Energy in Wales

Geraint Davies Excerpts

Thursday 14th September 2017 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

Thank you very much, Mr Paisley. It is a great pleasure to follow the excellent speech made by my hon. Friend the Member for Ynys Môn (Albert Owen). As the Minister will know, within the next few weeks the Government will launch their clean growth plan. I very much hope that he will use all his energies to ensure that the Swansea bay tidal lagoon, the tidal lagoon planned for north Wales and rail electrification to Swansea will be in that plan. Without trying to be rude to him, he is a Minister in the Wales Office: my great fear is that it is a small Department with very little bite and, arguably, very little bark. We hope that he speaks up for Wales on green energy.

I have to say that my other great fear is that the Swansea bay tidal lagoon and rail electrification to Swansea are set to burn on the altar of Brexit fundamentalism. I say that because the Government now face a bill from the EU of perhaps more than £50 billion, which translates to thousands of pounds for every family in Swansea and in Wales. The Government are now dashing out forward looking, long-term green plans—whether rail electrification to Swansea or the Swansea bay tidal lagoon—and prioritising London and the south-east once more, where they are not needed. They are looking at the short term, not the long term, and thinking about how they can pay that bill so that they can keep on pushing forward with a project that people now realise does not resemble anything like what they voted for.

I stood in the general election on a platform of saying that I will defend the 25,000 jobs in Swansea bay that depend on access to the single market, promote rail electrification and keep it on track, keep the lagoon moving forward and oppose fracking. On that basis, my vote went up by 50% in both share and number. I will stick to my pledges and will use this occasion to again promote the Swansea bay tidal lagoon. The tidal lagoon has been talked about for years. George Osborne, the then Chancellor, announced in his November 2014 autumn statement that he thought the lagoon was a fantastic idea and that he wanted to get work on it moving. David Cameron echoed that, and then the Hendry review gave it and its costings a clean bill of health.

However, we now have uncertainty and prevarication, which is making investors, who came around the table to support this important, pioneering project in good faith, wonder will happen next. We face uncertainties owing to Brexit, but people in Swansea and in Wales need the certainty that we will make these investments. On costings, the Treasury is obviously looking around and saying, “Oh, well how does the unit price for the Swansea bay tidal lagoon compare with the spot price for oil?”, but one has to remember—as I am sure you do, Mr Paisley—that 80% of fossil fuels that have already been identified cannot be exploited if we are to avoid irreversible climate change, sustain our commitment to the Paris agreement and fulfil our obligations under the Climate Change Act 2008. In the medium term, the price of oil will go up if we are not allowed to exploit it, while the value of green energy will be much greater. We need to pioneer forward.

Economists’ evaluations of the Swansea bay tidal lagoon showed that, if there is a marginal increase in the actual units of electricity produced—we are talking about a relatively small amount of global energy from this particular lagoon; enough to power 120,000 households —the actual cost is very small for market entry into what could be a global marketplace in a green future. The short termism of the bean counters at the Treasury, who ask about the cost over the next few years, is therefore completely counterproductive. We are looking to have a portfolio of lagoons around Britain and then beyond, to start off an export market during tough times. We know that the lagoon is in fact cheaper than new nuclear and, as I have said, it will be cheaper than oil in the future.

We want a green future for Wales and for Britain, and we want our fair share of infrastructure investment. We should be getting our fair share of HS2, for instance, which would be £2 billion that could be invested in infrastructure, whether that is rail electrification or helping to support the green energy of the future.

I am proud to say that I sit on the Welsh Affairs Committee, and we will produce reports on rail electrification and the lagoon. It is useful to have these exchanges, but the Minister needs to know that other Ministers, from energy to rail, will sit in front of us and will have to answer these questions, rather than flipping them away in the main Chamber in two seconds. We will issue responses to those. Infrastructure investment is important for lifting productivity in Wales, where, as the Minister knows, gross value added is only 70% of the UK average. We are delivering on skills and education to lift productivity, but we need to deliver on infrastructure, which we are not. That is why this is so vital.

On a green future, like my hon. Friend the Member for Ogmore (Chris Elmore), who has just left, I think there is also a case for investing in and supporting Ford’s attempt to generate batteries to support a new generation of electric cars as part of a plan to push forward with electric infrastructure across Wales. Investors need to know what is happening; there has been a lot of uncertainty, and not only with Brexit. While it is a long way away, I understand there was no consultation with industry on the announcement of the ban on sales of new petrol and diesel cars after 2040, which I welcome. We need to work with industry in setting our objectives in the clean growth plan to show our ambition. They should be ready for action, and we should put our money where our mouth is.

The question for people in Wales has always been “How green is my valley?”, and we very much hope that it will be a very green valley. We are here to ask the Minister to do everything he can to support both the Swansea bay tidal lagoon and other green energy, as my hon. Friend the Member for Ynys Môn said, and an integrated green future that provides productivity, prosperity and hope for all of us for the future.

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[Tonia Antoniazzi (Gower) (Lab)]

Thank you, Mr Paisley. You have indeed improved your pronunciation of my name. I would like to thank my hon. Friend the Member for Ynys Môn (Albert Owen) for securing this debate.

With the Government pursuing an ill-advised and short-sighted attack on renewables, the UK is set to miss its target. To put that into context, the EU is set to meet its target of producing 20% of its energy needs from renewable sources by 2020. The UK is missing even its own unambitious targets. That has not happened in a policy vacuum: it is a direct result of the Tories scrapping subsidies for onshore wind farms, solar energy, biomass fuel conversion, and killing the flagship green homes scheme—I could go on, as they have made many more decisions as part of their sustained attack on renewable energy.

In my constituency, we have a company called Gower Power that develops renewable energy projects and specialises in putting them into community ownership. That project will provide enough energy for 300 homes and create more than half a million pounds of funds for developing other community eco-projects. The Gower Regeneration project has been supported by the Welsh Government. It would not have been supported by the Conservatives. It serves as a telling case study into the contrast between a Labour Government’s support for new, renewable forms of energy and the Conservatives’ slashing of support for them.

The Welsh Government are completely committed to renewable energy and, despite significant budget cuts passed down from Westminster, have supported projects such as the Gower solar farm through their Energy Wales plan. Energy Wales is a framework and delivery plan for how Wales will transition to becoming a low-carbon country. Only a few years after its inception, solar farms such as the one in my constituency are springing up as a result of the Welsh Government’s foresight on this issue. Gower offers the perfect environment for a wide range of renewables, including the impressive onshore wind farm in Mynydd y Gwair.

In this harsh climate for renewables, new solutions and radical ideas are needed. We are talking about the Swansea bay tidal lagoon today, which is supported by parties of all colours. It is particularly notable that Conservatives from Swansea took to the seas this summer to support the tidal lagoon. Welsh Tories are behind it, so what is going on? The conditions around the Swansea bay make it perfect for a project of this nature. Both the River Tawe and River Neath enter the sea there. The proposal would build 16 hydro turbines and a six-mile breakwater wall around the area, generating enough energy to power 155,000 homes for the next 120 years. Where the Government’s short-sightedness has created a huge hole in our capacity to power our country in future years, the Swansea bay tidal lagoon offers us a way forward.

The benefits are not just environmental. West Wales was found by the Inequality Briefing to be the poorest region in northern Europe. Large infrastructure projects are few and far between. The Swansea bay tidal lagoon offers a rare glimpse of UK Government-provided hope in an area too often forgotten about by those who currently run Westminster.

[Geraint Davies]

My hon. Friend, who is a great advocate for the lagoon, will know that the constitution of the Welsh Government contains a commitment to sustainable development. With talks about changing powers post-Brexit, does she agree that this is the time to move the power to take leadership of green projects with the resources from Westminster to Wales, so that we can get on with the job of delivering a green future with our lagoon?

[Tonia Antoniazzi]

I agree with my hon. Friend. We have to move forward, and we need the infrastructure commitment from Westminster to be able to do that.

The tidal lagoon has a projected £1.3 billion capital spend, the majority of which will be spent in Wales and across the UK. The construction period is expected to contribute £316 million in gross value added to the Welsh economy and £76 million a year thereafter. In an area still struggling to recover from the loss of mining and manufacturing industries, the Swansea bay tidal lagoon offers a bright future for Wales post-Brexit.

Despite the money invested so far and the Government-commissioned Hendry report calling for the project to be signed off as soon as possible, where are we? The Government have now been sitting on the Hendry review for longer than it took Charles Hendry to conduct it. That is not acceptable. Investors’ money will not last forever, and we need to move on.

Labour’s Welsh Government and First Minister Carwyn Jones are delivering for Wales. We have Labour’s Swansea Council leader Rob Stewart delivering through the city deal. Everybody is behind it, but when the Conservatives in Westminster have a chance to deliver for renewable energy, for investment and for my constituency of Gower, they dither and delay.

Ultimately, it is not just my constituency that would feel the benefits of this project. Swansea bay tidal lagoon is a pathfinder project; we all know that. It offers a completely scalable blueprint for the programme, opening up the opportunity for a fleet of tidal lagoons across the country of varying sizes. Economies of scale apply, so the proposed follow-up larger lagoons could provide an even cheaper energy price. The Swansea bay tidal lagoon is therefore the litmus test for a renewable energy revolution across the UK.

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[Chris Ruane]

That is the point that I am trying to make. They are about tourism, flood defence, manufacturing, skills and research. That is why Welsh Ministers from different Departments have engaged on the issue, and that is what we want to see from the UK Government. We want to see Ministers from the Department for Business, Energy and Industrial Strategy, the Department for Environment, Food and Rural Affairs and other UK Departments engaging positively with Charles Hendry, the Welsh Government and the Welsh Assembly to make sure that these projects go ahead.

One of the arguments made—perhaps not by the Minister, but by others—is that with wind power and solar power, the wind is not always blowing and the sun is not always shining. With tidal lagoons we can predict down to the minute when the energy will be created over the next 125 years. It is all down to the moon and the movement of tides. That could create a predictable baseline of support for our national energy mix, on top of solar, wind power and nuclear, so that we have a good baseload of support.

All these renewable energy sources also become more viable with the advent of batteries. The lagoon will produce energy throughout the night, and if that can be stored in batteries it can benefit the rise of the battery-powered car industry in the UK. I ask the Minister to take these issues way and to consider them carefully. Hopefully, cost will not be an issue. I believe that £700 million will be saved by the cancellation of the electrification of the Cardiff to Swansea route. Can some of that money—just a fraction of it—be used to prime the Swansea economy and to support it?

I move on now to Wylfa Newydd. At £12 billion, it will be single largest investment project in Wales over the next 10 years. It has the potential to transform the economy of not only Ynys Môn and Gwynedd, but the whole of north Wales. Again, the Welsh Government have been working flat out to secure this development. It is their No. 1 priority as far as the economy is concerned. Successful delivery will involve many Welsh Government Departments if we are to maximise the economic benefit and reduce any negative effects on the environment and culture in Wales, so there is total engagement.

Big issues need to be addressed, such as the new power station’s access to the national grid and the building of a third crossing over the Menai strait. All those ducks need to be put in a row before this project starts. Again, we are looking for engagement and consensus between the Minister, MPs and Departments in Whitehall and the Welsh Government. There are many stakeholders, including local authorities; the company itself, Horizon Nuclear Power; the North Wales Economic Ambition Board; and the national Government. There is a good mix of groups and organisations, and we need to gel them together to get this renewable energy up and running in Wales.

[Geraint Davies]

I do not mean to take my hon. Friend off track, but I will just take him back to what he mentioned a moment ago about the cost of rail electrification to Swansea being put somewhere else. I just make the point that there are many of us across Swansea who want to hold the Conservatives to David Cameron’s promise to bring about electrification, and to keep that money in that project and deliver electrification for Swansea bay.

[Ian Paisley (in the Chair)]

Order. I call Chris Ruane. I encourage you to bring your remarks to an end and to start to wind up. I want to give the Minister time to respond.

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[Guto Bebb]

That is the same question that I have been asked several times in Welsh questions and in this debate. The answer is the same: we will provide the right answer in due course, but it is important that we take our time to consider all the implications.

[Geraint Davies]

rose—

[Guto Bebb]

No, I will not take another intervention on this issue. I would like to move on to the main elements of the debate—the issues raised by the hon. Member for Ynys Môn. As he rightly said, there has been an element of political knockabout towards the end of this debate, but it is important to highlight that we in Wales have an opportunity to contribute significantly to the energy mix in the United Kingdom, and to lead on energy generation. To those hon. Members participating in the debate who commented that we have not provided that leadership or that opportunity, I highlight recently consented projects in Wales: the Brechfa Forest wind farm, the Clocaenog Forest wind farm, the South Hook combined heat and power station, the Hirwaun power station, the internal power generation enhancement at Tata Steel and the North Wales wind farm circuit connection, which has benefited both my constituency and that of the hon. Member for Vale of Clwyd. We have had the Brechfa Forest connection; the Glyn Rhonwy pumped storage system, also approved recently; and the Wrexham energy centre at the Wrexham industrial estate.

If we were to believe the comments of the Labour party—

[Geraint Davies]

On a point of order, Mr Paisley. Is it in order for the Minister to refer directly to a comment that I made about the Government’s prevarication over three or four years about the cost of energy, which has created massive uncertainty in the business community, but not to allow me to intervene on that point?

[Ian Paisley (in the Chair)]

You have made a point, but I do not believe that it is a point of order.

[Guto Bebb]

I highlight again, therefore, in response to the comments that this Government have not supported energy generation in Wales, that the facts speak for themselves. The opportunities for further development have been discussed by the hon. Member for Ynys Môn and other hon. Members. I turn particularly to Anglesey’s potential for nuclear.

I think that everybody who is committed to the economic regeneration of north-west Wales is aware of the potential in nuclear. The hon. Gentleman has been rightly applauded by colleagues from all parties for the work that he has done to ensure that the development of nuclear does not happen in a vacuum but is fully integrated into the further and higher education sectors. We in north Wales can only be proud of how the HE and FE sectors are investing, in advance of any decision on the nuclear station on Ynys Môn, in order to ensure that the economic opportunities that come along with it are available for local people as well. We should be proud of that integration. Similarly, he highlighted that renewable energy is a success story in Wales. One of those successes, as I mentioned in an intervention, is the way that the FE sector in north Wales has tried to ensure that work opportunities servicing wind farms off the coast are open to local people.

North Wales is taking an integrated approach. The Government—both the Wales Office and the Department for Business, Energy and Industrial Strategy—recognise that as a positive sign of an area that is looking constructively at how we can contribute to the UK energy mix. Nuclear offers great opportunities as well as great challenges. This Government are the first to have commissioned and agreed to a new nuclear power station, but that was also a long-drawn-out process, because the sums involved and the implications of the investment are significant. The same will be true of the new Wylfa Newydd. It is imperative, in my view, that we reach a successful conclusion. In Horizon, we have significant partners willing to work with Government, but the decisions have to be right.

As a Minister in the Wales Office, I am pleased. I take with a pinch of salt the view of the hon. Member for Ynys Môn that I should not be in my place today, but I would have attended this debate regardless. Since taking my position at the Wales Office, I have been pleased to visit the current Wylfa station before decommissioning started, I will be pleased to visit the new proposed site and I have been pleased to visit Trawsfynydd, because the Wales Office knows full well how the energy mix in Wales can contribute to our economic redevelopment. That is why so many Conservatives in south Wales support the lagoon.

The small modular reactor opportunity is also an exciting prospect. The hon. Member for Ynys Môn mentioned the cabling systems that will be required to transfer electricity from Wylfa Newydd; my understanding is that the potential site of a small modular reactor in Trawsfynydd already has enhanced connectivity to the national grid. I take seriously the opportunity to build a small modular reactor in Trawsfynydd, and I am pleased to say to the House that I will visit there on Tuesday with a Minister for the northern powerhouse. We understand that although the consequences of a decision on Wylfa Newydd or a small modular reactor in Trawsfynydd would benefit the economy in north Wales, they are far more significant than that. As hon. Members have said, they have the potential not just to transform the economy of north Wales—as other projects could in south Wales—but to have an impact on the wider supply chain within the United Kingdom.

Contrary to Opposition Members’ comments, the Government have invested in city region deals for Cardiff and Swansea, so I must ask why we are accused of ignoring the Swansea city region. One reason for the Welsh and UK Governments’ keenness to see a cross-border north Wales growth deal is the energy supply chains. The energy opportunities in north Wales are not confined to north Wales; they are dependent on cross-border connectivity.

[Geraint Davies]

In the short time available, will the Minister say whether he has any idea when the decision will be made on the lagoon—not what it will be, but when it will be made? Will it be part of the clean growth plan?

[Guto Bebb]

I am surprised by that question, because the hon. Gentleman represents Swansea East—

[Guto Bebb]

I apologise; I meant Swansea West. The hon. Gentleman should be aware that the Swansea city deal includes a number of projects, but the tidal lagoon is not one of them, although it has certainly contributed to the development of the city region. I would have expected him, as the local MP, to understand what was within the deal in question.

[Geraint Davies]

I was asking about the timetable, not the city deal.

[Ian Paisley (in the Chair)]

Order. The Minister has not given way, as the hon. Gentleman knows.

[Guto Bebb]

Thank you, Mr Paisley. The tidal lagoon was not part of the Swansea region deal, as the hon. Member for Swansea West should have been aware.

[Geraint Davies]

I am.

[Guto Bebb]

Good.

I should also address the possibility of moving forward with the small modular reactor—as I said, we will visit Trawsfynydd very shortly—and the renewables issues that hon. Members have raised. Our track record on renewables is positive. I fully accept that wind farm costs have fallen quite significantly as a result of investments made, but I think the comments of the hon. Member for Vale of Clwyd about the success of our renewables project since we have been in government were unreasonable. There has been more than £52 billion of investment in renewables since 2010—not an insignificant sum.

As for expected energy generation, we are now on track to deliver 35% of the UK’s electricity demand through renewable sources. Far from being a failure, that is a success story that we should be proud of. I am surprised by the accusation that the Government have not been proactive in our investment within the renewables sector. The evidence points the other way. It is all very well talking about projections, but in 2015 we achieved 25% of energy generation through renewable sources.

These are successful outcomes of an integrated Government policy that should be supported. Their success is reflected in the fall in the cost of renewable sources of energy. Opposition Members talk about failure to support developments in Wales, but it is worth pointing out that 49,662 sites in Wales are generating renewable energy—another success story that we should be proud of.

That point brings me on to an issue raised by the hon. Member for Ceredigion (Ben Lake). I have not responded to him in this Chamber before, so I welcome him to his place. He is absolutely right that one of the success stories of north-west Wales has been community hydro projects. My constituency has a few such projects, and I know full well that there are similar projects in the constituency of the hon. Member for Arfon (Hywel Williams), who is not here today. Community energy projects are really exciting, because they generate electricity locally and give a financial benefit to the locality. The Government support such developments, which are crucial to our energy policy, but we need to highlight to the Welsh Government how they are taxed differently in Wales from in Scotland and England.

The Welsh Government have been very constructive on energy generation in many ways, but the taxes on community projects—on equipment used in small hydro plants, for example—are not beneficial to the development of further community projects. That can be contrasted with the situation in England, which is a result of the UK Government’s decisions, and in Scotland. The Barnett consequentials of the decisions made in England could be applied in Wales; certainly the funding has gone to Wales.

We have a good story to tell on renewables. It is a success story that has really touched the grassroots, but we need to make sure that it continues, and that requires action both from the Welsh Government and from Westminster.

I apologise that I am running out of time, but I would like to allow the hon. Member for Ynys Môn time to conclude. He mentioned marine energy opportunities beyond tidal lagoons. I fully understand why tidal lagoons have dominated the debate—the hon. Members for Gower (Tonia Antoniazzi), for Swansea East (Carolyn Harris) and for Swansea West have a real interest in the issue, as do Members throughout Wales, because we understand the potential—but there is a real opportunity for innovatively designed marine energy proposals in Wales. I know that for a fact, because I have visited potential developments off Holyhead and off the Pembrokeshire coast. This is an opportunity for new technology to be developed to put Wales at the forefront of renewable energy opportunities.

The Government are looking carefully at these issues. We want to be supportive, which is why I have visited sites in Pembrokeshire and Ynys Môn and met Anglesey developers. We want to see renewable technologies operating in Wales, but within the context of an energy policy that is fair to the consumer and the business user and supports the development of the energy sector in Wales and the job creation that goes with it.

I thank the hon. Member for Ynys Môn again for bringing the matter to our attention. I apologise if I did not respond to every issue he raised, but 15 minutes is 15 minutes, and I am more than happy to write to him with further guidance on any specific issues. To hon. Members who are concerned about the wait for the tidal lagoon decision, I say that the Wales Office continues to argue strongly for that decision to be made, but—as has consistently been stated—it must be right for Swansea, for people who support the tidal lagoon there, and for our energy policy and its costs. That is the decision that the Government will deliver in due course.