Office of Public Sector Information
563.Renewable heat is heat generated from renewable sources such as the sun, the heat in the ground and in the air, and biomass fuels such as wood from sustainable sources or biogas produced from biogenic waste. At present such heat meets only 0.6% of UK heat demand. The Renewable Energy Strategy (“RES”) consultation document published in June 2008 suggested that this may need to rise to around 14% in 2020 if the UK is to meet the projected overall renewable energy target of 15% for UK. Historically in the UK there has been little impetus for a renewable heat sector to emerge, due to the availability of large reserves of indigenous oil, coal and gas. The analysis which underpinned the RES consultation showed that without financial support very little renewable heat can be expected to come on line before 2020.
564.Renewable electricity generation has long been supported by existing financial support instruments in the UK, such as the Renewables Obligation. However, there have been no equivalent mechanisms to support renewable heat. This section of the Act gives the Secretary of State power to introduce a financial incentive mechanism for renewable heat – the Renewable Heat Incentive (“RHI”).
565.The purpose of the RHI is to stimulate a market for renewable heat by making support payments to the owners of renewable heat generation systems, proportionate to the amount of measured heat output delivered. It would essentially be a ‘feed-in-tariff’, though this is a shorthand way of describing it. In the UK heat is usually produced for immediate local use, and as there is no national heat network, it is not generally ‘fed in’ to a network and certainly not a nationwide one. The RHI will be funded via a levy on designated suppliers of fossil fuels supplied for the purpose of generating heat.
566.The RHI would be the only mechanism of its kind across Europe. A delivery framework and administrative and financial systems will need to be established to enable the RHI to be deployed. The enabling powers are broad enough to allow the detail of the scheme to be developed fully at a later stage following consultation. The provisions also allow flexibility to determine payment processes, levels of payments and to further identify who will be eligible to receive RHI payments.
567.This section gives the Secretary of State power to make regulations to establish a financial support mechanism for renewable heat which will be known as the Renewable Heat Incentive (the “RHI”).
568.Subsection (1) gives powers to the Secretary of State to make regulations:
To establish a scheme to provide financial incentives to encourage and facilitate the development of renewable heat.
about the administrative and financial arrangements for a RHI scheme.
569.Subsection (2) provides further details about the scope of the Secretary of State’s regulation making power. It also contains provisions relating to the administration of the RHI concerning the making of payments and the collection of levies.
570.Subsection (2)(a) specifically enables the Secretary of State or the Authority to make payments (or require designated fossil fuel heat suppliers to make payments) to three listed categories of recipient in specified circumstances.
571.Subsection (2)(a)(i) provides that owners of plant used for the generation of renewable heat will be eligible to receive RHI payments. The section permits an owner to qualify for the RHI payment even in the event that they are not actually operating the plant themselves. This flexibility allows for third parties to operate in the renewable heat market: for example, a landlord who owns plant will be eligible for a payment even if the plant is actually operated by the tenant of the property. “Owner” is defined in subsection (3) to include a person who has acquired plant under a hire purchase agreement, a conditional sale agreement or any similar arrangement where title to the plant does not pass immediately.
572.Subsection (2)(a)(ii) provides that producers of biogas or biomethane will also be eligible to receive RHI payments. This provision therefore allows the RHI regulations to reward the production of renewable fuels as well as the generation of renewable heat itself. This would allow the Secretary of State to encourage and facilitate the development of the biogas/biomethane sectors
573.Subsection (2)(a)(iii) provides that producers of biofuels for the purpose of generating heat will be eligible to receive RHI payments.
574.Subsection (2)(b) provides that the regulations can make provision about the calculation of the RHI payments described in subsection 2(a). This is a broad and flexible provision allowing the Secretary of State to take account of different circumstances in setting the level of payments to various parties.
575.Subsection (2)(c) provides that the regulations can make provision about the circumstances in which payments might be recovered. For example, this would enable the Secretary of State or the Authority to make provision to recover funds that may have been paid out by mistake. .
576.Subsection (2)(d) provides that the regulations may make provision requiring that specified information from designated fossil fuel suppliers be provided to the Secretary of State or the Authority.
577.Subsection (2)(e) provides that the regulations can require designated fossil fuel suppliers to pay a levy to the Secretary of State or the Authority.
578.Subsection (2)(f) provides that the Secretary of State may make regulations to calculate the level of the levy.
579.Subsection (2)(g) provides that the regulations can allow payments to be made to fossil fuel suppliers in specified circumstances. For example, this could allow the Secretary of State or the Authority to redistribute funds collected via levies to fossil fuel suppliers, or to return funds to them.
580.Subsection (2)(h) provides that the regulations can make provisions about the enforcement of obligations under the RHI. These may include a power allowing the Secretary of State or the Authority to impose financial penalties, which could be used, for example, to ensure that levy payments are made in accordance with the regulations.
581.Subsection (2)(i) provides that the regulations may confer functions on the Secretary of State or the Authority (or both) relating to the establishment, administration or financing of the RHI scheme.
582.Subsection (3) sets out the definitions of specific terms referred to in this section of the Act and which are central to the RHI. In particular, the definitions provide as follows:
they specify that the administrative Authority for the RHI, will be the Gas and Electricity Markets Authority;
they explain what is meant by the terms: biogas, biofuel, and biomethane. Subsection (3) also provides a definition of one of the underlying constituent materials; biomass. ;
they provide a definition of “designated fossil fuel supplier”. These are the suppliers who, under the RHI may be required, amongst other things, to make payments to owners of plant used to generate renewable heat and pay a levy. The definition provides that they are a specified class of fossil fuel suppliers (as provided by regulations) and, in any other case, (i.e. if not provided by regulations) all fossil fuel suppliers.
they define “fossil fuel” by means of a list of fuels, including, for example, coal and petroleum products
they define “fossil fuel supplier” as a person who supplies fossil fuel to consumers for the purpose of generating heat. This will therefore exclude electricity suppliers or suppliers of renewable fuels. It will also exclude those who are supplying fossil fuels for purposes other than generating heat.
they define the `owner’ of plant (see above). As mentioned above, in some cases third parties, for example large energy companies. may wish to finance the deployment of such heat plant in customers’ properties;
“plant” is defined as including any equipment, apparatus or appliance.
the definition of “renewable generation of heat” provides that renewable heat is heat generated by means of a source of energy or technology listed at subsection (4).
603.Subsection (4) sets out the sources of energy and technologies referred to above in the definition of renewable generation of heat. These are: biomass, biofuels, fuel cells, water (including waves and tides), solar power, geothermal sources, heat from air, water or the ground and combined heat and power systems – but only if the system’s energy source is from a renewable energy source as defined by section 32M of the Electricity Act 1989 (c.29) (this has the effect of excluding combined heat and power systems which are powered by fossil fuels). None of the sources of energy or technology are limited by capacity, meaning that all scales of plant which generate renewable heat from such a source or technology may be eligible to receive a RHI payment.
604.Subsection (5)(a) allows for the list of energy sources as defined in subsection (4) to be modified by regulations. The Government’s intention is to modify the list as technological developments bring forward new technologies capable of making a contribution to the renewable heat sector. In this Act, by virtue of section 106, the power to modify includes the concepts of amending, adding to, revoking or repealing.
605.Subsection (5)(b) allows for the definitions of biogas and biomass as listed in subsection 3 to be modified by regulations.
606.Subsection (6) allows for regulations to specify that particular activities do or do not constitute the generation of heat for the purposes of defining the generation of heat from biofuels in subsection (2)(a)(iii) and the definition of “fossil fuel heat supplier” generally.
607.Subsection (7) requires the Secretary of State to secure the agreement of Scottish Ministers before making regulations in relation to Scotland which are within the legislative competence of the Scottish Parliament. It also requires the Secretary of State to consult Scottish Ministers on all other aspects of any regulations which apply to Scotland before they can be made.
607.Regulations made under the RHI power are subject to affirmative resolution by virtue of section 105 of the Act.
583.This element of the Act and paragraph 21 of Schedule 5 propose minor legislative changes to ensure that the civil nuclear security regulator, the Office for Civil Nuclear Security (OCNS), is able to carry out its functions effectively. The proposed changes update the legislation to reflect recent changes in the nuclear sector. Those recent changes are:
The use of subcontracting following restructuring of the nuclear industry, made possible by the Energy Act 2004; and,
the administrative transfer in April 2007 of the OCNS to the Health and Safety Executive to sit alongside the civil nuclear safety regulator, the Nuclear Installations Inspectorate (NII).
584.The amendments in this element of the Act will ensure there are sufficiently serious sanctions available for those attempting to steal sensitive nuclear information. Minor and consequential amendments also re-establish the OCNS’s ability to gain access to Civil Nuclear Police Authority premises following its transfer from the Department for Business, Enterprise & Regulatory Reform to the Health and Safety Executive.
585.This section relates to the securing of sensitive nuclear information pertaining to uranium enrichment. Previously, such information could only be kept on licensed nuclear sites which also held a permit to undertake the enrichment of uranium. Restructuring of the nuclear industry following the Energy Act 2004 means that sensitive nuclear information pertaining to uranium enrichment may now be taken, and stored, away from those licensed sites (for example, at research facilities).
586.To ensure the security of that sensitive nuclear information, there is already appropriate legislation in place which applies to anyone lawfully holding such information, and which prohibits disclosure of it by that person. However, the sanctions available against persons stealing or attempting to steal such information from premises which are not licensed to undertake uranium enrichment, are only those available for the offences of burglary or theft.
587.The Government does not feel these sanctions are strong enough. This is because theft and onward dissemination to others of information pertaining to uranium enrichment has implications for national security.
588.The overall effect of the section is to allow the offences and stronger sanctions that exist under the Official Secrets Acts to be used to prosecute persons stealing or attempting to steal sensitive nuclear information from designated premises. The section achieves this through a number of steps that are set out below.
589.The Anti-Terrorism, Crime and Security Act 2001 (c.24) makes provisions about terrorism and security. This section adds a new section, 80A, to the 2001 Act.
590.Subsection (1) of this new section provides that certain premises holding sensitive nuclear information, should be deemed as belonging to, or used for the purposes of, the Crown. This will allow the Secretary of State to make an order designating those premises holding uranium enrichment technology as “prohibited places” by virtue of section 3(c) of the Official Secrets Act 1911 (c.28). Subsection (1) is a necessary part of the section because only premises belonging to, or used for the purposes of, the Crown may be designated as “prohibited places” under section 3(c) of the Official Secrets Act 1911.
591.The overall effect of designating these premises as prohibited places is to extend the Official Secrets Acts’ offences and sanctions to persons gaining entry, or attempting to gain entry, to those premises.
592.The penalty for breach of the Official Secrets Act 1911 (c.28), by virtue of section 8(1) of the Official Secrets Act 1920 (c.75), is a custodial sentence of not less than 3 years and not more than 14 years. Section 1(2) of the Official Secrets Act 1911 sets out that in prosecuting persons under the Act, it is not necessary to prove that a person broke into that “prohibited place” for a purpose which would adversely affect the security interests of the State. Once orders are made by the Secretary of State designating certain premises as prohibited places, the protection afforded by section 1(2) will apply. This reflects the potential impact on national security.
593.The Energy Act 2004 (c.20) established the Civil Nuclear Constabulary to protect civil nuclear sites and nuclear materials. The Civil Nuclear Police Authority was established at the same time to ensure the Civil Nuclear Constabulary carries out its policing functions effectively and efficiently.
594.Paragraph 2 of Schedule 13 to the Energy Act 2004 (c.20) sets out the directions which the Secretary of State may give to the Civil Nuclear Police Authority. These include making sure the Civil Nuclear Constabulary completes tasks as it is required, and allowing authorised persons access to Civil Nuclear Police Authority premises. Paragraph 2(1)(h) of that Schedule provides that “officers of the Secretary of State’s department” are authorised to access Civil Nuclear Police Authority premises for the purposes of enabling them to monitor and inspect their activities.
595.Until the Office for Civil Nuclear Security was transferred to the Health and Safety Executive in April 2007, it was a division of the then Department of Trade and Industry and as such, its inspectors were “officers of the Secretary of State’s department”. This meant they had a statutory right to access Civil Nuclear Police Authority premises. This right of access is necessary to allow them to ensure the security of all licensed civil nuclear sites and sensitive nuclear information wherever it may be, including on Civil Nuclear Police Authority premises. However, when the regulator transferred to the Health and Safety Executive in April 2007, they ceased to be “officers of the Secretary of State’s department”. As a result, they no longer have an automatic right of access to Civil Nuclear Police Authority premises.
596.To rectify this, paragraph 21 of Schedule 5 substitutes “persons authorised by the Secretary of State” for “officers of the Secretary of State’s department”. The effect of the paragraph is that the civil nuclear security regulator can once again access Civil Nuclear Police Authority premises, since the Secretary of State will issue a letter specifically confirming that officers of the OCNS are authorised persons.
597.Section 92 provides that in exercising any of the powers under this Act to amend licences granted under the Electricity Act 1989 and Gas Act 1986, the Secretary of State is bound by the general duties set out in Part 1 of each of those Acts. It thus ensures consistency with the existing statutory framework for the electricity and gas sectors.
598.Subsections (2) and (4) specify that these general duties apply when the Secretary of State is exercising his modification powers under the following sections:
Sections 41 to 43, in relation to the introduction of a feed-in tariff for small scale low carbon electricity generation;
Sections 84 to 86, in relation to directing changes to electricity transmission system licences and codes with the aim of helping to ensure timely and efficient access for electricity generation projects, including renewables;
Sections 88 to 91, in relation to the introduction of smart meters; and
Sections 95 and 98 in relation to recovering from licensees the costs of meter accuracy services for which the Secretary of State is taking over responsibility from the Gas and Electricity Markets Authority.
599.This section sets out the attribution of responsibility for offences under the Act by corporate bodies. Subsection (1) provides that an officer of a corporate body as well as the corporate body will be guilty of an offence if the officer agreed to, or knew about, the conduct constituting the offence, or if the offence was attributable to the officer’s negligence.
600.Where a body corporate is managed by its members (for example, a limited liability partnership), by virtue of subsection (2), subsection (1) applies to a member of the body corporate as it applies to an officer of a body corporate, provided the act or default in question was connected with the member’s functions of management.
601.Subsection (3) provides for a partner in a firm, as well as the firm, to be liable for an offence, if the offence is committed by a Scottish firm.
602.This section provides for the Secretary of State or Scottish Ministers to make Orders in Council, orders or regulations under the Act by statutory instrument.
603.The statutory instrument may include incidental, supplementary and consequential provision and make transitory or transitional provision and savings.
604.These powers permit the Secretary of State to modify Acts of Parliament, or Scottish Ministers to modify Acts of the Scottish Parliament but where the Secretary of State or Scottish Ministers do so the resulting instrument is always subject to affirmative resolution procedure.
605.This section provides for the procedures for Orders in Council, orders and regulations made under this Act.
606.This section introduces Schedule 5, which contains minor and consequential amendments, described in the Explanatory Notes under the Parts to which they pertain. It also confers on the Secretary of State powers to make any further amendments to Acts of Parliament, Acts of the Scottish Parliament or other instruments by order. These orders are subject to negative resolution procedure, unless they modify an Act or an Act of the Scottish Parliament in which case they are subject to affirmative resolution procedure (see section 106). The section also empowers Scottish Ministers to make amendments to Acts of Parliament, Acts of the Scottish Parliament or other instruments in consequence if Chapter 3 of Part 1 as that Chapter applies in relation to the territorial sea adjacent to Scotland or in relation to functions of the Scottish Minister. Instruments which amend Acts of Parliament or Acts of the Scottish Parliament are subject to approval of the Scottish Parliament.
607.This section gives the Secretary State or Scottish Ministers the power, by order, to make transitional or savings provisions which may appear appropriate as a consequence of the Act’s passage. These may include amendments to primary legislation which, by virtue of section 94, would be subject to the affirmative resolution procedure.
608.The section also empowers Scottish Ministers to make for transitional provisions in consequence of Chapter 3 of Part 1 as that Chapter applies in relation to the territorial sea adjacent to Scotland or in relations to functions of the Scottish Ministers. This can include amendments to Acts of Parliament or Acts of the Scottish Parliament subject to approval of the Scottish Parliament.
609.Subsection (1) lists the provisions of the Act which came into force immediately the Act was passed (i.e. 26 November 2008).
610.This section provides for the Secretary of State to commence the remaining provisions of the Act by order, which by subsection (6) may include consequential and transitional provisions as well as making different provision for different cases.
611.This clause sets out the extent of the various provisions of the Act.
612.The following provisions will come into force on the day on which the Act received Royal Assent, as well as the provisions relating to extent and the short title of the Act:
Section 37 and paragraph 5 of Schedule 5, on the Renewables Obligation so far as is necessary for the purposes of making orders under that section;
Section 88 to 91, on smart meters and the relevant parts of sections 104, 105 and Schedule 4;
Section 102, on the application of the general duties in the Electricity Act 1989 and Gas Act 1986 to the licence modification powers in this Act;
613.The remainder of the Act will come into effect as specified by the Secretary of State by order. This allows for different provisions to commence on different dates.
614.The following tables sets out the dates and Hansard references for each stage of this Act’s stages through Parliament.
| Stage | Date | Hansard reference |
|---|---|---|
| House of Commons | ||
| Introduction | 10 January 2008 | Vol. 470 Col. 552 |
| Second Reading | 22 January 2008 | Vol. 470 Col. 1362 - 1469 |
| Committee (public evidence session) | 5 February 2008 (am) 5 February 2008 (pm) 19 February 2008 (am) |
1st sitting Col. 1 – 36 2nd sitting Col 37 - 86 3rd sitting Col. 87 - 124 |
| Committee | 21 February 2008 (am) 21 February 2008 (pm) 26th February 2008 (am) 26th February 2008 (pm) 28th February 2008 (am) 28th February 2008 (pm) 4th March 2008 (am) 4th March 2008 (pm) 6th March 2008 (am) 6th March 2008 (pm) 11th March (am) 11th March (pm) |
4th sitting Col. 127 – 150 5th sitting Col. 153 – 199 6th sitting Col. 203 – 246 7th sitting Col. 249 – 298 8th sitting Col. 301 – 326 9th sitting Col. 329 – 366 10th sitting Col. 369 – 410 11th sitting Col. 413 – 462 12th sitting Col. 465 – 488 13th sitting Col. 491 – 544 14th sitting Col. 547 – 590 15th sitting Col. 593 - 628 |
| Report and Third Reading | 30th April 2008 | Vol. 475 Col. 312 - 416 |
| House of Lords | ||
| First reading | 1st May 2008 | Vol. 701 Col. 326 |
| Second Reading | 21st May 2008 | Vo. 701 Col. 1472 - 1548 |
| Committee | 12th June 2008 19th June 2008 24th June 2008 25th June 2008 1st July 2008 |
Vol. 702 Col. GC 249 - 302 Vol. 702 Col. GC 445 – 494 Vol. 702 Col. GC 561 - 614 Vol. 702 GC 615 - 672 Vol. 703 GC1 - 60 |
| Report | 22nd October 2008 28th October 2008 |
Vol. 704 Col. 1129 – 1224 Vol. 704 Col. 1476 - 1545 |
| Third Reading | 5th November 2008 | Vol. 705 Col. 218 - 272 |
| House of Lords/Commons | ||
| Commons consideration of Lords amendments | 18th November 2008 | Vol. 483 Col. 135 - 192 |
| Lords consideration of Commons amendments | 26th November 2008 | Vol. 705 Col. 1447 - 1453 |
| Royal Assent | 26th November 2008 | Vol. 705 Col. 1477 |
The Authority – Gas and Electricity Markets Authority. A group of executive and non-executive members who govern Ofgem, the regulator of the downstream gas and electricity markets. The Authority determines strategy, sets policy priorities and takes decisions on a range of matters, including price controls and enforcement.
CCS – Carbon Capture and Storage is the process of capturing carbon dioxide produced during the burning of fossil fuels and its transportation and storage in a secure place (usually under the seabed).
CNPA – Civil Nuclear Police Authority. This is the independent authority for the Civil Nuclear Constabulary. The CNPA aims to ensure that the Constabulary polices civil nuclear sites effectively.
The Crown Estate – land in the UK owned by the monarchy, the income from which is transferred to the Government.
DWMP – Decommissioning and Waste Management Programme. Used in the context of the nuclear provisions in the Act, a plan of work for decommissioning new nuclear power stations and the management of the radioactive waste they produce.
EA – Environment Agency. The leading public body responsible for protecting and improving the environment in England and Wales.
ECHR – European Convention on Human Rights. Its full name is the Convention for the Protection of Human Rights and Fundamental Freedoms.
EOR – Enhanced Oil Recovery. Process by which carbon dioxide can be used to improve the recovery of oil and natural gas.
FEPA – Food and Environment Protection Act 1985.
FIT – Feed-in tariff is a mechanism which provides generators with a guaranteed payment for generating electricity.
HSE – Health and Safety Executive. A statutory body whose role is the enforcement of work related health and safety law under the general direction of the Health and Safety Commission established by the Health and Safety at Work Act 1974.
LNG – Liquefied Natural Gas. A natural gas which has been converted to liquefied form, and thereby a much lower volume, for ease of storage and transport.
MWh – Megawatt hour. A watt is a measure of energy. One watt-hour is the amount of energy expended by a one-watt load in one hour. A megawatt is a million watts.
NFPA – Non-Fossil Purchasing Agency. An Agency set up in 1990 by the Regional Electricity Companies to act as their agent for the purpose of enabling them to enter into collective arrangements to meet their obligations in contracting a certain amount of their electricity from renewable sources.
NII – Nuclear Installations Inspectorate. The Health and Safety Executive is the licensing authority for nuclear installations. The Nuclear Safety Directorate of HSE exercises this delegated authority through the Nuclear Installations Inspectorate which is responsible for regulating the nuclear, radiological and industrial safety of nuclear installations in the UK.
NWML – National Weights and Measures Laboratory is an Executive Agency to the Department for Innovation, Universities and Skills and has responsibility for ensuring that all trade measurements are accurate, legal, and fair to buyer and seller.
OCNS – Office for Civil Nuclear Security. OCNS is part of the Health and Safety Executive and is the security regulator for the UK’s civil nuclear industry. It is responsible for approving security arrangements within the industry and enforcing compliance.
Ofgem – Office of Gas and Electricity Markets. The independent regulator of the downstream gas and electricity markets.
OREI – Offshore Renewable Energy Installation. Most commonly this is an offshore wind turbine.
RHI - Renewable Heat Incentive is a mechanism to provide financial support for renewable heat.
RO – Renewables Obligation. The RO places an obligation on electricity suppliers in the United Kingdom to source an increasing proportion of electricity from renewable sources. It is the main policy measure for supporting the development of renewable electricity in the UK.
ROC – Renewables Obligation Certificates. Certificates issued to electricity generators on the basis of them generating electricity from renewable sources.
TWh – Terawatt hour. A watt is a measure of energy. One watt-hour is the amount of energy expended by a one-watt load in one hour. A terawatt is a trillion (1012) watts.
UKCS – United Kingdom Continental Shelf. The area of water surrounding the UK where it claims mineral rights, such as for the exploration and exploitation of North Sea oil and gas.
UNCLOS – United Nations Convention on the Law of the Sea 1982 is an international agreement which defines the rights and responsibilities of nations in their use of the world’s oceans.
Energy Act 2008