carbon limited

Away from the fanfare around Ed Miliband’s announcement that a feed in tariff (FiT) is on the way, the Lords have been debating an amendment to the Energy Bill that has the support of Conservatives, Lib Dems, and even some Labour peers.

What’s in the amendment? It says the Secretary of State has one year from the passing of the bill to bring in a feed in tariff. And the qualifying technologies, their maximum capacity, and their level of support are left to the Secretary of State to decide with no specified cap.

Despite wide support, it was clear that the Government wouldn’t officially get behind the bill as it wasn’t their idea. In fact, as recently as June the Government were firmly against a feed in tariff.

Baroness Wilcox, the amendment’s sponsor, has now withdrawn it, but only on the condition that the Government meet specific terms in their own amendment, which they’re expected put forward on 5 November. However, if the Government doesn’t fulfill her demands, she will reintroduce her original amendment. Here are her terms in a nutshell (my comments in italics):

1. It must allow the flexibility to adjust the threshold and value of a feed in tariff according to each form of renewable generation. (The risk here is that an upper threshold is specified in the bill that is too low and difficult to change in future. For example, Lord Whitty wants to see community wind included in a FiT rather than under the RO. This implies a cap of at least several hundred kW.)
2. Heat should be included with the scope of the amendment. Baroness Wilcox specifically focused on low carbon heat as opposed to only “renewable” heat. By extension, the Government’s must include conventional gas-fired micro CHP. Her amendment included micro CHP to 50kWe.
3. There must be a clear timetable for implementation. Her amendment gave a deadline of one year.

Lord Hunt of Kings Heath OBE – Minister of State (with responsibility for heat supply – including locally distributed energy) offered some reassurances about what we will see in the Government amendment:

1. It will include heat but not a heat FiT (er, how does that work?)
2. The Govt are minded to put an upper limit in the bill and allow the threshold to be lowered but not raised. Lord Hunt mentions 2.2MW as an example in the context of community schemes. (Cross your fingers that figure sticks! It’s certainly an improvement on the 50kW figure that’s been kicking around.)
   
3. It will include a FiT for gas fired micro-CHP up to 50kWe. (That’s ok, but not much help. I’d have thought 500kW would make more sense given that even a smallish mixed use scheme on the edge of viability might require a CHP engine of 150kW+)
4. Any feed in tariffs in the Govt amendment will apply to electricity only. (The implication was: don’t expect to see a heat FiT for quite a while yet.)

Lord Hunt implied that a FiT will be funded by electricity suppliers. Given that all of the costs of the Renewables Obligation are currently passed on to consumers (we all pay it, not just people on a green tariff – though they pay it twice), we will probably see the same thing here.

The mechanism for spreading this cost among the suppliers may turn into a nightmare, however. Surely, surely, it makes more sense to pay this out of the treasury? Otherwise we have to sit around waiting while an “equitable” system of cost allocation is agreed and it would be surprising if they managed this in less than a year.

What next? Now we hang on til Wednesday the 5th to see what Lord Hunt brings to the third reading.