Photovoltaics

Energy and Climate Change – in the House of Commons at 10:30 am on 26th January 2012.

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Photo of Mary Glindon Mary Glindon Labour, North Tyneside 10:30 am, 26th January 2012

What recent representations he has received on his decision to reduce the feed-in tariff for solar PV.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

What recent representations he has received on his decision to reduce the feed-in tariff for solar PV.

Photo of Fiona O'Donnell Fiona O'Donnell Shadow Minister (Environment, Food and Rural Affairs)

What recent representations he has received on his decision to reduce the feed-in tariff for solar PV.

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

Ministers and officials meet regularly with a range of stakeholders from the solar photovoltaic industry. Details of meetings between Department of Energy and Climate Change Ministers and external organisations are published quarterly on the DECC website. The recent consultation on feed-in tariffs for solar PV closed on 23 December 2011. More than 2,300 responses were received and are being analysed prior to the publication of a full Government response to the consultation in the coming weeks.

Photo of Mary Glindon Mary Glindon Labour, North Tyneside

The Secretary of State spent more than £66,000 of public money on legal fees, but he is refusing to accept the Appeal Court decision that his plan to cut feed-in tariff subsidy is unlawful. As well as jeopardising the future of the industry by fighting the Court ruling, how much more public money does he intend to waste?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I entirely reject the idea that there is no future for the industry. The reality is that we would be able to support at least twice as many installations at the new tariff rate as we could under the old one.

The hon. Lady asks about the costs of the legal cases. I merely point out to her that we are spending a few thousand pounds in order to save consumers £1.5 billion, which is what the cost would have been had we left the case to run. The reality is that the previous Labour

Government introduced a scheme that was fundamentally flawed. As with other issues, this Government are putting Labour’s mess right.

Photo of Cathy Jamieson Cathy Jamieson Shadow Minister (Treasury)

Is not the truth of the matter that this episode has led to a frenzy of additional applications? There has been a 1,100% increase in the number of people trying to get systems installed in their homes in a short period of time. Businesses in my constituency tell me that that has caused chaos in the supply chain. Those systems also had to be installed at a time of extremely poor weather in Scotland. What does the Minister say in response to those points?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

The hon. Lady conveniently omits to mention that the design flaw in the scheme introduced by the Leader of the Opposition ensured that there was absolutely no way of automatically reducing the tariffs in line with what was going on in the real world, despite the fact that other countries—Germany, for example—had introduced such schemes. All we had to do was find out was happening in Germany and model our scheme on theirs. Did the Labour Government bother to learn those lessons? No. The result is that we have to clean up the mess.

Photo of Fiona O'Donnell Fiona O'Donnell Shadow Minister (Environment, Food and Rural Affairs)

It is becoming uncomfortable watching the Secretary of State trying to defend the indefensible. On 31 October, the Minister of State, Gregory Barker, told the House that the Government wanted to spread solar power as widely as possible. If that is true, why do the Government’s plans exclude almost nine out of 10 households and anyone living in social housing from having solar power?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I entirely disagree with the hon. Lady’s analysis of what was proposed in the consultation paper. Apart from anything else, she completely ignores the possibility of improvement in the energy efficiency of homes. Ensuring energy efficiency is one thing that we are keen to do.

I simply remind Labour Members that the Leader of the Opposition introduced a scheme at a cost of £7.9 billion. That went directly to consumers, and there was no way whatever of controlling those costs. He so doubted the dynamism of the private sector that he predicted no commercial take-up of solar power in the first three years of the scheme, even while solar costs were tumbling, and he ignored the best practice of the German FITs scheme and failed to include a system of automatic degression. All this Government are doing is clearing up the mess that Labour left behind.

Photo of Alan Reid Alan Reid Liberal Democrat, Argyll and Bute

One unfortunate knock-on effect of the solar dispute is a delay in the review of FITs for small-scale hydro. Many planned schemes on Argyll and Bute cannot go ahead until that uncertainty is resolved, which is causing severe problems for businesses and community groups. Will my right hon. Friend please do all he can to end that uncertainty as soon as possible so that those vital small-scale hydro schemes can go ahead?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I pay tribute to my hon. Friend, who has also raised this issue in correspondence. He is a doughty champion for the interests of those of his constituents who want to go ahead with micro-hydro and other schemes. I can reassure him that the Government will not let problems with the solar feed-in tariff get in the way. We want micro-hydro and other schemes to take off and will introduce proposals as soon as possible. I hope to be able to do so in February.

Photo of Robert Halfon Robert Halfon Conservative, Harlow

The Minister may be aware that there are hundreds of Harlow residents in social housing who were promised solar power panels, but the new rate is too low for the scheme to be viable. Will my right hon. Friend tell the House whether he would consider a more generous community rate for the feed-in tariff, even if it was for only a few months?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

The absolute key to what is happening with solar panels is the collapse in the cost. The idea that something might not be attractive commercially today does not mean that it will not be so in pretty short order. What has been happening over the past 18 months is an enormous increase in the production capacity of China. Essentially, what has happened is that the Henry Ford of solar panels—who happens to be Chinese these days—has introduced the Model T, and we are getting an enormous reduction in costs as a result of economies of scale.

Photo of Caroline Flint Caroline Flint Shadow Secretary of State for Energy and Climate Change

When the cuts to solar were announced, the Minister of State, Gregory Barker claimed that they would create jobs. Paragraph 73 of the impact assessment, signed off by the Minister on 2 November 2011, says that

“there could be around 1,000 to 10,000 gross additional jobs in this sector in the three years to 2014/15”.

Can the Secretary of State confirm today that those 1,000 to 10,000 jobs are not additional jobs, but the total number that the industry will support, which, for a sector that currently employs nearly 30,000 people, means tens of thousands of job losses?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

What is absolutely crucial for the sector is that there should be a sustainable pathway for growth in the future. What the right hon. Lady has completely failed to address is the fact that if we continued to over-subsidise at the previous rate, we would have fewer than half the installations that we can afford to subsidise today with the new rate. It was not an accident that the British Photovoltaic Association intervened on our side in the courts, precisely as a result of that calculation.

Photo of Caroline Flint Caroline Flint Shadow Secretary of State for Energy and Climate Change

Seven times I have asked the Minister of State what these cuts will mean for jobs; seven times he has tried to hide the fact that his cuts will put thousands of people out of work. According to his figures, released on Friday,

“in the 2012/13 to 2014/15 period…the total number of gross full-time equivalent jobs will be 1,000 to 10,000.”

That is not additional jobs; that is the total number. Nothing can hide the sheer incompetence of the Government’s handling of this. Is it not about time that the Government stopped thinking about saving face, creating more uncertainty and wasting even more money on more legal challenges, and sat down to work out how we are going to put the industry on a sustainable footing?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I realise that the right hon. Lady supported a different candidate for the leadership of her party from the winning candidate; nevertheless, given her repeated attempts effectively to undermine the former decisions of the Leader of the Opposition, as well as her failure to recognise their consequences, I would merely remind her, as she now likes to lecture us about the impact assessment, what the impact assessment showed in February 2010. It is important that she should go back—as she wants to look at this—because that impact assessment showed that the cost of the scheme introduced by the now Leader of the Opposition had a net present value of £8.6 billion, while the benefits had a net present value of £400 million. If she thinks that is the sort of policy making of which she is prepared to be proud, good luck to her.

Photo of Jo Swinson Jo Swinson Liberal Democrat, East Dunbartonshire

The Secretary of State is right to say that the design of the scheme he inherited from Labour was flawed. However, by continuing with that scheme for 18 months, coupled with apparently poor legal advice, the implementation of FITs that he has presided over has been somewhat chaotically managed for consumers and businesses alike. I am concerned that a letter from the Minister of State says that if there is no action, proposals may have to be brought forward to close the FITs scheme. What reassurance can the Secretary of State give that FITs will be put on a sustainable footing for the rest of this Parliament?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I entirely reject the idea that we did not act to deal with this issue as soon as we were advised. The problem with the design of the scheme was that it was unable to cope with the dramatic fall in the cost of solar panels. That dramatic fall, the reason for which I have already described, became apparent over the past year, and we acted as quickly as we could to deal with the situation. What is unforgivable is the fact that the present Leader of the Opposition failed to foresee, by looking at best practice internationally, how the scheme should have been designed in the first place.