Offshore Wind Contracts

Ed Miliband Excerpts

Tuesday 12th September 2023 Commons Chamber

[Edward Miliband (Doncaster North) (Lab) (Urgent Question)]

To ask the Secretary of State for Energy Security and Net Zero if she will make a statement on the implications for offshore wind of contracts for difference allocation round 5.

[The Minister for Energy Security and Net Zero (Graham Stuart)]

The first annual contracts for difference auction—the first that we have ever done—was completed last week and delivered a total of 3.7 GW of renewable electricity, with contracts going to a record number of projects. The auction delivered significant quantities of new solar and onshore wind generation, as well as supporting 11 new tidal stream projects and, for the first time, geothermal projects. It was a competitive auction, set against a backdrop of highly challenging macroeconomic conditions that have impacted the sector globally. Given that this was our first annual round, it was to be expected that it would have a lower capacity than the previous biennial rounds, and, because last year’s round was the first for three years, a higher annual element than that record round.

The Government remain committed to offshore and floating offshore wind projects, and this round provides valuable learning for subsequent auctions. Work has already started on allocation round 6, incorporating the results of the recent round, and we look forward to a strong pipeline of technologies being able to participate. The move to annual auctions means that allocation round 6 will open in just six months’ time, in March 2024, which means that there could be minimal or indeed no delay in the deployment of new capacity through that round.

The Government also remain committed to our target of decarbonising the power system by 2035 and our ambitions for 50 GW of offshore wind, including up to 5 GW of floating offshore wind. Our trajectory for meeting these aims, as well as our legally binding carbon budget 6 targets, is not linear. The outcome for one technology in one auction does not prevent us from reaching those goals.

[Edward Miliband]

What a load of nonsense. No wonder the Secretary of State is in hiding.

This auction is an energy security disaster for Britain, and an act of economic self- harm on the part of the Government. No new offshore wind projects means that families’ energy bills will £2 billion higher and our energy security will be weakened. Worst of all, this was totally avoidable. Ministers were warned again and again about the impacts of higher inflation—in a letter from RenewableUK in March, and again in July—and offshore wind is so much cheaper than gas that they could have raised the price in the auction and it would still have saved billions of pounds for families, but they refused to listen.

First, will the Minister tell us why the Government ignored those repeated warnings? Secondly, he said on Friday that every country was in the same boat, but that is just wrong. Ireland listened to industry and adjusted its price, and had a successful auction in March 2023. Why did the Government not learn that lesson? Thirdly, is not the terrible truth that this episode reveals a much deeper flaw in their approach? For month after month this summer, they claimed that the answer to our energy crisis was more oil and gas, and this is the result. We will now be more dependent on expensive, insecure fossil fuels. We will be more exposed to the whims of petrostates and dictators. Every wind farm that we fail to build makes us more exposed to dictators like Putin, and he knows it.

Bills higher, security worse, jobs lost, climate failure—the Government have trashed offshore wind, the crown jewels of our energy system, raising bills, just as they trashed onshore wind by banning it, raising bills, and just as they trashed home insulation, raising bills. We have seen 13 years of failed energy policy, and all this fiasco shows is that the Conservatives are, quite simply, a party unfit to govern.

[Graham Stuart]

I was pleased to see the other day that the rumours of the right hon. Gentleman no longer being in his position were not true. It is perhaps understandable in that context that he is so passionate about this highly successful round that has seen 3.7 GW on an annualised basis. I think that is a record round. He was a member of the previous Labour Government who left this country with 6.7% of its electricity coming from renewables. In the first quarter of this year, 48% of our electricity was from renewables. It was this Government, with our contracts for difference system, who transformed the economics of offshore wind. We have 77 GW of offshore wind in the pipeline—more than enough. We have 7.5—[Interruption.] The right hon. Gentleman understandably, given the weakness of his arguments, wants to heckle at all times, knowing how easy it is to dismantle them. He asks me where that capacity is, and I can tell him that 7.5 GW is currently under construction.

As ever, the right hon. Gentleman fails to be on the side of consumers. We moved to an annualised auction precisely to ensure that we could learn the lessons from each round, add them to our industry insight and ensure that we could move forward. The projects take multiple years to be developed, and none of them has disappeared. I predict that, moving on from the triumph of 3.7 GW of renewables, which came through successfully on Friday, allocation round 6 will be more successful still. We will continue to build our reputation as the country that has cut emissions more than any other major economy and that has transformed our electricity generation. He mentioned insulation—how he has the gall, I do not know. We have moved from 14% of homes being properly insulated when he left power to over 50% by the end of this year.