I deem the raising of the FITs threshold to be very attractive and am personally driving the issue in the Department. However, when looking at the proposal in further detail, I have been made aware of potentially perverse consequences and impacts on the renewables obligation. I was slightly surprised by the views of the
STA but have taken them on board. We need to unpack a number of issues and I currently have officials working on the matter. I am hopeful that we can find a way through or partially through, and land at an outcome that, while it might not be the one the hon. Gentleman exactly wants, he would find satisfactory. I cannot say any more on that because I have not come to the House in a position to make a commitment or statement, but I hope he takes from the tenor of my response that we are not just considering the matter; work is being done in the Department and we hope to bring further measures to the House. I reassure him that we hope to respond as the Bill continues its passage through Parliament—most likely, in the other place.
Amendment 46 seeks to increase the specified maximum capacity of the FITs scheme to 50 MW. I have considerable sympathy with that objective, which recognises the effective nature of the reformed FITs, but such an uplift could produce unintended consequences on FITs, budgets, the levy control framework and renewables obligation certificates. As things stand, we do not consider that such a large change offers the best value for money, because it could have significant impacts on the functioning of the renewables obligation and push up costs for energy bill payers.
Amendment 42 seeks to define distributed generation. I applaud the motive of the amendment, but having carefully considered it, and as sympathetic as I am to its intention, on balance, we do not consider it necessary. The reformed and highly successful FITs scheme already ensures that communities can generate their own electricity from a range of technologies. I am proud that, under the coalition, hundreds of thousands of people have decided to do so, and are now successfully self-generating electricity to meet some or all of their needs—in some cases, they export to the grid—on both community and domestic scales. Public buildings, particularly schools, are a popular choice.
Amendment 43 aims to implement a new support mechanism for generation attached to our electricity distribution network. I have led reforms on the FITs scheme to ensure that it remains not only open, but successful and increasingly ambitious, while delivering value for money. We are now closing in on half a million installations. Virtually all the installations supported by the FITs scheme are distributed generators. We therefore do not see the need for a new mechanism, which could confuse consumers and potential generators. The reformed FITs system is doing a good job and is increasingly popular.
Amendments 44 and 45 aim to require distribution companies to supply distributed generation—even if that does sound like a slight oxymoron. UK distribution network operators already ensure that electricity generated by distributed generation is transmitted to where it is needed, if it is not consumed locally. While I am sympathetic to the intent behind the amendments, I do not see that they are strictly necessary.
I am grateful to the hon. Member for Southampton, Test for tabling amendment 47, which seeks to address an important issue: the independent renewable generators’ route to market. The amendment would create a duty on the Secretary of State to establish a green power auction market for renewable generation—GPAM, as it is often known. I hope the hon. Gentleman knows, and the House appreciates, that I am sympathetic to the
intention behind the amendment. Bringing on board new, dynamic and disruptive new entrants is a key aim of the Bill. I am personally committed to breaking the grip of the big six and making our vision of a far more decentralised energy economy a reality.