New Clause 29 - Simplification of Renewable Energy Certificates for microgeneration
Climate Change and Sustainable Energy Bill
5:00 pm
Malcolm Wicks (Minister for energy, Department of Trade and Industry; Croydon North, Labour)
The Government are keen to amend the renewables obligation to ensure that microgenerators can more easily access the benefits that they deserve. I shall speak later to the amendments that I have tabled to achieve just that. I have some concerns about new clause 29, however, which was tabled by my hon. Friend the Member for Edinburgh, North and Leith, and the reputational risk that it could have for the smooth functioning of the renewables obligation.
The new clause would allow the obligation order to be amended so that microgenerating equipment could be “deemed”—that is the crucial word—to have generated a certain amount of electricity each year. The effect would be to remove the need for microgenerators to demonstrate that electricity has indeed been produced. Evidence of renewable generation is a fundamental requirement to take advantage of the significant benefits of the renewables obligation. The generating equipment may well have been type-approved and in certain circumstances generate at a certain level, but that is not a guarantee that it will be properly installed or that when it breaks it will be fixed. Nor do those factors take into account the siting of the equipment, so there would be less incentive on the owner to install their equipment in the best location.
The support provided by the renewables obligation to the renewable sector is of course significant, but I do not wish to put at risk the credibility of the system by providing further support without clear evidence that renewable generation has taken place. Such a situation would reflect badly not only on the microgeneration sector, but on the integrity of the obligation itself, and I want to avoid that.
I understand the arguments that the proposals would reduce the administration involved in a small generator’s having to take meter readings, and that increasing the certainty of income from renewable obligation certificates—ROCs, as they are known—would improve incentives for microgeneration. However, it is important to note that since the obligation’s introduction in 2002, the Government have taken measures to provide better access to its benefits, including an amendment to the legislation that allows small generators the choice between making monthly or annual claims for the ROCs. In the light of the comments that have been made, I place it on record that there is no compulsion to read the meters in the middle of the Easter holidays, although a point was made about that. There is more flexibility than some have suggested.
Those opting for annual claims simply have to provide Ofgem with a reading at the start and finish of an obligation period. They are also sent a reminder to do so by Ofgem about a month beforehand. I do not believe that that is an unreasonable burden. New clause 29 would also allow for the renewables obligation order to be amended so that generating stations could be deemed to have generated a certain amount of electricity each year. The power proposed is broad and general, rather than specific to microgenerating stations, but the intent of the proposal is clear. My concern remains the same: removing the need for generating stations to demonstrate that renewable electricity has indeed been produced would take us further than we would wish to go.
The amendments to which I shall speak shortly will introduce further real benefits by allowing agents significantly to reduce administrative burdens for smaller generators and by removing the requirement for a sale and buy-back agreement with an electricity supplier. Those changes can reduce the requirement of a small generator to the simple provision of a meter reading once a year to claim the benefit of ROCs through an agent.