(2 years ago)
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Stephen Crabb (Preseli Pembrokeshire) (Con)
I beg to move,
That this House has considered delivery of floating offshore wind projects.
It is a pleasure to serve under your chairmanship, Sir Christopher, and I am grateful to have secured time for a debate on the delivery of floating offshore wind power, which is one of the most interesting and exciting energy developments in play. It is good to see colleagues from across the United Kingdom and I look forward to hearing their contributions. I put on record my thanks to RenewableUK, the Crown Estate and many of the developers for reaching out ahead of the debate to provide briefing and insight.
This is a timely moment to discuss the role of floating offshore wind in the UK’s energy mix and to consider what further steps the Government need to take to facilitate the emergence of that new industry. The twin challenges of net zero and energy security mean that the strategic imperative around this home-grown clean energy solution is becoming ever stronger.
Floating offshore wind—or FLOW, to use the shorthand—harnesses the power of wind by using turbines based on floating structures rather than fixed. It offers an opportunity to deploy enormous turbines in larger, deeper, more exposed offshore areas where the overall wind potential is higher and therefore more energy can be generated.
There is a high level of expectation that floating wind is going to become an increasingly important part of our energy mix. The Government have set a target of 5 GW of FLOW to be installed by 2030, and Offshore Renewable Energy Catapult estimates that we could have up to 95 GW of floating wind in UK waters by 2050. At that point, the majority of the wind turbines in UK waters would be floating, not fixed to the seabed as they are today.
The UK is already home to the largest floating wind farm in the world—Kincardine, off the coast of Aberdeen in the North sea—which is using the highest-capacity turbines ever installed on floating platforms. The success of Kincardine should give both industry and Government confidence that the technology works and is scalable, and that it can be replicated elsewhere.
Floating wind will be critical to achieving the Government’s energy security targets, and if we do not choose to industrialise FLOW we will have to generate at least 15 GW of power by 2035 using other means. Indeed, it is difficult to see how the overall expansion of offshore wind envisioned by the Government’s targets would be technically possible without doing floating wind in a very big way. That industrialisation of floating offshore wind will create the pathway for cost reduction, as has been proven with fixed-bottom offshore wind.
Floating wind offers a huge opportunity for the world to harness offshore wind power, not just those limited regions with shallow sandbanks close to shore. Globally, the UK Government have set the most ambitious targets for developing floating offshore wind, but other countries are catching up fast. Spain has announced a target of 1 GW to 3 GW of FLOW by 2030. Similarly, France, Norway, Japan, Ireland and parts of the United States have set clear and ambitious targets. The world will therefore develop floating wind for sure. The UK is well positioned as the leading marketplace for investors, but if those targets are not followed through, I fear that the UK is likely to be left behind as other countries move to seize on the new technology.
Along with parts of the North sea, the Celtic sea—located off the coasts of south-west Wales, Devon, Cornwall and southern Ireland—is one of those areas with the greatest potential to deploy FLOW. It is attracting enormous interest from developers and investors, and I am delighted that my hon. Friend the Member for North Devon (Selaine Saxby), chair of the all-party parliamentary group for the Celtic sea, is here today. I look forward to hearing her remarks.
Floating offshore wind in the Celtic sea represents a multibillion pound economic development and investment opportunity for Wales, the south-west of England and the whole UK. The area has excellent wind resource infrastructure and local industry for potential supply chain development. The Crown Estate’s Celtic sea leasing programme aims to deliver 4 GW of new floating offshore wind by 2035. It could provide power for almost 4 million homes, and the project will kick start an innovative new industry in the area, with the Celtic sea assessed to have the economic potential to accommodate up to an additional 20 GW by 2045. Just last week, the Crown Estate announced that it is seeking to accelerate the leasing process for that first stage of development, recognising the importance of bringing floating wind onstream as soon as possible, and will be looking to launch the tender process in the middle of next year.
For us in west Wales—I represent a Welsh constituency —floating offshore wind represents a hugely exciting and valuable prospect. It is another stage in the evolution of Milford Haven port in my constituency. Shared with my right hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart), Milford Haven is one of the UK’s most important energy ports, beginning in the late 18th century when whale oil was imported for use in streetlamps. The late 20th century brought oil refining and trade in petroleum products, and the early 2000s brought liquefied natural gas imports. Strategically, Milford Haven plays an incredibly important role in our energy mix, and I believe that the coming decades at Milford Haven will be about floating offshore wind and hydrogen.
Early analysis by Cardiff Business School suggests that floating offshore wind, hydrogen and sustainable fuels investment could add an additional 3,000 Welsh jobs to the 5,000 already supported by the Milford Haven waterway. Floating offshore wind will facilitate the transition to a vital new green energy era, supporting the continued evolution of that major hub for another 50 years. On the Milford Haven waterway, we already have a number of very active projects: we have Blue Gem Wind, a joint venture between Simply Blue and TotalEnergies, which is looking to establish the first demonstrator projects in the Celtic sea. We have DP Energy, a joint venture involving EDF, and RWE—which has a major gas-fired power station on the Milford Haven waterway—is looking at floating offshore wind opportunities, in conjunction with exploring the possibilities of producing hydrogen and moving its entire operation in Pembrokeshire to a lower carbon future.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Does my right hon. Friend agree that the much-rumoured and long-awaited freeport status for places such as Milford Haven—even in conjunction with Neath Port Talbot or similar—would accelerate all of the exciting initiatives he has referred to?
Stephen Crabb
I will mention freeport opportunities a bit later, but my right hon. Friend is exactly right. So often when people talk about freeports, it is in the context of an answer looking for a question; what we have in Milford Haven—together with Port Talbot, I might say—is a solution. It is something that will help facilitate a new industry, and if we can use the freeport process to help support that—I am looking towards the Minister—then that would be excellent indeed.
Stephen Kinnock (Aberavon) (Lab)
The right hon. Gentleman is making an excellent speech, and I congratulate him on securing the debate. Building on his point about freeports, one of the key advantages of our freeport bid is that it is in synergy with the floating offshore wind opportunity. That will deliver a huge amount of added value through the manufacturing opportunities and long-term sustainable job opportunities that will come out of it, so the freeport offer is a strategic offer, not just transactional.
Stephen Crabb
As is typical, the hon. Member has gone right to the heart of the matter. Floating offshore wind is going to happen in a big way in UK waters— I absolutely believe that. The challenge that we need to get our heads around is how much real economic value and content can be captured and secured for the UK. The hon. Gentleman is exactly right that a collaborative bid between Port Talbot and the port of Milford Haven provides a potential framework to allow that industrialisation and capturing of domestic content to happen.
FLOW presents an important economic opportunity for the whole of the UK—for ports, industry and energy infrastructure, and by driving up investment and regional and national growth, as well as increasing the numbers of skilled jobs and career opportunities. The levelling-up opportunities are enormous: tens of thousands of people are already working in the offshore wind industry and supply chain in places such as Hull and Hartlepool. That is the kind of domestic content and supply chain opportunity that we want to deliver for Wales and the whole of the Celtic sea region. With large-scale projects in the Celtic sea perhaps five to 10 years away, there is an opportunity now for the development of the appropriate infrastructure and supply chain capability, which will deliver significant local opportunities in the region and, in turn, drive regional economic growth.
While we are talking about Port Talbot, I should say that I was excited to see RWE recently announce a new partnership with Tata Steel in the constituency of the hon. Member for Aberavon (Stephen Kinnock). That will explore how steel manufactured in south Wales could be used for floating wind projects, which is exactly the kind of innovative thinking that we need to achieve everything to which we aspire.
I hope to have outlined the scale of the vision and opportunity in front of us. It is ambitious and exciting, and in my view it is achievable. There is enormous private sector interest. However, along with the scale of the opportunity, there is an enormous delivery challenge. Ensuring that we have the appropriate offshore and onshore capabilities to deliver this is a big and complicated challenge. The 5 GW by 2030 target is ambitious. The industry is confident that it can respond to the challenge, but it will require a lot of work. Think about the sheer scale of what we are talking about: hundreds and hundreds of enormous new turbines being manufactured and towed out to sea. We have also to think about all of the onshore infrastructure around the turbine: the port infrastructure, new grid capacity, new grid connections, all the supply chain work that we have talked about, the financial architecture around it—contracts for difference—and, of course, the planning regimes in which the projects operate.
Projects cannot happen without the underpinning physical infrastructure—grid and ports—and the right policy architecture. Creating the right frameworks will require a lot of collaboration between the public and private sectors.
Stephen Kinnock
The right hon. Gentleman is absolutely right about all of the wraparound and complexity. One thing he may have mentioned—I may have missed it—is maintenance and servicing. Once the structures are in place, they require regular maintenance and servicing, which in itself is a huge employment-generating opportunity.
Stephen Crabb
The hon. Gentleman is exactly right about the operations and maintenance role. That is not just a job creator; they are valuable jobs. There is real economic value in those support services.
I come back to the delivery challenges around this big, complicated opportunity. The first challenge relates to leadership and co-ordination. As with the early development of fixed-bottom offshore wind, the support of the UK Government will be crucial in driving forward the political, regulatory and financial support frameworks that are needed to maximise the flow opportunities. I welcome recent positive statements by the Government, but there needs to be much more visible engagement from Ministers when it comes specifically to the Celtic sea opportunity. I have been impressed by the leadership that the Crown Estate has shown, and the work that it is doing to create robust frameworks around the tender process and environmental protections. However, there is a role for UK Government, over and above what the Crown Estate is doing, to push forward the Celtic sea programme. That role starts with setting credible, ambitious targets. We are in a relatively strong position when it comes to the UK’s clear pipeline of offshore projects, which is backed up by a firm commitment from Government. That is critical in increasing investor confidence in the UK market, but Ministers should be going further, perhaps by setting supplementary, longer-term targets to strengthen signals to investors and developers. Ministers should be clear about the UK’s intentions to scale up the sector rapidly in the coming 10 years.
The next area of challenge is getting the right financial architecture in place: a market environment that encourages price competition and industrial development. The contracts for difference have been incredibly effective at reducing the costs of renewable energy projects by reducing wholesale price risk, but the weakness of the structure of the CfD auction scheme is that it considers only the price of projects, and not wider industrial and economic considerations or future cost reductions. The Government should look to reform the CfD system to create a premium or incentive that recognises projects that make substantial commitments to industrial and economic development in the UK and to innovation in the UK. The aim of these reforms should be focused on fostering a market environment in which investment, innovation and economies of scale are incentivised. Consideration should also be given to what form of support can be provided to combined FLOW and hydrogen production projects, which cannot really be assessed alongside conventional FLOW from a cost perspective. I mentioned the work that RWE is doing in Pembroke, looking at the role of floating offshore wind to support hydrogen development, and there probably needs to be a different way of looking at that in terms of price support.
At the heart of the infrastructure challenge are ports. Floating offshore wind will require a lot of port infrastructure. No port close to the Celtic sea is currently ready to handle the key activities for deploying floating offshore wind, but we have a window of opportunity now to address this and ensure that the economic value of deploying these vast structures can be captured for the UK. The FLOWMIS—floating offshore wind manufacturing investment scheme—funding that the Government are making available will help. As far as I am aware, the Government have not yet announced how that money will be used, but a good chunk, if not the lion’s share, should be devoted to supporting the development of the Celtic sea industry.
Given the targets that we are looking to achieve and the scale of activity that will be required, there will be enormous opportunities for all ports across south-west England, Wales and Northern Ireland. There is a clear starting point, and we have already discussed it: the ports of Milford Haven and Port Talbot. Independent reports from the likes of ORE Catapult and FLOW developers have identified Pembroke Dock in the port of Milford Haven and Associated British Ports at Port Talbot as potential anchor ports for floating offshore wind. However, without collaboration and significant investment at both ports over the next decade, the vast majority of the potential £4 billion of benefits could simply go overseas. A combined, dual port solution, with close proximity to the Celtic arrays, has enormous potential to accelerate the deployment of floating offshore wind and increase prospects for UK Government generation goals.
Stephen Kinnock
The right hon. Gentleman is being very generous in giving way, and I thank him for that. He is right that port infrastructure is vital, but another key part of our infrastructure is the national grid. Does he agree that there are real concerns about the capability of the national grid to deliver the power that we need from offshore wind, and that the UK Government need to get round the table with National Grid and Ofgem to make that happen?
Stephen Crabb
I swear I have not shared a copy of my speech with the hon. Gentleman, but he anticipates the next section extremely well. I will just finish this point about the freeport bid. I am not expecting the Minister to comment—it is a live bidding process—but as I said on the Floor of the House yesterday in Levelling Up, Housing and Communities questions, I hope that Ministers will look closely at what is coming forward from Milford Haven, Pembroke Dock within that port, ABP at Port Talbot and the two relevant local authorities, because it is genuinely exciting and represents something different. We should not get hung up on freeport labels; it is about doing something innovative and collaborative that can help to unleash the full economic potential of this opportunity.
Let me get on to grids, before I bring my remarks to a close. The hon. Member for Aberavon (Stephen Kinnock) is exactly right: potentially even more challenging than delivering port upgrades is achieving a serious step change in the way we increase grid capacity and make available new grid connections here in the UK. The planning and consenting processes are ridiculously slow and difficult—they are not fit for purpose. We on the Welsh Affairs Committee in recent months have been taking evidence on the grid infrastructure in Wales. Our report on that will be coming out soon, so I will not pre-empt that. I was pleased in the evidence we took to hear about steps that are being taken by Government to reduce the offshore wind consenting times, but the truth is that we need to see far more urgent action from Government to address grid capacity. The danger is that developers will increase their capabilities and be able to construct and deploy large-scale renewable energy infrastructure way ahead of the planning process, and that cannot be acceptable. We need more anticipatory investment so that new grid networks are built in time for those major new sources of generation and for demand. We could talk about other planning challenges: in the Welsh context, we have the devolved body Natural Resources Wales. Developers are concerned that Natural Resources Wales should be fully equipped to be able to handle the volume and complexity of the planning jobs that they will be asked to do, to assess the impact on seabeds and things like that.
Floating offshore wind represents a major, exciting opportunity for the UK to tackle a number of critical issues: wholesale prices, energy security, job generation, levelling up and net zero. It is an exciting package. Floating offshore wind presents a compelling answer to all those challenges. The key challenges for us to consider are the risks and potential difficulties around delivery, and achieving the scale of offshore and onshore capabilities and systems that will be required just a few years from now. I look forward to hearing from colleagues and the Minister.
Stephen Kinnock (Aberavon) (Lab)
I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this vital debate.
If the last 12 months have taught us anything, it is that if we are to better protect ourselves from rocketing energy costs, as a country we must become more resilient and less exposed to fluctuating global energy prices. The good news is that the UK is well placed to do that, but we need a UK Government who will grasp the nettle and realise our potential.
A Labour Government will turn the UK into a green growth superpower through our green prosperity plan, by creating GB Energy, a new publicly owned clean energy generation company that will harness the power of the UK’s sun, wind and waves. We will establish the UK as a clean energy superpower, delivering a zero-carbon electricity system by 2030 and guaranteeing long-term energy security. It is only through a publicly owned company that we can ensure that communities and people across the country feel the benefits of the power created on our own shores through cheaper bills, good local jobs and putting money back into the public purse.
To achieve clean power by 2030, we will need to quadruple offshore wind. Floating offshore wind will be crucial in helping us achieve that goal. The Celtic sea will be a vital next step in that journey. The deployment of 24 GW of floating offshore wind in the Celtic sea presents a major opportunity to establish manufacturing and logistical support in south Wales. Port Talbot is ideally placed to be the hub for that activity, and a catalyst for the growth of FLOW in the region. Unlocking the Celtic sea’s potential requires ports that are capable of constructing foundation substructures, component storage and turbine integration, and continuous maintenance of those turbines.
Port Talbot’s deep sea harbour, with the land around it fully available for development, makes it the only port with capacity to combine FLOW fabrication, assembly, staging and flotation. The harbour is sheltered from high winds by a natural bay, and the space, size and water depth means that it can easily accommodate the substructure construction for the largest turbines in sufficient quantity to meet long-term Celtic sea demand.
Port Talbot also has the key infrastructure to support that groundbreaking technology. We are centrally located and have excellent transport links, with easy access to the M4 and the rail network. We also have world-class steelworks and the existing manufacturing supply chains, which bring with them the vital workforce skills and labour pool, including port workers, heavy industry workers, and maintenance and servicing workers, to support the quality manufacturing and assembly jobs essential for FLOW to become a reality.
Local businesses already in the manufacturing supply chains are keen to bring their transferable skills to the table and be part of this new, cutting-edge technology. Such is the scale of the FLOW project that there is significant potential to attract new industries in the supply chain, to create thousands of skilled jobs and to open up a world of opportunity for my Aberavon communities and those well beyond.
In short, Port Talbot has the capacity to deliver this scale of growth. It is a daunting project, but we have the basic infrastructure right there; it just needs to be mobilised. We have the critical mass and established manufacturing base needed to make a success of this future industry, but it is not just Port Talbot that would benefit. The benefits would be felt right across south Wales and beyond. The Swansea Bay economy has the ability both to absorb the initial demand and to translate it into new economic activity, and the sheer scale of what we are talking about would require additional resources to support Port Talbot, with the ports of Swansea and, as the right hon. Member for Preseli Pembrokeshire so eloquently pointed out, Milford Haven having the capacity to carry out vital supporting activities right through the supply chain, including integration, maintenance, and assembly of mooring and cabling components. This has to be a team effort if it is going to work.
A south Wales freeport centred around Port Talbot and Milford Haven has huge potential to support FLOW manufacturing, assembly, installation and associated supply chains, and those opportunities can be distributed between the ports of Port Talbot and Milford Haven, which complement each other and offer the prospect of establishing the energy and manufacturing coast in south Wales at the necessary scale. Freeport status for Port Talbot and Milford Haven would help to create an environment to attract inward investment for the manufacturing of components for FLOW and the development of wider industrial manufacturing. The proposed new port infrastructure at Port Talbot will be an attractive site for the co-location of manufacturing for offshore wind components, improving the logistics of the supply chain. Port Talbot will also offer access to new export markets as well as the industrialised economy of south Wales.
The ability to offer the benefits of freeport status for development land in close proximity to the newly constructed port infrastructure will provide significant advantages for potential investors seeking to establish new manufacturing capacity in the UK, but also across Europe. I have had extensive discussions with Associated British Ports, which stands ready to invest over £500 million in new and upgraded infrastructure to enable the manufacturing, assembly and launch of floating foundation substructures and the import, storage and integration of wind turbine components in Port Talbot. These plans would be transformative for my Aberavon constituency and the surrounding area, but support from the UK Government will be a crucial precondition for drawing in private sector investment so that the FLOW project can get off the ground. FLOWMIS co-funding would demonstrate the UK Government’s clear long-term commitment to developing the site and the sector, giving confidence to allow investors and other funding providers to back the project and unlock sizeable private sector investment potential.
There is no time to waste. As the right hon. Member for Preseli Pembrokeshire pointed out, other European countries, such as Ireland, France, Spain and Portugal, are also looking at investing in FLOW, so we must act now if we are to secure first mover advantage. We missed the boat with onshore and offshore wind in the past; other countries stole a march on us, and now they benefit from energy produced here. The largest onshore wind farm, which also happens to be in my Aberavon constituency, is paying for schools and hospitals in Stockholm. The Chinese Communist party has a stake in our nuclear industry, and millions pay their bills to an energy company that is owned in France. Such countries, rather than the local communities where the energy is actually being generated, also benefit from the manufacturing jobs that go with these industries. It is simply scandalous, which is why I am lobbying the Crown Estate to ensure that when it grants the lease for the Celtic sea, local benefits are maximised and we grasp the opportunity to build a homegrown manufacturing base to underpin these local industries. The manufacturing supply chain must stay in south Wales.
Worryingly, the Crown Estate’s announcement last week on the seabed licences lacked detail on the supply chain and the local content commitment that developers will have to give when bidding for seabed licences for FLOW development in the Celtic sea, and I urge the Minister to raise the issue with the Crown Estate as a matter of urgency. Under the current criteria, there is a real risk that the opportunity will yet again be missed to maximise prospects for local jobs and supply chains. The Crown Estate must therefore provide more detail on the local content commitment that developers will have to give as part of the bidding process.
The future of our country is in our air, sea and skies, and mother nature has truly given us a gift in Wales. We were the cradle of the first industrial revolution, and now Wales can be the cradle of the green industrial revolution, with Port Talbot at the forefront. Investing in Port Talbot as the hub for this game-changing form of renewable energy would turn south Wales into a green power superpower in the generation of renewable energy. I therefore urge the UK Government and all other key stakeholders to come together to ensure we grasp this opportunity with both hands.
Several hon. Members rose—
Sir Christopher Chope (in the Chair)
There are four Back Benchers seeking to catch my eye, and we have about half an hour before the wind-ups.
Selaine Saxby (North Devon) (Con)
It is a pleasure to serve under your chairmanship, Sir Christopher. I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for securing this important debate. I will reinforce and reiterate much of what he and the hon. Member for Aberavon (Stephen Kinnock) said.
I set up the all-party parliamentary group for the Celtic sea because the opportunities presented by the Celtic sea were apparent, but there was a disjointed approach, which many of my Welsh colleagues have discussed. I was concerned that we might miss out on the opportunity altogether in North Devon, and I am delighted that my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) is here to put in a case for the south-west of England. If we are to deliver these projects, we need a strategic approach that takes into account all the ports, skills and opportunities right the way around the Celtic sea. This is a national and international opportunity, and I am delighted to have the support of the Celtic sea APPG secretariat here today. We have been working hard to drive forward the issue, and we now have a Celtic Sea Developers Alliance. We have now established that the wind blows the opposite way in the Celtic sea, so we are delighted to have an opportunity, alongside our Scottish counterparts, to work across the whole country to see how we can deliver these projects.
On the strategy, like others I am concerned about the UK supply chain, because pretty much everything that is planned is coming in internationally. We are not realising the economic benefits that these enormous turbines present. I have seen the work going on in Blyth, and it is clear to me that my beautiful constituency is probably not best placed to develop a big port. However, we are the closest port to the development sites, and yet I cannot see anything local that is developing the kind of maintenance system that we need to service the 250 floating offshore wind turbines that are coming at us in the next five to 10 years.
In addition, as has been said, our ports are not ready. Much as it is lovely to hear everyone bid for projects for their ports, it would make much more sense to have a strategy that delivers the floating offshore wind manufacturing investment scheme—FLOWMIS—and liaises between the ports. Competition is great and drives innovation, but we need a decision so that we do not have three or four ports building exactly the same thing, none of them terribly well. We need to say, “This one can maintain and this one will build blades,” so that strategically we take the opportunity that we are presented with.
That is no better demonstrated than when it comes to cables, which are a particular bugbear of mine, given what has happened on the east coast with fixed offshore wind. Now that we understand that blue carbon is released every time we disturb the ocean floor, why on earth are we not insisting that cable corridors be put in at the start of the projects so that we can connect to the grid—I will come to the problems there—and damage the floor only once? When assessing the bids, we need to consider the full environmental impact, because we tend to look just at the benefits of delivering the wind power from the turbines without considering the international components—how far they have come, how they were made and what happened to the carbon in their production—let alone the damage to the floor.
I want to highlight some of the very small development sites, which I am sure were designed to deliver great opportunities and develop scientific insights. I have a small one in my North Devon constituency that can go into a small substation, but because there is no cable corridor connecting to the main grid, its cables go across four highly designated beaches, straight through my biosphere, and disturb all my sites of special scientific interest.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I am grateful to the hon. Lady for allowing me to intervene because she hits on an important point: the lack of co-operation and strategy. It is not just about cable corridors, important though they are. It is also about how floating offshore wind and, perhaps later, tidal stream generation sit with other users of the seabed. Fishermen in my constituency, and I do not doubt in hers, are already concerned about spatial squeeze. It should not be a barrier; it would be an unnecessary conflict if we do not take the opportunity now to do something meaningful, and hold the ring around the different people who want to use the sea and the seabed.
Selaine Saxby
I thank the right hon. Gentleman for his intervention—I agree entirely. I am also grateful for the work of the Crown Estate in trying to tackle some of these matters. We need to take a far broader strategic approach when it comes to the ocean floor.
Once we have got things into a cable, hopefully in a corridor, and have connected into the grid, the grid is perhaps able to take 30 kW out of the Celtic sea, but is that the full potential? What work is being done to upgrade that grid? Why have we got small substations, such as the development site at Yelland, when potentially it could go into the main national grid? Alternatively, if Yelland is to become a proper substation, can we have a proper cable corridor, so that it has to go through our precious beaches only once?
I hope that as we move forward we can look at the full environmental impact, and properly cost some of those points into the next round of contracts for difference. It is important to recognise that it is not always about price. As touched on by my right hon. Friend the Member for Preseli Pembrokeshire, other factors could be considered when awarding the contracts.
My other big concern is skills. We do not have anyone to do any jobs in North Devon right now, to be honest. I would like to see skills incorporated in the contract for difference, and that we reward developers who are prepared to invest in science, technology, engineering and maths facilities along our ports, right around the Celtic sea, so that all of us along those patches are able to develop the next generation of engineers.
On strike price, I would highlight concern in the industry that the price was too low in the contract for difference auction round 4, because it took into account some of the infrastructure that was already present. That is not a true reflection of where the price would be moving forward. I urge the Minister, as we look to take advantage, please can we consider some of the other elements that have been discussed today, such as the supply chain, environment and skills, and not just price, as we look to develop contract auction round 5?
We have the world’s largest pipeline and target for the sector, and there is long-term confidence in the UK. However, it is critical that that next auction round—AR5—demonstrates that we also have the right market conditions, or we could fail to realise the investment opportunities already displayed, and see it move to more competitive markets, which will have knock-on effects for subsequent auction rounds for contracts for difference.
Although I love the fact that my APPG has been able to drive some change. As a former maths teacher and not an engineer, I do not think I am best placed to drive this forward. I very much hope we shall see some big strategic interventions to achieve the potential of the Celtic sea.
Kenny MacAskill (East Lothian) (Alba)
It is a pleasure to serve under your chairmanship, Sir Christopher. I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing the debate and on an excellent speech. I concur with him on the future possibilities. I have a minor comment, meant as an assistance rather than a chastisement: the pronunciation of the windfarm’s location is actually Kincardine, although he is not from those parts and is not to know. Otherwise, I fully agree.
Scotland has 60% of the UK’s onshore wind; it has 25% of Europe’s offshore wind capacity. It is not simply the Celtic sea; it is all around Scotland’s shores. The Berwick Bank field, between East Lothian, my constituency, and Fife is able to power something like 2.5 million households. Scotland only has 2.4 million, and that is one field alone, so the potential is significant. It follows on from oil and gas and precedes, as has been mentioned, tidal possibilities and even carbon capture and storage, so our country has been blessed with huge natural resources—a significant blessing. Scotland is energy-rich, but Scots are fuel-poor. It is no comfort to be able to see turbines turning—if they are—onshore or offshore if people cannot heat their home, power their business or obtain employment. That is why we ask: where is our country’s and our communities’ benefit from resource?
I appreciate that there is a disconnect that has to be resolved. Scotland has more energy than it requires, as I mentioned with the Berwick Bank field. England has a surfeit of requirement, but not the ability to access that energy and therefore cabling makes sense. But where is the consequent payment? Where are the jobs? At present, they are simply not coming.
The turbines are going to be constructed, but sadly almost none in Scotland. Every yard in Scotland should be clanging and riveting. Every estuary in Scotland should be producing them, but we are bringing them in from south of the border, from the Netherlands, from Indonesia. Where is the work for our people? It is not evident in my constituency or across the country.
Transmission stations are also—correctly—being built. I have one near Torness that will take the cabling south to Redcar. A similar one is going from Peterhead down to Drax, but where is the consequent payment and compensation for Scotland’s losing the energy from our shores? Where is the money that we should be entitled to? It is simply coming in and going on. I get told there are supply chain jobs. I spoke to Scottish Power. The transmission station will employ four people in my constituency. That is an inadequate return. It is simply unacceptable. We accept cabling, but there has to be compensation and it cannot simply be a few pounds for the Crown Estate. It has to be for the communities and the country as a whole.
It is not simply, as I say, the cabling. Although the Berwick Bank field is in Scottish territorial waters and although it lies between East Lothian and Fife, 40% will be cabled directly south to Blyth. The Crown Estate will not even get any benefit. The Scottish Government, Marine Scotland, the councils, the communities, Crown Estate Scotland—nobody is getting any financial recompense. That cannot be right. It has to be addressed.
Mr Carmichael
The hon. Gentleman has hit on something really important: community benefit. In Orkney and Shetland for the last 40 years we have derived real community benefit from the presence of offshore oil and gas in our communities. It would be an absolute scandal if we cannot get the same benefit from the next generation of clean renewable energy. Does he agree that it is rather perplexing that when the ScotWind round of leasing was facilitated, a cap of £100,000 per sq km was put on bids in the auction? I do not understand for the life of me why that was necessary. It is a real missed opportunity. Scotland’s seabed has been sold cheap.
Kenny MacAskill
It has. The right hon. Gentleman raises two issues, including the community benefit that there should be. I pay tribute to Mr Clark and Shetland Islands Council, who negotiated that. Anybody who goes to Shetland will see the community benefit. East Lothian would give its eye teeth for that. That community benefit should apply not simply in Scotland and the Scottish islands, but across the UK. There should be a community benefit. It would not be a disincentive to investment, and it should be available for communities.
With regard to the Scotland project, the bulk of my criticism, because energy is overwhelmingly reserved, is against the UK Government, but the Scotland auction has been lamentable. Nobody goes into an auction, whether at a fundraiser for a political party or whatever, and puts a cap on an auction. Normally we put a floor on an auction, but for some reason the Scottish Government decided to put a cap on it. They returned a benefit of £700 million and crowed about that being a great benefit to Scotland. Of course, £700 million is better than a poke in the eye with a sharp stick, but one month later New York had the New York Bight. It put up for auction one quarter of what was disposed of in Scotland and it obtained $4.3 billion. The Scottish Government have to answer for their incompetence and the UK Government for their failures.
There are opportunities. There should be employment in Scotland. There should be energy storage, because that is now coming onshore with the battery, so we should be able to keep stuff in Scotland. We should be able to manufacture hydrogen—green hydrogen, not blue hydrogen. In my constituency, what do we require for hydrogen? In the main, we require water and energy, and we have that by the score, so there has to be more. This is a huge potential benefit that has landed in Scotland and its communities, but at present—through failures by the Scottish Government but primarily the UK Government—we are not seeing that benefit in terms of employment. We are not seeing our share, because it is ours and we should be taking it. It is absurd, as the hon. Member for Aberavon (Stephen Kinnock) mentioned, that Vattenfall and the Chinese national corporation are owners and yet our people are not. This potential must be for the benefit of our country and communities. The Government have to up their game and, indeed, so do the devolved Governments.
Cherilyn Mackrory (Truro and Falmouth) (Con)
I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for securing this important debate, which places a spotlight on an exciting emerging sector for my constituency of Truro and Falmouth in Cornwall and the south-west as a whole. Cornwall is already at the heart of the green revolution. We are mining and drawing out lithium and are drilling for deep geothermal, which is why I have worked on the all-party parliamentary group for the Celtic sea to promote floating offshore wind projects off our Cornish shores.
I pay tribute to my hon. Friend the Member for North Devon (Selaine Saxby), who set up the all-party group. She works tirelessly on this issue and is brilliant at bringing all the different threads together. When we became MPs in 2019, I was lobbied by only one company. Not a year later we had a reception on the Terrace where there were between 50 and 100 companies present, and that number continues to grow. It is a growing sector and one that should benefit all parts of the United Kingdom.
I was delighted to welcome the Defence Secretary, the COP26 President and the Business Secretary to Falmouth to see first hand how Cornwall can help deliver this vision. It is right that the Government have a target to raise the UK’s floating offshore wind capacity from one gigawatt to five by 2030. Floating offshore wind in the Celtic sea will be crucial to reaching that target, with the Crown Estate recently announcing that the leasing round for the region will be launched in mid-2023. That could deliver 4 GW of installed UK floating offshore wind capacity by 2035, supporting up to 3,200 jobs, with the potential of £682 million spend in the local supply chain by 2030.
A key part of the strategy is the TwinHub project, which is the first floating offshore wind project in the Celtic sea, based off the Cornish north coast. TwinHub has developed a new design that places two turbines on one platform, which gets twice the bang for its buck. This offshore wind farm will produce more energy while taking up comparatively less space and, by 2025, will be generating enough electricity to power 45,000 homes. The wider opportunities that floating offshore wind and the Celtic sea present will create over 1,500 skilled jobs, with £900 million headed for the regional economy by 2030 based on current projections.
As my right hon. Friend the Member for Preseli Pembrokeshire alluded to, the grid support maintenance will require cohesive collaboration between the public and private sectors, but we need the big port upgrades to build these floating offshore wind farms. Falmouth is one of the deepest ports in the world and is ideally positioned to become an integration port where turbines will be put together before being towed out to sea. Falmouth is also best placed for the maintenance of components and used vessels. The south-west supply chains will then be built up and will develop a strong network of experienced project developers and a wealth of skills and experience. These are all high-quality careers for the future of Cornish children in my schools. Falmouth should therefore receive its first share of the £160 million floating offshore wind manufacturing investment scheme to unlock wider private sector investment in the Celtic sea.
North sea ports already have the necessary infrastructure to be competitive due to their historical industry. If Celtic sea ports such as Falmouth are not upgraded, we risk utilising just one sea rather than the two. I urge the Government to look at further streamlining planning regulations to speed up the upgrades. One thing that the Celtic sea APPG has done perfectly is to encourage a port strategy. If I have one plea for the Minister, it is to try to do that, so that we know which ports will be best placed to do which parts and we can turbocharge development to ensure we get it right. Incidentally, Cornwall Council has submitted its application for an investment zone, which will include Falmouth port. I pay tribute to the council and our portfolio holder for economic growth, Louis Gardner, who has turbocharged efforts since coming into post recently to ensure we get this right for Cornwall.
Cornwall has a rich and proud maritime industrial history. I believe the Government can build on that by supporting investment in the port of Falmouth and the development of TwinHub, as well as ensuring high-skilled, well-paid careers for Cornish young people. If we can do that, Cornwall can continue to be at the heart of the green revolution. I urge the Government to listen to everything that is being said today.
Jim Shannon (Strangford) (DUP)
I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for leading the debate, and all the right hon. and hon. Members who have made significant and helpful contributions. I look forward to hearing from the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), as well as from the SNP spokesperson, the hon. Member for Aberdeen South (Stephen Flynn), and from the Minister, who I welcome to her place.
With the spikes in global wholesale gas prices, the rise in our national price cap and Russia invading Ukraine, we have seen an acceleration of the UK’s British energy security strategy to combat those circumstances. More recently, that has been seen in the floating offshore wind projects across the United Kingdom of Great Britain and Northern Ireland. It is great to be a part of the conversation, and to ensure our commitment to a UK-wide low carbon future.
Initially, I seek an assurance from the Minister that all of the United Kingdom can feel the benefits of the offshore wind policy—I believe that is happening, but it is always good to have it on record. To give an example, I know from my discussions with the Anglo-North Irish Fish Producers Organisation that it sees opportunities for some of those in the fishing sector in that field of alternative technology. That is something from back home that I am aware of, and it is good news.
The United Kingdom has announced plans to speed up consent for offshore wind projects across the nation to improve our energy sustainability, which is welcome news. They include reducing the consent time from four years down to one and assessing environmental considerations at a more strategic level. While that is welcomed, all nations throughout the United Kingdom have a role to play on offshore wind. In March 2022, just seven months ago, Simply Blue Group launched its latest offshore wind project in Northern Ireland, called nomadic offshore wind. It will be located between Northern Ireland and Scotland. Our Gaelic cousins, both in Northern Ireland and Scotland, are intertwined on that project. The company responsible is MJM Renewables of Newry, and it is playing a pivotal role in tackling climate change and developing offshore wind in Northern Ireland, this time in conjunction with those in Scotland as well. We are pleased to be part of that project.
Government must play a leading role in incentivising the use of greener energy. This winter has been a real eye opener in proving how global circumstances can impact upon our daily lives. Green energy and offshore wind will create additional projects such as manufacturing facilities, hydrogen production, and data and research centres, thereby creating the opportunity for more local jobs. I am always greatly encouraged by what the Scottish Government do on renewables in Scotland, and I often wish that we were in a position to match that. The UK is one of the world’s largest markets for offshore wind with the projects currently installed. BP has stated that the capability is there to power over 6 million homes, with 11 gigawatt of power currently under construction. Ørsted, the world’s largest renewable energy company, has invested over £14 billion in the construction of new offshore windfarms in the UK, generating 7% of the UK’s electricity.
I am pleased to see the chair of the all-party parliamentary group for the Celtic sea, the hon. Member for North Devon (Selaine Saxby), in the Chamber, and I thank her for all that she does. I am pleased to be vice-chair of the all-party parliamentary group on marine energy; the hon. Lady does all the work, I just have a VC—not a Victoria Cross, but rather a vice chairman title. As an MP for the coastal constituency of Strangford, it is imperative for me that marine technology be developed to maximise the economic impact in the UK. Ørsted has said that that is crucial for creating world-class UK supply chain companies.
I have been contacted by the Royal Society for the Protection of Birds, which has raised concerns about the deterioration in UK waters, which is evident through the catastrophic declines of globally important seabirds. I want to ensure that we have protection within the green energy strategy that we are pushing forward. Between 1986 and 2019, the number of breeding seabirds fell by almost a quarter across the United Kingdom. I seek reassurances from the Minister and the UK Government that any further consideration for offshore wind will not impact our marine wildlife. That must be a commitment from not just this Minister, but the Department for Environment, Food and Rural Affairs as well.
There are ongoing concerns over the security, affordability and sustainability of our energy supplies. We have aspirations for our climate strategy, and offshore wind is proving to be one of the leading initiatives. We must do more to put the United Kingdom in the best position to benefit from the growth that the renewable energy sector has to offer. What an opportunity. What possibilities there are for the future.
All nations across the United Kingdom of Great Britain and Northern Ireland have a part to play in achieving our net zero goals by 2050. Offshore wind projects truly present a great opportunity for us all. I call on the Minister and the Department to see this as a priority in meeting our climate change and net zero targets. I commend the right hon. Member for Preseli Pembrokeshire for bringing forward the debate, and I look forward to the Minister’s response.
Stephen Flynn (Aberdeen South) (SNP)
I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for bringing forward this incredibly important debate. I will start in a slightly unusual fashion, by referring to something that happened 10 years ago. In April 2012, there was a Scottish parliamentary inquiry into renewable energy. An Aberdeenshire hotelier put forward a submission, both in writing and in person. He said that offshore wind was unreliable and an expensive form of power. Much like many things that Donald Trump has said, that has been proven to be completely untrue. As we know, offshore wind is six to nine times cheaper than its gas equivalent, and it is very reliable. He was referring to the Aberdeen Renewable Energy Group, a joint venture with Vattenfall, which sits off the coast of Aberdeen. It has been providing clean, green, sustainable electricity—enough to power all the homes in Aberdeen—since it came onstream. I was fortunate to visit it recently with the team from Vattenfall.
Another wind farm that sits just off the coast of Aberdeenshire is the Kincardine development, which has been referred by both the right hon. Member for Preseli Pembrokeshire and the hon. Member for East Lothian (Kenny MacAskill). I went to visit Kincardine just under two weeks ago with a couple of colleagues. The weather was very Scottish—put it that way. The waves were choppy, and it would be unfair of me to name my colleagues who were perhaps a bit sick, although of course we cannot name people in the Chamber or Westminster Hall, so I guess my hon. Friend the Member for Aberdeen North and my right hon. Friend the Member for Ross, Skye and Lochaber have nothing to worry about.
It was a fascinating visit to the world’s largest offshore windfarm, and it showed us what can be done. Scotland’s potential in this regard is absolutely enormous, as has already been mentioned. We have 25% of Europe’s offshore wind capacity. What does that mean in real terms? At the moment, Scotland has about 1 gigawatt of installed offshore floating wind. There are 7 more gigawatts in the pipeline, and 28 gigawatts are due to come onstream from the first ScotWind licensing round in the years to come.
People want to know what that means for them. In the first instance, we need that to mean jobs and opportunities. That is particularly true for my constituency, given the sheer volume of individuals who work in the pre-existing oil and gas sector. We need to see a just, managed, fair transition that protects their employment and allows them to have new jobs in the future. I firmly believe that can be achieved. It is about not just jobs and opportunities, but energy security. It is about not just ensuring energy security for Scotland, because we are going to have far too much electricity to meet our own needs, but ensuring energy security for our friends and allies elsewhere on these isles and right across the European continent.
It is not just about energy security either, but about what we could achieve. Scotland could become not just an offshore wind delivery hub for these islands or Europe, but a global renewable offshore wind hub. Again, I firmly believe we can achieve that. The reason I believe we can achieve it in Scotland is that we have achieved it with the oil and gas sector. We lead the world in our expertise in that field, and we can do the same in renewables.
However, the issue is not just about all those things; there are also massive opportunities for the Scottish economy. Primarily, those will come from exports and the ability to turn renewables electricity into clean, green hydrogen, and again, to export that not only to our friends and allies across the UK, but across Europe using the hydrogen backbone. We have to aspire to that because it will bring not only employment and good jobs, but core economic value for the Scottish economy, which we will need when we break free from this place in the not too distant future.
What does that mean in real terms? It means around £25 billion of gross value added and 300,000 jobs by 2045. Do not take my word for it; take the word of David Skilling, who has produced a report of this very nature in recent weeks. The opportunities and the scale for Scotland are huge, but we need to grasp those opportunities and make sure they are delivered.
There are challenges, however—obvious challenges, some of which have been touched on in the debate. There is the concerting challenge of ensuring that these projects, which we want to come on stream, do come on stream at pace with jobs locally. Those local jobs will not appear in the next year or two, and maybe not even in the next five years: we cannot click our fingers and create an industrial base, but we can in the years to follow, and we must make sure that we do.
There are challenges in relation to the grid, which I hope the Minister will address, and challenges in relation to TNUoS—transmission network use of system—charges, whereby renewables projects off the coast of Scotland pay to access the grid and projects in the south-east of England get paid to access the very same grid. That is an inequity that should not stand: we have the highest grid charges not just in the UK, but in Europe. If we want to fulfil our potential, we need the UK Government to act in the interim, and we need to be free from this place to make our own decisions in the longer term.
One important thing has been mentioned by absolutely nobody. We have heard a little about skills and ensuring that we upskill people on our island. I do not disagree with that but, as the Government say all too often, employment is at a record low, so where are the people coming from? We need people to come from elsewhere and we need the Government to change their immigration policies because the reality is that the volume of jobs that need to be filled cannot be filled without a change to those immigration policies. We do not just need to talk about skills; we need to talk about that reality, and it is about time the Government got real.
Dr Alan Whitehead (Southampton, Test) (Lab)
We have had what I would characterise as one of the most sensible debates that I have heard in quite a long time in this place, and I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on bringing that debate to us. I also congratulate him on covering all the bases on offshore wind because the debate is not about pie-in-the-sky reflections on something that might be. It is about something that can make an enormous contribution in pretty quick time to the UK’s energy requirements, and do so in a way that unlocks a lot of resources that we have in this country, but which have hitherto been rather set aside because we have been concentrating on other technologies in other parts of the country.
Floating wind in particular is the energy answer for the western side of the UK, just as offshore fixed wind is the answer for the east coast. As far as the east coast is concerned, we have the great benefit of having an only slightly drowned large offshore island called Doggerland to come to the aid of wind. Offshore has successfully been planted in sea depths of 50 feet or less, but of course that is not the case for the west coast of the UK. Floating offshore wind is the answer to that problem: it can be established in much greater depths, and—as we know from the Scottish floating wind farm that has already been established—its efficiency level is far higher than fixed offshore. An efficiency level of 57% has been recorded for the Scottish floating offshore wind farm, compared with an average of about 40% for fixed offshore wind.
We in the Labour party are completely convinced that floating offshore not only can but will play an enormous role in the ambitious targets that we are now setting for wind overall to supply a very large proportion of our future energy needs. We have heard important and thoughtful contributions, not only from the mover of the resolution, the right hon. Member for Preseli Pembrokeshire, but particularly from my hon. Friend the Member for Aberavon (Stephen Kinnock). He concentrated on the things we need to do to really get offshore floating wind underway, particularly in the Celtic sea. Those include what we do about fabrication, the installation of floating offshore wind—because the techniques for installation are quite different between floating and fixed—and how we land the power we are going to get from floating offshore and integrate it into the grid system generally. We will have to address all those issues very quickly if the potential of floating offshore wind is to be realised as well as we hope it will be.
The industry has its own targets that it thinks it can install: about 18 GW of floating offshore by the early 2030s. Those are realistic appraisals, including supply chains and all sorts of other factors. To give Members an idea of the contribution that would make, that is 1.5 times the present installed capacity of all the offshore wind we have at the moment—which, as I say, is mainly fixed. An enormous contribution can be made, and I personally think that our targets—the original 1 GW target for 2030, now increased by the energy security strategy to, I think, 5 GW—can be easily exceeded over the immediate coming period.
However, as the hon. Member for North Devon (Selaine Saxby) alluded to quite substantially in her contribution, we need a great deal of anticipatory investment to make sure we can secure the potential that we know is there. That means proper investment in port infrastructure. From my hon. Friend the Member for Aberavon and the right hon. Member for Preseli Pembrokeshire, we heard that there is an opportunity for joint arrangements between Milford Haven and Port Talbot to secure fabrication, servicing, assembly and so on in areas where we have the resources to do so. That will service what is beginning to be a tremendous opportunity in the Celtic sea for floating offshore wind. It is a tremendous opportunity not only within the UK. As hon. Members have mentioned, it is an opportunity to be an international leader in floating offshore wind: sited in the UK, using UK components and perhaps exporting not just to countries around the Celtic sea, which are also beginning to think about floating offshore, but to a much wider canvas.
The UK component element of the task, which includes getting the Crown Estate around the table and giving them a good talking to about the UK content in bids, is not important just because bringing some industry to the UK is a nice thing to do. It is important because, by developing all the supply chains, skills, know-how, fabrication and so on in the UK, we can become an international leader in floating offshore in the way that, as hon. Members have mentioned, we failed to do in previous iterations of offshore wind. I want to see us supplying floating offshore wind to Denmark, rather than Denmark supplying us with offshore turbines and various other things, as it has so successfully over many years.
Today’s debate has summed up both where we are with floating offshore wind and where we need to be in the not-too-distant future. That leads us to what the Government need to do now to ensure that this revolution can succeed. It means proper anticipatory investment in ports and infrastructure. It means a great deal of anticipatory investment in the grid: both the development of the offshore grid, and the ability to land and incorporate energy properly into the onshore grid. We absolutely must not repeat the mistakes that we made in offshore grid connections: we connected each wind farm separately, just on the basis of the concerns of that particular wind farm, on a point-to-point basis with cabling. We must ensure that the infrastructure is available—in south Wales, Cornwall and Devon—to take the power, and to extend that out into the Celtic sea in particular, so that we are able to develop a collective collection of the resource.
Hopefully, there is a very rosy future for floating offshore wind; Labour is absolutely committed to that rosy future. As my hon. Friend the Member for Aberavon mentioned, one of the vehicles, I am sure, will be the GB energy company that we intend to set up in Government. That will be able to take the anticipatory investment forward, and will be a leading partner in the development of everything that is necessary to make floating offshore wind a great success. I look forward to hearing what the Government’s contribution to this exciting prospect will be. I hope that it will be positive; I am sure it will be. Together, we can then move forward to the rosy future of floating offshore wind.
The Minister of State, Department for Business, Energy and Industrial Strategy (Jackie Doyle-Price)
It is a pleasure to serve under your chairmanship, Sir Christopher. I thank you for making sure that I behaved in an orderly way at the beginning of the debate; I am very grateful. I also thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for securing the debate, and all Members who have taken part.
As the hon. Member for Southampton, Test (Dr Whitehead) just said, this has been a very sensible debate. I would say it has been a very mature debate in which we have reflected on what needs to be done to properly take advantage of the huge opportunities that we have around this island for floating offshore wind, and I want to highlight some of the contributions that we have heard. There was an absolutely fantastic advertising pitch for Aberavon from the hon. Member for Aberavon (Stephen Kinnock), and I heard about the freeport application from both his representations and those of my right hon. Friend the Member for Preseli Pembrokeshire. Obviously, that is not a decision for me, but from the agenda that they both articulated, it seems to tick all the boxes for what we are expecting from freeports. I say that as a former chair of the maritime and ports all-party parliamentary group, which has been involved in many of the bids. I wish them all well with the application, which is a competitive one.
At the heart of it, both the hon. Member for Aberavon and my right hon. Friend the Member for Preseli Pembrokeshire articulated a clear vision for what freeport status would do for the bid—a clear vision based on a port that is based on energy. Frankly, what better objective could we have in these times, when energy security is such a challenge? It is great to see such imagination and, more to the point, such a practical application of policy to fix a significant strategic problem. We will wait and see.
I was very struck by what the hon. Member for Aberavon said about British ownership of these industries. As a Minister in the Department for Business, Energy and Industrial Strategy, this is something that I reflect on very often. Yes, we are an open, free-trading nation and open to inward investment, but we also need to recognise that maximising those opportunities for this country means that we have to be very careful about making sure that we are doing everything we can to encourage homegrown investment. We have seen too often that some of these investments are made by state-owned overseas players, which is something to reflect on.
We heard from the hon. Member for East Lothian (Kenny MacAskill) and the hon. Member for Aberdeen South (Stephen Flynn) about the net contribution that Scotland can make in this area, and long may that continue. I will take away the points about what that means in terms of compensation.
The hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for North Devon (Selaine Saxby) reflected on the environmental implications. As we realise the benefits of floating offshore wind, we absolutely have to address the environmental consequences. We in Government have to look at all this in a very joined-up way, and sometimes the silo culture does not necessarily make for the best decision making, but laying cables once is sensible and cheaper. A more strategic approach might be necessary and the way to go.
I will reflect on the reference to investment zones by my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory). Of course, we are in a position whereby investment zones are a vehicle for securing the investment needed to achieve the kind of supporting infrastructure that we need if we are to properly exploit floating offshore wind. This is going to be a significant industry, and the sector could give a completely new lease of life to the port infrastructure at Port Talbot and Milford Haven. We must make sure that we are properly looking at everything, rather than just at what we can do to exploit new energy sources. It is about what floating offshore wind can do to contribute to economic regeneration and development more widely.
We have heard a great deal, and the Government would completely agree that renewable energy is central to the UK’s decarbonisation and economic growth, with floating offshore wind remaining a part. I am glad that my right hon. Friend the Member for Preseli Pembrokeshire referred to it as FLOW. I absolutely hate acronyms, but it just so happens that this one conveys exactly what we are talking about and is a very good description of floating offshore wind, which is a bit of a mouthful. It provides secure, low-cost and domestically generated electricity, and reduces our dependence on imports from overseas—there is no better lesson than the one we have learned over the past year—so what is not to like? It is absolutely essential that the Government get behind this source.
Offshore wind generates 11% of our electricity, and through the development of floating offshore wind, that figure will grow. As we have heard, we can be proud that the UK is already a world leader in offshore wind deployment. We have the most installed capacity in Europe, and we currently generate enough to power nearly 10 million homes. As I mentioned, it also has an important role to play in delivering the Government’s growth agenda by generating jobs and attracting significant private investment. According to the WindEurope trade association, the UK attracted investment worth €56 billion over the past decade, making it the biggest offshore wind market in Europe for capital spending commitments.
The Government intend to build on that success through the ambitions set out in the British energy security strategy for developing up to 50 GW of offshore wind by 2030, of which 5 GW will be from floating offshore wind. We estimate that will bring in £25 billion to £32 billion of private investment to the UK, and we expect it to support about 90,000 jobs by 2030. Those jobs will mainly be in coastal communities, which are in most need of job creation as they have traditionally been more reliant on heavy, high-carbon industry.
On that point, I was struck by what my right hon. Friend the Member for Preseli Pembrokeshire said. We often talk about those communities as if their greatest days were in the past, but they are not; they are in the future. If we get our offering right for these new industries, those communities can be the powerhouses they were at the time of the industrial revolution. We should not be modest in our ambitions. This is a great country, and we need to make the best of our assets. We really need to put our shoulder to the wheel for this sector.
Stephen Kinnock
All hon. Members raised concerns about the national grid, and landing and integrating power. Can the Minister say something about what action the Government are taking to resolve that issue?
Jackie Doyle-Price
I am glad that the hon. Gentleman intervened, because that is the one thing I was really tackling in my head. I really worry about the grid’s ability to respond to the demands we are making of it through our transition to renewables. We collectively need to give it enough support and oomph to make sure it delivers that. I am acutely aware of companies that have been doing the right thing by investing in renewables, but then have difficulties finding connections to the grid. It is a bit chicken and egg: if we are to exploit offshore wind, we must ensure that the grid connections are there and are effective, not least because otherwise we lose so much in terms of transition.
The Government are working with Ofgem and the National Grid Electricity System Operator to bring forward a series of strategic network designs to determine what the required infrastructure will be to support our net zero targets. A holistic network design was published in July, which includes the 1.5 GW Mona project off the north Wales coast, and an indicative network design for floating wind in the Celtic sea with a connection to Pembroke dock. It is being planned for, but we collectively need to ensure we execute that in order to realise the benefits as soon as possible. I will invite the responsible Minister to write to the hon. Gentleman fully about that, because it is a very real concern, given our experience with renewable energy in the past.
As I said, we recognise the potential of floating wind technology playing a key role in our energy mix as we move towards net zero. The floating wind deployments we have identified in Scotland and the Celtic sea represent a major development opportunity for the sector, which will create major employment opportunities.
Our support for floating offshore wind is demonstrated by the floating wind pipeline being supported in the previous contract for difference allocation round with a ring-fenced budget. That resulted in the first ever contract for difference-supported floating wind project, the 32 MW TwinHub project in Hayle, Cornwall. My Department has also joined the Offshore Renewable Energy Catapult’s floating offshore wind centre of excellence. We are providing the centre with £2 million over four years and strengthening its mission to accelerate innovation in the UK’s floating wind sector. I hope that will put us in a prime position to capitalise on a growing export market as other countries look to use this technology. Our pipeline project is growing. This year’s ScotWind seabed leasing round for Scottish waters resulted in 28 GW of new projects, of which 18 are floating wind projects.
We have heard much reference to the role of the Crown Estate. As we speak, Crown Estate Scotland is running a leasing round for innovation projects to decarbonise, which could result in another 6 GW. There are more than 400 MW of floating pathfinder projects already leased in the Celtic sea next year. The Crown Estate will run its Celtic sea floating leasing round, which will bring forward 4 GW of this innovative technology in the waters around south west England and south Wales. As my right hon. Friend the Member for Preseli Pembrokeshire said, there is potential for a further 20 GW of floating wind by 2045. That is transformational in terms of decarbonisation, and we must ensure we do what we can to secure it.
Our fixed-bottom pipeline is also strong, and we have 12.7 GW already operational, with a further 6.8 GW under construction and due to come on line by the mid-2020s. The world’s largest wind farm, Hornsea 2, became operational off the Yorkshire coast this summer, and offshore construction has already started on Dogger Bank, which will eventually take over Hornsea 2’s mantle as the world’s largest wind farm.
However, it is important that we do not rest on our laurels. This summer, the Government published results of the latest allocation round of contracts for difference. This year’s auction was by far the most successful yet, at a combined capacity of almost 7 GW. The successful offshore wind projects represent a significant step towards meeting our increased 2030 ambitions. Those projects are now finalising procurement and construction plans.
I am grateful to all hon. Members who contributed to the debate. This is just the start, and I look forward to continuing the dialogue to ensure that we realise the capability of floating offshore wind to contribute to our energy mix. I wish everybody well with the projects that they are supporting.
Stephen Crabb
I thank the Minister for her response to the debate. I am also grateful for the contributions from the hon. Member for Southampton, Test (Dr Whitehead) on the Opposition Front Bench. It has been a good debate, and I look forward to continuing the discussion with the Minister and her team of colleagues and officials at the Department for Business, Energy and Industrial Strategy about how we deliver this exciting new industry.
There are two takeaways for me from this debate. There is a key point around co-ordination and leadership and the need for strategy. It cannot just be left to the marketplace; it will require Government to pick winners in places, to set out a plan and execute it. The second takeaway is the point made extremely well by the hon. Member for East Lothian (Kenny MacAskill) about community benefit, ensuring that the communities closest to this large-scale infrastructure directly feel the benefit, yes, in terms of jobs and training opportunities, but also financially. It comes down to that: if we are to deliver on major new energy infrastructure in a timely way, communities need to be incentivised. The hon. Member’s points were well made.
If those who have participated today or are watching online have had their appetite whetted on floating offshore wind, the Welsh Affairs Committee is hosting an evidence session next Wednesday morning with many key players from the Celtic sea, including Associated British Ports from Port Talbot, Milford Haven, RWE and a number of others, along with the Crown Estate.
Thank you, Sir Christopher, for your chairmanship this morning.
Question put and agreed to.
Resolved,
That this House has considered delivery of floating offshore wind projects.