Amber Rudd has defended proposed cuts to solar PV subsidies while simultaneously subsidising rafts of small diesel generators in the capacity mechanism. The secretary of state for energy also dismissed criticism of the government’s concerted push to build new nuclear power plants.
Taking questions from MPs this morning alongside energy minister Andrea Leadsom, Rudd accepted that further policy intervention would be needed to meet carbon budgets. What these policies may be remains to be seen.
However, the energy secretary was adamant that the capacity mechanism had delivered increased energy security at best value. She said the policy lever, which awards availability contracts to plant via reverse auctions, was necessary because of years of under investment in new power stations under a Labour government.
Labour MP Lisa Nandy suggested that diesel generators had been given contracts worth £175 million during the capacity auction held last month, and were set to make 20% returns.
Rudd dismissed the criticism, stating that the market was “essential” to ensure security of supply, and would add “less than £10” to household bills.
“Diesel will form part of the future but only in very small amounts… occasionally… when needed,” said Rudd.
She also dismissed criticism from Green MP Caroline Lucas, who suggested that solar subsidies over 35 years (prior to tariff cuts) would be around “half the cost” of support for new nuclear at Hinckley Point.
Lucas, said Rudd, was “not dealing with fact”. She claimed that well-sited solar PV installations would still achieve a 5% rate of return and that the government was determined to achieve a subsidy-free industry.
“Nuclear provides important baseload when the sun isn’t shining or wind is not blowing,” said Rudd. “The honourable lady can have her own views but she can’t have her own facts”.
However, with the solar industry potentially facing further pressure due to the UK losing its court case with Brussels over VAT rates, energy minister Andrea Leadsom said Decc would “look at what more we can do” within the tariffs to support the industry should VAT rates be required to rise.
Watch the session here.