Tidal Energy Generation: Ringfenced Funding

Douglas Chapman Excerpts

Thursday 25th November 2021 Commons Chamber

[Ian Blackford]

Absolutely, because it is about that ambition. I hope the Government share our ambition to see this sector generate the level of electricity we believe it can generate. It is about creating the circumstances, by kickstarting the sector with modest Government investment, so that investors come in. We have developed an opportunity for green energy, but let us also think about the opportunities for manufacturing and for a global success story, given the technology that has been developed on these islands.

A proper level of investment will allow existing developments such as the MeyGen project to take off. This project, the world’s largest tidal array, is already exporting significant amounts of electricity, and it has significant capacity to grow. This presents a transformational opportunity for the tidal sector and would once again demonstrate Scotland’s commitment to a green recovery. It could also create thousands of new full-time roles in the Scottish supply chain, helping to achieve its full potential.

We also need to think about the opportunity for our industrial base in Scotland, because the ability to tie in green energy to the powering of data centres, for example, would be an enormous opportunity throughout Scotland, particularly in my area of the highlands and islands. From this ability to generate green energy, we can develop a wider industrial strategy to create the job opportunities and the wealth that we all want to see.

[Douglas Chapman (Dunfermline and West Fife) (SNP)]

My right hon. Friend mentioned supply chains, and 25% of Nova’s supply chain spend is in Shetland, with 98% of its spend being in the UK. If the UK Government are serious about levelling up manufacturing, is this not a golden opportunity for them to get behind it fully, instead of the partial funding we have seen in the last 24 hours?

[Ian Blackford]

My hon. Friend makes an important point. Actually, 90% of the Nova project’s supply chain comes from the UK, but let me put that into context. For a traditional wind turbine, the UK contribution is some 30%. We lost the opportunity to command the supply chain for the traditional wind industry, and here is an opportunity to make sure we do not make the same mistake again. It is important the Government recognise that.

We have an opportunity to have a green future driven by green jobs, but it will happen only if the opportunity is matched by the ambition of Government investment. In truth, the ask from the industry is modest compared with the support offered to other sectors. The ask is for a £71 million ringfenced fund from the UK Government so the sector can flourish. Although the Government’s offer of £20 million in yesterday’s contracts for difference auction is a step in the right direction, it is not the full stride that the sector deserves.

As my hon. Friend the Member for Kilmarnock and Loudoun has repeatedly stated on the Floor of the House, £71 million is a drop in the ocean compared with the billions that have been offered to the nuclear industry. There was seemingly no problem in finding £1.7 billion to further develop and design the Sizewell nuclear power station. There can be no reason, no logic and no excuse for failing to find the £71 million needed to support this vital industry.

Let us remind ourselves of the potential. This is an industry that can grow to 15% of the UK’s electricity production. If we look at a typical day over the last few weeks, on 16 November nuclear contributed 14.6% of the UK’s electricity. We do not need nuclear in Scotland. We can provide the baseload we need from this clean source of energy. We have the potential to deliver safe green energy and to provide jobs and energy security for a fraction of the cost of nuclear.

There are many other favourable comparisons, too. The predictability and stable power output of tidal stream energy offers additional benefits over other technologies for our future energy supply. For instance, this predictability and stability even compares positively with floating offshore wind, which secured a £24 million ringfenced budget in the draft budget for the fourth-round allocation.

The ask is modest and the picture for investment is clear. If we do not grasp this opportunity, other countries will. Countries including Canada and France have already put in place financial mechanisms to capitalise on tidal energy. Canada has a feed-in tariff equivalent to £300 per megawatt-hour, with many multi-megawatt projects in the pipeline. Nova, based in Leith, has an order to ship 15 turbines to Canada. The Canadians would love to have our technology, and they are enticing companies such as Nova to relocate. The French Government are about to announce a feed-in tariff for tidal energy backed by the EU green deal. Japan and Indonesia are piloting projects and negotiating power purchasing agreements to accelerate tidal energy deployment. We need a domestic market for the industry to grow and thrive. It is a case of use it or lose it. It is that stark, it is that simple. The grim reality is that if the UK Government fall short and short-change this sector, the industry could be lost to other countries that are willing to invest in this technology. We are back to where we were with wind and, in many cases, where we were on oil and gas. We must make sure that we do not lose the full extent of this opportunity. We must make sure that tidal stream cannot be lost to Scotland and the UK—it will certainly not be lost to the world, and we need to make sure that we fully play our part .In case that all sounds familiar, we should remember exactly what happened to the wind industry in the 1980s and 1990s. As I have mentioned, only 30% of the UK supply chain for UK wind is domestically generated.

If we are to reach net-zero and have a just transition, we simply cannot repeat those mistakes of the past. Let us just think of the job opportunities through developing the Scottish, UK and global markets. There are expectations of a global market of 100 GW, an industry that will be worth £126 billion by 2050. We have a choice: lead this emerging green energy sector or sit back and watch our sector-leading companies move wholesale to overseas markets. We can embrace the opportunity for green jobs, for base-load energy and for transitioning to that green energy future. We can lead the world in tidal marine or we can walk away from the opportunity to develop and deepen the sector leadership that has been developed in Scotland and the UK.

It will come as no surprise to Members from across this House that I am not the biggest cheerleader or supporter of the UK Government. Normally when I walk into this Chamber, I do so to firmly oppose those on the Government Benches. Today, though, I walked into this Chamber with a different intention, because this is an issue where we have a chance to work together; here is an area, an industry and an opportunity where we can genuinely work together in our common interests. With a modest amount of support in terms of the overall intervention in energy—of £71 million—the industry can reach its potential and we can all benefit. I hope the Government see it that way too, and I hope that yesterday was only the first step and that there are bigger and better strides to come. I hope the Government are listening, and I very much look forward to the Minister’s response.