Contribution
My Lords, given the relevance of this amendment, I remind the Committee of my interests as a generator of small-scale hydro.
Before I get on to the specifics of the amendment, I will try to clear up a confusion that crept into the debate on the previous group, at the risk of reopening the mini debate we had at the end of the second group. There is still confusion between “objective” and “object”, and the Minister is still guilty of falling into that trap. The objectives are what the company has to try to achieve. The “objects” in Clause 3 are what the company is restricted to being able to do. If it is not in the objects, the company cannot do it—it is not allowed to. If it is in the objects, the company is allowed to do it but does not have to. Therefore, putting something into Clause 3 does not mean, as the Minister has suggested, that we specify what GBE should be doing or making, or in any way restrict its ability to make its own decisions. That is a really important difference. I suspect that a number of noble Lords who tabled amendments to Clause 3 think that they are adding an objective. They are not.
That said, my Amendment 10 is designed to allow GBE to do something, not to tell it to do it. Since the removal of the feed-in tariff system, of which I am a recipient, there has been only a very limited incentive for people to install greater domestic renewable generation capacity than the amount that covers their own usage. Own usage brings quite a substantial return because it replaces the cost of buying electricity from a main supplier plus the VAT, but the only way to be paid anything for any excess you send into the grid is the smart export guarantee, and the rules around that are simply that the amount has to be positive. That can be, and in many cases is, as low as a penny per kilowatt hour. That is not much of an incentive to add an extra couple of panels on to your roof, or whatever it might be beyond your own needs.
There are now some higher smart export guarantee rates but they can be reduced at will by the electricity companies. There is no guarantee of them, so when you consider installing solar panels or any other renewable generation there is no incentive to install more than you want to use yourself. The cheapest and easiest way of increasing renewable generation—because you already have the scaffolding up and the builders—is to add two or three more panels, but you will do that only if there is a return from doing so.
So would it not be a great thing if you were able to sell your excess to your neighbours, at a discount from the full retail price but at more than the smart export guarantee? That way, both the generator and the consumer would win. At the moment, the only way to achieve that is to hardwire your neighbours into your system, and that is an extremely expensive and not very practical thing to have to do.
One potential solution to that problem is peer-to-peer trading, which would allow neighbours to buy your excess electricity over a trading platform. With trading via peer-to-peer networks, neighbourhoods, districts or entire towns can join forces and trade their self-produced electricity. This is not just a theoretical concept; there are projects all over the world investigating the possibilities of this approach in field trials. There are working examples as far afield as Spain, Switzerland, Bangladesh, the Netherlands and many more. There are also studies in the UK, such as the one by Repowering London, UK Power Networks and EDF in Brixton. The technology is available now.
The huge advantage of peer-to-peer trading is that it can incentivise greater installation of solar and other technologies at no cost to the Government or to the consumer. GBE can take a role in this process as a trading hub, or it could support local trading hubs. The trading operations themselves could be financed by taking a fee for using the trading platform. It is also a great way to create community energy networks. There are wider advantages than the purely financial. Peer-to-peer networks can improve resilience, improve energy access and reduce losses from long-distance transmission.
That links quite nicely, I think, to the Amendments 11 and 15, tabled by the noble Earl, Lord Russell, which would add community energy to the objects, and to Amendment 20, tabled by the noble Lord, Lord Ravensdale, which looks at local energy planning. I would support both of those amendments, alongside Amendment 10, as I believe they are highly complementary.
All that Amendment 10 does is add the trading of electricity to the allowed objects of GBE. This would allow it to create, manage or support peer-to-peer trading arrangements, for all the reasons that I have given. I hope, therefore, that the Minister will look favourably on it. It would be odd and rather sad if this interesting and relatively new technological way of incentivising small-scale generation was not allowed under GBE’s objectives.
I shall not comment on the other amendments in this group as the tablers have not yet spoken to them, but a number certainly appear to be very sensible and constructive suggestions. I look forward to hearing more detail. I beg to move.