Contracts for Difference (Sustainable Industry Rewards) Regulations 2024

Earl Russell Excerpts

Monday 13th May 2024 Grand Committee

[Baroness Bennett of Manor Castle (GP)]

My Lords, I have some technical questions, although I begin by broadly welcoming the Government’s direction of travel on this. It really is urgent that we proceed with offshore and floating offshore wind schemes.

I have two questions, one of which refers to the Procurement Act, which I spent more hours than I care to remember debating in this very Chamber when it was a Bill. How does this provision fit with the social value provisions in the Procurement Act? These measures would seem to be carved-out and very narrow provisions within that, so I am wondering how those two legal elements interact. My other question is, this provision provides a mechanism for offshore and floating offshore wind; how will this impact potentially on bids for solar, hydro and other schemes? Will it create a disadvantage for smaller-scale schemes, particularly community schemes?

[Earl Russell (LD)]

My Lords, I note that this SI has not been the subject of any report by the Secondary Legislation Scrutiny Committee. On these Benches, we broadly welcome the SI and its intention to grow the green economy. The UK is one of the best-placed countries in the world for developing and deploying offshore wind to help to provide energy security and meet our net-zero commitments. In 2023, a record 49 terawatt hours, 17% of the UK’s total electricity generation, was produced by offshore wind energy. The UK is aiming to triple its offshore wind capacity in the next six years and desperately needs a successful wind auction this year after the failure to attract any bids from offshore wind developers for the last round of contractual auctions.

The green economy in the UK grew by 6% last year and is crucial to delivering economic growth, the just transition and our climate goals. There are worries about the level of support for future investment in the UK offshore wind sector, and this SI is broadly welcomed on these Benches for recognising this and aiming to improve the situation.

This SI applies contracts for difference sustainable industry rewards—SIRs—which, it is said

“will help to address recent supply chain challenges that could otherwise hinder the deployment of offshore wind (OFW) and floating offshore wind (FOW). They will do so by providing additional revenue support to OFW and FOW developers, through a series of lump-sum payments in addition to their regular CfD payments, should they invest in the economic, social, and environmental sustainability of their supply chains”.