Renewable Energy in the East of England

Tuesday 11th July 2023 Westminster Hall

09:30

[Derek Twigg (in the Chair)]

I will call Peter Aldous to move the motion and then call the Minister to respond. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates.

[Peter Aldous (Waveney) (Con)]

I beg to move,

That this House has considered renewable energy in the East of England.

It is a pleasure to serve with you in the Chair, Mr Twigg. The transition to a zero-carbon economy in which the UK’s energy supply is in future sourced from low-carbon and renewable sources, puts the east of England right in the vanguard of the UK’s energy system. Last year, East Anglia’s renewable and low-carbon energy portfolio powered the equivalent of 32% of UK homes. The Opergy Group of energy advisers estimates that by 2035 that figure could rise to 90%. That dramatic transformation— I do not think it wrong to describe it is a revolution—presents our region with a once in a generation opportunity to drive inward investment, create exciting and enduring careers, and play a major role in delivering the UK’s net zero goals.

With wages in the east of England relatively low compared with those in other regions, and with pockets of deprivation, particularly in coastal areas such as my constituency of Waveney, it is vital that we grasp this opportunity. In many respects, a good start has been made, with energy companies setting up bases in the region, such as ScottishPower Renewables in Hamilton Dock in Lowestoft; new training facilities being provided by East Coast College at the energy skills centre in Lowestoft and at the eastern civil engineering campus in Lound; and EDF partnering with the Suffolk chamber of commerce to ensure that local businesses have every opportunity to be part of the supply chain for the construction of Sizewell C.

Up until now, the process has been developer led, with each developer focused on the delivery of their own individual projects. That is no criticism of them; they have simply been responding to the rules of the game laid down by the Government. That approach, however, is no longer viable. The scale of the planned development is such that a more strategic approach is needed. The Government need to recognise the enormity of the task they are asking the eastern region to perform, and they need to put in place the necessary policies, and provide the necessary resources, so that we can help them to meet their statutory targets.

We need a laser-like focus on delivery, which requires the Government to work in partnership with business, councils, and universities and colleges. Adopting such an approach gives us a good chance of delivering for the east, providing people with the skills to take up the new jobs, giving local businesses the opportunity to be part of strong and vibrant supply chains, and putting in place the necessary infrastructure. Infrastructure, whether in our ports or in the transmission networks that run through our region transporting electricity, hydrogen and water, is critical. If it is inadequate, we will fail in our objectives.

I shall focus on three technologies: offshore wind, nuclear and hydrogen. I shall set out the changes that I believe need to be made to the national energy policy framework, what we need to do to provide the necessary enabling infrastructure, and the investment that is needed in schools and training. Generally, Government energy policy has served the UK well over the past decade in promoting low-carbon energy technologies. In today’s geopolitical environment, however, with other countries—in particular the US and the EU nations—seeking to attract investment from globally footloose investors, the UK’s policy framework needs some adaptation to continue to be attractive. Keith Anderson, the chief executive of ScottishPower, writing in The Sunday Times this weekend, said of the US:

“We can’t possibly hope to outspend them. What we can do is outsmart and outpace them.”

That is the approach that we should have in mind when considering amendments to the Energy Bill.

With regard to nuclear, we are moving very much in the right direction by passing the Nuclear Energy (Financing) Act 2022 last year and creating Great British Nuclear this year. The Sizewell C project is gathering pace, and every effort should be made to fast-track early construction works, to make opportunities for significant local job creation.

In offshore wind, the Energy Act 2013 and the contracts for difference mechanism have served the UK well, and the industry is a major British success story, but the policies now require adaptation. Measures that should be considered include an increase in the contracts for difference budget, which RenewableUK has called for, to reflect increased supply chain costs and higher interest rates. In addition, a permanent investment allowance should be introduced for clean energy generators. Such capital allowances would support the growth of clean energy supply across East Anglia and throughout the UK.

The southern North sea currently hosts 37% of the UK offshore wind portfolio, with over 5 GW of capacity. That is due to expand to 15 GW, taking into account projects that are already in the pipeline, but nothing else is planned for after those projects have been delivered. If nothing is done, investment off the East Anglia coast could fall off a cliff edge after 2032. That is a disincentive to continued investment. To address the problem, the East of England Energy Group, Opergy, Cefas, the Offshore Renewable Energy Catapult and other partners are developing proposals with the Crown Estate that involve innovative proposals for seabed and marine habitat restoration integrated with subsea energy storage, which, importantly, do not require new grid connections. When they come forward, I urge my right hon. Friend the Minister to give them full consideration.

The UK’s hydrogen strategy is still in its early stages and is very much focused on industrial clusters. It must be structured in such a way that it can evolve to kickstart investment across more dispersed regions like East Anglia, where there is enormous potential for the industry and where we have three anchor assets. First, there is the Bacton gas terminal in the constituency of my hon. Friend the Member for North Norfolk (Duncan Baker), which can be a piece of strategic national infrastructure for transporting hydrogen around the UK. Secondly, we have Freeport East at Felixstowe and Harwich, which can play a major role in decarbonising the international freight logistics and transport sectors. Thirdly, there is the region’s primary industry, agriculture, in which hydrogen can serve three purposes: as fuel for tractors and combines; for producing fertiliser; and for heating and air-conditioning in the chicken-rearing units that are found across the region. To enable the hydrogen sector to grow, my sense is that we do need the hydrogen levy, as well as a contracts for difference mechanism for hydrogen.

At the moment, the enabling infrastructure required to support these projects, which in international terms are enormous, is woefully inadequate. The Government need to recognise the role being taken on by the east of England of hosting various power stations in the funding made available and by adopting a strategic approach to the provision of utility networks. To date, the process has been piecemeal, with each development being left to secure its own connections. We now need a much more joined-up discussion on future energy infrastructure. That could involve an independent strategic network architect working with the Government, private sector grid operators and project developers to plan the long- term future grid options and connectivity across all utilities, including electricity, hydrogen, water and digital communications.

The Government are beginning to put in place the jigsaw pieces required to enable such an approach to be pursued, with an amendment to the Energy Bill reforming Ofgem’s remit and the Government’s electricity networks commissioner, Nick Winser, due to publish his report on expediting grid development in the coming weeks. A consultation on community benefits is also under way. National Grid is consulting on the Norwich to Tilbury grid proposals, which would provide 180 km of new pylon infrastructure across Norfolk, Suffolk and Essex. Understandably, there has already been much opposition to the proposals, although National Grid has rightly emphasised that it is very much in listening mode. The detailed design of the proposal is a debate for another day and for those MPs whose constituencies the route runs through to lead. There will also of course be a public inquiry.

That said, I shall lay down some possible guiding parameters. First, it is important that the communities that house such infrastructure get a fair deal. There should be an enhanced package of benefits, and Government should look to overcome the technical obstacles that prevent discount electricity prices from being offered to local communities. Secondly, as well as National Grid, it is important that UK Power Networks, as the local distribution network operator, is included in the discussions. In doing so, we can explore ways of adapting the plans for the national grid so as to help to unlock investment and job creation opportunities in the region, which are currently constrained by inadequate power supplies. Thirdly, in the detailed design of the layout of such routes, it is important that steps are taken to mitigate the impact on high-quality and environmentally sensitive landscapes, undergrounding cables where necessary, and using newer pylon designs, such as the T-pylons being installed in the south-west.

It is important to comment on port infrastructure. Freeport East in Felixstowe and Harwich will play a role on the global trade stage, and ports such as Lowestoft will play a bespoke role in securing the transition to low-carbon energy. Associated British Ports has exciting investment plans for its £25 million Lowestoft Eastern Energy Facility, but to make that commitment, it needs clarity and certainty on future offshore projects. A small ports grant, a reinvigoration of the local enterprise zone or a fiscal measure, such as a revenue guarantee, would help, acting as a catalyst for that development.

Skills should be the topic of a dedicated debate, with another Minister from another Department being beamed down to take the place of my right hon. Friend the Minister. To a certain extent, we had that debate last week with the estimates day debate on further education colleges and lifelong learning, during which colleagues from across the House emphasised the need for a significant increase in revenue funding. The construction and operation of such a wide variety of energy generators presents the east of England with a great opportunity to provide local people with the skills required for the exciting new jobs that are emerging.

Some great initiatives have been put in place by inspirational local leaders, such as Stuart Rimmer, the principal of East Coast College, who has brought together energy colleges and trainers from all around the UK in the national energy skills consortium to share best practice. In addition, the coastal energy internship programme, supported by the Ogden Trust and founded by John Best, has made great strides over the past eight years in enabling students to undertake energy internships during the summer months. Given the volume of future energy and infrastructure projects in the east, we need much greater investment in energy-related skills right across civil, electrical and mechanical engineering. Skills can only be addressed locally, in places such as Lowestoft and Great Yarmouth, but there is a desperate need for much greater national and regional co-ordination and investment funding. Local skills improvement plans will help, but I believe the Department for Education made a major tactical and strategic error in not approving the eastern region’s bid for the Institute of Technology.

In conclusion, the energy transition presents the east of England with a once-in-a-generation opportunity to spread economic growth and prosperity right across the region, reaching areas that have felt overlooked and forgotten for too long. A lot of people are working incredibly hard locally to make the most of the opportunity, but as matters stand, I fear we will not realise its full potential. To do so, we need to pursue a strategic approach. Government must provide the necessary resources and work with local government and business to set up a delivery taskforce. If we do that properly, we can lay down a global exemplar of how to carry out the net zero transition, which will not only benefit East Anglian people, but can be replicated across the UK and around the world.

11:16

[The Minister for Energy Security and Net Zero (Graham Stuart)]

It is a pleasure to serve under your chairmanship, Mr Twigg, and to conclude this debate, which was so brilliantly set off by my hon. Friend the Member for Waveney (Peter Aldous). As you will recognise, Mr Twigg, it is rare to hear, especially in a short debate such as this, such a wide-ranging, deeply thought-through and comprehensive speech as the one that we have just heard from my hon. Friend. His grasp of the key issues in the energy space is remarkable, and it is grounded not only in his constituency, but in the wider region he represents.

My hon. Friend will be aware of the important role of offshore wind, as he highlighted, and other renewables in delivering secure, domestically generated energy, and of the boost they provide for economic growth, although I am sure he will also allow me to set out the Government’s position. The policies set out in the British energy security strategy and endorsed in the “Powering Up Britain” papers, which I announced to the House on 30 March 2023, include bold new commitments to super-charge clean energy and accelerate renewable deployment. My hon. Friend suggests that we have the opportunity to be a global exemplar. Not to diminish the—for the most part—accurate and properly based challenges he set out, but we already are the global exemplar. We have cut our emissions by more than any other major economy on earth since 1990. We took the position—a rather parlous one, when we think about it—just 13 years ago, when less than 7% of our electricity came from renewables. That is now well over 40%. In some senses, we are a victim of our own success, which has created some of the grid pressures that he rightly highlighted.

Turning to coal, I am the co-chairman of the Powering Past Coal Alliance, an international grouping of countries and organisations committed to ending the use of coal in power production. Nearly 40% of our electricity came from coal as recently as 11 years ago, in 2012. Next year that figure will be zero. We are a global exemplar, although I share my hon. Friend’s frustration when he asked whether—despite all the jobs that have been created and our success in leading—we have harnessed all the economic benefit. Have we embedded the industrial capability that we could have for the long term? If I had a mission in this job, apart from delivering and helping to facilitate this extraordinary transformation, it would be to do so in a way that leads to the long-term, high-paid jobs that my hon. Friend is so right to challenge the Government to work towards.

Wind overtook gas as our largest source of electricity during the first three months of this year, delivering more than a third of our entire electricity supply for the first time. I am proud of that. As my hon. Friend has said, the east of England plays an important role in supporting our offshore wind ambitions. Just last year, our contracts for difference scheme allocated support for a further 7 GW of offshore wind capacity, the majority of it located in the North sea and supported through the east of England. Since 2014, we have more than doubled our solar capacity in east England to more than 2 GW, with a further 1 GW of shovel-ready capacity and 2 GW more in planning.

This Government have driven that change. We have introduced the landmark Energy Bill, which is currently passing through the House, which contains measures to accelerate the rate of deployment of offshore wind farms, reduce the time it takes to get planning consent, and reform environmental regulations to streamline processes, while maintaining protection of the marine environment, but doing so in a more strategically joined-up way—a thread running through my hon. Friend’s excellent speech. He may or may not be aware that the Department for Environment, Food and Rural Affairs is running the marine spatial prioritisation programme, which, on a cross-purposes analysis, aims to optimise the use of our seas and manage competing priorities on the seabed. It is, in conjunction with my Department, leading on exactly the kind of strategic overview that my hon. Friend rightly highlighted.

We recently concluded our consultation on making changes to the national policy planning framework in England—again, as part of pulling together a more strategic approach. When designated, local authorities will be better able to respond to the views of their communities when they wish to host onshore wind infrastructure. Offshore wind developers in East Anglia will also be required to consider co-ordination of their infrastructure before submitting a planning application for any new network infrastructure. My hon. Friend rightly highlighted the project-based, linear approach and the need for a more co-ordinated and coherent one. [Interruption.] I am being given further “refreshment”, which is always marvellous.

Where communities such as those in the east of England host this infrastructure, we want to thank and, to be fair to them, also reward them for doing so, as my hon. Friend said. Our consultation on guidance on community benefits for transmission network infrastructure closed a couple of weeks ago, and I hope to be able to share the results later in the year. We have also just closed our consultation on developing partnerships for communities who wish to host new onshore wind infrastructure in return for lower energy bills. My hon. Friend also picked up on that.

Finally, I want to discuss network infrastructure, which, as my hon. Friend said, is an essential component for driving renewable deployment, and we need to build it more quickly. In Great Britain, around four times as much new transmission network will be needed in the next seven years as was built since 1990. The timescales for delivering transmission network infrastructure are currently 12 to 14 years, often far longer than the time taken to deliver the generation being connected—and we all recognise that having wonderful, new, low-cost, brilliantly planned generation is no good if we cannot get the electrons where they need to go. The lack of network capacity is already a challenge, as around 5% of wind generation is currently curtailed, meaning its output is reduced because there is not enough capacity on the network to transport it. This could increase to between 15% and 20% in the mid-2020s, as wind generation increases further.

In order to accelerate the delivery of network infrastructure, we appointed Nick Winser as the electricity networks commissioner, who is tasked with advising on how we can halve the timeline for delivering new electricity transmission infrastructure. His report will be published imminently, and the Government will respond with an action plan later this year. We will also come forward with a connection plan at the more local level, precisely because of the central importance of sorting out our transmission.

Placing all new infrastructure offshore is not a feasible option, as ultimately the electricity needs to get to where the demand is, which is of course onshore. Therefore, even with offshore cables, infrastructure such as substations are required onshore at landing points. To support faster delivery of transmission and better co-ordination, the holistic network design, or HND, developed by the electricity system operator, sets out a blueprint for the connection of groups of offshore wind projects to the grid—again, picking up on my hon. Friend’s central point about the need for a more strategic and coherent approach, informed, as it will be, by high-level spatial strategies.

This is the first time that connections and transmission reinforcements have been considered together for multiple projects, and it is revolutionising the way that we design our network infrastructure. Considering multiple projects together has allowed opportunities to co-ordinate infrastructure while balancing impacts on the environment, communities, cost to consumers and deliverability of the infrastructure.

Of course, as my hon. Friend has said, concerns have consistently been raised about the proposed infrastructure in East Anglia. I would like to reassure the House that the Department is working closely with developers, transmission operators and National Grid ESO to explore voluntary options to minimise infrastructure where possible, while also recognising that timely delivery of projects in the east of England will be key to achieving the 2030 ambition for offshore wind.

In the limited time that I have left, I will try to briefly review some of the points that my hon. Friend made and consider whether I can make any reasonable response to them. He mentioned the revolution, and that is what is going on; indeed, we need to tell the story to the nation about how we are rewiring this country. If people look around even the most beautiful landscapes, they will see things that they usually do not notice because they are just so used to them—major pieces of industrial infrastructure that were required to create the foundations for the wealthy and successful country that we are. Nevertheless, we will need to rewire things. Even with the best will in the world and strategic planning, co-ordination and minimisation of impacts, as well as a real focus on good design principles, there will be impacts, and we need to let people know that delivering net zero will require them.

My hon. Friend touched on the fact that we have been developer-led, project by project, which is very much changing. He also mentioned the focus on delivery, and on skills and jobs. I co-chair the green jobs delivery group, which is the high-level Government and industry body that is looking to get the information from the engineering specialities that he mentioned, so that information can be shared with the Minister for Skills, Apprenticeships and Higher Education, who also sits on that body, to make sure that education programmes are better aligned with and support the kind of revolution that is required.

My hon. Friend also mentioned the CfD budget. When he talks about that, I think he is probably talking more about the administrative strike price, as we call it in our jargon-world. That is the top level that we will pay, whereas the budget is the amount that we will commission. We always keep that price in mind, and obviously we recognise that there are financing costs, supply chain squeezes and inflation. However, those things are very much taken into account when we design these policies. We cannot always get everything right, but the industry always tells us that we have allowed insufficient funds for this type of work and typically predicts, ultimately, rather less generation coming through than actually occurs. However, we are now operating on an annual basis, so that we can better respond to those issues.

My hon. Friend also talked about hydrogen and the role of the east of England in being able to deliver it, not least in Bacton, Felixstowe and the agriculture sector. Like him, I am very excited about hydrogen. If we can properly harness our unique renewable resources and do things correctly in a co-ordinated fashion, we will not only have low-cost electricity, but we will become a leader, certainly in the European context and perhaps globally, in the production of green hydrogen. Of course, we are also blessed—he did not mention this—with 78 gigatonnes of carbon storage; we have the vast share of Europe’s carbon storage potential, and we can host carbon storage for our neighbours, too.

My hon. Friend is quite right to highlight all the opportunities in these sectors, and he is also right to congratulate people such as Stuart Rimmer at East Coast College and John Best for the internships he has supported. He is also correct that not only do the Government need to get the overall frameworks right, but we need to facilitate and support local authorities, communities and individuals to play their part. If we get this work right, we will not only deal with the environmental challenges, but reinforce our industrial strength, and grow and strengthen the prosperity of this country. That process can be led, to a great extent, from the east of England.

Question put and agreed to.

11:29

Sitting suspended.