Small-Scale Green Energy Bill: Second Stage

Private Members' Business – in the Northern Ireland Assembly at 11:00 am on 28th September 2021.

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Photo of John O'Dowd John O'Dowd Sinn Féin 11:00 am, 28th September 2021

I beg to move

That the Second Stage of the Small-Scale Green Energy Bill [NIA 33/17-22] be agreed.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

In accordance with convention, the Business Committee has not allocated any time limit to the debate.

Photo of John O'Dowd John O'Dowd Sinn Féin

Our society is on the cusp of a massive transition from being one that is powered by fossil fuels to one that is powered by clean, renewable energy. It will be a mammoth task, but it will also provide us with many opportunities for meaningful social change. If we embrace its potential, the green economy will bring new jobs and industries, new technologies and newly empowered communities.

One of the greatest areas for potential improvement comes from the opportunity that we now have to create greater energy democracy. Energy democracy will, over time, decentralise power generation and put it, quite literally, in the hands of the people, whether that be through farms, small businesses, schools, community co-ops or individual homes.

The Executive previously set a target of achieving 40% of electricity consumption from renewable sources by 2020. The Department for the Economy is developing an energy strategy for the period up to 2050, which is to be published by the end of the year. The 2019 report on decarbonisation from the Climate Change Committee (CCC), 'Reducing emissions in Northern Ireland', explicitly recommended a supplier obligation and feed-in system. Legislative intervention is necessary to grow rapidly the share of renewables on the grid. One way of doing that is to expand the share of microgenerated renewable energy. The energy market has evidently failed to provide sufficient price incentives for homes, businesses and farms to switch to microgeneration systems.

The removal of the Northern Ireland renewables obligation (NIRO) and other renewables obligations have produced a stagnant community energy sector. The Bill is intended to be the first step in reversing that trend. It will incentivise the growth of micro renewable energy generation in homes, farms and businesses by creating a minimum tariff that major suppliers must pay for power generated from such sources.

The Bill will also place an obligation on major suppliers to source at least 5% of their total electricity from microgeneration. Climate experts around the world agree that microgeneration must play a role in the decarbonisation of our planet. The Climate Change Committee's 2019 report specifically recommended supplier obligations and a feed-in system for the North. Not only can the growth of renewable microgeneration help us to reduce greenhouse gas emissions, it can create additional income for families and communities, and it can reduce our reliance on fossil fuels, which, as we have seen over the past few weeks and months, are prone to erratic and extreme cost swings that place additional and unexpected burdens on already struggling homes.

Despite all the advantages that the Bill offers, and the path to long-term reform that it sets us on, the scheme will cost the taxpayer nothing. It provides a win for families, farms and businesses, for climate action and for energy democracy. With all the positives associated with renewable energy, why is a private Member's Bill required? The Department's green energy strategy is important, but it remains aspirational. The Department confirmed that it has no plans to legislate on any aspect of that strategy within this mandate. The Bill before the House today is a practical measure that the Assembly can take now to help to tackle climate change and, through additional income, support homes, farms, businesses and families.

I turn to the clauses. Clause 1 establishes a small-scale green energy scheme and lays out the scheme's main goals, which are the provision of a minimum price tariff for microgenerated renewable power exported to the electricity grid and the requirement for major electricity providers to source at least 5% of their electricity from microgenerated renewables. It also sets a number of definitions of terms used in the Bill, such as microgenerated and renewable power. A microgenerator is defined as a renewable generator with a maximum generation capacity of 50 kW. That is the standard definition in many countries that are introducing microgeneration legislation, including Britain and the rest of Ireland. A major provider is defined as any provider with a market share of 5% or above. That covers all providers in the North, with the exception of Click Energy, which currently has a 3·4% market share. When I carried out the consultation on the Bill, more than twice as many respondents favoured a definition that specified 5% over one that specified 3%.

Clause 2 sets out the supplementary regulations for the scheme and a list of stakeholders who must be consulted when regulations are being set. Clause 3 commits the Department to reviewing the scheme as and when economic conditions change. Clause 4 outlines the rules for the suspension of the scheme, and clause 5 outlines the guidance that the Department may give in relation to the operation of the scheme and its goals. Clause 6 sets out the meaning of specific words and phrases in the Bill. Clause 7 sets out the timing for when it must come into operation, and clause 8 confirms the Act's short title as the Small-Scale Green Energy Act 2021.

In conclusion, the Bill has —

Photo of Jim Allister Jim Allister Traditional Unionist Voice

I would like clarification. The Member said that there will be no cost to the taxpayer. I have two questions. Take a house that hosts solar panels, for example. Who will pay for their provision? Could large providers take control of individual provisions on a collective basis, meaning that those provisions become a moneymaking proposition for large providers?

Photo of John O'Dowd John O'Dowd Sinn Féin

The Member's intervention could have been covered in his contribution to the debate, but I am happy to respond to it.

The Member mentioned costs to the taxpayer. If the Department introduces a grant scheme, there will be a cost. However, no direct cost is associated with the Bill in front of Members today, other than the cost of its implementation by the Department.

In answer to the Member's second question, the scheme that the Department will develop, if the Bill passes, will involve consulting widely with all interested parties, and any suggestions or objections — whichever the Member may have about the point that he raised — can be dealt with at that stage. The scheme will give the detail of the programme's operation. If the Bill is passed, it will give the Department only the authority to establish the scheme; it will not set its parameters other than in a couple of minor points. Earlier today, I said to the Minister, "We will ask the House to do a, b and c, and, if the Bill passes, the Department will have to do d, e, f, g, h, i, j and the whole lot".

The Bill has the potential to do tremendous good in tackling carbon emissions and promoting green energy, and I look forward to hearing Members' contributions on the ideas in it. It is worth remembering that, as I said, the Bill is not the scheme under which microgeneration will be delivered. It instructs the Department to bring forward a scheme, fully consulted on and evidence-based, which will come into operation by January 2025. The Bill sets out the path that will help to decentralise electricity generation, empower local communities, provide additional income for families and help to tackle climate change. I look forward to the debate.

Photo of Peter Weir Peter Weir DUP

There is no doubt that there are good intentions behind the Bill. No one will argue against the concept of microgeneration or the greater use of renewables that will reduce the pressure to use carbon. It is an entirely environmentally friendly Bill. In bringing it forward, the Member has very much embraced the spirit of recycling: the Bill's wording is the same as that used by his colleague in the Dáil. It therefore did not have a great production cost in Northern Ireland. No one will disagree with the intentions behind the Bill, but, as the old saying goes, the road to hell is paved with good intentions. To that extent, I have considerable concerns over aspects of the Bill that, should it pass today, we would want to tease out. There are also a number of flaws.

The Member summed up how he sees the lie of the land quite well when he said that the Bill asks for a, b and c today and that it will be thrown to the Department to do d, e, f, g, h, i and whatever. It is, therefore, somewhat disingenuous to say that the Bill costs the public purse nothing. Its passage may not immediately create a bill, but there will undoubtedly be a major cost to the public purse in effectively indicating to the Department the expectation that a tranche of regulations and schemes will be brought forward.

Photo of Roy Beggs Roy Beggs UUP

Will the Member give way?

Photo of Peter Weir Peter Weir DUP

Yes, I will give way briefly.

Photo of Roy Beggs Roy Beggs UUP

While there may be limited cost to the public purse, does the Member agree that we also need to be concerned because there will be a cost to electricity purchasers, whether they are homeowners or businesses?

Photo of Peter Weir Peter Weir DUP

I completely concur. I was going to come to that point later.

We need to look at the timing and overall context of the Bill. As the Member conceded, the Department has been working on an overall energy strategy, of which microgeneration is one component. The Member indicated that that strategy is due to be published before the end of this year; indeed, it may be only a few weeks away. Dealing with one small aspect of it is putting the cart before the horse. It would have been an awful lot better if microgeneration had been put in the overall energy strategy. The Bill is a micro solution, but we need a macro solution. That is one of its weaknesses.

There is considerable concern about where the Bill will lead on state aid. I will be interested to hear the Minister's views on that later.

Concerns have been raised about whether it breaches state aid rules. It envisages a subsidy for the production of electricity. While that may not necessarily be direct government funding, nevertheless, it could be interpreted as state aid under article 10 of the protocol.

What I would say about the Bill and the electricity directive is that restrictions are currently placed on Northern Ireland, particularly state aid restrictions, because of the protocol. I would be happy to do a deal with the Member if he wanted to join with some of the rest of us and say that, to alleviate those fears, he would support sweeping away the protocol so that Northern Ireland is not put in that restrictive position. If that were the case, I would wholeheartedly back the Bill.

While that creates an opportunity, it would mean that we would need to tease that out with the state aid unit in the Department for Business, Energy and Industrial Strategy. We are not saying that it is necessarily a very clear-cut breach of state aid rules, but it may be. Consequently, that is a concern.

Leading on from that is the pre-existing electricity directive. Article 5 of that directive states:

"Suppliers shall be free to determine the price at which they supply electricity to customers. Member States shall take appropriate actions to ensure effective competition between suppliers."

Similarly, article 9 states:

"Member States shall ensure, on the basis of their institutional organisation and with due regard to the principle of subsidiary, that electricity undertakings operate in accordance with the principles of this Directive with a view to achieving a competitive, secure and environmentally sustainable market for electricity, and shall not discriminate between those undertakings as regards either rights or obligations."

Again, the question is whether the Bill breaches existing law because of its interference with, or contravention of, articles 5 and 9.

I turn now to the impact of the Bill. We are aware that the costs are ultimately passed on to consumers. We also know that the analysis of the Utility Regulator would note that small-scale generation and microgeneration has been four times more expensive to incentivise through the one-off costs for the initial connection to the grid and the ongoing costs, and there is a danger that that proportion of electricity would be produced at a much more expensive rate. The reality is that companies will look to pass those costs on to consumers. We need to get assurances about that as well.

On the broader element of the energy market — it has been very prescient over the past number of days — we have seen hikes in energy costs and the pressure on consumers has grown greater. Therefore, we need to question whether we should take actions that will further pressurise consumers. We also know that those costs bear down most severely on vulnerable customers who can afford them least. If we look at the connection costs for those in remote areas, those who are in poverty and those who live, perhaps, where multiple connections are needed, we see that, sometimes, those people bear the greatest costs. We also need to tease that out.

Finally, I want to speak about the route to market and, indeed, the existing provisions. A figure of 3·4% was mentioned, but I suspect that that figure is now higher. There is existing provision here and in Great Britain, and the regulator approves the price that is offered to microgenerators annually. There is an opportunity to make the arrangements similar to those in GB, where the small export guarantee scheme to microgenerators requires that a zero price be offered. Consequently, there are opportunities for generators as well. It means that the question is this: is this trying to do something that is not particularly necessary? We are edging closer and closer to 5%. While the Member quoted an older figure of 3·4%, I suspect that, today, the figure is probably a lot closer to 5%, if it is not above that. That leads to the question of why it is needed now, particularly in light of the energy strategy that is about to be produced by the Department.

There are question marks over the value of this legislation and over the detail. Some of that is, as I indicated, about things like state aid or the electricity directive. There are initial concerns that will need to be teased out, but I question whether what we see today will be fit for purpose to be finally proposed as legislation when it comes to the end. I will wait to hear what others have to say during the debate, particularly the response to some of those points from the legislation's sponsor and from the Minister. However, there is a level of scepticism, and we believe that the Bill is considerably flawed at this point.

Photo of Sinead McLaughlin Sinead McLaughlin Social Democratic and Labour Party 11:15 am, 28th September 2021

I support the Bill, but I believe that, exactly as Mr Weir said, there are many issues that need to be teased out. The Bill sets a pathway and, at this point, is a positive concept, and I would be happy for it to move to Committee where it can get thorough scrutiny and we can see whether we can make it much more robust.

The SDLP is strongly committed to taking tough action against climate change, and that is why my constituency colleague Colum Eastwood has tabled a climate change and green jobs Bill in the House of Commons. Taking effective action against the climate crisis requires a comprehensive package of measures. Some of those are needed at the macro level and others are needed at the micro level. The effectiveness of those measures will be assisted by the financial incentives that are put in place. It is necessary for homeowners, leaseholders and owners of commercial properties to be promised financial incentives to switch to renewable heat systems.

Before I go on, however, I will stress that the first and immediate priority must be a reduction in energy use. That means that the Minister for Communities must, as a priority, reform the affordable warmth scheme to support the installation of effective insulation in properties. Similarly, the Minister for the Economy must reform Northern Ireland's sustainable energy programme so that it is focused on making properties more energy-efficient rather than merely switching from oil to gas. However, those concerns about current energy policy are no reason not to get on quickly with the adoption of more installation of renewable heating systems. Those will include solar panels on roofs, wind turbines in small areas of land and district heating schemes that, for example, make use of waste heat from anaerobic digestion (AD) units.

None of this, of course, justifies some of the perverse incentives that we have seen in the past that flowed from the former Department of Enterprise, Trade and Investment (DETI) into the current Department for the Economy. Paying landowners more for having smaller rather than larger wind turbines clearly did not make sense and was just wrong. However, that is not a criticism of this Bill. My party supports the use of financial incentives to encourage wider adoption of micro schemes of renewable energy.

Indeed, I will go further than that and encourage Members to learn more about two of the best-practice community energy schemes in the North of Ireland. One of those is Drumlin Wind Energy Co-operative, and the other is Northern Ireland Community Energy, which is also known as NICE. I hope that a third community energy scheme may progress, as I have been approached by a constituent who believes that there is enough force in a local water source to develop a small hydro scheme. Those are excellent projects, but it is a shame that there are so few of them. While community energy is a significant sector in England, it barely exists here in Northern Ireland. In England and Wales, around 200 MW of electricity capacity are produced by community energy projects. That is equivalent to about 50 of the most effective large offshore wind turbines, which means that they are significant sources of additional energy.

While we should support the Bill, it is important that all parties join together to demand much more effective and urgent action now from the Department for the Economy and the Department for Communities. Let us really make the necessary progress and act much faster than we have to date.

Photo of Mike Nesbitt Mike Nesbitt UUP

First of all, I will make a declaration. I was an early adopter of a domestic wind turbine and, for some years, a recipient of Northern Ireland renewables obligation certificates (NIROCs), which is the government subsidy, although I believe that the machine has not been active for a couple of years now.

I am certainly in favour of tackling the climate crisis, aiming for net zero carbon and doing what we can in various ways to achieve those aims. On that basis, I am very open to the Member's Bill. The Ulster Unionist Party will certainly at this stage support the Bill going to Committee for its scrutiny phase, not least because the Bill does not propose a scheme. Rather, it would place an obligation on the Minister and the Department for the Economy to create a scheme, although it is prescriptive in one sense in that in clause 1(4) it aims for "5% as the specified percentage" and specifies 1 January 2025 as the date for reaching that target. The Committee would like to examine and hear witness testimony on the potential for achieving that goal, on whether there will be a cost and, indeed, on whether the Member is right to assert in the explanatory and financial memorandum that he:

"anticipates the Minister can design the scheme to address any potential increased costs associated with electricity generation."

Perhaps the current Minister will address that during the debate, although I accept that it is the Member's intention that the scheme will not come forward during this mandate but will be something of a legacy for the next Minister, whoever that may be.

We are content with the clause on the establishment of the scheme, with the exception of that specified percentage and date. Clause 2 refers to supplementary regulations, including the provision to have:

"different minimum prices for different purposes;"

I have asked the Member what his intent with that is. I believe the response was that it is about taking account of emerging technologies for electricity generation, so there may be something that we have not yet invented that we will consider to be highly desirable but that, at least in its initial phases, will be expensive. Therefore, the Department will have a facility to adjust the subsidy or price range to accommodate the development of that technology.

I note that in clause 4, "Suspension and revocation", the Member is making room for the Department to suspend or re-evaluate the scheme because of "unintended and harmful consequences". I commend the Member for that. He is clearly bearing in mind previous incentive schemes in energy generation.

In clause 6, he defines "community project" as:

"a project organised for the benefit of a group of individuals comprising at least 5 households".

Again, I commend the thought process behind that. It would be a good idea if citizens were more engaged in thinking about where their electricity comes from, how it is generated and the extent to which they can take control of it.

Mr Allister made reference to a scheme; I think that it was in England and Wales some years ago, where large companies were installing solar panels, or photovoltaic equipment, on roofs. They were basically renting domestic roofs, and any electricity that the household generated, they were using at no cost. The rest went back into the grid and was to the profit of the large organisations.

While that scheme had merit in principle, in operation it was weighted far too heavily in favour of the major organisations.

Photo of Paul Frew Paul Frew DUP 11:30 am, 28th September 2021

I thank the Member for giving way. That scheme was here and not just in GB. It had two aspects: the owner of the property could buy the solar panels and install them on their roof, thereby claiming the renewables obligation certificate (ROC), or a company could, effectively, rent your roof, install the solar panels and take the ROC, which would have been accumulated somewhere else — probably offshore — with the wealth directed away from the domestic property and the householder and into the pockets of the big companies.

Photo of Mike Nesbitt Mike Nesbitt UUP

I thank the Member for the intervention. I was unaware that the scheme had been applied in Northern Ireland. When I was first aware of it, it did not apply here. He is right to point out the downside of the scheme. However, I still think that the principle has merit to discuss. Perhaps, it could be some sort of social enterprise initiative.

My party is happy that the Bill should go forward for scrutiny at Committee Stage. There is, perhaps, a potential Achilles heel with regard to the grid. My colleague Mr Aiken will focus on that. It is my understanding that, when a load change application is requested, the total cost of the new load is borne by the applicant. That was certainly my experience some years ago when buying an old house. The electricity came in overhead, but I wanted it to come in underground, and I had to arrange for the tunnel to be dug out with a digger. However, the quote from Northern Ireland Electricity (NIE) for its part of the work was absolutely eye-watering. If a new electricity line is required, NIE Networks will request that the applicant negotiates the way leave for the new line as well as the associated costs. In other areas, the electricity supplier has right of way in that regard.

Self-generating electricity with integrated battery or car battery storage could, of course, reduce the generating load and, perhaps, reduce the cost of network upgrades. However, we really need to consider the impact on the network, and, as I said, Mr Aiken will touch on that in greater detail.

Finally, one of the reasons that the Bill should go forward for Committee scrutiny is the Member's reference to the consultation in his explanatory and financial memorandum (EFM). The consultation was conducted by SurveyMonkey. The weakness with SurveyMonkey is that you cannot be absolutely sure or verify who has issued their response to your consultation. That is a weakness, though not a fatal one, not least because clause 2(3) puts an obligation on the Department to consult the relevant people before it brings the scheme forward.

That is all that I have to say. We will support the Bill at this stage.

Photo of Stewart Dickson Stewart Dickson Alliance

Very much in the spirit of what I have listened to in the debate so far, I can confirm that, at this stage and looking forward to Committee Stage, the Alliance Party will also support the Bill. I thank the Member for bringing the legislation forward.

We should not be behind the door in noting the success that we have had in growing renewables in Northern Ireland. Over half of our generation now comes from renewable sources, chiefly wind. However, it has become abundantly clear that we are not moving fast enough to tackle greenhouse gases and the resulting climate crisis. Clean energy represents a major opportunity for jobs and provides sustainable and clean sources of heat and electricity. Northern Ireland is missing out due to a lack of ambition. The Alliance Party believes that we need a green new deal for our whole society in order to accelerate the transition to a clean economy, including building a skills base and eliminating fuel poverty, ensuring that no one is left behind. The Bill is a step in that direction.

One of the key parts of my party's green new deal is microgeneration — the decentralisation of our power system and, in a way, its democratisation. We have all watched on with horror at the sharply increasing prices over the last few weeks, especially of natural gas. This will be a particularly difficult winter for vulnerable households in Northern Ireland. Our Communities Minister will need to be proactive to prevent a major rebound in fuel poverty. With greater indigenous microgeneration, however, we can become much less dependent on imported fossil fuels and thus better insulate ourselves against the swings of the world markets; indeed, households can become energy-independent.

The Bill will essentially establish a small-scale green energy scheme with minimum tariffs for microgenerators, giving certainty to enable planning and rewards for generating renewable electricity and contributing to the grid. That said, it is not without difficulties and problems, and those are issues that, I genuinely believe, we will need to tease out at Committee Stage. My understanding — Members have referred to it — is that similar schemes have been operating in GB for nearly 10 years. By and large, we appear to have missed out on that in Northern Ireland. I believe that there is demand here and that we just need to provide the financial incentive for the installation of solar panels or small-scale turbines. This could be a major step change in how our power is generated and will hopefully provide more resilience. Resilience is important: businesses and households will not forgive us if there are interruptions in power supply.

I note from clause 1 that the scheme will set targets for energy suppliers to have a specific percentage of microgenerated electricity. I am not opposed to that, and it would be helpful for suppliers to have a real investment in promoting the scheme, but the Committee needs to look specifically into how that will be run and, ultimately, at how it will be enforced.

I welcome the provisions in clauses 2 and 3 that require the Department to consult other bodies and to review the operation of the scheme. That relates, however, to one of my major concerns regarding the Department for the Economy's capacity to deliver on energy policy and on our upcoming energy strategy.

There are also issues that, I hope, the Member will address either directly in this debate or at Committee Stage, should the Bill move to that point. They are the connection issues. Comment has already been made about the cost of connection, but there are also technical issues around connection. At some households and some points where generation is good and can be made, it is difficult to make connections to the grid, particularly in the case of wind sources. We need to work out how that will be achieved and how the cost of that will be met. I look forward to the Bill sponsor dealing with that area today and, more specifically and in detail, at Committee Stage.

The recent University of Exeter report on the green transition made recommendations that, from what I can see, the Department has unfortunately totally disregarded. If we are to deliver on our clean energy ambitions, we need a Department that is ambitious and actively leads in this area. We need expertise and policy in relation to energy, and we need to tackle climate and fuel poverty in one place. That is why, going forward, I will advocate a specific Department in Northern Ireland for energy and climate change, but that digresses from the purpose of this Bill. I have been disappointed by the lack of ambition shown by the Department, but I recognise that civil servants are working hard on our energy strategy. Unfortunately, departmental silos are more of an issue in Northern Ireland as we try to make legislation like this as successful as possible. Having one energy and climate change Department would help to overcome many of those problems.

The spectre of the renewable heat incentive (RHI) disaster haunts this place. We must never forget that. Clause 4 sensibly speaks to that by allowing for the suspension of the scheme where there are "unintended and harmful consequences" or where:

"urgent action needs to be taken to control the operation of the scheme".

That is a powerful acknowledgement.

I note that a major public cost is not anticipated, but, like others, we await the detail of that at Committee Stage. There will be administrative costs to be considered. We live in difficult and strained times for public finances, and there is a need to recognise that.

Clause 5 allows the Department to give guidance on the operation of the scheme. Perhaps the Bill's sponsor will outline what role he sees for the Utility Regulator in the legislation and in setting prices etc. I understand that a fair amount would be delegated to the Department by way of regulation, so that would give the Committee an opportunity to investigate.

Decentralising our energy grid would have greater benefits. It would make energy generation local. Others have referred to this, but it would be remiss of me not to note the potential contribution of local organisations and households coming together on the microgeneration landscape and not to acknowledge the emerging work of cooperatives and social enterprises. It is vital that they be encouraged through the legislation and the regulations that may follow, if it is successful. That may face us away from some of the concerns that have been expressed about the big players in the energy generation market. We should genuinely encourage local groups, such as cooperatives and social enterprises, to come together. Indeed, as Chair of the all-party group (APG) on social enterprise, I believe that those local organisations have a major role to play in not only promoting microgeneration but in generating electricity from their premises and reinvesting. How we involve local community groups, co-ops and social enterprises will be a key consideration in the legislation. I hope that we can consider that further at Committee Stage.

We need to do more than talk about the generation of electricity in the format that is proposed in the Bill. It is a difficult area at the moment, because of the increase in energy prices, but we need to look at expanding. We have not seen it yet in Northern Ireland, but GB has seen some of its small electricity providers go to the wall. There is room for social enterprise to deliver price comparison and the price for electricity in Northern Ireland. That is an issue that Social Enterprise NI is looking at. Although it is not part of the Bill, it is an area to which we need to give consideration. It may well become part of the consideration at Committee Stage.

I welcome the legislation and thank the Member for tabling it. Given the lack of action from the Department, it fills a space that needs to filled. I look forward to considering the Bill in more detail in Committee. As I have outlined, there must be much more concerted action to deal with two issues that are stark at the moment: fuel poverty and the urgent need to ramp up the insulation of homes. Until we do that, generating electricity and heating the atmosphere is not the way forward. There needs to be a holistic approach to the production of energy in Northern Ireland. I look forward to the Bill coming to the Committee and to addressing those issues and many more there.

Photo of Caoimhe Archibald Caoimhe Archibald Sinn Féin

I welcome the opportunity to contribute to the debate and speak in support of my colleague John O'Dowd's Bill. The context in which the Bill has been introduced is that of the climate and biodiversity crises that pose an existential threat to the planet and how we live. That was set out starkly in the recent Intergovernmental Panel on Climate Change (IPCC) report, which the UN Secretary-General described as nothing less than:

"a code red for humanity. The alarm bells are deafening, and the evidence is irrefutable".

The Paris Accord requires countries to take action to limit global warming to 1·5°C by the end of the century. Achieving that will require resolute and meaningful action right now. The energy strategy that the Department for the Economy is developing will set the direction of travel until 2030 and is therefore crucial. We must not miss the opportunity to embed in it the expansion of our renewable capacity and end our reliance on fossil fuels. That type of upscaling of our renewable capacity will require significant investment.

As Mr Dickson said, we have made good progress to date, and we need to build on that. Investment will come from the public sector and the private sector, and the private sector will include individuals, families, small businesses and communities. That will require incentivisation and support for those who can least afford it. It is crucial that the move to net zero is based on the principles of just transition. Legislative change will be required to ensure that that happens.

The Bill is an important step in the right direction. As John outlined, the Bill will, first, place a requirement on major providers to source at least 5% of their electricity from renewable microgenerators, and, secondly, require major providers to pay a minimum price for electricity generated by those microgenerators. The potential for additional income for homes, small businesses, communities and the cooperative social enterprises that Mr Dickson referred to provides them with a small incentive and places little burden on providers.

Empowering communities must be at the heart of our new energy strategy. Decentralising and democratising power generation, including through microgeneration, has to be a key part of the new energy strategy to make that necessary move away from fossil fuels and to deliver more affordable energy and the ending of fuel poverty.

Ensuring that people and communities have ownership and a stake in the process of decarbonisation will help to ensure the type of buy-in that will be necessary to deliver on our energy and climate targets. Microgeneration projects will also help to reduce dependency on the overall grid, as well as helping to reduce emissions from power generation. It can also, if paired with the electrification of heating, lower emissions from homes, farms and businesses.

Currently, there are no active green energy support schemes in the North. Certainly, there are none that incentivise the installation of small-scale renewable systems. The Bill looks at one aspect of how to incentivise the uptake of small-scale green energy projects. The energy strategy also needs to consider the type of support that will be required to ensure that the upfront equipment costs create no barriers, particularly to those on lower incomes.

With respect to the broader energy strategy and policy framework, it is crucial that the final strategy sets us on the right trajectory to deliver net zero. In the current context of soaring wholesale gas prices that, due to global demand, are hitting record highs, and with coal and oil prices also rising, it has never been more apparent that tackling fuel poverty is strongly interlinked with the need to end our reliance on fossil fuels. There should be no further investment in fossil fuel infrastructure. The obligation to promote the development of the gas industry here needs to end, and we should not encourage more people to rely on an energy source with such fluctuations in price. Instead, we should have an obligation to promote decarbonisation.

As others have said in the course of the debate, we need to improve energy efficiency, particularly in housing for families in fuel poverty. We must ensure that those on lower incomes have access to affordable heat and power sources that are not vulnerable to the same global forces as fossil fuels.

As I said, the Bill is a small step on the right path towards delivering on the objectives of empowering communities, increasing uptake of small-scale green energy technology, and diversifying our energy sources. Therefore, I urge Members to support the Bill, and I am very encouraged that, going by the contributions so far, we can look forward to its coming to Committee for us to explore it in further detail. Hopefully, it will be the first practical step to net zero.

Photo of Keith Buchanan Keith Buchanan DUP 11:45 am, 28th September 2021

I welcome the opportunity to discuss the Bill. I will not go into great detail. I appreciate that a lot of points have been raised. I ask, rather, for clarification from the Bill sponsor. I will not ask a list of questions. I would just like clarification on some points, if he does not mind.

I presume that the 5% in clause 1 is a minimum export capacity to the national grid. Obviously, a dwelling will use a percentage of what is created. Perhaps the Member could clarify that.

Under 50 kW is referred to as "microgeneration". The average domestic dwelling can be fused, as in a single phase supply, of 63, 80 or 100 amps. If you do some calculations based on 25 kW — I will not blind you with science — it works out as roughly 104 amps. Therefore, you need infrastructure. Our colleague referred to creating a tunnel for his machine. You need infrastructure at your private dwelling to do that. It is not as simple as putting 50 kW in every domestic house in Northern Ireland, because we do not have the infrastructure to do that.

I will not refer to any specific energy supply companies, but it is extremely expensive to do any modifications to the grid, whether it be for new builds or any other modifications. That is something to bear in mind. It is not as simple as sticking 50 kW on top of a domestic dwelling. Infrastructure has to be to put in and capacity within that. It is worth bearing that point in mind.

My colleague referred to state aid implications. We have concerns about that, and other Members raised the issue. Maybe that can be addressed.

The explanatory and financial memorandum uses the word "incentivise". I appreciate that the Bill will go to the Department for it to come up with a scheme, but it depends on the definition of "incentivise". There is a big difference between small-scale and large-scale production, given the economies of scale. I do not disagree with the principle of the Bill or its intent, but "incentivise" can mean lots of different things.

While other Members were speaking, I did some calculations. The average domestic house uses 3,100 kWh, but that depends on how that is calculated. If you do a simple equation of 20p per kilowatt-hour, the average cost for a dwelling in the United Kingdom is £620. If a dwelling can avail itself of that by using its own energy — I am using 20p as a guesstimate — there is obviously a saving for the dwelling, and an export can be put on to the grid.

Without getting into too much science, it depends on how many kilowatt-hours you are using in your dwelling in an average day, after which the remainder can exported. You would not have to increase your capacity leaving the dwelling, if you understand where I am coming from.

We will see where the obligation on the Department goes. My colleague referred to putting the cart before the horse. We may have bought the saddle, but we do not have the cart or the horse. The energy strategy would probably have been the way to do that, with legislation to follow.

I am interested in the figures, percentages, capacity, kilowatts and all that stuff. It is interesting to me from my previous life. It is about how it will work practically. How we incentivise the scheme is another issue. Members can go away and do some calculations in their own dwellings tonight.

Photo of Liz Kimmins Liz Kimmins Sinn Féin

I welcome the opportunity to speak on this important Bill, and I thank my colleague John O'Dowd for bringing it to the Chamber today.

It is no secret that we are on the brink of an environmental disaster. That has been well rehearsed at this stage, but it is important to note that time is precious. We must do all that we can to ensure that we meet our climate targets by reducing our use of fossil fuels and enabling an effective transition to a net zero society.

The Bill provides a real opportunity to take practical steps in the short term that will help us to move towards delivering effective change, which will benefit generations to come. It is particularly important, because the Department for the Economy has indicated that it has no plans to legislate for the green growth strategy in this mandate. Therefore, that remains aspirational at this stage, while the Bill can be passed by the Assembly within the current mandate.

As we are all well aware, the recent extreme hikes in the price of fossil fuels have demonstrated our over-reliance on the major power companies, and the Bill will help to provide greater democracy in that regard.

A lot of what I had planned to say has already been said, but, as other Members said, the Bill provides an opportunity to increase income for families, businesses, the farming community and the broader community right across the spectrum. Most importantly, it will take practical steps to tackle climate change by incentivising renewable energy and encouraging more homes and businesses to make the transition in the absence of any active renewable energy support schemes in the North. There is nothing to incentivise the installation of small-scale renewable systems. I encourage others to take note of those facts and to support the Bill today.

Photo of Stephen Dunne Stephen Dunne DUP

I welcome the opportunity to speak in the Second Stage debate on the Small-Scale Green Energy Bill. While I commend any efforts to develop and enhance our security of supply and to look at all sustainable ways to improve our energy offering, I have a number of concerns about the Bill.

In response to an Economy Committee request about the Bill, the Department confirmed that there are already mechanisms in place in Northern Ireland, through which microgenerators can export excess generation to the grid in return for payment, and they, crucially, have a choice. That brings welcome competition, given that there are a number of suppliers, including Power NI and others.

On page 4 of the Bill's explanatory and financial memorandum, this line certainly jumped out at me:

"it is difficult to project demand for the scheme due to the set-up of the electricity market".

Those words cause me some concern and certainly do not fill me with confidence about the viability, need for and effectiveness of the scheme, should it ever get the green light.

There is also the issue of the costs of any support scheme and how those would be distributed, particularly given that many who are simply unable to install microgeneration facilities — that has been the case for some time; it is not a new problem — may end up having to foot some of the bill. One of the common barriers, right across Northern Ireland, to households generating their own electricity is the set-up costs. There is a real danger that households that simply cannot afford to install microgeneration facilities will end up contributing to the costs involved. That would impact upon our most vulnerable, particularly those who live in apartments and so on, given that it would not be practical for them to go down the road of microgeneration. Those people would miss out on any of the benefits received by those households that are generating.

As has been said, energy issues are all interconnected, and a partnership approach is essential. The issue of rising energy prices, which is a global problem and is having an impact in Northern Ireland, is very important. Certainly, the energy sector must deliver for customers. Effective and sustainable competition in the energy markets is critical for delivering choice, value and innovation. The main factors in the recent energy price increase here have been the rising cost in wholesale markets, the increasing global demand for gas and the challenges in the supply chains. Those have led to a rise in the price of gas in the wholesale and retail markets, which has resulted in the increased cost of electricity generation, with associated impacts in the retail electricity market. The recent rises have demonstrated, once again, the need to move away from our reliance on importing.

It is, however, worth highlighting that, despite some of the negativity across the Chamber this morning, Northern Ireland successfully achieved its 40% renewables target by 2020. Indeed, for the 12-month period from July 2020 to June 2021, 45·4% of total electricity consumption in Northern Ireland was generated from renewable sources located here. That is a positive point that needs to be highlighted and put on the record. Indeed, much work has been done on energy by the Minister and those who have gone before him, and the Department has worked extensively, right across the energy sector, with consumers and stakeholders. I know that that work is ongoing through the upcoming energy strategy, which we look forward to.

The cost and affordability of energy to businesses and households have been key matters of concern for some time. The upcoming strategy provides an opportunity tackle those issues and to ensure that fuel poverty is left behind. The strategy also provides an opportunity to produce a fair and affordable price for consumers as we begin our journey towards net zero carbon emissions by 2050, which is another ambitious target, as was the 2020 target that was successfully achieved. Affordability will be crucial, and ensuring that a balance is struck will require a lot of work and dedication.

Energy efficiency is another key area. As has been said, the unit of energy with the lowest cost is the one that we do not use. The local energy efficiency sector has the potential to grow significantly over the coming years, providing skills, development and job opportunities. We can certainly develop that, and I look forward to hearing from the Minister about it. I am sure that it will be a key part of the strategy, going forward. It also has the potential to contribute positively to our economic growth as we look to a post-COVID recovery.

Decarbonisation is yet another key issue for homes and businesses, and it is a future strategic target, with the aim of, importantly, reducing our reliance on oil and natural gas.

Quite a considerable amount of work is ongoing in a number of sectors. Companies such as Phoenix Natural Gas are looking at the potential for the use of heat pumps, geothermal, biofuels, biomass, biogas and hydrogen. Other sectors are also actively looking at that right across Northern Ireland.

All in all, while I acknowledge the intention and motivation behind the Bill, the timing is not right. I share some of the concerns that my colleagues mentioned. I believe that it is best to wait to see the energy strategy, which has had extensive expert input from across the sector to ensure that we meet our targets and do better.

Photo of Pat Catney Pat Catney Social Democratic and Labour Party 12:00 pm, 28th September 2021

I speak in broad support of what the Member for Upper Bann is trying to do with the introduction of his private Member's Bill. The Member is completely correct about the stagnation in the community energy sector, and it needs to diversify into the renewables sector. As the Bill moves through the process, I hope to fully scrutinise how its provisions will help to achieve its stated goal.

It is important to get this right from the start. I do not need to mention the failure of past energy schemes, whether that was in how incentives were set up or how they worked in the real world. Let us just say that we do not have the best track record. We must get it right, so that the scheme has qualitative and quantitative value and because its impact can be much wider than just reaching a renewable energy target. Of course, meeting our renewable energy target is important. However, if the scheme is pitched right and is done in combination with the wider strategy for sustainable energy, we may have the ability to completely transform how communities acquire energy.

My main interest is in how we can use an all-encompassing energy strategy to tackle the devastating levels of fuel poverty in Northern Ireland. Fuel poverty is another area in which Northern Ireland tops the leader board. It is an area in which we definitely do not want to top the leader board, but 22% of our population is fuel poor. A huge amount of stress and terrible anxiety come with fuel poverty. A huge number of preventable health issues come from living in cold, damp, mould-ridden properties and homes. Every year, we have an average of just over 900 people who lose their life and are recorded in the ridiculous statistic of "excess winter mortality". How can that be acceptable in 2021? How many of those anonymously recorded in that ridiculous statistic have lost their life due to fuel poverty?

My apologies for going a little off-topic, Mr Deputy Speaker. I cannot stress enough the impact that a properly set up small-scale green energy strategy could have. We need a scheme that gives proper incentives without producing the ridiculous situation where people were paid more to produce less. We need a scheme that invigorates our community energy sector to help people to find innovative, local solutions and to realise affordable, renewable energy production that will take our communities out of fuel poverty so that families are not cold this winter.

Photo of Steve Aiken Steve Aiken UUP

I make a declaration of interest. In previous roles, I represented renewable energy companies, grid suppliers and other companies. For my sins, I also worked on the UK energy strategy for a considerable time. Unfortunately, I worked on five strategies in the space of five years, and that shows that we are not quite where we should be. The answer on the 50 kilowatt-hours issue is that it is based on the international definition of microgeneration.

As Members heard from my esteemed colleague Mr Nesbitt, we support the Bill's moving to its next stage. However, I wish to raise a significant issue that I think might be addressed in clause 1, so the Bill sponsor might consider it. If I may digress slightly, he will be aware that, in Denmark in particular, microgeneration is particularly successful. It works in Denmark and, indeed, in other areas of Europe and across the world in places like California, where there is a specific responsibility for allowing easy access onto the grid and for the grid to deal with microgeneration at 50 kilowatt-hours. There are significant concerns across all of Northern Ireland about getting any form of grid connection with the monopoly supplier, which is NIE. There are considerable costs to trying to get onto the grid for virtually anybody who is considering renewable generation.

One of the most significant issues that has been reported to me and probably to many MLAs is that, if you look at a similar attempt to get onto the grid in Scotland, where the contractor is likely to be from NIE, you will see that the contractor is also likely to use supplies that were taken from the same resources as everywhere else across the country, including electrical supplies, switching gear, cabling and all the rest of it. You will also see that, although that contractor works to the same outline planning policy, the costs in Northern Ireland will be significantly more. The fact is that some people are being requested connection charges via NIE of between £120,000 and £130,000. Unless we can answer the question about access to the grid and grid connections, it will not matter how much microgeneration we are able to do or what the tariff for it is. If there is no grid connection, it will not be able to move forward. Indeed, if you talk to anybody in the renewables industry in Northern Ireland, you will find that this is the standard refrain: when will we get equitable connection to the grid? The Utility Regulator and the electricity strategy that, I trust, will be on its way fairly soon from the Minister, are important. I also trust that the monopolistic position of NIE and SONI — or, indeed, should I say ESB and EirGrid? — will be looked at very closely here in Northern Ireland, because it is anticompetitive.

Many people and, indeed, businesses in Northern Ireland are seeking to invest in microgeneration. However, some of the most innovative small-tech companies here are investing in microgeneration in Scotland, Wales and England because there is a clear policy and strategy for it and they are not being charged through the nose for grid connection. That is a significant issue that we must deal with and deal with soon because, otherwise, no matter how much we try to incentivise microgeneration and the rest of it, we will not be able to achieve it.

The second issue we must address is storage. We need to be able to incentivise microgenerators to have storage capacity. That is important to provide and for making sure we do not have peaking problems on the grid. I am looking directly at Mr Frew, because some people talk about issues, but, unfortunately, we need to get down to the technicalities of it. The most important things to improve are synchronicity of supply, security of supply and the ability for the system to be smoothed out effectively. The problem is that the more renewables you put on the system, the more potential there is for instability of supply and, therefore, the more baseload or inter-grid connection is needed to be able to achieve it.

Another significant problem in Northern Ireland is that, even though we are part of the Integrated Single Energy Market (ISEM), we need to be in an all-islands interconnection and distribution system if we are to do this effectively. The reason why the Danish system works effectively is because it has interconnection with a much wider system; it is not a market of six million people, but a market of between 30 million and 40 million people, including in particular Sweden, Norway, northern Germany and the Netherlands.

In fact, we have to also ask an important question about regulation in Northern Ireland. I am looking at the Minister here as well, because this is quite an important piece. Northern Ireland, in many respects, is too small to be able to effectively manage renewables and microgeneration. It has to be done on a sufficient scale to allow us to maintain the integrity of the grid. Put simply, if the wind is not blowing in the west of Ireland, you can be pretty sure it is blowing at the North Sea. We can be certain that, when the sun is shining in the south-east of England, we will be under some kind of cloud. We need that degree of interconnectivity. One of the questions that we will have to ask is this: is the regulation system in Northern Ireland fit for purpose? Is it ready for the real challenges of the 21st century? Is it ready to deal with the very significant issues that we have? That has to be addressed in the Bill.

We cannot have microgeneration in a stovepipe. It must be interconnected with a smart-grid system that is effective enough to deal with the challenge of peaks and troughs of supply. If it is not, microgeneration will do no more than, in effect, go back into the area of subsidy-mining. We need to get away from that. We have had years of the impacts of subsidy mining. We have had issues with wind turbines that have been operating with no load because there is no market for their energy. There is not a properly working integrated system. The Utility Regulator does not have the capacity to address that.

I support the Bill — and I am glad that Mr O'Dowd has brought it before the House — because it raises some very significant issues. It is not just about guaranteeing microgeneration and supply on the grid. It is about guaranteeing access to the grid. However, it is also about looking at where future technologies are taking us. It is about how, if necessary, we look at improvement of storage. My friend here has talked about electric vehicles. One of the easiest ways of storing renewable energy is, of course, on electric vehicles. If we have significant numbers of electric vehicles, we can plug ourselves in. However, NIE does not allow us to do that. We cannot turn our own cars into battery storage facilities to regenerate on the grid, because that is stopped by the monopoly supplier. It is absolutely ludicrous to be in the position of having technology ready but not doing anything about it.

This is very important legislation, and there are more aspects that we need to link into it. I encourage my friend the Chair of the Economy Committee to look specifically at the grid, grid connection, security of supply, synchronicity and how we can bring the storage element into the Bill. If those things are incorporated — I see the Economy Minister listening — and elements of them get into the strategy and we start thinking seriously about how we regulate the energy system in Northern Ireland as we deal with the challenges of the climate emergency, we could be in a good place. Again, I thank Mr O'Dowd for bringing the Bill to the Floor.

Photo of Paul Frew Paul Frew DUP

I am somewhat disappointed. When I heard a whiff of a rumour that there was going to be an energy Bill, I got really excited. I looked forward, in anticipation, to reading its content. I commend the Member for bringing forward a Bill. I encourage every Member to bring forward a private Member's Bill on a subject that is close to their heart. That is a good thing; it is good for democracy. However, when I look at this Bill, it leaves me somewhat dismayed at yet another missed opportunity. For the second day in a row, a Sinn Féin Member is kicking a can down the road to another place and another time, for another person, another Member and another Minister. It is simply not good enough.

Legislation should be powerful and meaningful; it should do something. This Bill, basically, puts an onus on whoever the Minister is, from whatever party, by saying, "There should be some sort of an incentive scheme, and it should look roughly like this, and there is a suspension clause in case something goes wrong". There is not enough detail in the Bill for you to say whether you support it. Everyone in the House will support the generation of renewable energy. Not everybody will know the cost to households and businesses. We have to reflect on the past. Whilst we have been very good at generating renewable energy, my goodness, it has cost us.

Where does that cost fall? The cost falls on the most vulnerable and on our businesses. That is the only place it can fall.

The electricity market in Northern Ireland — like most places, to be fair — is a complicated beast. It is complicated for a reason: a lot of people make a lot of money out of it. However, it is worse than that. You can take complication, because you can always break down complication. You can always get through it. You can always learn, and you can always make your knowledge greater, but in Northern Ireland we have a lack of transparency with regard to system operation, and that costs us even more. The worst bit about that is that we do not know how much it costs us. That is a scary proposition.

When I saw that an energy Bill was coming before us, I thought, "Great! Is it on grid connection? Is it on the cost of the grid? Is it on electric vehicles and the letting down of people who want to purchase?"

Photo of Steve Aiken Steve Aiken UUP 12:15 pm, 28th September 2021

I thank the Member for giving way. He raises an interesting point about grid connection. Of course, there was a report by the Utility Regulator, particularly about SONI, that raised real concerns about the governance of how the major grid connector and part of that system works. Does the Member agree that, again, one of the things that we should urgently look at is the monopolistic position that NIE and SONI have?

Photo of Paul Frew Paul Frew DUP

I thank the Member for his intervention. I am sure that I will get onto that at some stage in my contribution.

What could the Bill have been? It could have dealt with incentivising for electric vehicles and the state of disrepair that our very young network of chargers is already in. The company that is responsible for maintaining it, ESB, does not maintain it. That puts people off going to electric vehicles. My friend just alluded to the transparency of market systems, which costs us so much and unfairly treats our most vulnerable. We do not talk about greater powers for the Utility Regulator. We have a Utility Regulator that regulates these issues, and, after everything that I have said around complication and lack of transparency, the Utility Regulator, through no fault of the office itself, is massively underfunded and massively under capacity. It cannot cope, especially when there are powerful players in the energy market and the system operation that try to challenge and bully. That is what we face in Northern Ireland.

The Bill could have done much more, but I take the point that, I am sure, the Bill sponsor will make: it is about a specific thing. Granted, that is the case. Let us talk to the specifics of the Bill. Again, I am disappointed with clause 1, because it basically just places:

"a requirement on major electricity providers and suppliers to provide an obligatory minimum price tariff for exporting micro-generated renewable power into the grid."

That one condition in itself raises a bit of alarm for me for a number of reasons. The fact that it places:

" a requirement on major electricity providers" means that you are talking about further regulation. The Bill talks about an obligatory minimum price tariff, and that skews and adds a layer of regulation between network costs and wholesale costs. That is basically what we are talking about, because you are talking about generation and you are talking about suppliers. It convolutes and complicates an already complicated system. The Utility Regulator does not have the capacity to regulate what it has to regulate already, through no fault of its own, yet we are going to add and apply further regulation and incentive and tariffs for exporting microgenerated renewable power into the grid. There are massive differences and parameters in generating power to the grid, even in the renewable world. The domestic and all-powerful companies that generate megawatt after megawatt after megawatt are very different.

The Bill also puts an onus on the Minister for the Economy:

"to establish a small scale green energy micro-generation scheme with powers that include setting this minimum price tariff, and to alter it depending on relevant economic conditions".

The Bill says, "Minister, you must do this. You must design it. You must shape it". The reality could be that the Bill sponsor will not like the microgeneration scheme that a Minister, whoever it might be, produces. Where does that leave the Bill sponsor? You could argue that he should have added more detail and more of his thought process and stamped more of his authority on his Bill. We can all say that we want more renewable generation and we want more people to do it at a more micro level — absolutely — but how do we get there? The Bill does not tell us how we get there. It just tells us that the Minister must do something.

Another policy objective is:

"to provide the Minister with the power to determine what providers are eligible for the scheme by setting a minimum threshold for market share."

Again, we start to go into the world of regulation, where we could end up having an anti-competitive edge or stopping or hindering more providers from coming here. Northern Ireland currently has six providers. You are either putting pressure and more regulation onto a number of those providers or starting to twist and tweak the market itself. You do not want to dabble there, when there are already so many problems in the market.

Clause 1 requires the scheme regulations:

"to specify a target of 5% micro-generated renewable power to be sourced by 1 January 2025."

Is that timescale realistic? How far away are we from that target? Does it mean that each provider must be at 5%, or can one provider have less or more? Those are questions that we need answered. What about demand-side units (DSUs)? Where do they come in? How are demand-side units affected when the generation of renewable power is incentivised but the flip side, which is the demand side, is neglected? That is another question.

In the past, we had the best of intentions and produced the ROC scheme — the renewables obligation certificates. We have already talked about how that changes and has the potential to create new industries, which are not always good, in that the householder could be disadvantaged. There is no doubt that the ROC scheme produced an industry — I call it "rent of roof" — where people come and say, "We can install solar panels for you. We'll do it at a very low cost to you, and there'll be no burden on you. We'll just stick them on to your roof. We'll even rent the roof off you. We'll give you money". The condition of the roof means that householders are sometimes in complicated territory. Do they have rights on their own roof? What about if they sell their property? There are issues there. An incentive scheme can be all well and good and exist for all the right reasons, but it can skew things and create industries that are not always good for our people. Of course, the ROC payment went straight into the hands of the bigger providers. It did not go to the domestic property owners or the most vulnerable in society; rather, it went into a big collegiate pot and probably ended up on the other side of the world. That is the truth of it. Those are issues that we have to be mindful of and careful about when we talk about any future incentive scheme.

What about connection costs? Take, for instance, people who decide that they want to partake in the scheme. They think that it is a good scheme and say, "I want a piece of that". Why would they not? I know that some people who have participated in incentive schemes in the past have been treated as if they were criminal elements, just because they applied for an incentive scheme. That is completely unfair, untrue and unwarranted. Radio broadcasters play creepy music simply because people happened to avail themselves of an incentive scheme. That is not where we want to be and not where we should be. It is completely untrue.

What about connection costs? You decide that you want to install a generator to generate electricity, whether that is through a solar farm, one or more wind turbines or something else — biomass or whatever. You have to ask for a grid connection because, as my colleague stated, your current connection will not work, so you need an upgrade. Alternatively, you want to build a completely new outlet somewhere — a new business — and want to avail yourself of an incentive scheme. You will apply for a grid connection. If you are out in a green field with no grid near you, you will pay for the whole grid. What happens if, a year later, a rival company or neighbour builds a house beside you? They will pay for their connection to the new grid that you paid for. There is something inherently unfair about how we charge for grid connection. Set aside the cost, which is astronomical; it is the unfairness of the system. A new company could come into Northern Ireland from afar, plant itself in a green field and have to pay exorbitant prices. The next year, a rival company selling the same wares comes in, plant itself in the field beside it and pays a fraction of the cost. We should be aware of such things, which are inherently unfair, and we should tackle them, yet we do not. The burden is on business every time. We could rectify that.

On the cost of an incentive scheme, the Bill sponsor can say all he likes about it going to the electricity providers, but the market in this jurisdiction is set up so that most costs fall — they always do — on business and not necessarily on domestic customers. In the Republic of Ireland, it is the other way about. If a Bill like this were to be enacted down South, Sinn Féin could be hurting the most vulnerable, namely families in a domestic setting, the most. Here, if the incentive scheme is not correct and fair, it will impact most on business, which will have an impact on jobs. We have seen that in my constituency. We lost JTI Gallaher and Michelin, both of which cited energy costs as being either the top reason or one of the top five reasons for leaving. More companies have left. We have to get this right. We have not been getting it right, and the Bill does not get it right.

There are so many other issues. The Bill sponsor claims:

"On the basis of comparable renewable schemes"

— really? —

"and depending on the design of the scheme that the Minister may bring forward"

— passing the buck there —

"it is estimated the administrative expenditure associated with the bill’s objectives would be less than £1million per annum."

What evidence is there for that claim? Amber Rudd of the Conservative Party closed down the ROC scheme in GB a year early. That was a manifesto commitment, and I was surprised that she did it, but she did. Mr Deputy Speaker, you know all about this. If we had continued the Northern Ireland ROC scheme for that further year, our businesses and bill payers would have been burdened with in the region of — this is a wide estimate, and I will tell you why — between £600 million and £900 million over 25 years. Using mental arithmetic, that works out at £24 million a year to keep a scheme open for one year — one year — and any successful applicant would have to be paid for 25 years. That burden fell exclusively on the bill payer. The Bill would not do that, and I accept that. In the energy world, however, the cost falls to the bill payer. That is inevitable; it is as natural as the law of physics.

There are grave dangers associated with any incentive scheme that tries to incentivise what we have been very successful in doing up to this point. Before you consider any other questions around incentive schemes, the principal questions that must be asked are these: why is there a need, and where is the need? What costs will there be? The Bill sponsor talks about administrative costs, and I want to know what that means. Is that an administrative cost to the Department, to the regulator or to any other body, whether that is SONI, EirGrid, NIE, Power NI or any other provider? Where does that £1 million per annum fall? What about the costs of any network reinforcements that will be required if the scheme is highly successful? Who will pay for that? At the minute, we have a price review mechanism that heavily involves the transmission grids, the network grids and the Utility Regulator, and they basically barter to agree a price and a forward work programme. If the Bill sponsor sets a target for 2025 and moves on from there, how does that skew the forward work programme? Those are all serious questions that need to be asked about the Bill.

Costs will inevitably fall on the bill payer. I talked about the difference in tariffs between the two elements of the single electricity market — Northern Ireland and the Republic of Ireland — and how those two jurisdictions have different network charges, costs and frameworks. We charge our businesses more heavily, whereas the Republic of Ireland basically subsidises its businesses with its domestic customers. Germany does that too, by the way. Strictly speaking, that practice is illegal, and they are queued up to go before the European Court. They will never see the inside of the courtroom. There are massive issues around all that.

What about the current price controls? Will that skew the network and transmission price controls? How will the scheme work when people switch providers? Will the scheme add a layer of bureaucracy that will disincentivise domestic customers from switching providers? We should worry about that, because we need more switching in the retail market. It is not happening, and, when it does not happen, people pay more for their electricity.

While having and meeting renewable energy targets is a good thing, it is costing us, as I said. It also causes the system to be fragile. Surely there is nobody in the Chamber who does not realise the perilous position that the integrated single electricity market (I-SEM) was in over the past three weeks, when the wind stopped blowing. We are in a more precarious position than most of Europe. Why? First, we are small, and, secondly, our mix is not appropriate for alerts like that.

Photo of Steve Aiken Steve Aiken UUP 12:30 pm, 28th September 2021

I thank the Member for giving way. It is also important that the Member recognises the importance of interconnectors, as, I am sure, many Members in the Chamber do. The interconnector between Wales and the Irish Republic is one of the reasons that the lights on the island have remained on. I am sure that the Member also welcomes the fact that, on 1 October, a new interconnector will be introduced, connecting Norway directly to the GB market. That shows that an all-islands approach to energy security is vital.

Photo of Paul Frew Paul Frew DUP

I agree with the point about interconnection. Interconnection is a good thing. It costs, and there is an upfront cost, but interconnection is a good thing, because it adds flexibility to a system that is quite rigid in island nations such as Ireland and GB compared with Europe and Scandinavia. Those are all good things. Interconnection is good, but we must bear in mind that, if the energy mix is not appropriate on our land, interconnection will cost. You and the consumers would be frightened to know how much EirGrid has paid the GB market over the past three weeks for its energy, when EirGrid has not got its mix right in the I-SEM. That costs us all.

Where does that cost fall? It is not EirGrid paying the GB market: we, the bill payers, pay for that energy. Ultimately, that is where the cost falls. At the same time, our energy costs have increased because of gas prices, which is part of the mix problem in Northern Ireland and, in fact, in the island of Ireland. Today, practically, we have only air and gas. That is our mix.

We need to think outside the box. Does the Bill do that? No, unfortunately, it does not. It might, however, if it were to go to Committee Stage. It might be possible to repair and amend it to the point of doing something meaningful. At the minute, it does not do anything meaningful.

All of it adds regulation and cost. I plead with the House to consider giving additional powers and support to the office of the Utility Regulator, which is being hammered by the system operator, EirGrid, about governance. We will need proper governance of our markets to be able to get through this. We need transparency. We need SONI to look after Northern Ireland consumers. Time and again, over many years, it has failed to do that. I have had enough of it and, to be fair, so has the Utility Regulator. That is why it has published a report with the findings of its investigation into SONI's governance and the ownership of EirGrid. I hope that that will move at pace very soon so that Northern Ireland consumers can get the system operator that they deserve.

Photo of John Blair John Blair Alliance

I will follow my colleague Stewart Dickson's earlier comments, which focused mainly on economic themes, and I will concentrate on the Bill's — indeed, the debate's — environmental aspects.

To tackle the climate emergency and protect the environment for ourselves and future generations, we must leave behind the old ways of producing electricity. Northern Ireland has the potential and the resources for a clean-energy future, and I, along with Alliance colleagues, welcome the progress made in unlocking that potential.

The operator of Northern Ireland's electricity transmission system, SONI, has said that investment of hundreds of millions of pounds is required to cope with increased demand for electricity as we move to decarbonise the economy, with the electrification of heat and transport, and strive to meet net zero emissions targets. In order to reach the current target of at least 70% clean electricity by 2030, the grid will require unprecedented change. In fact, the renewable generation connected to the grid is projected to need to double in the next nine years to meet the target.

Although we have a long way to go, in recent years, Northern Ireland has had notable success, which was referenced earlier, in renewable generation, surpassing its target of 40% renewables by 2020 by a considerable margin, setting up community energy initiatives and supporting innovative generation research projects. We can and must go further, however. Northern Ireland can be an ambitious world leader in energy efficiency and clean, net zero technologies. The Small-Scale Green Energy Bill moves us towards that goal. It incentivises microgeneration technologies, such as rooftop solar panels and small-scale wind turbines, and boosts the microgeneration of renewable energy. The Bill also places a legal requirement on major electricity providers to pay a statutory minimum price for the electricity that they purchase from private homes, farms and community schemes, which will help us to tackle the climate emergency and, hopefully, to improve people's living standards across Northern Ireland.

I welcome the Bill's ambitions and support its progression through the Assembly. I am sure that its sponsor will take on board some of the comments made today.

Photo of Roy Beggs Roy Beggs UUP

I, too, indicate my support in principle for the Small-Scale Green Energy Bill progressing to Committee Stage for further investigation, which it merits. We need to encourage further diversification in renewable energy and the take-up of new technologies in order to minimise the long-term cost to the public and to protect the environment.

A question that we all should consider before encouraging any additional energy generation is whether our homes and businesses are sufficiently insulated to begin with. It might be worthwhile taking that on board and deciding whether any new grant should also look at that aspect. If there is not sufficient insulation, it is pointless to spend money on electricity generation. It will not be good for the environment or the users, who will have to pay for it in the long term.

Why do we need to generate our energy supply? We are over-reliant on gas. Just look at the present times in which we are moving increasingly towards gas as our source of electricity generation. The current model at EP Kilroot will close, and new peakers will be installed over the next few years that will again rely on gas. As said by other Members, Northern Ireland's electricity is becoming increasingly reliant on gas and wind. Those are the two principal generators that we utilise, and we need to be careful that we do not become over-reliant on them.

We also need to recognise that any scheme may not have a public purse contribution upfront or have NIROCs paid. However, ultimately, if we create a legal requirement to purchase something, there will be a cost implication. If those who come forward with small generating units — there may be a limited number; we do not know — have ridiculous grid connection costs, guess what? We will have to pay for that, because those will be the best options available to those who are supplying electricity at that time. We need to make sure that we do things efficiently and are cognisant that our electricity users — homeowners and businesses — will ultimately pay for it. We do not want to create a situation in which our businesses are not competitive, nor do we want to drive up the price of domestic electricity because those in fuel poverty will suffer the most. We need to take great care with all of it, because consumers will pay.

Renewable energy has been badly served by previous schemes in Northern Ireland. I am thinking of the RHI scheme, which was to be environmentally friendly but turned into "cash for ash", whereby some actually wasted energy and created emissions to profit, which happened largely because of the inability to adjust the grant tariff. Huge public costs were racked up, and some exploited the scheme. I also point Members to last week's Public Accounts Committee report on renewable energy, which highlighted the absence of digression in the scheme as a key flaw. The scheme was stopped, and the commitments that were given by the then Minister of Enterprise, Trade and Investment were not honoured. Public confidence in renewable energy schemes has been dented, and any new scheme must be designed so that we can renew that public confidence. Instead of evolving the RHI scheme into something appropriate, all support was cut off, which stymied renewable energy generation in Northern Ireland.

Approximately 50% of Northern Ireland's electricity is generated by renewable means. According to a report from the Northern Ireland Audit Office, some 85·4% of that is generated from onshore wind. That is why I said that we are heavily reliant on wind. I understand that, currently, wind is probably the most cost-effective method of generating renewable energy. In the past, the market was driven by the ROCs or NIROCs subsidy. However, even without there being that subsidy, I am aware of several large-scale planning applications in which the business cases stack up on their own. Therefore, more wind generation is being planned, and there is likely to be more again in the future. Whilst wind energy is a very clean renewable energy, we need to consider an over-reliance on it.

Why do I say that? As Mr Frew said, we create a potentially unstable grid if we are over-reliant on any particular aspect of energy generation, and wind generation in particular is vulnerable to the weather. Peak demand each winter is on the cold, frosty, calm days when there is no wind, so we are actually creating a situation where we must have a backup supply, meaning that there is an additional cost for a second supply for the entirety of the generation we may be relying on wind for. So it is important that we consider whether we should encourage further wind renewable energy through public grant or whether we are already over-reliant on it. That may need to be looked into.

What is the best economic model for wind generation? When you encourage wind generation, you also have to pay for the peaker units, which are the very expensive units that could be pulled in quickly. At present, that would require using gas for such a situation. It is not just about the cost of encouraging —.

Photo of Roy Beggs Roy Beggs UUP

Yes, I certainly will.

Photo of Paul Frew Paul Frew DUP

The Member raises a very valid point about the mixture of gas and wind. If the wind is blowing, everything is fine, but, when the wind stops blowing or if it is intermittent, which is even worse, it is very hard to crank up a gas unit, even a peaker unit. Even if you do achieve it in a fast time, that has a massive impact on the life of the unit.

Photo of Roy Beggs Roy Beggs UUP

The Member is correct. If peaker units are turned on and off, that adds wear to them. Also, they are not very environmentally friendly, because they are not the most efficient method of generating electricity. They are the cheapest way of getting power quickly, but we need to understand the full mix in supply, and that is why I am saying that we need to look very carefully at whether we want to pay for encouraging additional wind, whether on a small scale or a large scale. That is an area we need to be careful with.

I will support the Bill's moving forward, so I draw Members' and the Committee's attention to the recent Northern Ireland Audit Office (NIAO) report, 'Generating electricity from renewable energy'. Indeed, last week's Public Accounts Committee report into the matter indicates some of the lessons that can be learned from the mistakes of the past. I draw Members' attention to recommendations 1 and 2, which talk about the need to identify potential environmental or planning aspects in any policy and the need for more formal arrangements and agreements with other related public bodies. That was one of the failures of past renewable energy schemes here.

I will also mention recommendation 3, which highlights Departments' skills gap. One of the issues to come out of previous schemes is that the Department was over-reliant on private-sector consultants, or outside experts, and there was an inability to assess what was coming and develop appropriate policy. My question is this: does the Department have the capability to develop further such schemes? That fundamental question must be answered at the outset before we require the Department to do the work.

I will move on to recommendation 5. The issue in that recommendation arose because there was, dare I say, a dispute over just how profitable renewable energy generation had been. Some were saying that excessive profits were being made, and that point was being countered. The question is this: why do we not build into any scheme a need for confidential information to be passed back to the Department so that there is transparency in the Department on the level of profits being made? There is no point in the Department continuing to pay excessive profits if those profits are not needed to encourage a scheme.

Another aspect of learning we need to take from the past is on how setting a capacity tariff and the level of grant varying with it can direct what is delivered on the ground.

In Northern Ireland, the maximum ROC was 250 kilowatts, where they got four ROCs. That is why we have turbines up to that size dotted around the countryside. That was the maximum grant and it was the grant, and not the site or the efficiency of the wind turbine, that was driving the system. The construction of 1,209 of those turbines were driven by that grant at that stage, as opposed to there being only 20 of between 250 and 500 megawatts and 53 greater than 500 megawatts.

We need to make sure that we build a system that is environmentally friendly. We have the strange phenomenon of some of those turbines being taken down and replaced with derated larger turbines because even more money can be made. It is questionable why those turbines had to be taken down. The scheme is being maxed out by the operators, which it is perfectly reasonable for them to try to do, but we should not be designing a scheme that will allow for excessive profits. There should be mechanisms in it to stop that and ensure that the public interest is looked after. There were similar issues with anaerobic digesters, so lessons must be learned.

I have attached lots of caveats but there is still potential. When we suddenly stopped our support for renewable energy of any sort, we stymied development and demand. There may well be a need to encourage that once more, particularly in diversification. I question whether we need to have wind, as much as many may benefit from that. I am looking at the overall cost, the sustainability of the grid and the cost to electricity users. There may well be merit in hydroelectrics, solar, biofuel, and combined heat and power, which is an area that has not been heavily looked at. There may well be merit in the scheme but we must do it sensitively and ensure that excess profits are not generated.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

I call Clare Bailey. I apologise in advance if I have to interrupt you for the business to be stopped for a meeting of the Business Committee at 1.00 pm.

Photo of Clare Bailey Clare Bailey Green

Thank you, Mr Deputy Speaker. I have seriously cut down my speaking notes, so I will not be saying everything that I wanted to say.

Most of us know that we are in a climate emergency in Northern Ireland. In our push to achieve net zero, the energy sector will be able to move far and fast, and renewable energy will be key to achieving that. The Green Party will support the key policy objectives of the Bill to make microgeneration even more affordable and to incentivise the growth of micro-renewable energy generation at household and community levels. Therefore, I support the Bill at this stage and want to see it progress for further scrutiny at Committee Stage. I have to admit to Mr O'Dowd that I have not given as much time and attention to the detail of the Bill as I would have liked, but I hope that my contribution will be of some use to him as the sponsor.

Like others, we have concerns with the detail of the Bill. Our concerns are mainly with the potential for abuse of the scheme, for adverse impacts on nature and for the scheme to impact negatively on low-income households. RHI should have taught us so much. We were also reminded by Mr Frew of the rent-a-roof solar scheme that operated here. Mr Beggs made reference to the anaerobic digester schemes. Those schemes continue to operate here. The financial incentive for anaerobic digestion has caused, and continues to cause, widespread environmental harm. In Northern Ireland, we set subsidies at a rate that was far higher than those in GB. What we have done is to incentivise the likes of venture capitalists from London to come over and build many of these polluting AD plants. We need to keep an eye on that, because the impacts of those are causing destruction to our habitats and waterways and are damaging to public health as well.

Photo of Roy Beggs Roy Beggs UUP

Will the Member give way?

Photo of Roy Beggs Roy Beggs UUP

Does the Member not accept that, if an anaerobic digester is properly installed with all the planning and environmental regulations in place, it can contribute to renewable energy safely? I ask her to be careful about what she is saying; she seems to be damning all anaerobic electricity generation, but it does have potential.

Photo of Clare Bailey Clare Bailey Green

I thank the Member for that. He is really getting into the planning system there, and we are going to go into that one. I have spent a long time looking at AD plants, the pollution and the ammonia-emitting projects. I will be happy to show the Member a picture of the ammonia map that we have produced for Northern Ireland. We have a lot to do, and while there is a theory, we are not good at the practice. That is where the alarm bells need to be ringing. It is for those reasons that the safeguards should be included in this Bill in order to ensure that a maximum threshold, as well as a minimum threshold, is set for tariffs to ensure that a Minister cannot inadvertently incentivise harmful practice through the setting of disproportionately high tariffs.

We would also like to see limits on the number of microgenerators that can be placed in one household, business or farm, so that gaming of the system does not result in unintended outcomes. Clause 1(6) should include the need for strict and robust environmental impact assessments of any small-scale green energy schemes in order to ensure that renewable technologies are not increasing the threat to nature and biodiversity. That technology must be deployed in the right places and in harmony with nature.

The Green Party also has concerns about the types of technologies that are included under the term "renewable" in clause 1(5). Certain types of electricity generation that may fall under those categories, including AD and combined heat and power, which is explicitly mentioned, are not suited to a scheme like this. A similar scheme is being developed in the South, but this scheme is not as broad in the types of energy generation that it covers, excluding, for example, energy created from biofuel. The primary purpose of domestic generation or microgeneration should be for electricity users to meet their own need for power. Again, there should be a maximum threshold for tariffs paid to micro-producers, otherwise lower-income households could, effectively, subsidise wealthier households that can afford to install microgenerators.

Finally, we believe that the Bill could be enhanced by adding some points — for example, referencing the need to achieve net zero in Northern Ireland and introducing additional environmental safeguards. We know that the planning system is not well equipped to deal with these issues and that many microgenerators may not require planning permission. We could perhaps remove the inclusion in the Bill of energy from sources that are not environmentally friendly or entirely renewable or that cause harm to nature and biodiversity. Of course, this is a narrowly focused private Member's Bill with a targeted purpose, so it is not going to address all things for all people or all of our energy woes. We all need to be mindful of that, but we support the Bill in principle at this stage and would like to see it proceed for further scrutiny at Committee Stage.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

The Business Committee has arranged to meet at 1.00 pm. I propose therefore, by leave of the Assembly, to suspend the sitting until 2.00 pm. The first item of business when we return will be Question Time. This debate will resume after the urgent oral question, when the next Member to be called will be the Minister.

The debate stood suspended. The sitting was suspended at 12.59 pm.

On resuming (Mr Deputy Speaker [Mr Beggs] in the Chair) —