Marine Renewables: Government Support

Graham Stuart Excerpts

Wednesday 7th December 2022 Westminster Hall

[The Minister for Climate (Graham Stuart)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, and I thank all those who have participated in the debate. Westminster Hall often shows the House in its best light, as we are able to focus on a specific issue such as this, and we have heard thoughtful contributions from across the Chamber. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this important debate. He has continued to be a champion for his constituents on this issue.

The British energy security strategy affirms that the Government will aggressively explore renewable technologies, including the potential of tidal power to contribute to a net zero-compliant future. Members will have been delighted that the Government established a ringfenced budget of £20 million for tidal stream developments in pot 2 of the fourth contracts for difference allocation round—AR 4—which has been referred to.

The contracts for difference scheme is our flagship mechanism, and it has been mentioned that the Government are very proud of it. Well, we are very proud of it. It has helped the UK to move from a pretty pitiful position in—let me pick a year—2010, say, to a position today where, instead of less than 8% of our electricity coming from renewables, the figure is more than 40%. That is a transformation, and we have led Europe in that regard.

The CfD scheme is our flagship mechanism for supporting the cost-effective delivery of renewable energy. That support will ensure that the nation’s tidal stream innovators get the opportunity they need to bring their cost of energy down and learn the valuable and exportable —a point made by a number of hon. Members—lessons that come with being the first in the world to deploy a cutting-edge technology at scale.

I have watched the transformation of offshore wind from my constituency in East Yorkshire, and if there is one thing I bring to this role—which is pretty overwhelming in terms of deploying all the technologies at speed, the grid and all the rest of it—it is a desperate desire to see us ensure we maximise our industrial and service capability so that we not only deliver at home, but build up a capability that can export and bring prosperity and a solution to the challenges globally.

I welcome the contributions that have been made today by Members across the House, who have shared their passion for ensuring that we get our policies right so that we maximise the chances of companies staying in Scotland, Wales, England and Northern Ireland and maximise the economic benefits. As well as being good in itself, that will help us to maintain the coalition—this is quite unusual in this country—of the many people who agree that action on climate is the right thing to do and that it can bring prosperity as well as environmental benefit.

The Government have delivered for the burgeoning tidal stream industry. It is now time for the developers to push on, to make good on their promises and their potential and to demonstrate the value for money and scalability that we need from our renewable energy technologies as we transition to an efficient and net zero-ready power sector.

The fourth contracts for difference auction in July this year saw four tidal stream projects, totalling 40 MW, win contracts at a strike price of £178.54 per megawatt-hour. Three of the contracts were awarded in Scotland, to MeyGen and two Orbital projects in Orkney, and one was awarded in Wales, to Magallanes. To put that into perspective, only 36 MW of tidal stream has been deployed worldwide between 2010 and 2020. We really are making significant strides forward. This is the first time that tidal stream power has been procured at this scale, and it provides the industry with a golden opportunity to demonstrate the cost-efficiency and proof of scalability that we need from our sources of renewable electricity.

We hope that other technologies can follow offshore wind in its remarkable reduction in price over just two auctions—from 2015 to 2019 it went from £120 per megawatt-hour to £39.50—but we cannot assume that just because it happened with offshore wind, it will happen with everything. We want to create genuine competitive tension between the technologies because we want not only to take an accelerated path to net zero but to do so in a way that, in the end, brings the UK the lowest and most competitive electricity costs as a base part of our energy system. That will put us in a position to be able to keep energy affordable for families but also make us industrially competitive. There is so much to play for. We have got to get the balance right, and CfDs have done a great job so far.

[Richard Graham]

The Minister is absolutely right, but the challenge for the marine energy industry in delivering that scalability is the certainty that 2021 will not be a one-off but the beginning of a series of contracts that will enable it to develop. Does he agree?

[Graham Stuart]

The broad parameters of allocation round 5 will come out this month, and the more detailed criteria will come out on the eve of its launch in March. I can say no more than that, but I think the direction of travel is fairly clear.

The results of allocation round 4 confirm that tidal stream is a home-grown industry of considerable promise, as colleagues have noted. The UK remains the world leader in tidal stream technologies, with half of the world’s deployment situated in UK waters. Given my passion when I came into this job, the last thing I want to see is British research and development and British invention turned into billion-dollar businesses in other places rather than here in the UK, which is what has happened so often. I want that development to happen here in the UK, and I want to work with colleagues.

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on his chairmanship of the APPG, with the right hon. Member for Orkney and Shetland as his deputy chair. It is so important that we have these specialist interest groups, which can keep Government honest and act as a ginger group—a caucus—to make sure that we think about and get our policies right, so that the promise is delivered.

Europe’s foremost tidal and wave energy testing centre—the European Marine Energy Centre—is on Orkney, as the right hon. Member for Orkney and Shetland said. We have new marine energy hubs developing on Anglesey and the Isle of Wight. In answer to the question asked by the right hon. Member for Orkney and Shetland, I would be very happy to meet him and discuss EMEC and its future.

We have a raft of brilliant developers designing and building tidal stream devices in the UK. That picture is so positive in large part because successive Governments have provided more than £175 million in innovation funding, of which more than £80 million has come since 2010. In 2018, thanks to the extensive support afforded under the renewables obligation mechanism, we were able to build the largest tidal stream-generating array in the world in the fast-moving waters of the Pentland firth.

[Liz Saville Roberts]

It is evident that the Minister understands the potential associated with marine energy for the levelling-up agenda, which I really appreciate. Could he give me a sense of what will happen in Wales with the national grid? Improvements to the grid will be critical if we are to increase generation in Wales, and the timetable for that is essential, because otherwise these are just abstract concepts.

[Graham Stuart]

The right hon. Lady is absolutely right. Since taking this job—about three months ago now—I have been seized with the centrality of that issue. For all the fascinating issues with the different forms of deployment, if we do not have the grid to bring it all together, we will not have a successful system. I am co-chairman of the offshore wind acceleration taskforce as we seek to move from 13 GW of offshore wind, or whatever it is today, to 50 GW by 2030. That is our ambition, and one of the biggest challenges to that is making sure that we have the grid in place to do it, and are carrying colleagues with us while we do so. I am meeting with a group of colleagues today from East Anglia to discuss the onshore impact of that technology.

[Wera Hobhouse]

Will the Minister give way?

[Graham Stuart]

I am still answering the question posed by the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). The offshore wind acceleration taskforce has been working really hard with the regulators, including Scottish and other devolved regulators, because they have their own systems and agencies. We are trying to make sure that we streamline and avoid duplication, and that anything that can be done in parallel is done; we are looking to improve that.

In a sense, offshore wind has been an exemplar for the overall grid system—that is not really the focus of this debate, but we are absolutely focused on that. We have got something called the holistic network design, trying to look at this issue in a more joined-up way for the first time, rather than just linear connections for individual ones, with the grid responding. We are looking at more of a planned approach, and the second holistic network design will come out soon. Floating wind in the Celtic sea, for instance, will be included in that design.

[Jim Shannon]

I thank the Minister for his comprehensive, detailed and helpful response. I just have one very quick question: if at all possible, could he facilitate us with a visit to Northern Ireland? We would be very pleased to show him Strangford lough—the narrows, the waters, and what they can generate. In my discussions with the relevant Minister in the Northern Ireland Assembly, he indicated that there needed to be a direction from Westminster as well, so that would be extremely helpful. I am asking in all honesty whether the Minister, in the generosity of his position, could facilitate that.

[Graham Stuart]

I have a serious problem with the hon. Member for Strangford (Jim Shannon), which is that he is a very hard man to say no to—I do resent that. I will certainly try; I think other duties may take me to Northern Ireland, and perhaps that is something I could fit in. I will certainly try to do so if I possibly can.

Let me pick up on a few of the points that have been made. I want to say a bit more on EMEC.

[Wera Hobhouse]

Will the Minister give way?

[Graham Stuart]

I will not give way to the hon. Lady. We heard her generalised remarks earlier, and I think she had her opportunity.

There are two BEIS overseas funding streams that EMEC may be able to apply for in partnership with developers: the first is the £1 billion net zero innovation portfolio that provides support for research and development, and the second is the energy entrepreneurs fund, which provides small grants to developers of innovative energy technologies. In May this year, BEIS awarded a £5 million grant to a hydrogen technology developer based at EMEC. Two of the CfD AR4 projects are, of course, also based at EMEC, and will be paying lease fees to EMEC from 2026. There are a number of things there, but as I have said, I am happy to meet and discuss it.

Quite rightly, we talked extensively about export potential. We recognise the success of Nova Innovation and the supply of turbines to Canada, and note the support of UK Export Finance, for which I used to be the Minister responsible. I remember Nova coming over my desk and, notwithstanding some of the challenges, being keen to be involved. I remember saying, “If we can’t support someone like this, what are we here for?” I am pleased to see that UK Export Finance, our credit agency, has been able to support Nova.

With regard to further export potential, my officials have met their counterparts in Indonesia and the Philippines on the role of marine energy and what the UK can offer. We need a joined-up approach as we develop here. With the Department for International Trade and other colleagues, we are also reaching out across the world, to ensure that we can show that this is the place in which to develop these solutions and then export them.

I go back to the point about speeding up or expediting, as the hon. Member for Bristol East (Kerry McCarthy) referred to it. Government are working on reforming the planning and environmental consent system, to increase its efficiency and speed, while maintaining proper scrutiny of projects. That repeats what I have already said.

I thank my hon. Friend the Member for Gloucester, the chairman of the all-parliamentary group, for his kind words about my Department. I also thank the right hon. Member for Orkney and Shetland for his kind words about one of my predecessors, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), and his interest in work here.

I look forward to receiving the paper in January. I have touched on the opportunities in Indonesia and the Philippines. I think I have dealt with the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on the CfD delays. I have probably mispronounced her constituency, but I will keep trying—she can tutor me. On the issue of multiple technologies, there are provisions in the Energy Bill, which I am delighted to say we are pushing forward. We are hoping, with cross-party support, to push that through Parliament as quickly as possible. It has a lot of enabling facilities in it—

[Richard Graham]

He will not forget about England, will he?

[Graham Stuart]

I am sorry. I could not hear my hon. Friend.

[Richard Graham]

Will the Minister give way?

[Graham Stuart]

No; I am going to bring my remarks to a close, under the Chair’s steely eye. Notwithstanding the chairman of the APPG’s efforts to get people not to make comparisons, we want to get proper tension in the system. One great thing about tidal technologies is that they could offer that dispatchable power—the kind of baseload needed to balance the system. It is necessary to compare apples with apples. It is that kind of tension we need to judge how much nuclear, for instance, should play in our system. I am pleased to say that the £92, or whatever was the strike price for nuclear, now looks a tremendous bargain. Even Scottish nationalists might recognise that.