would have a fairly insignificant role to play in the future. However, given the renewable energy strategy that is developing, and the ambition for microgeneration and small-scale generation to become a part of overall renewable energy generation targets, it is far from small-scale in practice. If we also consider the indicative proposals in the renewable energy strategy for reaching the 15 per cent. target for renewable energy—not for renewable electricity—as part of the energy mix by 2020, we see that out of that 15 per cent., it is proposed that no less than 9 per cent., which, according to my maths is about 1 per cent. of the total energy supply, should be supplied by solar heat. The hon. Member for Cambridge (David Howarth) mentioned the importance of solar heat and solar thermal technology, and in the renewables strategy solar heat plays a substantial role. When we break that down, it means a large number of small installations on the roofs of houses and small-scale commercial properties, and in agricultural areas and so on—all of which individually make a small contribution but collectively add up to the proposed large contribution to the strategy. That would probably mean several hundred thousand installations on the basis that, currently, we install a few thousand per year throughout the country. That represents a quantum change in the rate of such installations, and in their distribution throughout different sectors of domestic energy, small business and agricultural environments. The clauses in the Bill that seek to remove the third impediment to such installations, the planning arrangements, are therefore potentially very important and valuable. Those impediments have largely been removed in terms of solar thermal technology, but, for other important technologies such as micro wind and, particularly, air source heat pumps, which I believe will also make a substantial contribution to the 15 per cent. energy target by 2020, the impediments remain. Heat pumps, incidentally, are scheduled and projected to provide some 4 per cent. of the 15 per cent. energy target. Again, my maths partially elude me, but that represents about 0.5 per cent. of the total future renewable energy supply, and it would also be based on a large number of small installations that, collectively, would make up the total. Therefore, the idea that they should fall within the general permitted development order is, as far as domestic properties are concerned, very important, but the Bill goes much further by clarifying the environment, as far as such planning is concerned, in the commercial and agricultural sectors. On occasions, we have talked about microgeneration as if it were all about putting a small turbine, a small solar thermal device or a solar panel or two on our roofs. However, some of the biggest gains in the not-too-distant future will relate to small and medium-sized enterprises enhancing the insulation of their properties and putting money-earning renewable energy devices on their roofs, around their premises or within the curtilage of their agricultural land to enhance their businesses and secure their energy supplies. There is an impediment, however, because most small business rent their premises, so there is no enormous incentive either for them or for the landlords of such properties to equip themselves with such devices. The Bill offers some succour, however, in the clauses relating to council tax payments. In Committee, I hope that the business rates for small-scale commercial premises will be considered, because they represent an important means of removing a number of disincentives to the installation of renewable devices. Overall, the ambition that we now properly have on microgeneration and small-scale generation is real and attainable—attainable, provided that we diagnose the future impediments to the imposition of such energy production devices and systematically ensure that those impediments are ameliorated or eliminated from the system. The Energy Saving Trust recently projected that, by 2050, 30 to 40 per cent. of our overall energy supplies could arise from distributed, small-scale renewable energy at local, district, housing and small-scale commercial property levels. My concern is that that ambition, which could play such a key role in the provision of our future energy supplies, could be tripped up by impediments that we can easily remove. The Bill goes a long way towards removing a number of those impediments, and I commend it for that. If, in a few years' time, we get the level of renewable energy generation in our communities and homes which is not only desirable but essential as far as our energy mix is concerned, we will be able to look back and say that this Bill played a part in making the change. For that, we should thank the hon. Member for East Surrey (Mr. Ainsworth).