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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.