Selaine Saxby (North Devon) (Con) I beg to move, That this House
has considered floating offshore wind and Allocation Round 6 of the
Contracts for Difference scheme. It is a pleasure to serve under
your chairmanship, Sir Philip. I thank the Backbench Business
Committee for allowing time for the debate and the Minister for
agreeing to continue it despite yesterday's announcement. This
topic will be ongoing, regardless of what happens over the summer.
I also thank the...Request free trial
(North Devon) (Con)
I beg to move,
That this House has considered floating offshore wind and
Allocation Round 6 of the Contracts for Difference scheme.
It is a pleasure to serve under your chairmanship, Sir Philip. I
thank the Backbench Business Committee for allowing time for the
debate and the Minister for agreeing to continue it despite
yesterday's announcement. This topic will be ongoing, regardless
of what happens over the summer. I also thank the Department, the
Minister and the rest of the ministerial team for their ongoing
engagement on the issue, and for increasing the administrative
strike price for allocation round 6, which I will refer to as
AR6.
The industry welcomed the administrative strike price for AR6,
with the uplift of £60 from £116 per MWh to £176 per MWh,
demonstrating that the Government have listened to the industry
and signalled a policy change that acknowledges the changing
economic landscape for developers. Following the Climate Change
Committee's recommendations, floating offshore wind, which I
refer to as FLOW, is set to make up to 5 GW of our energy
generation by 2030 and 50 GW by 2050. The UK is a leader in FLOW,
having the largest pipeline of floating projects globally, with
leases of 33 GW and two pioneer projects in Scotland—Kincardine
and Hywind.
FLOW has the potential to bring 29,000 jobs and £43.5 billion in
gross value added to the UK by 2050, a prospect that should fill
us with optimism. We need to ensure that we are ahead of the
curve and not just deploying this technology for energy
generation, but harnessing its full potential by developing the
manufacturing element. However, all that is technically feasible
only if we develop FLOW at a large scale. To do so, we need port
investment from FLOWMIS—the floating offshore wind manufacturing
investment scheme—and, most importantly, a co-ordinated strategy
with stepping-stone projects to make that happen.
As chair of the all-party parliamentary group for the Celtic sea,
I will make a strong case for FLOW in that region. I have had
significant input from Professor Deborah Greaves at the
University of Plymouth and the team at RenewableUK. I thank them
for their contribution to my speech.
FLOW in the Celtic sea offers unique advantages, allowing us to
harness energy regardless of wind direction. Despite its previous
neglect due to seabed depths, FLOW can now be deployed in waters
deeper than 60 metres, unlocking 80% of our offshore wind
resource. That technology presents a significant opportunity for
the region's economic growth and net zero benefits. In 2024, the
Crown Estate launched the leasing round for up to 4.5 GW in the
Celtic sea, a crucial component in the battle to mitigate climate
change and to make progress to net zero greenhouse gas emissions.
I am pleased that the Crown Estate is taking what steps it can to
drive onshore benefits through its leasing round, but a tender
process is only one mechanism for realising the opportunities
arising from such projects.
A co-ordinated national infrastructure approach for the Celtic
sea is crucial. Such an approach, ideally as a bespoke strategy,
is necessary to overcome the ongoing delays and issues we are
facing and to ensure the successful development of FLOW in the
region. I am glad to hear that RenewableUK, the Crown Estate and
others have published an industrial growth plan to co-ordinate
the investments needed to realise the opportunity, including
prioritising where those investments will have the most impact.
Using the growth plan as a blueprint for an industrial strategy
for the Celtic sea—to give clarity on how those private
investments can co-ordinate with public investment in critical
infrastructure such as ports—will provide other investors with
the long-term certainty they need to ensure that allocation round
5 and future Celtic sea projects are as successful as
possible.
The importance of AR6 cannot be understated. At the moment,
investor confidence is low, partly due to the failure in 2023 of
AR5 of the contracts for difference, or CfD, to secure any
contracts for offshore wind. That has been compounded by
international competition and the attractiveness of other
markets, which are investing significantly in FLOW
infrastructure. Competition, in my mind, is stopping the
evolution of FLOW. Currently, four FLOW projects can bid into
AR6, with a total capacity of 658 MW: Blyth, which is a 58 MW
project in Northumberland and is presented by EDF Renewables UK
and Ireland; Erebus by Blue Gem Wind, which is a 100 MW project
in the Celtic sea and is backed by TotalEnergies and the Simply
Blue Group; Pentland, which is a 100 MW project in Scotland and
is backed by Copenhagen Infrastructure Partners; and one new
innovation and targeted oil and gas project, Green Volt, which
received consent in April and can bid 400 MW.
The budget for AR6 needs to be big enough to accommodate not only
the projects that lost out in AR5, but those that would have bid
into AR6, so as to not have a knock-on effect on future
allocation rounds. I cannot stress enough the future benefits of
getting the budget right in this round, and of getting as many
viable projects out to sea as rapidly as possible.
The opportunity is to not only regain lost ground, but support
FLOW's growth into the future. That means that while a typical
budget might accommodate one or two projects, this year's budget
needs to accommodate three or four. Without these stepping-stone
projects, we run the risk of higher costs for future
commercial-scale projects and of creating mixed signals for
investors in projects, supply chains and ports. Every project
that bids and has cleared the hurdles set by the Department
should be able to progress, especially if projects are ready to
float.
Historically, Celtic sea ports have not received the same
investment that has helped their North sea counterparts to
develop the supply chain and port capabilities necessary to
deploy FLOW. It is indeed hugely disappointing that the only
successful FLOW project in AR4—the Hexicon project in
Cornwall—did not see its associated port, Falmouth, receiving any
funding from FLOWMIS. The dislocation of these spending decisions
is bewildering to those of us working with developers in the
region.
As I said, investor confidence is low following the lack of bids
into AR5, so we have to encourage external investment, but that
is simply not the direction of travel we have seen in recent
Government spending decisions. I understand that the budget is a
matter for the Treasury—the future Treasury—and I have met the
Exchequer Secretary to the Treasury to ask for a pot 2 budget big
enough to accommodate multiple projects, so that we can maximise
the number of winning projects and accommodate those that could
not bid in AR5. That is essential to allow Celtic sea projects to
move forward at the same pace as North sea projects.
The Celtic sea region of the south-west and Wales includes
economically deprived areas, so there is a great opportunity for
impact on the economy and society there, but there also needs to
be huge innovation to fully commercialise the sector. With my
Celtic sea hat on, effective routes to investment could include
Celtic sea ringfenced CfD allocations—indeed, I would allow each
region to have its own pot. We need these small test and
demonstration sites to succeed before any business will invest
the kind of money required to deliver the FLOW of the future that
the country needs. I was told yesterday that developers are
spending £50 million before they even get in their bid for their
contract for difference, and that it costs £1 billion to build a
stepping-stone project. We should also look to the past, as fixed
offshore wind projects were not required to bid in this
competitive way until 5 GW had already been secured.
We also need dedicated Celtic sea FLOWMIS allocations,
place-based investment, regional co-ordination of public funds
and proper net zero plans for the region. The CfD budget plays a
vital role in supporting the development of FLOW in both the
North sea and the Celtic sea, but it must be substantial enough
to ensure the progress of multiple FLOW projects each year,
thereby preventing a monopoly in the North sea and ensuring a
fair distribution of resources.
On port investment, I am pleased that one Celtic sea port has
been supported through Port Talbot in Wales, but I urge the
Government to look at a multi-port strategy. We know that no
single all-purpose port can accommodate the scale of FLOW
development and the need to serve such a large area of ocean. An
increase in budget requires more FLOWMIS funding rounds. The
decision criteria for allocating grant funding should be reviewed
to better apportion the budget to support multiple ports in the
Celtic sea region, taking into consideration the stepping-stone
nature of the Celtic sea FLOW projects.
I was, as I mentioned, hugely disappointed that no funding had
been made available to Port Falmouth, given its partnership with
Hexicon's TwinHub. It had successfully bid for its CfD in AR4,
and the TwinHub project is therefore far more advanced than
others. However, the absence of FLOWMIS funding will now make it
more challenging for those partners to deliver their project, and
will almost certainly see all the onshore benefits of that vital
project go overseas. The stepping-stone nature of the Celtic sea
FLOW project seems to have been omitted from the decision
criteria for FLOWMIS. The all-party parliamentary group will
continue to seek to engage with Ministers to secure additional
port funding for Falmouth and other ports around the Celtic sea
as more projects secure a lease.
I will take this opportunity to share the diverse mix of port
facilities across the region, including Falmouth, which is ideal
for deep-water logistics and fabrication; Appledore, which has
shipbuilding, low-carbon vessel innovation and servicing;
Plymouth and South Devon freeport, which has marine innovation,
blue tech investment and the Smart Sound Plymouth autonomous
vehicle test range; Portland port, which is a potential logistics
hub; and Ilfracombe in my constituency, which is ideally located
for ops and maintenance. In Wales, my right hon. Friend the
Member for Preseli Pembrokeshire () made me aware of the
challenges with the port of Milford Haven. Although he could not
be here today, he has worked closely with me as vice-chair of the
APPG for the Celtic sea to ensure the Department's support of the
port of Milford Haven project.
The port of Milford Haven stands ready to create a new green
energy terminal in Pembroke Dock. As the closest port to the
Celtic sea development sites, the port of Milford Haven's
development ambitions at Criterion quay for a 400 MW test and
demonstration phase and a fit-for-purpose site for integration
and operations and maintenance activities are crucial to support
future commercial-scale phases of FLOW in the Celtic sea.
The APPG's main ask today is for subsequent rounds of FLOWMIS
grants and an increase to the £160 million scheme budget. The
Government's support of Hexicon's TwinHub project is crucial,
especially as the sector has been battling a much-changed
economic environment since its bid. With Falmouth port ready to
match Government funding, this first stepping-stone project needs
that vital FLOWMIS leg-up to see optimal onshore benefits
alongside this innovative, leading offshore project. Funding
decisions should be made on FLOWMIS as quickly as possible to
allow our ports and supply chain to gear up for that huge
opportunity to ensure that ports work collaboratively and
optimise supply chain expertise.
Another issue that can pose a stumbling block for FLOW, which I
am dealing with at first hand in my constituency of North Devon,
is the National Grid and cable routes with the White Cross wind
farm project. Since my election, I have championed floating
offshore wind, and getting the Celtic sea projects right would
create huge economic opportunities for the local economy in North
Devon.
I have previously raised concerns about the White Cross wind farm
because of the route submitted to planning, which would involve
tunnelling through several miles of highly designated sand dunes
and would severely disrupt several businesses for many years to
come. Although some community engagement has been ongoing this
week, the community benefit proposed for the project and the
manner in which engagement has progressed has been severely
lacking. Although local communities are hugely supportive of
FLOW, there are environmental concerns with cable corridor
routes, and certain developments risk undermining all the support
that has been generated along the south-west coastline in
particular.
Because of the scale of the project, the decision on whether it
goes ahead now lies entirely with the Marine Management
Organisation that approved the work to the shoreline and North
Devon Council's planning authority. Although I have no influence
on that decision, I am pushing for the community to be properly
recompensed for any associated disruption. The White Cross
project is not yet through the planning process and is now
blighted by an issue with bats. Bizarrely, there are now
objections from Natural England, which was the main reason that
that cable route was chosen in the first place, as well as nearly
1,000 objections on the North Devon Council planning portal.
The site has been leased from the Crown Estate, and apparently
the only viable grid connection is at Yelland, which is a highly
contentious site in its own right. Getting from the wind turbines
to that connection will be hugely problematic, whichever company
tries to develop it. I know that strategic work on the grid is
ongoing, but we need to better link these huge infrastructure
projects together, as the current piecemeal approach is causing
unnecessary distress to communities and businesses and untold
environmental damage as a result of a project that is designed to
help to reduce our carbon footprint in the long term. Frankly, we
need to follow Tim Pick's strategy to deliver FLOW right around
the coast effectively and efficiently.
My genuine fear is that if the budget is not increased adequately
for AR6, the Celtic sea project, which we hope has bid, may not
proceed, as Hexicon alone will not be a big enough step to the
next project. As I have said countless times, for those doubters
of wind, the wind blows the other way in the Celtic sea—to the
north- east. We therefore optimise our wind resource and energy
security by ensuring that all the regions are able to participate
in FLOW. Again, I urge the Minister to hear the objectives of the
APPG for the Celtic sea to co-ordinate a more strategic approach
to this new region for offshore renewables to avoid some of the
cabling issues we have already seen on the east coast. The
National Grid also needs to work to minimise onshore disruption
from that vital infrastructure.
Let me restate the asks. We need dedicated Celtic sea funding and
an integrated port and infrastructure strategy, working across
the Celtic sea region to derive maximum benefit from FLOW
developments and ideally treating the entire region as one
national infrastructure project. That could also include
establishing sector-based working groups that engage developers,
the Crown Estate, National Grid, ports and regional stakeholders
to ensure strategically phased developments to support supply
chain engagement and prioritisation of infrastructure spend in
the region.
Future CfDs need to support multiple FLOW projects a year to
ensure their progress and to make up for lost ground in AR5. The
individual support for the Celtic sea's first FLOW project,
TwinHub, with recognition of its stepping-stone nature, is vital
to ensuring the development of the supply chain. We need to
remove the barriers to FLOW and although I know the Celtic sea is
a different kettle of fish to FLOW elsewhere, there is one thing
in common and that is the barriers to planning and
applications.
The barriers to delivering FLOW must be removed to ensure lasting
benefits. Streamlining the planning and consenting process and
increasing co-operation between Government Departments—from the
Department for Energy Security and Net Zero and the Department
for Environment, Food and Rural Affairs to the Department for
Transport and others, taking a whole systems approach—could be
transformational. For the Celtic sea, the APPG preference
throughout has been that a single cable corridor to Devon and
Cornwall and one to south Wales should be established to reduce
sea floor damage and cabling onshore, as the bigger projects go
out to sea. A strategic view taken on cable corridors might also
reduce costs.
At a deeper level, there is also a skills piece that interlinks
with our FLOW projects. The Crown Estate estimates that up to
£1.4 billion could be generated for the UK economy, with up to
5,300 new jobs created within the supply chain. The creation of a
skills taskforce to strategically bring together sector
developers and education providers will unlock the workforce
needed to deliver and ensure that local people, particularly
those in economically deprived areas, develop career
opportunities for now and for future generations. Getting that
right has financial implications, so I know some of the decisions
will involve the Treasury.
I will continue to lobby for a budget big enough to maximise the
number of winning projects and accommodate those who could not
bid into AR5. One part of my six-point plan for North Devon is to
ensure we fully benefit from the green economy. I am doing that
today because, if fully recognised, FLOW will create high-value
jobs and strengthen local economies, while bolstering research
and development within the industry so that the UK can become a
world leader and exporter of FLOW.
12.47pm
(Glenrothes) (SNP)
It is a slightly strange experience to realise that the
summing-up of the debate could well go on for quite a bit longer
than the debate itself. I thank the hon. Member for North Devon
() for securing the debate and
commend her on the quality of her speech, which she has clearly
put a great deal of time into researching.
It seems to me that the byword for a future energy security
strategy has to be diversity, or variability. We should be
looking at every opportunity out there for us to secure renewable
energy; we should not be turning anything down just now. Offshore
wind has been recognised for some time, and given that the
technology now allows us to float wind turbines rather than
trying to anchor them to the sea massively increases how much of
our waters can potentially be tapped for wind. As the hon. Lady
pointed out, having installations around different parts of the
UK also increases the chances that the wind will be blowing in
the right direction somewhere.
The Government set a target of 50 GW of offshore wind by
2030—that is not that long ahead now—and they hope that 5 GW will
come from floating offshore wind. At the moment we probably have
less than 100 MW, so we are nowhere near where we need to be.
That is about a 50th of what the Government are looking for. As
has been mentioned, there was welcome news in November when the
Government increased the strike prices for both floating and
fixed offshore wind, but the announcement of how much the budget
would be was not nearly so welcome. My concern is that if the
Government—whichever Government we have in a few weeks' time—do
not listen again to the industry, we could have a rerun of the
calamity that was AR5, where nobody put in a bid for offshore
wind.
We have to view round 6 against the backdrop of two previous
failures. In allocation round 4, almost 3 GW did not come into
fruition, and as we have mentioned, in round 5 there was no
interest at all. In round 5, the Government managed to set the
strike price for offshore wind energy so low that not a single
wind producer could afford to sign up for it. That should not
have surprised anybody, because industry leaders had been telling
the Government for some time before the official auction that
they would have to increase the strike price. The Government
decided that they knew better, and as a result, there were no
bids at all in round 5. That has put us seriously behind where we
need to be and where the Government want to be.
If the Government are now aiming to reach their 2030 target of 50
GW, they need to secure another 21 GW over the next two
allocation rounds, as there is unlikely to be time for a round 8.
That means that round 6 and round 7 both need to average about
10.5 GW each. To put that into context, that is almost double the
highest figure achieved in any single previous round. We have
already left ourselves in a position where we have to increase
massively the pace of build and increase the scale or number of
projects that we fund. We cannot continue to fund only one
project with each round.
Energy UK has forecast that, based on the current budget, round 6
is likely to deliver between 3 GW and 5 GW of offshore wind
capacity. That will leave us looking for 16 GW from round 7—an
almost impossible task when we consider how little we have
produced over the previous rounds. When the budget was set, it
was set at a level that the industry is telling us was too low.
Okay, businesses are there to make a profit and they are good at
telling the Government they need more money when they do not, but
they were not crying wolf last time. They were not crying wolf in
round 5, and I do not think that they are crying wolf in round 6.
The disaster and humiliation that was round 5 was completely
preventable, and the current jeopardy facing round 6 is
preventable as well. If the Government are really serious about
supporting innovation and the development of new renewable energy
technologies, such as floating offshore wind, they need to be
prepared to invest in it. As has already been mentioned, other
people are; they are going to take the lead from us.
We are—and certainly should be—a leader in this technology.
Scotland is a world leader in a number of renewable energy
technologies. Floating offshore wind, as has been mentioned,
gives creative flexibility. About 80% of Europe's offshore wind
resource is estimated to be in waters that are more than 60
metres deep, which is too deep for a fixed wind turbine but is
very exploitable for floating turbines. In Scotland, we know that
we are an energy-rich country. We already produce significantly
more energy than we need. We are a world leader in a lot of
renewable energy technologies, including offshore wind and
hydrogen, which is being developed—as Members will know—in my
constituency, along the coast in Methil and Buckhaven. We have
the capacity, the world-leading technology and the expertise, but
what is holding us back is a lack of enthusiasm and a lack of
visible commitment from a succession of Governments. We have a
long history in Scotland of developing floating systems to use in
the oil and gas sector. That technology is adaptable, and we have
the people with the ability to adapt that expertise, in the same
way as they adapted the previous expertise in fixed drilling
installations for oil and gas. That was used in the design of the
earlier generations of wind turbines.
It is maybe hard to believe now, but when the contracts for
difference model was originally set up, it was hailed as the gold
standard. It was one of the best ways of securing renewable
energy investment that anyone had ever come up with, and it has
achieved quite a lot. However, one of the lessons of the failure
of allocation round 5 is that, while other countries and
economies have continued to push forward at pace, the UK has
started to fall back. In recent years, while successive
allocation rounds in the UK have failed, we have seen the
implementation of, for example, inflation reduction in the US and
the green deal in the European Union. That means that, when green
energy companies are looking for somewhere to invest—and a lot of
those people will invest anywhere—they see tax credits in America
and subsidies in the European Union, but all too often they see
what looks to them like half-hearted commitment from the United
Kingdom. If that continues, we will start to lose that
investment.
The UK Government should be doing what they can to make sure that
Scotland, and indeed the rest of the UK, retains its
world-leading position at the front of the green energy
transition revolution. We can do that by increasing funding to
green energy programmes, including floating offshore wind and
fixed onshore wind. It is estimated that between 8 GW and 12 GW
of offshore wind projects around the UK already have planning
consent—they are ready to go if somebody would just provide some
of the investment they need. They are already there. If the
contracts for difference had the capacity, they could all be
brought on stream much more quickly. They are ready to start
building to produce the clean, reliable and cheap energy we know
we will need to meet our net zero climate change targets.
The SNP will continue to call on whoever is in government after
the election to introduce a comprehensive industrial strategy
that includes identification of where our longer-term energy
needs will be met. They should be aiming to match the Scottish
Government's just transition fund, and invest at least £28
billion a year into green transition. The potential Government in
waiting have ditched their promises; I hope they will reinstate
them in their election manifesto.
The renewable energy industry is an essential component of
Scotland's long-term growth strategy. We can be world leaders—we
are already world leaders. We want to maintain that position. We
cannot allow a UK Government of any persuasion to hold Scotland
back in the 2020s in the same way they did back in the 1970s and
1980s.
12.56pm
Dr (Southampton, Test)
(Lab)
I congratulate the hon. Member for North Devon () on securing this debate. It
is sad, but understandable, that there are not more Members
present in the Chamber to take part in or listen to it. I have to
say that if more hon. Members had been present, they would have
heard a comprehensive and substantive contribution from the hon.
Member in support of floating offshore wind, as she has given on
so many occasions. I could not disagree with much of what she had
to say, and I and the Labour party could strongly support a great
deal of it.
The potential of floating wind is now pretty much undisputed. It
is a technology that can go where other offshore wind cannot. It
is particularly adaptable for deeper waters, more difficult
circumstances, and parts of the UK that otherwise would not have
much in the way of floating offshore. Floating offshore's ability
to take the offshore wind revolution to its next stage is
manifest in the Celtic sea, Scotland and the north-east of
England. It will ensure that we take advantage of the wind speeds
around the UK, which are such a national and international asset
for our country, wherever we can.
Labour want to see at least 5 GW of floating offshore wind—I
emphasise “at least”—deployed by 2030. Not only that, but we want
to see the arrangements in place to properly support that
deployment. We envisage Great British Energy playing a
substantial role, taking stakes in future flow as it goes forward
and supporting it all the way. We also propose establishing a
national wealth fund. That fund will play a substantial role,
along with other bodies such as the Crown Estate, in developing
the necessary future infrastructure for FLOW.
As we know, at present the infrastructure is sorely lacking, as
the hon. Member for North Devon mentioned. The assembly, erection
and future servicing of floating platforms all require
substantial upgrading of the port facilities. While it is a
little bit encouraging that the FLOWMIS programme allocated some
funding for port development, it is clearly by no means enough to
get the infrastructure properly under way. As RenewableUK
recently said, we need at least 11 ports to support floating
offshore wind, not just Port Talbot and the port in Scotland
supported by FLOWMIS.
We come then to the question of how we actually get at least 5 GW
of FLOW installed by 2030. As the hon. Member for Glenrothes
() pointed out, if we do the
sums on our ambitions for offshore generally and FLOW in
particular, we have to move ahead far more quickly in allocation
rounds than we have done in the past and are anticipated to do in
the immediate future. That is against the backdrop of pretty
total failure to fund and support either FLOW or offshore fixed
wind in the most recent allocation round, and to a considerable
extent in the allocation before that.
The figures for how much we must put in place per allocation
round, in both fixed and floating offshore wind, over the next
several rounds are compelling. We have to move far faster and far
more extensively to secure those arrangements for the future.
For FLOW, moving into AR6, the prognosis appears pretty bleak. It
looks like perhaps just one FLOW project will actually fit in the
pot 2 budget—the budget FLOW sits in—despite, as the hon. Member
for North Devon said, there being at least four shovel-ready
projects, ready to go right now, that could easily fit within
that allocation were it made available. I do not think that
includes the Hexicon project—a really important project which
needs enormous support, because it has twin-turbine capacity,
which is a further step forward in FLOW technology and can take
the whole FLOW arrangement forward.
We have the beginnings of a real breakthrough as far as FLOW is
concerned, but it is probably directly hampered by what AR6 has
in store for us. That should not be allowed to stand. Of course,
we are in rather different circumstances than we were in
yesterday morning. I might have been standing here today asking
the Government to do various things over the summer to sort out
some of the problems; what I will be doing is asking the next
Government, whoever they are, to get on with it quickly,
particularly because AR6 is already well through its various
design iterations and there is a limited window for changing
anything in it before the tendering for the various projects.
Whatever party comes in after the election, this issue will
pretty immediately land on the desk of the Government, and by
“pretty immediately” I mean that the new Government will have to
get AR6 and floating offshore wind right possibly within a
month.
The problem for FLOW is not the uplift in administrative strike
price. The Government actually did not do a bad job of looking at
where the price was and where it should be for AR6. The problem
is the budget that has been allocated to this particular pot.
Were there to be a reasonable uplift in that budget, it is highly
likely that a number of the shovel-ready projects would be
successful in AR6 pot 2. Of course, I cannot specify what a new
Government are likely to do, but the case for early action to put
that right is compelling. Even today, I hope that the Minister
will commit himself to getting that action under way in his
Department, as far as he has any capacity in the few days before
we all pack up and start knocking on doors—if he has not
already.
This is a looming loss of opportunity for floating offshore wind,
and there is a wider prospect that a technology in which we are
world leader will almost immediately start falling away. As the
hon. Member for North Devon said, if we do not get the projects
under way early, there will be a chain reaction: people lose
confidence in the investment, they take their investment
elsewhere, the projects do not progress, the appetite for
investment in infrastructure starts to fall away and the whole
thing starts to disintegrate. We are at a vital juncture. In
their last few days, I hope that the Government can grasp the
opportunity of making investment in FLOW right.
1.09pm
The Minister for Energy Security and Net Zero ()
It is a pleasure to serve under your chairmanship, Sir Philip.
Normally, a Westminster Hall debate would have an overwhelming
number of speakers. Heaven knows what has distracted our
colleagues from what we can all agree is a very important debate.
I pay tribute to my hon. Friend the Member for North Devon
() who could easily have been
distracted herself today, but will never miss an opportunity to
champion her community.
I will return to my wonderful hon. Friend shortly, but first I
will take a slight deviation. As I was bounding up the steps with
the shadow Minister, the hon. Member for Southampton, Test (Dr
Whitehead), it dawned on me that this is his final contribution
as he will sadly be retiring. He is held in high regard across
both sides of the House. In the coming weeks, as we seek
re-election, we will all be championing our local credentials,
but the local candidate for Southampton, Test will be
hard-pressed to beat the shadow Minister's credentials. He has
been the student union chairman at the University of Southampton
and the leader of the council, no less. Not only has he been
elected since '97, but—God loves a trier—he also ran in '83, '87
and '92. For colleagues who do not quite get the result they feel
they deserve, just keep going and you will get here.
The shadow Minister has always conducted himself with a real
passion for his areas of interest. His contributions are always
backed up with thorough research, which is why he is held in the
highest regard. As the newest member of the DESNZ team, I admire
the way in which he has performed his various shadow roles since
2015. He will genuinely be a loss to this Parliament and it was a
pleasure to listen to his final contribution, powerful as it was.
Although he recognises that nobody can definitely say who the
Government will be, he has had that one last opportunity to shape
what happens going forward in this important area. Finally, we do
share one interest, which is that we both played for the
parliamentary football team. While he looks excellent for 73,
having seen some of his performances over the years as a
goalkeeper, I think there is still a chance for a late call-up
now that he has a bit more time on his hands, and we all look
forward to cheering him on in Portugal.
I congratulate my hon. Friend the Member for North Devon on
securing this important debate, building on the Westminster Hall
debate that she obtained last year. I feel that I am a
cheerleader for her, because only this time last week when I was
doing the ITV “West Country” programme and she appeared as one of
the vox spokesmen, I heaped praise on her for her work on water
quality. She is a tireless campaigner, and particularly a vocal
champion of floating offshore wind, particularly through her role
as chair of the all-party parliamentary group for the Celtic
sea—how does she fit it all in?—and she rightly highlights the
benefits that this new technology could bring to the UK.
The world's first floating offshore wind farm was built in UK
waters. Today we have 80 MW of installed capacity, making us a
world leader in the sector. That builds on our world-leading
status in fixed-bottom offshore wind deployment, where we have
over 14 GW of installed capacity—more than any other European
country. In 2010, just 0.8% of the UK's annual electricity was
generated by offshore wind. Last year it was 17.4%, which is a
significant transformation. It plays an important part in our
overall transformation from just 7% of power generated by
renewables in 2010 to 47% currently, and it continues to expand
rapidly.
Looking to the future, we are committed to furthering our
position at the forefront of the sector. Our ambition is to
install up to 50 GW of offshore wind by 2030, of which 5 GW will
come from floating offshore wind. Based on seabed exclusivity, we
have the largest pipeline of floating projects in the world, at
25 GW. The 5 GW is a stretching ambition, so we are working hard
to create the right environment for investment and address
barriers to deployment. I am a mere deputy today. The Minister
for Nuclear and Renewables leads this work, and he is passionate
that this is a key part of our overall strategy.
First, I will address the main point made by my hon. Friend the
Member for North Devon on the contracts for difference mechanism
and the budget for floating offshore wind. The CfD scheme is
recognised worldwide as a model for supporting renewables
deployment. Our CfD auctions have so far awarded contracts
totalling around 30 GW of new renewable capacity, including
around 20 GW of offshore wind. Last year's allocation round was a
success story for many technologies, including marine energy and
the UK's first three geothermal projects. But—we would not be
having this debate if there were not a “but”—we recognise the
shortfall of fixed-bottom and floating offshore wind, and I
acknowledge the concerns that my hon. Friend voiced at the
time.
We reflected carefully on the results of allocation round 5 and,
following a comprehensive review of the latest evidence, we
raised the administrative strike price for floating offshore wind
by 52% in real terms, recognising the unprecedented upward
pressure on project costs. We also recognised the importance of
the right support mechanisms for new technologies that may not
yet be cost-competitive. That is why this year's allocation round
6 pot 2, which is dedicated to emerging technologies such as
floating offshore wind, has its biggest ever budget— £105
million. But for the announcement yesterday, which may have
passed some people's attention, I would have gone to view one of
those in Norway next week. Unsurprisingly, I now will not be
doing that, but there is always YouTube if hon. Members want to
learn about new technologies, as I discovered when I learned
about hydrogen. I assure my hon. Friend that the Secretary of
State and the Minister for Nuclear and Renewables have met
directly with eligible floating wind developers for allocation
round 6 to understand their concerns.
I stress that there has to be a balance. The thrust of this
debate has been about the need to be more generous to unlock
more; I absolutely get that, because we have legally binding
commitments and we need to expand our basket of renewable energy
sources, but we also have to be held to account by the Public
Accounts Committee. I served on the Committee for three years and
I know that the current Chair, the hon. Member for Hackney South
and Shoreditch (Dame ), will not let taxpayers' money be wasted
unnecessarily, so there is always a balance. If we are overly
successful, perhaps we have overpaid, so we have to strike that
balance. There are few colleagues more interested in making sure
that we do not forget the impact on consumers' bills.
The Government are proud of our record on tackling climate
change, but we will never lose sight of the need to do so in a
pragmatic way and to ensure that ultimately we deliver a cleaner
and, crucially, more efficient energy system that leads to
cheaper consumer bills. If we lose sight of that, we lose public
support and endanger all the good will that collectively we are
seeking to unlock.
Secondly, we recognise that port infrastructure and supply chains
are critical to the long-term future of floating offshore wind in
the UK. The floating offshore wind manufacturing investment
scheme is worth up to £160 million and will support investment in
port infrastructure for floating offshore wind deployment. The
port of Cromarty Firth and Port Talbot have both been placed on
the FLOWMIS primary list, meaning that we will take those
projects to the next stage, which is due diligence. We are also
supporting ports in the region through the Celtic freeport,
backed by up to £26 million in UK Government funding. I
acknowledge the concerns that my hon. Friend the Member for North
Devon has raised about the FLOWMIS decision, and her letter to
the Minister for Nuclear and Renewables about the issue. FLOWMIS
is a competitive scheme, and I recognise that the results are
disappointing for the port of Falmouth and for the port of
Milford Haven.
My officials are engaged in the ports task and finish group, led
by RenewableUK. The group is looking into the barriers to port
investment and identifying the most appropriate levers to
overcome them. There is no stronger champion than my hon. Friend
to ensure no stone is left unturned so that her constituents and
neighbouring constituents will not miss out in future.
We are taking significant action to support supply chains through
the green industries growth accelerator, a fund of nearly £1.1
billion to support investment in manufacturing capability for
clean energy sectors. That will enable the UK to seize growth
opportunities from the transition to net zero by unlocking
private investment and creating new jobs, for which we are the
envy of the world.
Thirdly, my hon. Friend is right to highlight the potential of
the Celtic sea region for floating offshore wind. I can assure
her that the Government are determined to ensure that that
potential is realised. As she will know, the Crown Estate has
launched leasing round 5, making available areas of seabed that
could support up to 4.5 GW of capacity in the Celtic sea. The
Government worked closely with the Crown Estate to unlock that
opportunity and will continue to do so as the sector grows. In
last year's autumn statement, we committed to bringing forward
additional floating wind in the Celtic sea through the 2030s,
which could see an additional 12 GW of generation deployed in
that important region.
Britain's geography makes it ideally suited to offshore wind, and
floating offshore wind enables us to make the most of our natural
resources by unlocking the potential out at sea. We are aware of
the challenges involved and are taking actions to address them.
We know that this technology is an enormous opportunity for our
journey to net zero and for our economic growth. It is local
communities such as those in the Celtic sea region that stand to
gain the most from the economic growth and the highly skilled
roles that will be created.
I look forward to working with my hon. Friend as we harness the
enormous potential of offshore wind power. I am sure we will
return to this issue in a matter of weeks.
1.19pm
I thank all hon. Members for their contributions. I echo the
Minister's comments about the shadow Minister, the hon. Member
for Southampton, Test (Dr Whitehead): I wish him all the
best.
This debate has been small but perfectly formed. We very much
agreed, as has been the case for all Celtic FLOW debates and
projects that I have worked on. Whatever happens over the next
few weeks, I very much hope that that cross-party consensus
continues. Having been with developers and the Crown Estate this
week, I know that there is a huge drive for it to succeed. It is
about how we get those projects over the line in a pragmatic
manner to bring bills down in the longer term. We need to get
these things moving; otherwise, we will not get there in the end.
I thank everyone for their contributions to the final Westminster
Hall debate of this Parliament.
Question put and agreed to.
Resolved,
That this House has considered floating offshore wind and
Allocation Round 6 of the Contracts for Difference scheme.
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