Lords, subsidy cuts and an ‘Orwellian’ government

The proposed cuts to solar subsidies has attracted the ire of the renewables industry since they were unveiled by the Department for Energy and Climate Change (DECC) late last month, but stinging criticism has poured in from unexpected sources too.

During a House of Lords debate for the draft Energy Bill, which is hoped to ascend into law next year, a number of lords clashed over the scant clarifications both within the bill and forthcoming from the DECC with regards to proposals to close RO support for sub-5MW solar farms a year earlier than planned.

The debate was ironically held on the same day DECC made the proposals public, which could be good reason for very few lords present at the debate having much idea about what was included.

But it did not stop a number of those present from picking one of the truly contentious issues with the Conservative’s “big reset” of green subsidies; the potential for them to significantly dent investor confidence in the UK and convince asset fund managers to take their business elsewhere, with other markets in Europe such as Spain and Italy continuing to attract companies such as Bluefield.

Lord Foulkes rounded on the decision by insisting that the move was “shifting the goalposts” and had “caused investors and potential investors great dismay”. He also picked up on Cabinet Office minister Matthew Hancock’s previous claims that support for onshore wind would not be targeted until such a time that the technology provided 10% of the UK’s energy needs. It provided just half that figure when the Conservative’s enacted a manifesto promise to curtail all support for the technology, regardless of it being the cheapest form of renewable energy in the UK.

“This Bill is harmful. Already £350 million has been spent on projects that may now not be financially viable. That is a terrible waste of resources. On top of that, the July Budget scrapped the climate change levy exemption, which results in a double blow to renewable energy production in the United Kingdom, and a loss of investor confidence, which puts investment decisions in renewable energy in doubt,” Foulkes concluded.

Lord Whitty echoed his sentiments, whilst also stating his belief that subsidies should, over time, diminish as the cost of the technology falls. “However, that should not precipitate change which will affect decisions already taken by investors, companies and planners on the basis that rebates announced only a few months ago by the government would remain in place,” he said.

But it was perhaps Baroness Liddel of Coatdyke who provided the most withering commentary of the situation, questioning why the government wanted to “muck about” with investor confidence.

“I am never sure whether we can refer to strangers in this Chamber, but I saw the energy minister standing at the bar of the house. She was looking remarkably well. In her position, I would be losing sleep.

“There are real concerns about security of supply. A major outage in the United Kingdom could put us in an extremely perilous position, and that is a strategic issue. The last thing we need at the moment is uncertainty around energy investment," she said.

Support for the measures within the chamber was hard to find. Conservative Viscount Ridley urged energy and climate secretary Amber Rudd to “push ahead urgently” with the proposals, claiming such support had distorted the market and accelerated the switching of land from food production to “extremely expensive and unreliable energy”, comments that bear an uncanny resemblance to those made by Elizabeth Truss and other ministers at the Department for the Environment, Food and Rural Affairs.

But even Lord Howell, Chancellor George Osborne’s father in law and long proponent of oil and gas, poured scorn over Conservative energy policy, particularly in relation to the hugely expensive Hinckley Point C nuclear development and its impact on the future of the Levy Control Framework.

“By far the biggest obligation, or future burden, on consumers and households is the Hinkley Point C nuclear project. I am very pro nuclear and pro its low-carbon contribution but this must be one of the worst deals ever for British households and British industry,” he said.

His point hammers home perhaps the biggest bugbear with DECC’s proposals and the reasoning behind them, and that is the apparent inconsistency behind the message. Rudd and other ministers at DECC have repeatedly said that the UK cannot afford any more ground-mounted solar or onshore wind, yet hugely expensive projects such as Hinkley are passed through. The Levy Control Framework has been stretched to breaking point because 58% of the budget has been lavished on just eight projects awarded under the non-competitive FIDeR scheme, effectively ending the chances for further cost-competitive CfDs.

Speaking during the debate Lord Teverson offered perhaps the most succinct summary of this. “What concerns me most, very much reflecting what the noble lord, Lord Whitty, said, is that we seem to have a government who are ‘1984’ Orwellian in their style, in that what we read is not borne out by the actions that we see.”