New Clause 29 - Simplification of Renewable Energy Certificates for microgeneration
Climate Change and Sustainable Energy Bill
5:29 pm
Malcolm Wicks (Minister for energy, Department of Trade and Industry; Croydon North, Labour)
I am sorry if I have delayed the Committee, Mr. Benton. There was some suggestion that there would be a second vote, but it did not transpire.
As I was about to say, I am happy to explore further the ideas that inspired the new clauses and, in particular, to assess the recommendations made by the distributed generation co-ordinating group. However, it would be sensible to undertake that further work before putting specific provisions in primary legislation, so I must oppose new clause 29.
I turn now to new clauses 35 and 36 and amendment No. 37. Hon. Members who are familiar with the renewables obligation will be aware that it is a fairly complex measure, as the provisions before us demonstrate. I believe that the policy behind them, though, is a simple one. New clause 35 would provide an enabling power to allow the Renewables Obligation Order 2002 to be amended in a way that would bring significant benefits to generators.
The changes would allow agents to act on behalf of small generators through the process of accreditation and claiming of ROCs. They would allow ROCs to be issued to agents and would allow agents to amalgamate the output of small generators. They would remove the requirement for a sell and buy-back agreement for small generators who consume some or all of their generation. During 2005, a review of the renewables obligation took place that involved two consultations on various issues, including those that I have outlined, and there was strong support for the proposals, not just among generators, but among electricity suppliers.
Allowing agents to act on behalf of small generators, not just in the accreditation process, but in the claiming and issuing of ROCs, would remove a level of administration that we know can be a burden. The additional change of allowing agents to amalgamate output would allow small generators to benefit from the renewables obligation by joining forces with others in the same boat, when previously they may not have generated enough to make claiming ROCs worth while. Currently, many individual small claims for ROCs are required, but in the future it would be possible for agents simply to submit one large claim—a significant reduction in administration for all concerned. There is also an opportunity for a market to emerge in agents who would have the expertise to gain the most benefit from the obligation, particularly through economies of scale.
It is important to note that we do not intend the use of agents to be compulsory. They would simply allow small generators to have greater flexibility when accessing the benefits of the obligation. Any changes to the renewables obligation order would be subject to statutory consultation, and that is where the detail of the proposals would be addressed.
The removal of the sell and buy-back agreement is a little less self-explanatory. Under current legislation there is a requirement that if generators want to consume electricity that they have generated themselves, and claim ROCs, they must first sell the electricity to a supplier, before buying it back for their own consumption. It is clear that that is not only an administrative burden—indeed an administrative absurdity—for small generators, but could be a barrier to their making ROC claims or establishing generating stations.
The proposed provisions are for enabling powers to allow the renewables obligation order to be amended to remove the sell and buy-back requirements for smaller generators. They would also allow the order to be amended to make it easier for small generators to claim ROCs for electricity that they do not consume themselves, including where the electricity is sold within a private wire network. As with the proposals for agents, the removal of the sell and buy-back requirement will be subject to a statutory consultation which will set out the detail of the proposal.
I hope that the Committee agrees that the proposed provisions will make it significantly easier for microgenerators to gain the access to the benefit of the obligation that they deserve. New clause 36 contains a number of additional provisions relating to the operation of the renewables obligation, which will assist the effective working of the amendments introduced by new clause 35. Amendment No. 37 changes the long title of the Bill to take account of the fact that it will now include measures relating to the renewables obligation.
I therefore oppose new clause 29, and I urge acceptance of new clauses 35 and 36, and of amendment No. 37.