Westminster Hall debate on Marine Renewables: Government Support for Commercial Roll-out - Dec 8
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Mr Alistair Carmichael (Orkney and Shetland) (LD) I beg to move,
That this House has considered Government support for the
commercial roll-out of marine renewables. It is a pleasure to be
here in Westminster Hall—not least because somebody thought it
would be a good idea to turn off the heating in Portcullis House
today—and to serve under your chairmanship, Mrs Cummins. This
debate is both timely and—for a half hour Adjournment debate in
Westminster Hall—very...Request free
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Mr Alistair Carmichael (Orkney and Shetland) (LD) I beg to move, That this House has considered Government support for the commercial roll-out of marine renewables. It is a pleasure to be here in Westminster Hall—not least because somebody thought it would be a good idea to turn off the heating in Portcullis House today—and to serve under your chairmanship, Mrs Cummins. This debate is both timely and—for a half hour Adjournment debate in Westminster Hall—very well attended. I thank all right hon. and hon. Members present. I say timely because it follows hot on the heels of the speech by the Prime Minister last week, where he announced plans for a green industrial revolution creating 250,000 jobs. That has the potential to be a highly significant milestone on the road to net zero carbon emissions by 2050. The speech included many laudable goals, and it is my experience from many years in the House that where ambitious targets are made and married to genuine political commitment, that building cross-party consensus in the House for them is not a difficult process; I do hope that we will be able to do so. If what we got from the Prime Minister last week was the strategy, then today I want to focus the attention of the House and the Minister on one very important tactic: marine energy. The generation of electricity using wave and tidal power is an industrial sector in which the UK has the ability to lead the world. Much of what I want to discuss today will not be new to the Minister. It follows on from a briefing he had in the House from leading industrial developers in the sector earlier in the year, organised by the all-party parliamentary group on marine energy and tidal lagoons. What is needed now is the finely tuned support mechanisms from Government to turn technical feasibility into commercial application. I declare a very obvious and particular constituency interest. Living in an island community, one is acutely aware of the power of the sea and never far away from it. It can affect just about every aspect of life. Orkney is home to the European Marine Energy Centre, the undisputed world leader in testing wave and tidal devices, both domestic and international. Others envy that status, but it will not last for ever without the positive signals of support that I seek to get from the Minister today. The Minister will be aware that the EU is already looking at ways to ramp up its efforts to exploit the opportunities that marine renewables present. History tells us that, although we have an advantage having done the groundbreaking research and development work, there are plenty of other places in the world where that could be deployed commercially, as happened with the development of onshore wind. Although my constituency is currently central to this emerging technology, even now this is not an industry confined to any one constituency, region or nation of the United Kingdom. Work is ongoing in engineering workshops and university research centres throughout the country, from Strangford lough to the Isle of Wight, from the Pentland firth to the south-west of England, this is a truly UK-wide industry. Of course, on the mention of Strangford lough, I give way to the hon. Member for Strangford (Jim Shannon).
Jim
Shannon (Strangford) (DUP)
Mr Carmichael
Richard
Graham (Gloucester) (Con) We have representatives here from Wales. It is true to say that Bardsey will become the first island in the world to be entirely powered by tidal stream. The other projects in Morlais, Pembrokeshire and Perpetuus Tidal Energy Centre on the Isle of Wight, which is one of five centres funded through the Government’s TIGER project, give an idea, as the Minister is aware, of the potential. Does the right hon. Gentleman agree that, with COP26 in Glasgow next year, if the contracts for difference auction were to be just beforehand and marine energy to be given a fraction of the capacity there, that would be a fabulous project to highlight at COP26?
Mr Carmichael Estimates of support suggest that the tidal stream could deliver £1.4 billion gross value added by 2030, while the figure for wave is £4 billion by 2040. Those figures, plus the thousands of jobs that would come with them, are a tremendous prize. There are currently tidal stream sites with an aggregated output of 1 GW under development in the UK, awaiting a positive signal from the Government. The industry is ready to move, the technology is there, the private investment is primed but it does need a helping hand from Government at this critical stage.
Stephen Crabb (Preseli
Pembrokeshire) (Con)
Mr Carmichael I will offer a couple of illustrations from my constituency. Orbital Marine Power is at the forefront of this industry, and the most recent prototype successfully generated 3.25 GWh into the UK grid during a 12-month period of trials at the European Marine Energy Centre. Orbital has raised £7 million of construction debt finance through the Abundance crowdfunding platform to finance the building of a commercial tidal generator for deployment in spring 2021. Orbital and its investors are now awaiting the right signals from the Government to go fully commercial. Orbital illustrates well the opportunity that we have here. Some 80% of the Orbital machine currently under construction is from UK suppliers. It believes that this could increase to 95% if the correct market conditions were put in place. The contrast with wind power, which has relied overwhelmingly on imported machinery, is almost too obvious to mention—I say almost, because nothing is ever too obvious to mention in politics. The same runs true of Nova Innovation, which deployed the world’s first offshore tidal array in Shetland. Construction of the Shetland tidal array had over 80% UK content, including 25% of the supply chain spend in Shetland. Operation of the array has seen 98% UK supply chain content, with over 50% of project expenditure going to companies in the northern isles, such as Shetland Composites, which made the blades for Nova’s turbines and is now one of the top tidal blade manufacturers in Europe. Nova expects this high local content to be replicated at its other UK sites in Wales, Scotland, Northern Ireland and the south of England. If we can be world leaders in the domestic application of marine renewable technologies, we will also be in pole position to become the leading exporters to the world. Make no mistake: these devices are substantial pieces of engineering, so the potential for jobs and green industrial benefits is enormous—I would say, parenthetically, that this is the point at which we should be looking at export finance support for these companies, so that when we get to that point we are not having to play catch-up. The missing link, however, has long been one that would give wave and tidal energy the chance to develop commercially to the point at which it would, like other renewable technologies, outgrow the need for subsidy. To get to that stage, it simply cannot be linked in with other renewable technologies—often better established—and told to compete. That brings me to my first ask of the Minister. We need a bit of fine tuning of the Government’s approach in the next CfD round. It is welcome that tidal and wave technologies will be in pot 2 for the forthcoming CfD round, with offshore wind in a separate pot 3. That learns from the failures of the past, and goes some way to addressing the most obvious weaknesses, which pitted so many technologies at very different stages of development against one another. What the industry is really looking for is a pot within a pot—in other words, an allocated amount to be competed for by tidal and wave developers at a price that will not only make their projects economically viable and able to attract investment but, importantly, will do so in a manner that does not interfere with the overall objectives of the CfD round. The ability to create that ring-fenced refinement exists within legislation already. It is imperative that we act now. As we know from other renewable technologies, once the process of a commercial roll-out in underway, the costs drop like a stone. As well as having an immediate effect, the creation of a tidal and wave-specific allocation would provide a clear and long-awaited policy signal and will pave the way for private investment, and not just in the technologies but in the infrastructure required to support the deployment. It is worth remembering that, by definition, most of that work will take place in coastal communities, from the Cromarty firth and the Clyde to the north-west and south-west of England, many of which have suffered badly for years as a result of post-industrial decline, even before the impact of the current pandemic. My second ask of the Minister is one that he has heard before. The Government should support technology developers by implementing a complementary proposal that would support technology developers not yet able to participate in the CfD process. The innovation power purchase agreement would allow a developer to sell electricity to an electricity supplier at a strike price to be agreed with the Department for Business, Energy and Industrial Strategy. I understand that that is not a BEIS responsibility and that it sits with the Treasury, and we all know that the Treasury is not always the easiest Department to deal with, so I offer it to the Minister as his opportunity for glory. This emerging industry needs a champion inside Government, someone who will prosecute the case with the Treasury so that the potential that we have all spoken about today can be realised and something that he has heard about can then become a reality. He could be that champion for the marine renewable industry. I can think of nobody better for the role. In short, what the marine energy sector needs today from the Government is not a handout, but a signal of support that can in turn be used to open the door to private investment and to create a platform for a vibrant industrial sector that ticks all the Government’s boxes: clean energy, technical innovation, world leadership, export potential, industrial regeneration, a genuinely British product, and economic benefits for hard-pressed coastal communities the length and breadth of the United Kingdom. It is an opportunity to turn the rhetoric of the Prime Minister’s speech last week, and the Government’s laudable aspirations for levelling up, into a genuine political reality. If the Minister will take on that cause and fight it for us, he will have the support of all parties and all parts of the country. 16:17:00
Stephen Crabb (Preseli
Pembrokeshire) (Con)
Ben Lake (Ceredigion)
(PC)
Stephen Crabb
Ben Lake
Stephen Crabb The only other point that I will make, before I allow the Minister to respond, is that in a constituency such as mine, for the last almost 50 years, the economy has been heavily dependent on oil refining. We as a country, and as a Government, have now made a commitment to bring forward a ban on the sale of new diesel and petrol engines, and we are moving away from a carbon-based economy. Constituencies such as mine are vulnerable to the big strategic changes that we are mandating as part of our efforts to meet the global challenge of climate change. There is a duty on the Government to help bring forward replacement jobs—high-quality jobs and apprenticeships—in new exciting clean technologies.
Virginia Crosbie (Ynys Môn)
(Con)
Stephen Crabb I will now allow the Minister to respond to the debate. 16:20:00
The Minister for Business, Energy and Clean Growth (Kwasi
Kwarteng) I will address the two points made by the right hon. Member for Orkney and Shetland (Mr Carmichael), and then I will address some of the wider concerns relating to economic opportunities and the levelling-up agenda. First, the right hon. Gentleman gave me two challenges: the first was to look at the pot structure of the CfD round; and the second was, as he put it, my bid for glory within the Government, by championing the cause of marine energy. He will know that I have a real interest in this subject. I have seen the APPG on marine energy and tidal lagoons and its chair, my hon. Friend the Member for Gloucester (Richard Graham), a number of times on this issue, and I have also attended APPG meetings that the right hon. Gentleman, my hon. Friend the Member for Gloucester and I have had the privilege of hosting here in Parliament. To begin with, the right hon. Gentleman is absolutely right about the pot structure, and I pay tribute to him for actually attributing some degree of good policy on the part of the Government, because we split the offshore wind element—the offshore wind competition—into a separate pot, and we have allowed marine tidal projects and remote island wind projects, which may be of interest to him, to remain in pot 2. The right hon. Gentleman said that the competition was unfair, but of course when we set up the pot structure we did not know that it was unfair, because we had not seen the progress in the development of offshore wind. And all I will say to him now on this issue is that I am very sympathetic to ideas, as he put it, of having a pot within a pot. That means that within pot 2 there would be a reserved quantum for marine projects, particularly tidal projects, to be able to compete for. I can assure him that that idea is being considered. Having said all that, however, there is an issue, as the right hon. Gentleman will be aware, about the actual costs—the initial costs of marine technology and how we can support such technology. This is very much a chicken and egg situation, because people who are keen supporters of marine energy technology would say, “Well, if you don’t support it, how are you going to bring the costs down?”, and of course, our friends in the Government, including within the Department for Business, Energy and Industrial Strategy and, in particular, the Treasury, would say, “Well, if something is going to cost £250 per megawatt-hour and nuclear is at £92 per megawatt-hour, there is a discrepancy there.” Obviously, public money must be well considered and looked after, and the challenge is very much on the industry, as I have said to industry players and champions on separate occasions. The challenge is for them to show how these costs can come down. If they can, then I am sure that the Government would be very willing to support the technology. We have initiated a marine energy call for evidence. The right hon. Gentleman will remember that there was a whole debate about the Swansea Bay lagoon. When the development consent order for that lapsed, the Secretary of State said that we would have a call for evidence and we are engaged in that process. I fully recognise the economic opportunities for the coastal communities that he represents so ably, and I also pay tribute to the European Marine Energy Centre in Orkney, which, as he reminded us, is a world-beating centre. Of course, it initially enjoyed Government support, as he will well remember, because he was in government at the time. It is something that I would be very willing to engage with him on.
Mr Carmichael
Kwasi
Kwarteng I pay tribute not only to the right hon. Gentleman, but to the communities he represents and to my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb)—I am glad I got the constituency right; I knew it was not Ceredigion. He made the point well. He represents a community that has clearly been under a huge amount of economic pressure and even distress with covid, and the green industrial revolution represents a real answer and a real chance to build back better, to level up, and to increase and widen economic opportunity across the country. It is rare to see three constituent countries of the United Kingdom represented in debates in Westminster Hall. I do not think we have Scottish representatives here.
Mr Carmichael
Kwasi
Kwarteng The Government remain absolutely committed to renewable energy, and that was highlighted specifically by the Prime Minister’s 10-point plan. We believe that the only way we can get to net zero by 2050 is through innovation. Tidal technology is part of that innovation. The only caveat is that it cannot come at any cost. My right hon. Friend the Member for Preseli Pembrokeshire referred to eternal waiting and eternal words and rhetoric. We must have this dialogue and we must at least show a pathway to reducing costs, and if we can do that—I am sure we will be able to do that—we will in the short term be able to put flesh on the bones and realise in fact some of the aspirational rhetoric exchanged across the House for many years.
Richard
Graham
Kwasi
Kwarteng |