18:00 The Minister for Energy and Clean Growth (Chris Skidmore)

The regulations are necessary to ensure the smooth running of the capacity market in the period after state aid approval is received, and to broaden the participation of renewable technologies. That is important the week after we committed to net zero emissions by 2050. I commend them to the Committee.

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18:08 Dr Alan Whitehead (Southampton, Test) (Lab)

Finally, I seek the Minister’s clarification on something else that I think is a welcome departure in this SI. Will he clarify how renewables and low-carbon energy in general can become eligible for obtaining some funding under capacity auctions? The Minister mentioned that renewable energy with some subsidies—but not subsidies sufficient to put them out of contention, by which I understand subsidies that have historically come under the terms of the renewables obligation, the feed-in tariffs and the contracts for difference—would continue not to be eligible, if those renewables were in receipt of those subsidies.

However, can the Minister tell me what subsidies would be eligible for those renewable and low-carbon sources of energy that are open for the capacity market? If there are none, does he consider it appropriate to pit completely unsubsidised renewable energy against other forms of energy in a capacity market auction, or should there be sub-auctions, even in unsubsidised circumstances, for renewable and low-carbon energy as against fossil fuel and high-carbon energy?

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18:21 Chris Skidmore

Major schemes such as contracts for difference exclude renewables schemes from participation and we have not identified other forms of subsidy. We cannot rule out the possibility that some minor schemes may exist—at a local level, for example—but we are keen to do more and we will look, as part of the pathway to net zero, to set that out for the future. The Government believe that the capacity market is the right mechanism for achieving security of supply at the lowest cost to consumers—a view supported by the majority of stakeholders who responded to the call for evidence last September as part of our five-year review. The revenue from capacity payments incentivises the necessary investment to maintain or refurbish existing capacity and to finance new capacity. Without that capacity, we would be at greater risk of power shortages. It has had a direct and indirect impact on new-build capacity, and around 4 GW of new resources was cleared in the most recent 2018 T-4 auction.

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