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Selaine Saxby (North Devon) (Con)
I beg to move,
That this House has considered floating offshore wind.
It is a pleasure to serve under your chairmanship, Dame Angela. I will start by welcoming the work of the Department for Energy Security and Net Zero and, in particular, that of my right hon. Friend the new Secretary of State in developing floating offshore wind—which I will refer to as FLOW for the rest of the debate—right here in the UK.
FLOW represents a huge opportunity for the UK as a whole, but especially for coastal communities such as my own in North Devon. I particularly thank the new Secretary of State for her engagement following the results of the contracts for difference allocation round 5. Indeed, in her own maiden speech, she celebrated the role of her constituency in pioneering renewable energy and celebrated our being a world leader in offshore wind.
Yesterday’s announcement that the Government have halved inflation since the start of the year was very welcome, as is the reduction of energy bills. As we all know, the price jump was caused by Russia’s illegal invasion of Ukraine, but it demonstrated just why we need to accelerate the development of sustainable British energy generation. We live on a very windy, very tidal and sometimes even sunny island, and my North Devon constituency is particularly blessed with all three. If we can increase the amount of energy that we generate from these renewable sources, British households will be better insulated from global energy price shocks and able to rely on secure, clean energy.
We have already seen the potential that onshore wind and fixed offshore wind has, and it is fantastic to see it generating more and more of our energy mix. FLOW can potentially take that even further. A common criticism of our continued development of wind turbines is that they only work when the wind blows the right way. Traditionally, our offshore wind farms are situated off our north-east coastline, where the waters are shallower and the current is less temperamental—conditions that work for fixed offshore wind. In the Celtic sea, the wind blows the other way around, but the Atlantic Array was unable to go ahead because of the deeper waters and the strong currents coming in off the Atlantic. FLOW will open up areas such as the Celtic sea, so that we can generate energy no matter which way the wind blows. As it can be deployed in waters deeper than 60 metres, this technology opens up 80% of our offshore wind resource.
FLOW is set to make up to 5 GW of our energy generation by 2030, and 50 GW by 2050. It has the potential to bring in 29,000 jobs and £43.5 billion in gross value added to the UK by 2050, but we must ensure that we are ahead of the curve by not just deploying this technology for energy generation but harnessing its full potential by developing the manufacturing element as well.
The lack of bids in AR5 was incredibly disappointing for developers across the industry. Missing out on a year of development has increased uncertainty in the market at a time when both the EU and United States are offering more support to develop FLOW. It also put at risk £20 billion of short-term investment into the UK, which will be crucial for developing not just FLOW itself but the associated manufacturing and supply chain.
We are currently a global leader. Of the 200 MW of FLOW deployed worldwide, 70 MW can be found here in the UK. However, to maintain our position, we must provide developers with certainty and get this technology off the ground and out to sea. There is concern about FLOW being treated the same as fixed offshore wind in AR5. When fixed offshore wind was at a similar point in its development, it had access to final investment decision enabling for renewables and renewables obligations certificates. FIDER and ROC both provided revenue and business-case certainty, reduced competition and created the conditions for much-needed investment, and we are now reaping those benefits. Fixed-bottom wind farms were able to trial different cutting-edge technologies and take higher risks, where they could accurately model best-case and worst-case scenarios.
FLOW is currently in a similar situation. Pre-commercial projects in the UK need to be able to trial different approaches. FLOW will reach price parity with fixed, but with this new complex technology, it cannot be all about price at this stage in its development journey. As one industry expert observed at our last meeting of the all-party parliamentary group for the Celtic sea:
“We have to stop obsessing about cost reduction for a technology that has not yet been deployed at scale, that if we support it to get it going like we did for fixed wind, costs will fall. Cost reduction occurs by deployment of technology, not the passing of time.”
The administrative strike price offered today for AR6, alongside the announcement that offshore wind will get its own pot, provides the Government with the potential to unlock a record level of investment in FLOW. To ensure we achieve that potential, I ask that the budget for offshore wind in AR6 is large enough that it is not consumed by one project, so that we can see as many eligible projects as possible get afloat.
That is counterbalanced by the need to ensure that the budget, to be announced next March, is not set so tightly that it forces violent competition during this fledgling stage of FLOW’s development. Today’s AR6 announcement is warmly welcomed by the industry and means we still have the opportunity to hit 5 GW by 2030, to safeguard those stepping-stone projects, and to cement our position as a global leader. It is also crucial to rebuilding confidence in the existing FLOW development pipeline. Now that we have the administrative strike price, I would welcome the bringing forward of AR6 for FLOW technology so that we can keep pressing to get FLOW afloat and minimise the delays caused by AR5.
Developing FLOW turbines and substructures is a considerable engineering endeavour, as substructures alone can be up to 80 metres across and weigh thousands of tonnes, with turbine heights expected to reach as high as 300 metres, as tall as the Shard. The manufacture and assembly of components will therefore need significant port requirements if the UK is to seize the first mover advantage. The £160 million floating offshore wind manufacturing investment scheme, known as FLOWMIS, which opened for bids this spring, is welcome, and the industry looks forward to seeing a fair share coming to key Celtic sea ports. However, funding decisions should be made on FLOWMIS as quickly as possible to allow our ports and supply chain to gear up for this huge opportunity, along with a strategic overview to ensure that ports work collaboratively to optimise supply chain expertise.
Developers also need certainty on leasing rounds to secure the sites they need to develop a full business case and make applications for future allocation round auctions. The recent update from the Crown Estate on the steps it is taking to increase transparency through the auction process was welcome. However, there remains uncertainty on the timelines for the leasing round, and it now appears leases will not be awarded until later in 2024. At this stage of technology development, it is essential that innovation projects start their journey now, if they are to succeed and help grow a flourishing UK supply chain. Initial opportunities need to be maximised to develop the capabilities to secure the economic benefits of the subsequent large-scale FLOW projects so that we can maximise exports to the growing global market in the future.
My right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) chairs the Welsh Affairs Committee. He could not join us today, but he has done a huge amount of work to support FLOW and the projects potentially coming onshore in south Wales, where community engagement has ensured that they are now hopefully ready to bid straight into AR6 and proceed. The Committee recently released “Floating Offshore Wind in Wales”, which is a relevant document for this debate. I was glad to see its recommendation for the Department for Energy Security and Net Zero to work with the Crown Estate to provide visibility beyond the current leasing round and to bring out a strategy as to how it will be delivered.
Although I welcome the Government’s response to the report that the “Powering Up Britain” energy security plan already sets out the steps that they are taking, it would be good to see a more strategic lead on the development of FLOW, especially in the Celtic sea, where it is a brand-new technology. We need to look at the development of FLOW strategically, particularly in the Celtic sea and at a national level. We must work on the main prize, which is the gigawatt arrays and getting the demonstrators that are ready to proceed afloat.
Far too much time and energy is being spent in my constituency on the distraction of the seven turbines of White Cross. The time it takes to get these projects afloat means that early decisions are out of date by the time we get to crucial decisions. Indeed, the controversial White Cross project due to come ashore in my North Devon constituency may have only been able to secure a plug-in point at Yelland when it applied back in 2021, but National Grid seems to think now that it would be possible to connect at Alverdiscott, where the majority of the other projects coming into England will plug in. However, I suggest that this hugely unpopular project at White Cross, which has now attracted more than 500 objections from across North Devon, including from our Biosphere, Natural England and an energy expert, will never get through planning. Community consultation and engagement are vital for such projects to succeed. This project is being bulldozed through my community, taking up vital local authority planning time when planning is the No. 1 reason that development of all types is delayed in North Devon.
In its objection to the development, Natural England said it still has fundamental concerns about the application as currently submitted. It also asks that the application is put on hold until further information and evidence are provided. I hope that someone can look more strategically at the Celtic sea, incorporate White Cross into the main projects and consider the whole Celtic sea project as one national infrastructure project, rather than subjecting small planning authorities to this amount of additional work. Indeed, we should learn from what happened down the east coast and secure one cable corridor in the Celtic sea, probably a split into Pembroke and Alverdiscott. We do not need one into Yelland as well. We should recognise that areas that rely on tourism are potentially less receptive to cables landing in beach car parks and to reduced income for multiple businesses in the area. I hope the Minister can bring whatever powers his Department has to bear to ensure that White Cross, if it goes ahead, delivers proper community benefits, fully recompenses the community for the inevitable damage to our core current industry, and shows more respect to the community of North Devon that I represent than its engagement programme has to date.
I set up the APPG for the Celtic sea to bring a strategic overview to the development of FLOW. That is not only about the process of getting the turbines afloat, which is obviously the priority, but looking further down the line to the supply chain, where cabling will land, the use of our marine areas, the environmental concerns, the operation and maintenance of the turbines once they are afloat, and how we service what should be an enormous industry in our region.
As has been seen with the proposed White Cross development in my constituency, many people who are otherwise supportive of the development of FLOW are concerned when it has an outsized and unnecessary impact on the local environment and businesses. It is crucial as we move forward that cabling routes are planned for the 250 turbines to minimise the disruption of blue carbon locked into the seabed, and we need to continue to focus on that long-term objective of getting the 250 turbines afloat.
Similarly, consideration needs to be taken for local industries, such as fishing, and of the effect that turbines will have on marine wildlife, such as seabirds. It is certainly not the case of supporting one of those things over the other, but by considering the development as a whole, we can minimise the impact the turbines and associated activities will have and can ensure that we develop clean green energy with community support.
As I have laid out, FLOW will be key to our secure and sustainable energy future. While I welcome today’s AR6 administrative strike price, I reiterate my ask that the AR6 for FLOW specifically—if at all possible—is brought forward. There is a concern that even the one- year delay may cause a far greater delay to these projects due to international supply chain pressures. We cannot lose our first mover advantage and watch development of this exciting technology float overseas. I ask the Government to consider the Celtic sea development as a national infrastructure project so that we can consider it as a whole and bring the benefits to all our communities in the south-west and in Wales as swiftly as possible. Clear long-term plans are the best thing for the industry and the other industries that rely on our beautiful coastal areas.
Dame Nia Griffith (Llanelli) (Lab)
I congratulate the hon. Member for North Devon (Selaine Saxby) on not only securing the debate, but all her work on raising the issue of offshore wind and floating offshore wind.
It was shocking and disappointing that the Government were not nimble and responsive enough with the industry to attract any bids for floating offshore wind in the last round, AR5, thus losing a year in the race to tackle climate change and to get ahead in the worldwide race to develop renewables. The Irish made the necessary adjustments, and they had a successful bid. I am not saying that we should always be in hock to manufacturers, but we need to listen to the people who will develop the renewable forms of energy, and co-operate, getting clear messages out so that they feel that the Government have a clear strategy and want manufacturers to be here, or they will be off somewhere else, as we saw clearly with Ireland on the border.
I will not dwell on that now; I would rather look to the future to see what needs to be done for us as the UK to get the most out of the development of floating offshore wind. We in the UK are well placed to grasp the opportunities and to reap the rewards that the development of floating offshore wind offers. Furthermore, it offers us a real opportunity to reinvigorate areas of the country where industry has declined in recent years, the very areas where we have deep ports and industrial base, and have for a long time been concerned about the decline of traditional industries. They are well suited to be leading the way on floating offshore wind.
In south-west Wales, for example, we have not only the potential in the Celtic sea, but the two ports, Milford Haven and Port Talbot, offering deep waters, plenty of space and a strong industrial base. Between them, we have my constituency of Llanelli, with its strong traditions of engineering firms and metal industries producing a huge range of components, from cables and bearings to complex equipment for the automotive and other sectors.
If the Government get this right, there is much potential for jobs in FLOW—the abbreviation the hon. Member for North Devon used for floating offshore wind—and the supply chain. Indeed, the floating offshore wind taskforce said that FLOW might support 30,000 jobs by the end of the decade. A report by Opergy in 2022 highlighted that with the right strategy, that could be as many as 67,000 by 2040. The report also noted that to get that jobs bonus, the Government will need to be proactive in addressing the skills gaps. To grasp the opportunities, we need a grim determination and a coherent industrial strategy from Government.
Here in the UK, we have this tremendous potential for floating offshore wind, as we are surrounded by sea, with plenty of strong winds. Floating offshore wind has the advantage of being able to be deployed further out, in deeper waters, where there are stronger and more consistent winds, and where it is too deep for fixed turbines. Furthermore, away from these islands, 80% of the world’s potential offshore wind energy is in fact in deeper waters. Therefore, the potential for export of FLOW technology and components is significant.
The fact that we have several demonstration projects operational, such as Kincardine and Hywind, also puts the UK in a good position to be a world leader. The UK can only grasp the full benefits of developing FLOW, however, if we get ahead of the game and become the country that is exporting the turbine technology and the components, rather than letting other countries get ahead, offering greater certainty and incentives to lure investors. Otherwise, we will find ourselves importing the very components that we could have been manufacturing here.
Unfortunately, the UK invests a lower percentage of GDP than our competitors, such as France, Germany and the US, and we spend a lower percentage of GDP on research and development. What we need to attract investment, and research and development is certainty, along with a clear strategy from Government. First, we need that strong commitment by Government to ramp up investment in FLOW at scale. For that, we need a generous budget in AR6 to allow a number of projects to go ahead. We need the scale so that companies see that it is worth while to invest in component factories in the UK. Scale will bring prices down and make investment economically viable. Companies need to see that more projects are definitely on the horizon. We need certainty, enthusiasm and commitment now, before those companies go elsewhere. We also need long-term clarity on the Celtic sea seabed leasing.
We need investment in our ports now. There is real concern in the industry that the ports are not being developed quickly enough and that investment needs to be much greater. We must recognise that they need huge capital expenditure now and that the revenue will not come until later through the FLOW projects. Although £160 million in grant funding is available through the FLOW manufacturing investment scheme, the FLOW taskforce has identified that some £4 billion will be needed for FLOW ports, so there needs to be a support mechanism for ports to manage that. There need to be interim measures now to ensure progress at pace and the development of a revenue support scheme to give long-term certainty and create assets that will attract investors.
Turning to the national grid, it is estimated that we will need to build some six times as much capacity in the next 10 years as we have in the last 10. I am sure the Minister is well aware of the challenges, but perhaps he could outline what steps he is taking to ensure that we have the capacity and skills for that vital development to take place. It is crazy to continue with a situation where companies are being paid to turn onshore wind turbines off simply because the capacity is not there to transport the cheap electricity to the densely populated areas where it is needed. The challenge to the grid capacity posed by FLOW is enormous, so I would be pleased to hear what the Government are doing in this respect.
Then, sadly, we come to our steel industry. If it were not so tragic, would be farcical. We have had the devastating news from Tata that it wants to close the blast furnaces in Port Talbot, followed a few days later by the news from Scunthorpe that British Steel have also proposed closing the blast furnace. Just when we want to invest in manufacturing the components for FLOW, we are losing the capacity to produce our own steel, and we will have to import more. It is no good saying that this is a green measure, as we know that iron ore will be being smelted with the same blast furnace process elsewhere in the world, quite likely with lower environmental standards. We lose jobs, there is no environmental benefit, it is a threat to our security, and we are more vulnerable to price fluctuations in the steel market, which will have an impact on our ability to manufacture the components for FLOW. Yes, we welcome investment in the electric arc furnaces, but that capacity is needed simply to try to mop up some of the 800 million tonnes of used steel that we export for recycling. Some grades of steel can only be produced in the blast furnace process at present. We need the investment in the technologies of the future to green those processes so that we can produce all the grades of steel that we need in the UK.
Then we come to the railway. The Government have a sorry record on the railway west of Cardiff. When Labour left office in 2010, we had committed to electrify the railway west of Cardiff at least as far as Swansea. Then the Conservative Government cancelled it west of Cardiff. After lobbying by MPs, the Government then relented and agreed to electrify to Swansea, but then they cancelled it again. Contrary to what the former Secretary of State for Wales, the right hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart), said one day at the Dispatch Box—that it is not worth doing because it would not save time—it absolutely is worth doing to help reach net zero by using electricity from renewables, including FLOW, instead of dirty diesel. That will offer an opportunity to upgrade the line not just to Port Talbot, which is now clearly urgent, but on through Llanelli to Pembrokeshire.
To sum up, we have a unique opportunity now to become a world leader in floating offshore wind, bringing down energy costs, cutting emissions, and creating jobs in places like Llanelli. But it needs clear commitment and strategy from Government. I would be very grateful if the Minister could set out in detail what his Government are doing to ensure a sufficient scale of development to attract investment in the UK supply chain, enable rapid enough development of the port infrastructure in Port Talbot and Pembrokeshire, retain primary steelmaking in the UK, ensure the timely development of grid capacity and ensure that we have the skilled workforce we need for the green jobs of the future.
Kirsty Blackman (Aberdeen North) (SNP)
Thank you for chairing this debate, Dame Angela. I congratulate the hon. Member for North Devon (Selaine Saxby) on securing the debate and allowing us to have the opportunity to talk about floating offshore wind.
I really enjoy coming to Westminster Hall, where we can have a conversation in which we largely agree. In the main Chamber, it is not often that Conservative Members will stand up and I will agree entirely with the content of the speeches they make, but I think we are all pointing in the same direction on floating offshore wind; we all have the same ambitions for it.
Currently, two out of four of the floating wind groups in the world are in Scotland. That is a pretty amazing statistic, and it is amazing how much better it could be. With the calls on AR6, the more we ensure that that happens as quickly as possible, so that we do not lose any more of the time that has been lost because of the farcical issues with AR5 and so that these projects have the confidence, ability and agreements with Government in place to go ahead, the more likely we are to be able to capitalise on this technology.
There are an awful lot of moving pieces—that was not meant to be a pun—in relation to this. An awful lot of things have to come together to ensure that it is as successful as possible. We have heard mention of grid connections: I would push the Minister again to ensure that, whatever happens with floating offshore wind, or, in fact, offshore wind in general, as much pressure as possible is put on to ensure that those grid connections are delivered timeously. Having spoken to a number of organisations that are leading the way on renewables, I think that not being able to get those grid connections is genuinely putting a number of the projects at risk. In some cases, the issue is communication, rather than the length of time. The length of time is not ideal—in fact, it is pretty bad—but if they will not even come back to say when the connection could be made, that causes problems. Even an increase in the communication on that would help investor confidence and would help with some of the final decision making needed in order for the project to go ahead.
Mention was made of some of the work being done here, and I agree with the hon. Member for North Devon that the budget needs to be large enough for multiple projects to go ahead. We have done incredibly well with ScotWind. Some of the clauses and requirements that were put in by the Scottish Government related to local content and developers having to ensure that they proved the work that they were doing with it. It is incredibly important: most people do not see Aberdeen as some sort of manufacturing hub, but the Minister will know very well that an awful lot of manufacturing goes on in and around Aberdeen. People see us as an oil and gas capital—an energy capital—but we make plenty of widgets, often for offshore work. A lot of that work is incredibly transferable as an awful lot of the incredibly precise instruments that are used for managing and measuring offshore oil and gas installations can be used for offshore wind, particularly once we get far away from the coastline.
On the transferability of skills, I understand that there has been something of an agreement between OPITO and the Global Wind Organisation, and a reset around passporting the offshore skills, and accreditations that are available. The relationship has been somewhat fraught in the past, particularly between some of the unions and organisations such as GWO. Anything the Minister could do to ensure that these organisations keep collaborating and working together would be in the interests of his and my constituents and all those around the UK who work in the offshore industry, so that they can use the skills they have already and so that new entrants can join the offshore industry without the need to go through multiple different, yet incredibly similar, training courses. Helicopter ditching training is the same whether someone is working in an offshore wind installation or working on an offshore oil and gas installation. There is very little difference. Anything that can be done to ensure that the passporting of those skills is allowed between the two industries will ensure that we have a better, more flexible workforce. The reality is that there is an awful lot of companies currently working in both spheres. They are working in offshore oil and gas, and they are working in offshore wind and other renewables. Innovation and Targeted Oil and Gas will particularly ensure that those two things are incredibly integrated. Just as the companies are working in those spheres, we need the individuals to be able to work in both of those spheres too.
I also urge the Minister to support—I am sure he does—Developing the Young Workforce to ensure that young people in school, particularly in our area of the north-east of Scotland, are not saying, “I’m not going into engineering, because my uncle was made redundant in the oil and gas industry.” I do not want young people to have that concern stopping them pursuing careers in science and technology, which I am quite concerned will happen. I do have a huge amount of confidence in DYW; I do not want to try and take away from that, and I am glad about what it has done. DYW was created as a Sir Ian Wood project, and it has put a link person in each of the secondary schools in the local area to ensure that businesses and secondary schools are linked and that we are creating a workforce for the future. But we need to ensure that science and technology jobs are sold to young people, who should not be scared away by previous family experiences.
In terms of science and technology and development of things, there is the Advanced Research and Invention Agency, and I was on the Bill Committee for the related Bill. I asked for ARIA to focus on renewable technology and on technology that would ensure we are moving towards meeting our climate change objectives, and towards net zero. The Government refused that. I do not imagine the Minister could tell me now, but at some point it would be useful to know whether ARIA has been directed in any sort of way to focus on green technology. It is important that with those cool, new inventions coming out as a result of that Government funding going to ARIA, we consider tackling the most important issue facing the planet today, and ensure that we meet our objectives in relation to that.
I have one last thing to say on jobs and on the transferability of skills. When we are building floating offshore wind, the likelihood is that if you are building a very large floating offshore wind platform, there will be people living out there to take part in the building. It will not be dissimilar to the kinds of routines that people undertake working on an offshore oil and gas installation. They will be doing three weeks on, three weeks off, they will be travelling in helicopters and they will be spending a significant length of time offshore. My constituents and other people working in the offshore industries have transferability of skills. They have a lifestyle set up to work on a three-and-three basis, so they will find it easier to transfer.
We have probably not spoken enough about how— I did make this point to Offshore Energies UK this week—that workforce has got the mindset and the lifestyle. It is not ideal that in Aberdeen we have a lot of women at home looking after the kids while the guy works offshore, but if your husband is working three weeks on, three weeks off, there is very little you can do other than have a part-time job. When we are trying to find that workforce, we need to think about the lifestyle choices that people are making, and realise that there is a workforce in Aberdeen city and Aberdeenshire, and there is actually a workforce in a lot of places in, for example, the north of England. People who work offshore will be able to go and do it pretty easily.
I want to focus for a moment on the ownership of the wind that we have. I have been to visit the Kincardine wind farm—I went on a boat, and I was incredibly, unbelievably sick. I have not been on a boat since, and I will not be going on a boat ever again as a result, but it was an amazing thing to see up close—it was really cool. The flexibility of those wind turbines is immensely cool: they are able to turn and tip, and they are remotely controlled. I thought that wind farm was ginormous—the turbines are absolutely huge—but I was told that the ones that we are likely to have further offshore are something like three times the size; they will be huge pieces of engineering equipment, and it is really important that we have as much local content as possible.
Ports have been mentioned, and we need to work collaboratively with them. It is difficult to do that, particularly because ports have different ownership methods. In Aberdeen, we have a trust port that works on a different basis from some of the commercial ports. I do not envy the Government’s job of having to ensure those collaborations, but I encourage them to do that and ensure that, where a differential offer is needed for different ownership of port models, that is in place so that ports can speak to each other, and so they understand the impetus and the structure that drives and creates them.
Selaine Saxby
I thank the hon. Lady for her kind words and her speech. Does she agree that, because we do not have the same learned past and piecemeal development, the Celtic sea is like a blank canvas, so there is an opportunity to take learning from elsewhere? We do not want ports to replicate each other, but they should work collaboratively to get momentum behind these projects.
Kirsty Blackman
The hon. Lady is absolutely correct. That is exactly what needs to happen: one port should focus on one thing and another port should focus on another thing. I know the Government do not like to pick winners, but encouraging ports to work together collaboratively is not about squashing competition; it is about ensuring that these projects happen. I completely agree with the hon. Lady on that.
We previously called for tax relief or a subsidy scheme, like the US and the EU have, to encourage green energy companies to invest. It is pretty shocking that the Government of Malaysia own more of the UK’s offshore wind capacity than UK public bodies. I think UK public bodies should own it, but one of the issues is that pension funds have not had the flexibility to invest in a lot of renewable technology. Anything the Minister can do to push the Chancellor to ensure that pension funds have the extra flexibility to invest in green tech would be incredibly important. We know that these things will make money; they are technologies of the future.
In the North sea, we have the gold standard for offshore health and safety. We have been through incredible tragedies such as Piper Alpha, and therefore have incredibly high health and safety standards in the North sea. I would like much more floating wind to be developed in the UK, not just because it would be great for jobs and tax revenue, but because those incredibly high safety standards would be embedded at the very beginning of the expansion of this technology. When we sell it around the world, people will look at what we have done here and, hopefully, embed the highest possible safety standards in all floating offshore wind anywhere around the world. Floating offshore wind does not have exactly the same issues as offshore oil and gas, but it is still very important that we have the best possible safety standards.
On consistency and certainty for companies, I am concerned that the UK Government’s direction of travel on things such as AR5, and the Prime Minister’s statements about cutting back climate change targets, including on net zero, have affected investor confidence. Since I became an MP, all that the energy companies have asked of me is that they have certainty, particularly on things such as tax regimes. Companies are genuinely finding it difficult to convince investors to invest in the United Kingdom, because investors are concerned that the Government will stop backing these things. The more positive statements the Government can make about things such as floating offshore wind, the more confidence they will give the industry to make final investment decisions and ensure that as many of these projects as possible go ahead, whether in the North sea or the Celtic sea.
Sarah Jones (Croydon Central) (Lab)
It is a pleasure to serve under your chairmanship, Dame Angela.
We have had a short but very good debate, and the enthusiasm for floating offshore wind has come across loud and clear. The SNP spokesperson, the hon. Member for Aberdeen North (Kirsty Blackman), was right to say that there is a lot of agreement across the board about what we should be doing.
I congratulate the hon. Member for North Devon (Selaine Saxby) on securing the debate and on her very good speech. All the speakers so far have made a really good case for why we need a national industrial strategy that pulls together all these different levers so that we can get jobs, skills, infrastructure and energy all working in the right way and in the right places. Labour would certainly do that in government, and I ask the Minister to consider doing it as well.
The hon. Member for North Devon talked very politely about AR5—indeed, we will all talk very politely about it—but it was clearly a catastrophe. I would be interested in the Minister’s views about the hon. Member’s suggestion that we try to speed up the next process.
My hon. Friend the Member for Llanelli (Dame Nia Griffith) also made an excellent speech—my grandfather was from Llanelli, where he worked in a tinplate factory all his career. She talked about all the issues to do with floating offshore wind, as well as about steel, which was very interesting, and about the need for primary steel to remain in this country. Again, I would be interested in the Minister’s views on that.
The hon. Member for Aberdeen North talked enthusiastically, as she always does, about a range of issues, and she made some good points. The passporting of skills from oil and gas to renewables is really important. Somewhere in the mix, there is a big piece of work to do on that. We also need to look at things such as apprenticeships and how they work, because they are not flexible enough for today’s environment.
At the end of her speech, the hon. Member said that the industry in general just is not confident about investing in the UK, and that is absolutely at the core of all this. Even though I have been in this role for only eight weeks, the sense I have is that every single person needs stability—we need stability, we need certainty and we need things not to chop and change. When the Prime Minister changes a target, as he did for the automotive sector, it sends a message to wider industry, prompting it to ask, “Why would we invest here when we’re not really sure what is going to happen?”
Going back to floating offshore wind, moving away from fossil fuels and towards renewables is a huge opportunity, and floating offshore wind is at the absolute cutting edge of that change. As has been said, the technology represents a once-in-a-generation chance to create good, skilled jobs, bring down energy bills and put the UK at the forefront of the world.
The hon. Member for North Devon made the point that the price jump in energy was caused by Russia’s invasion of Ukraine, but of course the UK was worst affected because of our dependence on fossil fuels. So this is an opportunity to tackle that problem.
Analysis from the Global Wind Energy Council suggests that 80% of the world’s potential offshore wind resources are in deeper waters, which fixed turbines simply cannot reach, as the hon. Member said. Floating offshore wind allows us to capture the power of the stronger, more consistent winds that blow further out at sea, to harness the unique advantages that our island status affords us and to breathe new life into economies and communities around the Celtic and North seas.
With innovation, the cost of FLOW could be below the Government’s low wholesale price forecast as soon as 2032. There are loads of innovations in this space, such as artificial reefs, which can potentially help to enhance the marine environment as well. So there is a lot to be positive about.
We have already touched on the contracts for difference, which really was an energy security disaster: there was not a single offshore wind project bid, and two viable offshore projects missed out on long-term funding, adding to the cost of energy bills for families up and down the country. Of course, that catastrophe was avoidable. My hon. Friend the Member for Llanelli said that the Irish Government managed to navigate their way through this. Recently, at a conference, I talked with the energy Minister in Ireland, who explained what they did. Basically, they are more agile and more responsive to the needs of industry, and the Government have hopefully learned lessons from that. Of course, we welcomed the news yesterday that the Government have set the strike price for the next round of bidding, but what will matter for the success of AR6 are the as yet undecided elements of the framework: how big the pot will be, and how the Government will support the floating offshore supply chain in the meantime. It would be helpful if the Minister responded to some of those issues.
As we have said, new floating offshore wind projects are vital to our move away from fossil fuels, and they can and should be the source of good British jobs. However, the Government’s neglect of Britain’s infra- structure and industry means that much of the benefit of projects that do manage to secure funding is likely to be felt elsewhere. Their allergy to strategic industrial direction has meant that the largest floating offshore project in the UK had its foundations made in Spain and its turbines made and assembled in Rotterdam, and that the finished project was simply towed into Scottish waters. Jobs that could and should come to Britain are being held back by the fact that our critical infrastructure is not fit to support them. In the UK, we lack a clear route from project design to plugging into the grid—the grid has been mentioned before and will be mentioned again, and it is mentioned by every single industry representative I meet.
Our ports need major investment and upgrading to allow the manufacture and assembly of turbine components and their bases at the required size. Floating offshore turbines are mammoth structures, as the hon. Member for Aberdeen North knows from her perilous trip to see one, and we need to be making them in the UK. There is great potential to revitalise port infrastructure in this country, and in Scotland and the Celtic sea, for fixed and floating offshore wind. The floating offshore wind manufacturing investment scheme, which closed for applications at the end of the summer, and which represents £160 million to be spent across the whole UK, will not make the difference we need without serious strategic investment in our ports alongside it. We need our ports to be advanced for the most cutting-edge technologies to make the strongest difference to jobs and to power generation.
The Conservatives have had 13 years to show they can get a grip on the move to clean energy. Labour’s strategy is to drive this country’s floating offshore wind industry forward. Labour’s national mission for clean power by 2030 has set ambitious targets to rapidly expand the offshore wind industry as a whole, giving us 5 GW of floating wind power by 2030. We recognise the leading role that Britain can and should play in pioneering this technology, which is why we will help to accelerate floating offshore wind deployment and manufacturing. The national wealth fund will deliver renewable-ready ports, alongside good, well-paid jobs, hand in hand with the private sector.
Industry is still waiting for the Government to spend £160 million on ports; Labour will invest £1.8 billion over the Parliament to make sure our ports are renewable-ready and fit for the future, and we will use Great British Energy—a new, publicly owned energy company—to invest in floating offshore wind, so that Britain can lead the world. The market for floating wind is very new, meaning that Great British Energy can drive the sector forward, where the Conservatives have sat and left it alone. That will help to finally overturn the stagnation and offshoring of British jobs and manufacturing that has been caused by the neglect of the British wind power industry.
I hope the Minister can answer a few questions. Can he outline how the floating offshore wind supply chain is being supported in the absence of new projects in the past year? Can he update us on FLOWMIS? When will the allocations be given out? Can he ensure that the funding will be allocated fairly across the country, including in Wales, where there is such huge potential?
We talked about skills, and I would like the Minister to suggest that the Government might consider—perhaps in the autumn statement—some changes to the apprenticeship scheme, which would be helpful, and which Labour has called for. The grid is the single biggest obstacle we need to remove, and Labour has set out plans for how we will speed up the removal of barriers. We will need four times as much grid infrastructure to be built in the next seven years as has been built in the last 30. It would be good if the Minister could tell us how he will do that.
Where the Conservatives have cast floating offshore wind off to drift, Labour will drive it forward. Where the Conservatives are letting global leadership on FLOW technology slip through our fingers, Labour will pick up the ball. Where the Conservatives have left critical infrastructure such as ports gather dust, Labour will see them renewable-ready at long last. People around the country, and across all political parties, want to see the potential of the British people and of our island’s unique geography realised. I would very much appreciate hearing from the Minister how he will do that.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Andrew Bowie)
It is a pleasure to serve under you in the Chair this afternoon, Dame Angela. After quite an exciting political week, it is a pleasure to end with such an—on the whole—agreeable and positive debate in Westminster Hall. I think we all agree on the potential of floating offshore wind and the huge contribution it makes to the United Kingdom, our economy and our drive towards net zero, energy security and independence.
I congratulate my hon. Friend the Member for North Devon (Selaine Saxby)—she is a friend—on securing this important debate. She has been a vocal champion of floating offshore wind at all levels—from her constituency through to the wider Celtic sea region—in her role as chair of the all-party parliamentary group for the Celtic sea. She rightly highlighted the benefits that this new technology could bring to the United Kingdom as a whole.
Far be it from me to disagree with the shadow Minister, the hon. Member for Croydon Central (Sarah Jones), but the United Kingdom is actually one of the world leaders in floating offshore wind. The world’s first floating offshore wind farm was built in UK waters. Since then, we have built a strong base of new projects and development to grow our industry still further. Indeed, in the oil and gas industry, which has already been referenced by the hon. Member for Aberdeen North (Kirsty Blackman)— my constituency neighbour—and which surrounds our constituencies, there are opportunities for floating wind to play a crucial role in decarbonising North sea production, by accessing deeper waters and providing electricity to those platforms.
Our 80 MW of currently installed floating wind capacity builds on our world-leading status in fixed-bottom offshore wind deployment—not that anyone would know it, listening to the Labour party. We have over 14 GW of installed capacity—the most in Europe—with the first, second, third, fourth and fifth largest offshore wind farms in the world generating power right now. Contrary to the Labour party’s castigation of this Government’s record, we have gone from only 7% of renewable electricity on the grid in 2010—when Labour left office—to 48% in quarter 1 of last year. We have decarbonised faster than any other G7 nation, at the same time as growing the economy.
The opportunity for floating offshore wind is significant. The Global Wind Energy Council has said:
“The market is nascent, but could be huge: 80% of the world’s offshore wind resource potential lies in waters deeper than 60m.”
That is too deep for fixed-bottom wind. The UK’s Offshore Renewable Energy Catapult’s Floating Offshore Wind Centre of Excellence has estimated that floating offshore wind has
“the potential to deliver £43.6bn in UK gross value add…by 2050, creating more than 29,000 jobs in the process.”
Our 5 GW ambition recognises that and the potential for floating wind to play a key role in our energy mix as we move steadily towards net zero. We are committed to building on the UK’s position and to placing the UK at the forefront of the development of this exciting new sector. However, we know that 5 GW is a stretching ambition, and we are working hard to create the right environment for investment and to address barriers to deployment.
First, we recognise the crucial importance—raised today by every Member who contributed—of port infra- structure to floating offshore wind. That is why we launched the £160 million floating offshore wind manufacturing investment scheme—or FLOWMIS for short. That funding will help leverage the vital investment needed in port infrastructure to deploy floating offshore wind at large scale. FLOWMIS closed for applications on 27 August, and I can reassure Members that we are assessing all the bids we received.
Secondly, we recognise the importance of the right support mechanisms through the world-leading and envied contracts for difference scheme. The scheme is looked to worldwide as the model for how to support the deployment of renewables, and CfD auctions have so far awarded contracts totalling over 30 GW of new renewable capacity across all technologies, including around 20 GW of offshore wind. Last year’s allocation round, AR5, was a success story for many technologies, including marine energy and the first three geothermal projects.
However, we recognise the shortfall in fixed-bottom and floating offshore wind, and I acknowledge the concerns that my hon. Friend the Member for North Devon and others raised at the time and this afternoon. We reflected carefully on the results of AR5, and I trust that today’s announcement detailing the parameters for next year’s allocation round, AR6, demonstrates that we have listened and responded to concerns. The administrative strike price for floating offshore wind has increased from £116 to £176 per MWh—an increase of 52% in real terms from AR5—recognising the unprecedented upward pressure on project costs, which, as we have seen, have affected the industry worldwide. We hope today’s announcement will bring forward viable floating wind projects as we look to boost investment in the industry.
Thirdly, we recognise the importance of a long-term pipeline of projects to give investors the confidence that they need to take long-term decisions. The UK has the largest floating wind pipeline in the world, based on confirmed seabed exclusivity, with around 25 GW already agreed, including through the ScotWind leasing round referenced today and the INTOG process.
Selaine Saxby
Could my hon. Friend clarify something in today’s AR6 announcement? We all know that there were two projects ready to bid in AR5, and at this point there are two projects ready to bid. Now that the strike price seems to be acceptable to all concerned, is there any opportunity for us to accelerate the decision for these two projects and then effectively to have an AR7 for all the projects in the next pipeline, so that we can get these ones afloat?
Andrew Bowie
I understand very much why my hon. Friend wants that to be the case, but we must recognise that one reason for the success of renewables, including in this country, has been the predictable options we have had. Developers are already planning for AR6 in March next year, and bringing the round forward any further could jeopardise it, not amplify it, so we are reluctant to do that. However, I hope the confidence the industry will receive from today’s announcement means that AR6 will be a huge success. We all need it to be, and that is why we took that decision.
As my hon. Friend will know, the Crown Estate is also moving forward with its plans to launch leasing round 5, making available areas of seabed capable of supporting up to 4.5 GW of capacity in the Celtic sea. The Government fully support those plans, which represent the first opportunity for commercial-scale floating offshore wind projects in the region. We also recognise the importance of a long-term pipeline in the Celtic sea beyond leasing round 5. We will continue to work closely with the Crown Estate on that as we seek to realise the full potential and opportunities represented by floating offshore wind in the Celtic sea. The Crown Estate is due to make further announcements on its plans before the end of the year.
We recognise the importance of dialogue between industry and Government in driving progress. The floating offshore wind taskforce is co-chaired by industry and Government. Its first report, in March this year—“Industry Roadmap 2040”—has been highly informative in shaping our understanding of the specific demands on port infrastructure needed to support floating wind at scale. The taskforce is currently working on a vision to 2050, due for publication in quarter 2 next year, which will set out the potential prize that floating offshore wind could offer the UK.
We will continue to work closely with industry, through RenewableUK and the Offshore Wind Industry Council, to assess supply chain needs and opportunities for the UK and to develop an industrial growth plan—an IGP—to support the growth of sustainable supply chains.
Kirsty Blackman
On that issue, as I said, Scotland encouraged the conversation between developers and the supply chain. Are the Minister’s Government doing everything they can to ensure that those who are bidding, and winning the bids, are working with the supply chains to get them upskilled as quickly as possible, and to ensure that they can make investments in the confidence that they will be able to create widgets for offshore wind farms?
Andrew Bowie
Widgets being one of the specialties of our region. There is always more we could do, and we should absolutely seek to push the boundaries and work as closely as possible with the industry—in lockstep with it—to ensure that the supply chain in the UK grows, creating the jobs of the future and ensuring that the pieces, the widgets and everything else that is required to develop a successful floating offshore wind industry is created here in the UK, bringing benefit to communities up and down this country.
The floating offshore wind taskforce is an important part of that process, and we now have our industry road map as well. We are working closely with industry to deliver that, but of course there is more that we can, and will, do. The Government are open to any suggestions as to how we improve that relationship more to ensure that we get to the place we need to go.
I was about to address the comments the hon. Member for Aberdeen North made regarding skills. I agreed with every single thing she said, which is not very rare, but it is quite rare. Creating a workforce for the future, for all the energy projects we are embarking on right now, is a personal passion of mine. We need to get young people engaging in science, technology, engineering and mathematics subjects at school. We need to grow the capacity of our further and higher education institutions to deliver the courses and create the apprenticeships with industry that we will need if we are to get people into the growing energy industry in this country. We need to ensure that the right processes are in place, so that those people who want to transfer, upskill and reskill from existing technologies and industries into new and emerging technologies and industries can do so.
The passporting issue the hon. Lady raised is incredibly important to that journey. As the Nuclear Minister, I am delighted to have set up the nuclear skills taskforce between my Department and the Ministry of Defence, to see what we can do to grow that workforce. Similar work is going on in the renewables sphere, and I am keen to see what we can do to work with the existing oil and gas industry, for example, to transfer skills and make that transfer much easier.
We understand that cost is a challenge for nascent sectors such as floating wind. We are supporting the sector with £31 million of funding, matched by £30 million from industry, through the floating offshore wind demonstration programme to explore innovations to help reduce the cost of deploying floating offshore wind technology. As part of its 2050 vision, the floating offshore wind taskforce is also looking to identify the key enablers of cost reduction and recommend specific actions to address them.
Finally, given my role as the Networks Minister, it would be remiss of me not to mention the grid, networks and connections, which have rightly been raised by all Members present—not a day goes past when another connection issue is not brought to my desk in the Department. We know that these issues are a significant barrier to the deployment of many renewables projects, and a challenge for our energy infrastructure more widely. In July 2022, the Government appointed Nick Winser to the role of electricity networks commissioner, to advise the Government on how to reduce the timeline for transmission network delivery by half. The commissioner’s final recommendations were submitted to the Government and published on 4 August. We welcome his report and are committed to the direction of its recommendations. We have committed to publishing our response to those recommendations and an action plan imminently.
As my hon. Friend the Member for North Devon knows, community engagement, respect and thought-through, sympathetic planning of onshore infrastructure is something I take a keen interest in. For all the reasons I have suggested, decarbonising the grid and increasing capacity are important—in fact, they are vital—but they must be done with respect, sympathy and understanding of local communities and businesses. We must be willing to change, adapt and be flexible in those plans. My hon. Friend knows that, given the role of Ministers in the planning system in England and Wales, I cannot comment on specific projects, including the White Cross farm project that she referenced. However, the developers will have heard her loud and clear today and at other times. A response on community benefits, which she asked for, will also be published imminently.
I congratulate my hon. Friend on securing this timely and important debate.
Kirsty Blackman
I mentioned the fact that communication from the grid is not always up to scratch. Will the Minister ensure that he does what he can to put pressure on? I know he is working on the speed, but we also need to make sure that communication is improved, so that developers know what is happening and when it is happening—even just when they will hear an answer.
Andrew Bowie
Absolutely. I assure the hon. Lady that I am working hard on that.
I hope I have demonstrated that the Government not only understand the challenges faced by this exciting new sector, but that they are taking concrete action to address them. The opportunity is there for the UK to firmly establish itself as a world leader in floating offshore wind, and we are determined to see this vision and opportunity realised.
Selaine Saxby
I thank all hon. Members for taking part in the debate, and particularly the Minister and his team for their ongoing engagement ahead of AR5. I raised the matter of the strike price 22 times in the Chamber, and I think everyone is well aware of my views on AR5. I hope that we can rectify the issue as we move into AR6 and that the voice of my community of North Devon will be heard, because some of the issues we are dealing with locally will be replicated around the coast. We need to get these things right if communities are to welcome these developments, as they have done up until this point.
We also need to recognise some of the issues in AR6. Yes, we can forecast where this development is, but the planning is being rushed so that a bid can be made in AR6—if it cannot be made in AR6, it may not be made at all. That makes you wonder why those involved are bidding at all if they are not in it for the long term, but also whether we are creating some unintended consequences through the processes we are putting in place. I heard the Minister, but I asked 22 times last time, and I have asked a couple more times in this debate, if the Government might reconsider the speed at which we deliver AR6 for floating offshore wind.
Question put and agreed to.
Resolved,
That this House has considered floating offshore wind.