Floating Offshore Wind: Celtic Sea

Henry Tufnell Excerpts

Thursday 12th December 2024 Westminster Hall

[Henry Tufnell (Mid and South Pembrokeshire) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Efford. I am grateful to my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham) for expressing so eloquently the challenges we face in the Celtic sea. I would point to the work that we have been doing in our all-party group for the Celtic sea to look at this issue from a regional perspective. The opportunities are so vast that this is not a situation where competing interests are trying to divvy things up, so to speak. There is sufficient food at the table for all.

We have exceptional natural resources: high average wind speeds of eight metres per second and water depths of 50 metres. These unique conditions provide the framework for us to achieve the election manifesto commitments that we, as a party, have put at the front and centre of our agenda: clean energy and economic growth.

In my constituency, in Pembrokeshire, one in four children is living in poverty, and these serious systemic issues stretch back over multiple generations. The oil and gas industry radically transformed my constituency, but over time we have gone from having four oil refineries to having just one. We have transferred into natural gas—we have liquefied natural gas—but the challenge, as a result of that decline, is to work out what the alternative is for people in my constituency. How can we ensure that the brightest and the best can remain in the county, succeed in the jobs of the future and see that just transition happen?

The opportunity is there; floating offshore wind is our opportunity—if it is not, then what is? It is our opportunity to bring back prosperity and opportunity and to give people in my constituency hope. However, my hon. Friend the Member for Truro and Falmouth set out the challenges we face, and it is incumbent on us—not only as individual Members of Parliament but as a party of social justice and change—to rise to meet those challenges.

We have been partnering with the Crown Estate and looking at supply chains. We have to tackle the issue of ports. We have to look at CfD and, fundamentally, at the picture on skills. At the end of 2023, there was a total of about 230 MW net of installed floating offshore wind. There was 101 MW in Norway, 78 MW in the UK, 25 MW in Portugal, 23 MW in China, 5 MW in Japan, and 2 MW in both France and Spain. It is unusual, and incredibly exciting, that the UK can play its part in leading on a technology. Not only are we at the forefront of this transition and of combating the global challenge of climate change, but we are looking to play our part in the reindustrialisation process.

Let me turn to the Crown Estate. There have been issues, which my hon. Friend has alluded to, including annual option fees. The annual option fees placed on the leasing round will have a devastating effect on the commercial viability of developers in facilitating the conditions to take forward that reindustrialisation package, provide the new jobs and do that domestic manufacturing, such as the fabrication—anchors and cabling.

The Crown Estate produced a report saying that the first 5.5 GW would involve 5,000 jobs and require 260 turbines, 1,000 anchors and 900 km of cables. But where are those things going to be produced? Will it be in Spain or South Korea? No. I want them done in Pembrokeshire—I want to produce anchors and cabling in Pembrokeshire. I want a future for Port Talbot in providing steel for that fabrication and those substructures. The prize is there—we just have to seize it.

It simply is not good enough for the Crown Estate to sit and think about maximising its own revenue generation from the seabed. It is the Crown Estate’s time to step up. We as a Government have united with it—in terms of the legislation currently going through the House, and in allowing it to have greater borrowing power—but the time for action is now. The Crown Estate cannot sit behind WTO rules and use them as an excuse for inaction; it must seize the day and take control, and in doing so create the right conditions within the leasing round and create the pipeline that we need. Without that pipeline, there can be no security for the developers or the local supply chain. We need to have a clear route as to how we can realise the 25 GW that has been set out. This whole project cannot be about maximising the 12% for the Crown Estate—that is greed. This must go beyond basic greed—one of the seven deadly sins. The Crown Estate cannot be obsessed with maximising its revenue for the sake of greed. This is a project for the benefit of the Celtic sea and the country, and we undertake it because it is so vital.

With the supply chain, there are plenty of opportunities in terms of the numbers, as I have set out. There is exponential growth, from 4.5% to 12% to 25%, which must be set out clearly. As those numbers increase, so will the demand in the supply chain. However, the challenge for local developers, particularly those I have spoken to in my Pembrokeshire constituency, is that there is no certainty of revenue. They cannot plan those contracts, because they are not in place, and they are not in place because there is a lack of strategic planning and the conditions have not been set up. If a developer came in, bid for a seabed lease and got it, they would be hit with annual option fees, and they have had to pay through the nose to get the lease. Why would they pay a 20% uplift on an anchor in Milford Haven when they could go and get it from overseas in whichever country they chose that has the lowest common denominator on price? There is an up-front capital cost here, but the prize is in the long-term realisation of the benefit: cheaper bills, reindustrialisation and the UK once again leading as an industrial, manufacturing force. That is no small prize.

I repeat the words of my hon. Friend the Member for Truro and Falmouth about the challenges facing Port Talbot in getting the money out the door from FLOWMIS, but we have equal challenges in the port of Milford Haven. We need to have confidence, and that confidence comes from Government and from setting those conditions. I have been incredibly encouraged by the words of my hon. Friend the Minister, which is absolutely fantastic, and by the national wealth fund. We now have these mechanisms from our Labour Government in place to create the foundation and confidence for the private sector to invest in ports, and that is where it will all stem from.

This is about the ports and the supply chain, but it is also about the skills. In my constituency, we have the great Pembrokeshire college, which has been doing fantastic work with the private sector to improve the facilities available to students. We recently unveiled a new facility with Shell, which has invested £1 million in Pembrokeshire college. These partnerships between the public and private sectors to upskill people and address the skills gap are so fundamental, but we must have that co-ordinated strategy. Without that, things fall apart because of how complex and difficult this issue is.

We are coming from a situation where we did not have an industrial strategy and where, under the previous Government, the market would decide. We would create the conditions, then we would go to the lowest common denominator on price, and it could be anyone’s business. That is not the way that we approach things. We have a strong lead from this Government. We create the conditions in respect of public investment, allowing and facilitating private investment. That is the way we try to have reindustrialisation and address regional inequality.

My hon. Friend the Member for Truro and Falmouth made a critical point about contracts for difference, which fall squarely in DESNZ. The issue we have had with these stepping-stone projects is that floating offshore wind is an inherently nascent industry, and it is not well suited to that competitive framework, which is driven by the lowest cost per MWh. Fixed wind did not have to contend with that when it began as an industry and a technology, so we are forcing floating offshore wind to play in an inherently competitive market to which it is totally ill suited.

On the topic of grid, capacity is a real difficulty and will be a real challenge. We have a grid connection in Pembroke coming out of RWE at the Pembroke Net Zero Centre. If we can get that pipeline, the power coming off these turbines will be phenomenal and could meet half the UK’s power needs. We have to meet that challenge, so I am glad the Labour Government are taking the bull by the horns, if that is the right expression, by attempting to change the national grid.

The key is merit: we have to prioritise these projects. It comes back to the fundamental question of delivery; the project is complex, and the crux of all of this—the crux of the Government, if I may be so bold—is delivery. It is an honour to be part of this debate, which is about pushing this agenda forward.