Marine Renewables Industry

Alistair Carmichael Excerpts

Thursday 16th January 2025 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered Government support for the marine renewables industry.

I thank the Backbench Business Committee for the allocation of time for this important and, as we head towards allocation round 7, timely debate. I hope that we will be able to influence some of the Minister’s thinking. It is good to welcome him to his place in the Chamber.

It is also good to welcome you to the Chair for the first time, Ms Jardine. You and I have known each other for many years, and I anticipate—I might yet be shown to be horribly wrong about this—that the next few hours may witness the longest I have ever been able to speak in your presence without interruption. [Laughter.] I should also place on the record that my hon. Friend the Member for Taunton and Wellington (Gideon Amos) is celebrating a significant birthday today. What better way to celebrate the acquisition of a bus pass than an afternoon spent in Westminster Hall?

This debate is particularly timely. As well as coming in the run-up to AR7, we anticipate in the next few weeks the publication of a fairly comprehensive piece of work by one of Scotland’s finest universities, the University of Edinburgh. Its school of engineering is about to publish a report on the future economic potential of tidal stream and wave energy in Scotland. I will not spike the release of the report, but it is an enormously significant piece of work, which will significantly progress the debate as we head towards AR7.

Among the headlines from that report may be an indication of the potential of tidal stream and wave energy in Scotland and across the whole United Kingdom. Marine energy could contribute £37 billion gross value added to Scotland’s economy by 2050, and £28 billion of that, most significantly, is from exports. When the Minister speaks to colleagues in Government about the opportunities to grow our manufacturing base, contribute to the economic growth to which we are all committed and, as a consequence, improve export performance, this is the direction in which he might want to point them. Marine energy has the potential to create 62,400 jobs—to put that in context, the wind industry currently supports in the region of 20,000 jobs—and we have the potential in Scottish waters alone to deploy 9 GW of tidal stream and wave energy by 2050.

The opportunities for tidal stream generation come from the fact that as a brand-new industry—how often do we get to say that?—we can shape the supply chain and then export the expertise and products from that supply chain around the world. Tidal stream is not unique to Scotland or the United Kingdom; when we show that it can be done here, others will want to do it in other parts of the world. Devices that are currently in the water have produced a UK supply chain input in the region of 80%. Not many technologies are in a position to make that boast.

The vibe in the industry, if I can put it like that, is fairly positive and upbeat: there are opportunities coming down the road. However, this “overnight success” has been at least 20 years in the making. It has been a long march, and progress is never linear. We have had false dawns and disappointments, but in the last few years it has been demonstrated beyond any measure of doubt that obvious and visible demonstrations of Government support make a real difference in getting this industry towards the point of commercialisation and the opportunities that that will bring.

At the time of the fourth allocation round, the then Government committed to the first ringfenced pot for tidal stream generation. That had a massive impact, not just as a consequence of the opportunity that it provided, but as a signal that the technology was taken seriously by Government and was being given opportunity and support from Government. It is to that series of signals that we now need to look, because although we have made significant progress, we are not yet at the point of commercialisation. We do need to do a little bit more in order to get there happily.

[Lorraine Beavers (Blackpool North and Fleetwood) (Lab)]

Does the right hon. Gentleman agree that the Government need to give leadership and clarity to the tidal sector, including by explaining whether the criteria for well developed tidal range proposals published by the last Government are being taken forward by the current Government, so that projects like the Wyre tidal barrage in my constituency will be better informed when going forward with their proposals?

[Mr Carmichael]

I do agree. I suspect that I do not have as much expertise as the hon. Lady in tidal barrage—or whatever we are calling it these days. Most of the interest I have developed over the years is in tidal stream, but there is never going to be a single technology or a single silver bullet here; there has to be an opportunity for all the different technologies to contribute. The USP of tidal energy, however we capture it, is of course its predictability, so it can contribute to baseload. I will discuss later how the industry is able to engage with Government, because there are parallels to be drawn with what has been done in the past for the oil and gas industry, which might now be done for renewables, particularly marine renewables.

I shall first dwell briefly on the progress we have made thus far. Orbital Marine Power, for example, now deploys the world’s most powerful tidal turbine—in Orkney, obviously. It is estimated that that device, manufactured in Dundee, has on its own created something in the region of 80 full-time equivalent jobs across the United Kingdom. Since its incorporation, Orbital has raised and deployed £84 million of capital. It won two contracts for difference in round 5, totalling £7.2 million, on top of the £7.4 million that it had been awarded in AR4. It is expected that the first power from these contracts will be collected in 2026. These are serious companies doing serious business. This is no longer a sort of aspirational, slightly hippy niche subject; these are serious businesses that require serious attention from Government and regulators.

Nova Innovation, which operates in Shetland, as it happens—I am told other island groups are available—installed the world’s first offshore tidal array in Bluemull sound between Yell and Unst in Shetland. It has six two-bladed horizontal axis tidal stream turbines and is the largest array yet deployed. In AR6 Nova secured three 15-year contracts totalling 6 MW of tidal energy capacity. As a consequence of the last allocation round, the UK is on track to have in excess of 130 MW deployed by 2029. Nova is also involved in floating solar developments, and it is estimated that floating solar has the potential to produce 9.343 TWh in the future. That is the scale of the opportunity that presents itself.

The real catalyst of this serious and determined progress was the setting up in 2003 of the European Marine Energy Centre in Orkney, a body that had its roots in a report of the Science and Technology Committee of this House, which was taken up and driven by Highlands and Islands Enterprise and then the Scottish Executive. I pay tribute to my predecessor in this House, Lord Wallace of Tankerness, who as Deputy First Minister of Scotland saw the opportunity, got the resource and the political drive behind it, and set up EMEC, which is the facility for demonstrating and testing wave and tidal devices.

EMEC’s operations since 2003 have contributed £370 million GVA to the UK economy. EMEC’s success is due in no small measure to Neil Kermode, its director since 2005. I am not going to turn around because he is in the Gallery and I know that he will be staring daggers at me for singling him out, but Neil’s contribution to the success of that institution must not be underestimated, as it shows the difference that one person in the right place at the right time can make.

Another significant driver of progress in Orkney is Heriot-Watt University’s campus there, the International Centre for Island Technology. In recent years, its postgraduate taught courses in renewables have grown a skills base at postgraduate level which has been an important part of driving the progress we have seen. We cannot make progress without skilled people; we can get in all the investment we like, but it will only take us so far if we do not have people who are capable of using and developing it. Despite that, in 2019, the Scottish Funding Council grant scheme that had supported the tuition for these postgraduate taught courses ended. That has precipitated a fall in student numbers.

Although this issue is principally within the Scottish Government’s remit, I want to put it on the Minister’s radar, because if achieving development and deployment goals is part of UK Government policy, there must be a means of finding UK Government money for these courses. Whether it is done by sponsorship of places or some other means, the cost of 20 students a year at £9,200 each would be £920,000 over a five-year period. Think about that in the context of the numbers that I have spoken about—the potential that the sector adds to the UK economy. If we do not make this investment now, we will be penny wise but pound foolish.

I have some key asks of the Government as co-chair of the all-party parliamentary group on marine energy, in consultation with the Marine Energy Council, Scottish Renewables and RenewableUK. The most important thing, as we head towards allocation round 7, is an increase in the ringfenced budget for marine energy. The last three consecutive ringfences for tidal stream through contracts for difference have delivered an unprecedented deployment pipeline, but the last round saw a fall in the contracted amount at a point where we really needed to build momentum for the sector. I am told by those in the industry that there is sufficient eligible capacity to ensure that there would be competition for a ringfence set at that level. Scottish Renewables and the Marine Energy Council believe that the UK Government should set a £30 million ringfence for tidal and a £5 million ringfence for wave energy in this year’s round—a round, incidentally, that they described to me as “crucial”.

We also look to the Government to enable support for marine energy through GB Energy and the national wealth fund. High capital costs and unconventional risk profiles are hindering some of the progress in securing adequate finance for a move towards large-scale commercial construction. GB Energy and the national wealth fund could accelerate deployment of and embed UK content in marine energy projects. They could provide finance under commercial terms for viable projects that have secured a CfD. That is not asking them to make a particularly risky investment, but it would allow them to bring to final investment decision, and thus construction, some of those projects in this parliamentary term.

The third ask is to provide a voice for marine energy with a marine energy taskforce, which brings me back to my answer to the hon. Member for Blackpool North and Fleetwood (Lorraine Beavers). In addition to supporting investment, both the Scottish and UK Governments have an important role to play in bringing key stakeholders together. Again, it is about sending signals. Scottish Renewables and the Marine Energy Council believe that the UK Government should establish that energy taskforce to develop a strategic road map, to tackle barriers to deployment, to secure investment, to increase innovation funding and to deliver value for money.

When I was in Government, we set up a body for the oil and gas industry called PILOT. It was essentially the forum in which all the various majors, and those with any production interests in the UK continental shelf, could sit down and inform Government on the progress of their industry, and on the strengths, weaknesses, opportunities and threats. That was a formal body, so that there was a degree of transparency associated with it. If PILOT could be set up for the oil and gas industry in the past, a similar body for marine renewables would be a particularly positive development. Again, it is about sending signals to the markets to give them the confidence to make the necessary investment.

We are looking for the Scottish Government—this is obviously not a point for the Minister—to prioritise marine energy in their energy strategy; for the Minister to speak to his colleagues in other Departments as we get the industrial strategy; and for both Governments to set bolder targets, which we believe would boost investor confidence. These asks do not come with particularly large price tags attached. The CfD levels would of course be a significant increase, but that is money that is already there and accounted for. Everything else is essentially about sending signals. We saw at the time of the creation of the first ringfence, at AR4, that sending these signals can be an enormously significant catalyst for investment.

There are a couple of issues that I want to put on the Minister’s radar. They do not necessarily fall under his portfolio, but I know that Ministers talk to each other. First, as the deployment of marine renewables and offshore wind continues to develop apace, there has to be some mechanism for holding the ring between renewables and other users of the sea and the seabed. The Minister knows that I have big concerns about the role that has been given to the Crown Estate Commission as owners of the seabed. I would like to think that the commission would be a body that could hold the ring, as it owns and licenses the use of the seabed, but experience tells me that it does not always work out like that. If we give the powers to the Crown Estate Commission that are anticipated in the Crown Estate Bill, which is going through the House, while retaining the obligation on it as a primary duty to maximise return to the estate, then there could be an issue. To be successful, we have to be able to bring island and coastal communities along with us, otherwise this becomes another thing that is done to those communities, rather than something in which they feel they have a role.

Finally, if we are going to deploy more resource at sea—and obviously, I think we should—we have to take the question of cable security seriously. We have to look at what happened just before Christmas, when the Russian so-called ghost fleet cut the cable going into the south of Finland. We know that Russia has had some activity, which we believe to be malign, in the UK continental shelf, so let us get ahead of the game and take that seriously.

The placing of cables on the seabed will only become more significant. I recently met Xlinks, which is bringing a significant amount of solar energy from Morocco to the United Kingdom via a subsea cable, which it is burying as it goes. It is at these points that we realise that with every opportunity there is a threat, and we must take the threats seriously. That is not within the Minister’s purview, but at the end of the day it has to be part of the way that we approach the outcomes.

Thank you for the opportunity to bring these concerns to the House, Ms Jardine. I am thankful that a good number of colleagues have stayed here on a Thursday afternoon. I appreciate their commitment, and I hope it will bear fruit.

[Christine Jardine (in the Chair)]

I remind Members that they should bob if they wish to be called in the debate.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

I have quickly written this speech while others were speaking, so if it is a bit general, it will be because of haste. I have just read it twice, and I thank the Lord I should be able to decipher my writing.

I thank the right hon. Member for Orkney and Shetland (Mr Carmichael). I have said it before, but I really do mean it: he brings many issues to Westminster Hall and the Chamber, and always with calmness, which is quite a talent. He also makes sure they are subject matter that all of us from the Gaelic nations—Northern Ireland, in my case—are right away interested in.

I have a big interest in this subject. Since I became an MP, way back in 2010, I have always been aware that Strangford lough, which is in the constituency I represent, has the potential for tidal green energy provision. There was a pilot scheme so many years ago. That was probably the wrong time, simply because the energy generated was too expensive. Things have moved on, and what was not possible way back then is possible now. That is why I wanted to speak on this issue.

The hon. Member for South Devon (Caroline Voaden) mentioned fishing, and I also want to reflect on that. I am a great believer that, when we move forward, as much as possible we have to bring everybody with us, although that is not always possible in this world.

I want to mention a Queen’s University Belfast marine development scheme in Portaferry. Exciting stuff is happening there, and it reinforces the ideas advanced by the right hon. Member for Orkney and Shetland. Strangford is being used as a test site for a groundbreaking marine energy project. That is something that I hoped to bring forward many years ago—for the record, I have not brought it forward, but I have supported bringing it forward. It has been great to see it, and to tell people about it.

Ocean Renewable Power Company Ireland and Queen’s University have announced the successful deployment and commencement of the testing of a new generation of marine hydrokinetic turbines on the Strangford lough tidal test site. This is groundbreaking and visionary, and I am particularly pleased to see it. It is a significant milestone for ORPC, because it is the first time that the company has generated electricity from one of its turbines outside of North America—that is where the innovation and excitement comes from—after 17 previous deployments in America and the USA. We are on the frontline.

The deployment in Strangford lough is the company’s first in the United Kingdom of Great Britain and Northern Ireland. It is part of the deployment of the X-flow project, which is led by Queen’s University. The project includes Applied Renewables Research and the Shell Technology marine renewable programme as industry partners, and is supported by the green innovation challenge fund. That fund is led by the Centre for Advanced Sustainable Energy, and is delivered in partnership—again, partnership is how it all works—with the Department of Enterprise, Trade and Employment at the Northern Ireland Assembly. That is another initiative that I pushed in my time as an Assembly Member, but more so as an MP here, working in conjunction with the Assembly back home.

The purpose of the deployment in Strangford lough is to collect data on turbine performance in a real tidal environment, building on laboratory testing undertaken earlier this year in another project—it never sounds great when I speak Italian, so I will not try to pronounce this; an Ulster Scot speaking Italian is a real challenge. [Hon. Members: “Go on!”] No, I am definitely not doing it; it would be embarrassing. Suffice it to say that the company comes from Rome, in Italy—I will leave it at that. The European Commission funded the project, which is called CRIMSON—commercialisation of a recyclable and innovative manufacturing solution for an optimised novel marine turbine project. It is no secret that I am a Brexiteer, but Europe does some good things, and we have to acknowledge that this is one of them.

Carwyn Frost, who is senior lecturer at Queen’s University Belfast, says that the marine laboratory tidal test site at Strangford lough

“is a unique facility providing developers the opportunity to deploy and monitor their technology in real tidal flows.”

I have had the opportunity to experience that a few times as an MP, as well as when I was at the Assembly. At one time, people swam across Strangford lough for charity; I always wondered how anybody could swim across Strangford lough, because the tidal flows are so extreme that swimmers can start in Portaferry and end up well round the tip of the peninsula. Mr Frost went on:

“The X-Flow project will provide unique insight on the impact of turbulent flow conditions on the control of the crossflow turbine and its blade loading. The fully instrumented turbine by ORPC will provide vital data for assessing the impact of turbulent flow conditions on performance, blade loading and control.”

I want to put that on the record because I believe that the project, which is happening right on my doorstep, is incredibly exciting. I have lived in the Ards peninsula for all but four years of my life, so I feel great pride about this.

The work will facilitate condition monitoring by the Queen’s University marine team, which is committed to working in collaboration with partners. That is how it works: big business along with universities and local government. It is great to see Queen’s University leading the way, and I look forward to the conclusion of some of that research. The way forward is to energise the tidal flows at Strangford lough so that we can all gain—homes and businesses across this great United Kingdom of Great Britain and Northern Ireland, who are crying out for it.

I am conscious that others want to speak. I should have said, Ms Jardine, that I welcome you to the Chair. I apologise; I should have done that right away. It is lovely to see you in your place, and it is well deserved.

As an island nation with a rich history of maritime culture, we must recognise the incredible wealth of life beneath the waves and the imperative to protect it. The hon. Member for South Devon referred to fishing; I want to say a quick word about how important fishing is for my constituency of Strangford. Ours is an inland shore fleet, by and large, based in Portavogie in my constituency and further down in Ardglass and Kilkeel. Marine ecosystems, essential for not only biodiversity but the economy, are facing mounting pressures that demand urgent action. Fishermen depend on the sea for their livelihoods, and I want to support those who fish in Strangford lough and out on the Irish sea.

Northern Ireland has a close connection with the sea. We have 650 km of coastline. The sea is home to an amazing variety of marine life, some of which is found nowhere else in the world. Isn’t that great to say? It cannot be found anywhere else but Strangford lough. That reiterates what I have always said: Strangford lough is unique. Strangford is unique, and I am pleased and privileged to be the MP for the area.

[Mr Carmichael]

And they’re fortunate to have you!

[Jim Shannon]

The right hon. Gentleman is very kind.

Strangford is at the junction between significant bodies of water, and it contains a thriving commercial fishing community, primarily based on the inshore fishery. A significant number of fishermen fish out of the local fleet and there is also an important processing plant sector, tied to the inshore fishery, that produces mussels, cockles, whelks and shrimps. The fishery is one of the most important in the country and local people feel passionately about it. They and their families have been fishing these waters for generations and their views are deeply rooted in tradition.

The hon. Member for South Devon put forward a case: to move forward with all our great technology and establish all the green marine energy that we can. I support that. Some people in Northern Ireland may not share my opinion, but I think it important for us to move forward. However, we also need to protect our fishing sector, and I make a special request on its behalf. What is required is a regulatory framework that is flexible, adaptable and responsive to changing conditions at sea. Unlike land-based conservation, whose ecosystems are more static, marine ecosystems are dynamic and can change year by year. We must be able to adapt our policies to the changes, ensuring that our approach to marine energy also supports our fishing sector and those who—let us be honest—vote for me. Let us make sure that we deliver for them as well.

--- Later in debate ---

[Michael Shanks]

I will touch on the Crown Estate later in my speech. On that specific point, I am afraid that I fundamentally disagree with the idea that devolving the Crown Estate is the answer, and I take issue with the suggestion that the Crown Estate’s considerations in Wales somehow come from Whitehall. I have met a number of representatives of the Crown Estate, and they are in engaged with the Welsh Government and with communities in Wales. If we can do more on that, I am very happy to reach out to the Crown Estate, although I am not directly responsible for it and it is not accountable to me. Of course, it has published a number of strategies recently and there is more coming on the long-term vision for the Celtic sea and other parts of the Crown Estate in Wales. It is about partnership work, which includes not just bringing together the Crown Estate but how we look at the planning system and consenting, as well as the strategic spatial energy plan more broadly to plan for the long term. I will come back to some of those points later.

Although marine renewables are not at the centre of that clean power action plan to 2030, they will hugely benefit from the actions that we will deliver through it, not least on grid connections. Grid connections are all about future-proofing the grid in this country so that it can meet the demand of the future, and prioritising a grid queue that has got out of control with over 700 GW waiting to connect, which is simply not deliverable.

I would like to turn to the issue of funding, but first I wish a happy birthday to the hon. Member for Taunton and Wellington (Gideon Amos), who does not look a day over 21—but that is the last time I will pander to the Lib Dems. He raised a point about Great British Energy, as did a number of other hon. Members, many of whom I cannot help but notice did not vote for it, but now want it to be headquartered in their constituencies and deliver significant amounts of funding. Great British Energy will play a role in this space. It is our first publicly owned energy champion, and it will deliver and deploy clean power across the country and help with some of the innovation and development work.

Marine renewables are exactly the kind of technology that Great British Energy might invest in at an early stage and have a significant impact on, rather than technologies that are at a more confident stage. Hon. Members may not have had the opportunity to reach out to Great British Energy—the Bill is still going through the House of Lords, so it does not technically exist yet—but the start-up chair, Jürgen Maier, has had a number of meetings across the UK, has engaged on questions about a whole range of technologies and is keen to continue to do so. It will be for Great British Energy, as an independent company, to make its own investment decisions based on a whole range of factors, including the return on investment potential, but I see marine renewable technology as a potential benefit for it.

We think that tidal stream energy will play a significant role, particularly beyond 2030. As many Members raised, tidal stream will bring balancing benefits to a future electricity system that will have renewables at its heart. The balancing role that tidal can play—as a baseload, in the traditional way of thinking about the electricity system—would be important. Currently over half of the world’s tidal stream deployment is situated in UK waters. However, this Government want to go further and faster, as the technology has huge potential.

Aside from having one of the world’s best tidal resources, the UK also hosts world-leading marine energy hubs. Many hon. Members spoke about the EMEC. I have been pleased to speak to the EMEC over the last few months; the Minister for Climate, my hon. Friend the Member for Bristol East (Kerry McCarthy), visited recently and I hope to get to Orkney to do the same at some point.

When we came into power, the Government took the contracts for difference option that had been started by the previous Government and increased the budget to try to get as many projects as we could over the line. That led to a 50% increase in the ringfence for tidal stream to £15 million in the last allocation round. That demonstrated our commitment to the technology and ensured that 28 MW of tidal stream was secured in allocation round 6, including 9 MW for projects based in Orkney.

[Mr Carmichael]

The creation of the ringfence in AR4 had an absolutely transformative impact, so my sense is that meeting the industry’s request for a much bigger ringfence in AR7 could do similar. I am not expecting the Minister to tell us today whether that is the direction of travel that the Government are intending to take—although he is welcome to—but could he at least tell us when we might get an answer on that?

[Michael Shanks]

The right hon. Gentleman makes an extremely important point. One of the things we announced before Christmas in the clean power action plan was the broad outline of where we see allocation round 7 progressing this year, alongside the clean industry bonus. We will be saying more about that in the weeks ahead when we launch the initial information on what it will look like, but I am glad that the right hon. Gentleman is not surprised that I cannot announce anything today about what ringfences might be in place.

It is a tricky balance. The aim of the CfD and the reason that it is effective at what we want it to do is that it has to balance the deployment targets that we want to see with the critical role of delivering value for money for those who will end up paying for it—the consumers and all our constituents. Ringfences have an important role to play, but there is a danger that a ringfence could lead to us paying significantly more for a particular technology than we might want to.

[Mr Carmichael]

The Minister is being very generous. Actually, the setting of the ringfence is a process that could be significantly improved by the taskforce being set up, as that would allow the Government to understand what is going on in the industry, which improved understanding could inform decisions such as the setting of the ringfence.

[Michael Shanks]

The right hon. Gentleman is determined to move me more quickly through my speech; I promise that I will come on to the taskforce. He is right that the more visibility we have of projects that might bid, the more aware we can be of what the sizes of ringfences and budgets for each pot in the CfD might look like. A range of factors makes that complex, such as whether projects are at final investment decision stage, or whether planning and consent are in place to allow them to bid into the auctions. There are many factors, but the visibility point is well made. On ringfencing, I hear what hon. Members have said and what has been passed to our Department over the past few months, but we will seek to balance the needs to deliver deployment and to ensure value for money when making these decisions.

A number of hon. Members raised the issues of licensing and consenting, which are at the heart of our aims for reform of the planning system. We want to continue to have a robust planning system in which communities have a voice, but we also want to move much faster in making decisions, so that projects are not held up for years on end.

--- Later in debate ---

[Mr Carmichael]

I thank everybody who has attended. For the benefit of the Backbench Business Committee, who may run the rule over these things, we have had no fewer than 17 Members in the Chamber in the course of this debate, covering the length and breadth of the country. The hon. Member for Truro and Falmouth (Jayne Kirkham) said there was unity in the message; it was almost as if we had been briefed in these matters. This allows me to place on record my appreciation—shared by all who are engaged in this issue, I am sure—of the work of the UK Marine Energy Council, RenewableUK, Scottish Renewables, and in particular, the companies that get the devices in the water. Their commitment and dedication to decarbonisation and the development of this most important sector is nothing short of inspirational. I extend my gratitude to them and everyone who has contributed today.

We are not using the full amount of time that we have been allocated, so I am off to sign up the hon. Member for Strangford (Jim Shannon) for a Duolingo course in Italian. We may benefit from that in the future.

Question put and agreed to.

Resolved,

That this House has considered Government support for the marine renewables industry.