Offshore Wind Generation (North Wales)

Ian C. Lucas Excerpts

Wednesday 24th October 2012 Westminster Hall

[Albert Owen]

Yes, I absolutely agree. I am sure the Minister will acknowledge this later too: we should not be either/or; we need all the options. We need the base load that nuclear can provide, along with clean coal and gas, but we also need the flexibility that renewables give us, and I hope to develop that argument today.

As I say, I see no contradiction here. If we are to create the vibrant low-carbon economy that the UK wants, energy security, along with food security, is probably the most important challenge that this Government and Governments around the world will face in the future. North Wales is—I will argue that it can continue to be—a major contributor to a low-carbon future. My own constituency of Ynys Môn—the Isle of Anglesey—has been in the vanguard of nuclear generation for more than 40 years, and there are plans for a new replacement station at Wylfa. The island also has early wind farms, comprising of some 77 turbines—from the 1980s and 1990s—in the north of the island. There are plans for a tidal array at the Skerries, and footprints for two biomass plants, so no one can accuse my constituency and its people of not contributing to our energy needs or to the rich energy mix that we want in the future. I support the concept of Anglesey becoming Britain’s energy island, and I hope to invite—I am sure that I will formally invite —the Minister along to see the energy island programme and meet its director, John Idris Jones, and his team, to see how we can take this forward, with local government, local businesses and the Welsh and UK Governments working together.

Given what I have just said, I do not believe that I can be accused of being an “environmental Taliban”. The Chancellor likes to joke about such things, but he should not poke fun at people who want a balanced energy mix that includes renewables, as well as coal, gas and nuclear. Indeed, I do not understand why he made his remarks, because that is his Government’s policy. It was also the policy of the previous Government, so there has been consensus and continuity. Businesses and consumers tell me that they want clarity and continuity on energy policy, so that north Wales and the United Kingdom can become the centre of excellence that we want to see.

The purpose of this debate is to highlight the pros and cons, to focus the attention of Government, at all levels, on providing certainty for investment and to create the high skills and the low-carbon energy sector that can deliver in the future.

[Ian Lucas (Wrexham) (Lab)]

I am delighted that my hon. Friend has secured this debate. He mentioned certainty, and uncertainty is the enemy of long-term investment. Does he agree that one of the problems with the present Government is the incoherence and uncertainty that is causing long-term investors such as Siemens to reconsider investment in the UK, because of the lack of clarity about Government policy?

[Albert Owen]

My hon. Friend is absolutely right. We have just come from a meeting of industrialists, and they highlighted that very point. The Aluminium Federation was present, and it said that international companies are considering pulling out of the UK because of uncertainty about the future. The Minister will be aware of that, and he will try to work with others to allay the fears and create the confidence needed for the future. It is not warm words that will heat our homes or drive industry, but action, and we need to see that.

--- Later in debate ---

[Albert Owen]

Constitutional issues have their place, but it is clear that ports are a reserved UK matter—I have worked with previous UK Governments on developing ports in my constituency—so the Government should take responsibility and treat all UK ports the same. We are not asking for anything extra in Wales; we are asking for a level playing field so that Welsh ports can develop and, importantly, benefit the whole United Kingdom. If the development goes ahead and north-west Wales has port infrastructure, that will help the energy needs of the whole United Kingdom.

I move briefly to tackle head-on some of the criticisms of wind energy. Intermittency is an issue. Just as we need base load electricity at peak times for industry and domestic use, we also have off-peak periods. If hon. Members can remember the long hot summers we used to have, we needed to cut off much of our electricity generation during those times. Wind is an excellent resource in that respect, because turbines can be switched off easily. It is both costly and difficult to turn off a gas-fired, coal-fired or nuclear power station. We need the flexibility that wind and other renewables give us for the future. Of course, on long, cold winter days when the wind is not blowing, we need base load at full capacity, but the other side of the coin appears when we have warm weather.

The economics of wind are also controversial. In response to the mini-inquiry by the Select Committee on Energy and Climate Change on the economics of wind power, DECC gave some interesting figures. Two large companies undertook research on DECC’s behalf, levelising the cost per megawatt-hour of the different technologies for producing electricity. Nuclear was by far the cheapest, but wind was considerably higher. I have the figures in front of me; they give costs looking forward to new technologies that may or may not develop in future. Nuclear costs £60 to £80 per MWh, compared with some £94 per MWh for onshore wind and £110 per MWh for offshore wind. Clean coal and gas using carbon capture and storage cost some £100 to £150 per MWh.

We need to develop those technologies to make them more efficient. Logically, if we can improve gas, coal and nuclear, we can improve our wind technology as well. I have seen some of the new turbines that are being developed. They run for longer, are more efficient and need less maintenance, so we can reduce costs.

Subsidy is not a dirty word to me. Most energy generation in most countries has had some form of subsidy, and emerging gas in this country was 100% subsidised by the taxpayer when it came into effect. I do not feel that we should not subsidise new technologies, although I think that the Government are right to move subsidy under the renewables obligation from onshore wind to offshore, now that onshore is established, to make offshore wind more competitive.

[Ian Lucas]

It is critical to emphasise, because it is not emphasised often enough, that the UK is in the vanguard of offshore wind technology. We must press forward with it. We need to consider the support and assistance given to companies such as Prysmian Cables in my constituency, which has created jobs as a result of the investment in offshore wind. That needs to be factored into the equation when we assess whether to invest further.

[Albert Owen]

My hon. Friend is absolutely right.

Moving on to the additional costs of renewables, one controversial point is the impact of renewable energy on household bills, and on business bills. We talk, rightly, about protecting the consumer, but a lot of British businesses are suffering from the high cost of energy. According to DECC’s estimate, as recently as 2011, public policies, including environmentally friendly subsidies to renewables, comprised about 7% of our bills. The Committee on Climate Change projects that costs might rise as much as 33% before 2020. Of that, two thirds will be contributed by the rising price of fossil fuels and one third by the cost of renewables. I want to put that in a proper context for the future. Yes, there is a cost in moving towards renewables, but there will also be a huge cost if we do not, given the rising price of fossil fuels.

As my hon. Friend the Member for Wrexham said, we must also consider the pluses of investing in wind generation and renewables. As he pointed out in his example, the socio-economic benefits to the north Wales region, and across the United Kingdom, would be huge. RenewableUK estimates that by 2022, the United Kingdom’s offshore wind industry will generate some £60 billion in gross value added, supporting some 45,000 jobs. Other estimates are even higher—as high as 0.4% of UK GDP and more than 90,000 jobs. That is the potential. This debate is about focusing attention on what has been achieved and on the potential for the future. Regions such as north Wales can benefit because of their natural resources, deep-water harbours and skills base.

The Celtic array project is not that far away, Minister, and we need to get this right. We need to get the port development right. We need to increase our skills base. We need stability, so that companies from all over the United Kingdom and beyond have the confidence to invest in our country. I support wind generation on the north Wales coast. It harnesses the benefits for the region. It will have benefits for the north of Ireland, the north-west of Britain and other parts of the United Kingdom, too. Governments at all levels need to work together. I urge the Minister, in the first few weeks in his job, to contact the Welsh Government—the First Minister is responsible for energy matters—and discuss these issues, so that Wales can have the benefits that it deserves for the future.

Wind energy is simply about turning wind into electricity, but we need to generate real jobs, too. We are on the right track—a few years of stable government has given investors what they need. There are concerns now, and I hope that the Minister will address them in his winding-up speech. I will allow other hon. Members their opportunity to discuss what I think is an exciting future, with north-west Wales playing a big part in the low-carbon economy that we all want to build, and the UK being a world leader in that economy.