HC Deb 06 May 1999 vol 330 cc1073-6
7. Mr. Gareth R. Thomas

(Harrow, West): If he will make a statement on the Government's progress in encouraging power generation from renewable sources. [82364]

The Minister for Energy and Industry (Mr. John Battle)

The Government are working towards a target of renewable energy providing 10 per cent. of UK electricity supplies as soon as possible. We hope to achieve that by 2010.

On 30 March, the Government published a consultation paper entitled "New and Renewable Energy—Prospects for the 21st Century", reaffirming the commitment to developing renewable sources of energy and seeking views on future support measures.

Mr. Thomas

I congratulate my hon. Friend on the excellent consultation document that he published before Easter. Can he assure me that the pool review will properly reflect the needs of renewable generators? What action does he intend to take to promote the prospects of solar and wave energy?

Mr. Battle

My hon. Friend may know that we recently produced proposals to draw the potential of wave energy into renewable energy sources. In February, I announced three new photovoltaic initiatives, worth £15 million—£5 million from the Department of Trade and Industry—to consider the potential of solar. Wave and solar are being brought in from the cold.

The reform of the wholesale market—the pool—is vital. If we had left it as it was, it would have squeezed out potential for renewable energy companies. Our remit to the regulator and the team considering reform in the wholesale market is to ensure space for the renewable energy companies which I believe will begin to displace traditional fossil fuels as we move into a new century.

Mr. Richard Page (South-West Hertfordshire)

I welcome the Government's commitment to renewable energy, which I vehemently support. However, has there not been a problem with the non-fossil fuel obligation rounds? No matter how large they are, and no matter how many awards are made, the number of schemes that achieve completion and production remain a problem. When they are considered in future, would the Government bear in mind the achievability of bids? What is being done in that regard? Are the Government approaching local authorities, for example, to find out whether planning permissions are likely? There is no point in taking the lowest possible bid if it will never work.

Mr. Battle

The hon. Gentleman championed NFFO when he was in government, and it is accepted in Europe and more internationally that it was a good scheme which has been successful. The hon. Gentleman is right to raise problems with implementation and planning permissions, however. We have discussed that matter in my Department, and with the Department of the Environment, Transport and the Regions. We cannot impose schemes from the centre on local communities or override local planning constraints. Projects must win support.

Planning is not the only problem, as companies are sometimes over-ambitious in their bids. We are encouraged, however, by the number of bids and their range. Bids have come in not only for wind schemes, but for landfill gas—the landfill tax is encouraging the use of methane gas. Energy from waste is also becoming increasingly popular. A range of sources will exist and projects will continue successfully under NFFO. We are urgently addressing the planning matter raised by the hon. Gentleman.

Mr. Tony Colman (Putney)

May I add my congratulations to my hon. Friend on his excellent consultation paper on renewable energy? It is a real step forward as regards sustainable development in the United Kingdom. Is he aware of the "100,000 rooftops" solar energy programme initiated by the German Federal Ministry for Economics and Technology and supported by 10-year, interest-free loans from the European Bank for Reconstruction and Development? Will my hon. Friend consider that idea for the UK, and will he consider in particular the rooftops of the houses of Putney?

Mr. Battle

I must enter one caveat. I know of the German scheme, and it is ambitious. However, one problem with PV in Britain is the structure of our houses. It may not be well known that around half the homes in Britain are more than 100 years old. We tend to do up and renovate our homes rather than build new ones. It is easier to fit PV solar in new homes than in refurbished homes. There are also price problems, as the cost of PV may be between £14,000 and £20,000. Achieving a payback on investment is difficult.

To tackle that problem, our recently announced £15 million PV initiative will examine technologies in order to reduce costs. PV will be tested on 100 homes, and we are moving towards introducing PV in a price-competitive marketplace, rather than taking the German route of direct subsidy. We also have SCOLAR schemes intended to help 100 schools to use PV so that youngsters—new scientists and technicians—learn about the technology, develop it and bring it to fruition in the new century.

Mr. Tim Boswell (Daventry)

We welcome both the Minister's acknowledgement of the success of the previous Government's NFFO policy and the testing and challenging objectives of the Minister's Green Paper on renewables. However, can he confirm that he has set himself an interim target of achieving 5 per cent. of energy generated by renewables by 2003? He mentioned that the pool review was an important future consideration, but does he acknowledge that, however much we do on renewable energy, it is important to ensure that generation in the short term is as environmentally friendly as possible? Will he therefore give consideration to the earliest possible elimination of the moratorium which is holding back the development of more environmentally friendly generation in this country?

Mr. Battle

In case the hon. Gentleman is under any illusion, we are trying to encourage non-fossil fuel sources under renewable energy. The strict consent policy is in position until we can reform the pool. As I said, unless we tackle that and get a new reference price for renewable energy companies, the new energy companies will be squeezed out altogether by the forces of the pool. In September, we announced a record 261 renewable energy projects for 1,177 MW contracted. If the projects in NFFO 1, 2, 3,. 4 and 5 go ahead, we will achieve that target of 5 per cent. without difficulty.

The targets are challenging, but when we include other measures—such as in response to the suggestion that disposing of waste in landfill tips is not the best answer, and that the more tips we cap and seal, the more methane gas is generated; and that, rather than flaring it off, it is better to use that gas to generate local combined heat and power—we will find that some of that renewable energy source of supply will enable us to achieve the 10 per cent. target.