---

Energy: Feed-in Tariffs

My Lords, I am grateful to the noble Baroness for her questions—quite a lot of them—which I will deal with. I will, I hope, cover the canvas of this particular issue. The motive for the Government here is putting consumers first. That is absolutely fundamental in these difficult times. I was delighted that Consumer Focus should say that the Government are, "““taking a sensible approach to protect energy bill-payers with the proposed changes to Feed-in Tariffs. Incentives to overcome the high set-up cost of solar panels and help make our energy supply greener are necessary. But the cost for this is passed onto bills of energy customers and we need to strike a balance””." I do not think you can say it more clearly than that. That is at the very heart of the difficult decision that we have had to take in changing these rules. Why was this initiated? It was initiated simply because if we carried on at the current rate at which people are taking up this thing, we would have run out of money by March. Therefore there would have been no money available to pay for other excellent initiatives that have the benefit of feed-in tariffs such as anaerobic digesters and other projects that we have out there. We read in the St Albans & Harpenden Review that a solar panel company is advertising panels at £3,995, which is down enormously from the original cost—not by 30 per cent but by nearly 60 per cent. There is also a guaranteed IRR of 14 per cent, backed by the Government through an incentive scheme that frankly has become overheated and bloated and is in danger of ripping off consumers and those who invest in it. So of course the goalposts have been moved for the investors who the noble Baroness wants to have a clear path. Of course, they brought it upon themselves to a large extent by advertising schemes that show that government-backed schemes have outstanding benefit beyond the normal rate of investment return. It is reasonable in the current world that we have an investment return of 4.5 per cent or 5 per cent, which is what the new tariff would offer. The impact on jobs is regrettable, given that an industry has developed. I am sure the employers will look very closely at that and will hopefully look to the export market, where, as we all know, the sun shines more often than it does in this country. I have just been on a visit to China, and I offer to support any solar panel manufacturer in their export endeavours. As we all know, one of the unfortunate things about this country is that the sun does not always shine when we need energy most, and we have the shortest days of the year. The Government are left with a choice. Does the tariff represent value for money for the customer? Does it represent value for the taxpayer? Does it have a real impact on the supply of electricity to homes, which is currently 0.1 per cent and could go up to 0.3 per cent? Do we have the climatic environment that is necessary or beneficial for this type of product? The answer is that we believe it could be used better elsewhere. The noble Baroness asked further questions on cut-off dates, the response to the consultation and community things. Of course, the whole point of consultation is that we are consulting. This is not an edict but a consultation period. We want to listen to views before we go ahead with our proposals and we will look at exceptions, which is the point. On community projects, it is important that we maintain community buy-in. That is why we have agreed to keep 80 per cent of this tariff for aggregated schemes, which will still provide a return on investment of around 4 per cent. Because the purchasing power of these solar panels can drive greater economies of scale, they should be able to benefit more from IRR. Therefore, it is wholly in tune with this Government’s policy, which is to be the greenest Government ever and to deliver a benefit for consumers. That is at the heart of these proposals.