Part of the debate – in Westminster Hall at 2:55 pm on 30 November 2021.
It is a pleasure to serve under your chairship, Mr Betts, and I congratulate Wera Hobhouse on securing this important debate.
It is just two weeks since the conclusion of COP26 in Glasgow and I welcome the focus that the debate places once again on how we practically deliver on the UK’s climate targets. We know that the Government’s recent pledge to decarbonise the UK power system by 2035 will require not just leaving fossil fuels in the ground where they belong, but a significant increase in renewable energy generation. Although progress has been made, with renewables generating 42.9% of electricity generation in the spring of 2020 and the Government committing to 40 GW of offshore wind by 2030, it is clear from everything we have heard this afternoon that community energy generation remains the missing part of the equation.
As we have heard many times, a failure to remove the barriers being faced by local suppliers is what is holding us back. Indeed, while large developers will soon benefit from the contracts for difference scheme, projects smaller than 5 MW continue to be excluded. Yet as the Minister will be aware, the potential for community-scale renewable energy generation is enormous. I am particularly delighted to hear the number of times that a report by the Environmental Audit Committee has been cited in this afternoon’s debate already. As a member of that Committee, I was pleased to sit in the deliberations as we came up with the figures that by 2030 the sector could grow by up to 20 times, powering more than 2 million homes and saving 2.5 million tonnes of CO2 each year. It is a very powerful report and I commend it to those who have not yet had a chance to look at it.
The report made it clear that the UK’s outdated regulations are unfit for the present, let alone for the future. As things stand, as the hon. Member for Bath reminded us, community energy generation makes up less than 0.5% of the UK’s total electricity generation and there has been almost no growth in the sector in the past six years. Compare that with a country such as Germany, where there are 200 local energy companies, and with energy systems in countries such as Denmark, which are entirely decentralised. In comparison, the UK is an incredibly centralised four-nation country with an incredibly centralised energy system, and local energy companies have been little more than collective purchasing vehicles.
In other countries, local energy systems incorporate all aspects of generation, storage and supply. Households, communities, schools and businesses become joint producers and consumers in the local energy system, with vested interests in generating clean energy as well as consuming it, yet here at home, as Community Energy England has so clearly set out, Government policies have made it more difficult for the sector to flourish. The outdated market that we have largely dates back to the 1990s, when the sector was privatised, and prohibitive costs combined with the complexity of licensing laws are stifling community energy schemes.