Floating Offshore Wind and Contracts for Difference

Alan Whitehead Excerpts

Thursday 23rd May 2024 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the hon. Member for North Devon (Selaine Saxby) on securing this debate. It is sad, but understandable, that there are not more Members present in the Chamber to take part in or listen to it. I have to say that if more hon. Members had been present, they would have heard a comprehensive and substantive contribution from the hon. Member in support of floating offshore wind, as she has given on so many occasions. I could not disagree with much of what she had to say, and I and the Labour party could strongly support a great deal of it.

The potential of floating wind is now pretty much undisputed. It is a technology that can go where other offshore wind cannot. It is particularly adaptable for deeper waters, more difficult circumstances, and parts of the UK that otherwise would not have much in the way of floating offshore. Floating offshore’s ability to take the offshore wind revolution to its next stage is manifest in the Celtic sea, Scotland and the north-east of England. It will ensure that we take advantage of the wind speeds around the UK, which are such a national and international asset for our country, wherever we can.

Labour want to see at least 5 GW of floating offshore wind—I emphasise “at least”—deployed by 2030. Not only that, but we want to see the arrangements in place to properly support that deployment. We envisage Great British Energy playing a substantial role, taking stakes in future flow as it goes forward and supporting it all the way. We also propose establishing a national wealth fund. That fund will play a substantial role, along with other bodies such as the Crown Estate, in developing the necessary future infrastructure for FLOW.

As we know, at present the infrastructure is sorely lacking, as the hon. Member for North Devon mentioned. The assembly, erection and future servicing of floating platforms all require substantial upgrading of the port facilities. While it is a little bit encouraging that the FLOWMIS programme allocated some funding for port development, it is clearly by no means enough to get the infrastructure properly under way. As RenewableUK recently said, we need at least 11 ports to support floating offshore wind, not just Port Talbot and the port in Scotland supported by FLOWMIS.

We come then to the question of how we actually get at least 5 GW of FLOW installed by 2030. As the hon. Member for Glenrothes (Peter Grant) pointed out, if we do the sums on our ambitions for offshore generally and FLOW in particular, we have to move ahead far more quickly in allocation rounds than we have done in the past and are anticipated to do in the immediate future. That is against the backdrop of pretty total failure to fund and support either FLOW or offshore fixed wind in the most recent allocation round, and to a considerable extent in the allocation before that.

The figures for how much we must put in place per allocation round, in both fixed and floating offshore wind, over the next several rounds are compelling. We have to move far faster and far more extensively to secure those arrangements for the future.

For FLOW, moving into AR6, the prognosis appears pretty bleak. It looks like perhaps just one FLOW project will actually fit in the pot 2 budget—the budget FLOW sits in—despite, as the hon. Member for North Devon said, there being at least four shovel-ready projects, ready to go right now, that could easily fit within that allocation were it made available. I do not think that includes the Hexicon project—a really important project which needs enormous support, because it has twin-turbine capacity, which is a further step forward in FLOW technology and can take the whole FLOW arrangement forward.

We have the beginnings of a real breakthrough as far as FLOW is concerned, but it is probably directly hampered by what AR6 has in store for us. That should not be allowed to stand. Of course, we are in rather different circumstances than we were in yesterday morning. I might have been standing here today asking the Government to do various things over the summer to sort out some of the problems; what I will be doing is asking the next Government, whoever they are, to get on with it quickly, particularly because AR6 is already well through its various design iterations and there is a limited window for changing anything in it before the tendering for the various projects. Whatever party comes in after the election, this issue will pretty immediately land on the desk of the Government, and by “pretty immediately” I mean that the new Government will have to get AR6 and floating offshore wind right possibly within a month.

The problem for FLOW is not the uplift in administrative strike price. The Government actually did not do a bad job of looking at where the price was and where it should be for AR6. The problem is the budget that has been allocated to this particular pot. Were there to be a reasonable uplift in that budget, it is highly likely that a number of the shovel-ready projects would be successful in AR6 pot 2. Of course, I cannot specify what a new Government are likely to do, but the case for early action to put that right is compelling. Even today, I hope that the Minister will commit himself to getting that action under way in his Department, as far as he has any capacity in the few days before we all pack up and start knocking on doors—if he has not already.

This is a looming loss of opportunity for floating offshore wind, and there is a wider prospect that a technology in which we are world leader will almost immediately start falling away. As the hon. Member for North Devon said, if we do not get the projects under way early, there will be a chain reaction: people lose confidence in the investment, they take their investment elsewhere, the projects do not progress, the appetite for investment in infrastructure starts to fall away and the whole thing starts to disintegrate. We are at a vital juncture. In their last few days, I hope that the Government can grasp the opportunity of making investment in FLOW right.