Amendment to Energy Bill - letter to House of Lords
12/11/2008

Dear Lady Adams of Craigielea,

We are writing as the coalition campaigning in support of a UK renewable energy tariff for household, businesses and community scale heat and electricity production.

We warmly welcomed the Government’s announcement a fortnight ago that they would introduce a feed-in tariff for electricity and an incentive for heat. However, we are disappointed that both of the amendments that the Government has tabled lack a timetable for their introduction, and that the feed-in tariff amendment does not even guarantee the introduction of a feed-in tariff or have a high enough threshold.

There are three key problems that we have identified with the Government’s amendments:

Firstly, as it stands, the electricity amendment is so vaguely worded that it gives no certainty that a feed-in tariff as internationally recognized will actually be introduced.

Feed-in tariff schemes have been successful in other countries due to the opportunity for low risk investment that they provide. This is based on a tariff fixed by Government and guaranteed for a period of time. However, the current amendment lacks these basic elements of a feed-in tariff. This amendment must be changed to introduce a tariff payment to require the Government to fix the tariff level for a specified contract period, enable different payment for different technologies and different payment for different scales of different technologies. This would give certainty to business that a feed-in tariff as internationally recognised will be introduced.

Secondly, the urgency of tackling climate change means that the Bill must create a duty to introduce a feed-in tariff within one year. Again, this is essential both to give certainty to business and to allow investment to come forward speedily in order to meet the 2020 renewables directive target.

Finally, we believe that the 3MW threshold is not high enough. The threshold should be set at the level which will have the greatest impact on reducing carbon emissions in the UK. Ninety five percent of wind capacity currently in the planning system is in developments larger than 10MW. The Renewables Obligation therefore is comprehensively failing to incentivise investment in schemes of under 10MW. Germany has a feed in tariff and produces 10 times more wind power than the UK, despite having a lower natural resource in this area. Moreover, between 30 and 50 per cent of this is under 10MW. If the threshold is not raised then we shall miss out on this enormous potential for renewable electricity, which can be achieved without disturbing existing investment.

If we are to meet the scale of the challenge of both combating climate change, and meeting the UK’s renewables directive targets, then the Government must give the opportunity for a full range of community scale renewable schemes to get support from the feed-in tariff scheme. The legislation must guarantee that a feed-in tariff scheme, including the basic elements outlined above, will be introduced within a year.

Amendments will be put down to support these points and we ask you to give them your backing.