Floating Offshore Wind: Celtic Sea

Jayne Kirkham Excerpts

Thursday 12th December 2024 Westminster Hall

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

I beg to move,

That this House has considered floating offshore wind in the Celtic Sea.

It is a pleasure to serve under your chairmanship, Mr Efford. We are here today to talk about floating offshore wind, particularly in the Celtic sea. It is the next frontier in the UK’s clean energy transition, and is positioned to unlock up to 4 GW of power by 2035—enough to power 4 million homes. There are huge opportunities for Cornwall, the south-west of England and Wales, because the Celtic sea is all around us.

The ambition is to put floating offshore wind in the south-west, where it would complement other offshore arrays. The opportunities that arise from it for Cornwall and the region—for our supply chain, which is poised to expand, for our economy and for our people, who will benefit from skilled, good jobs—are vast. However, to be quite brutal, an ambition is pretty much all that it is so far.

The first question is, why floating offshore wind? Eighty per cent of the world’s potential offshore wind resources are in deeper waters. The Climate Change Committee estimates that the UK needs 100 GW of offshore wind by 2050, which is feasible only through the development of FLOW. FLOW is new technology, and the UK could be at the forefront of developing it for a global market, rather than relying on overseas supply chains and losing out on new investment in UK industries. The potential for jobs is vast.

Why the Celtic sea? Offshore wind has a successful history off the east coast of the UK. However, the wind blows both ways. By developing FLOW in the Celtic sea, we can maximise the energy generated and mitigate the intermittency. Previously, that was not possible due to the depth of the seabed, but new floating technology has opened up the region to development, and this could be a huge opportunity if it is done well. The current Government target is for 5 GW to be produced by FLOW by 2030. It is estimated that a 4.5 GW programme in the Celtic sea, as modelled by the Crown Estate, would lead to £1.4 billion in gross value added and 5,300 jobs in the development of port infrastructure and critical component supply across the region.

However, there are barriers. As I have said, FLOW has not got to the stage that we hoped it would be at by now. One of the barriers is the contracts for difference programme. After the failure of allocation round 5 to secure any FLOW projects at all under the last Government, the most recent funding round, under the new Government, resulted in the Green Volt project in the North sea securing CfD funding in AR 6. However, the budget for that pot was still too low for more than one of the three bidding projects to be successful. To reach the Government’s decarbonisation goals, contracts for difference will need to support multiple FLOW projects in each allocation round and the vital test and demonstration models—the stepping stone models—in the Celtic sea.

Projects in the North sea have received significantly more investment to date, and have more developed supply chains and port capabilities, enabling them to deploy FLOW at lower costs. There is no offshore oil or gas legacy in the Celtic sea; it is a greenfield site and lacks the infrastructure that it will need to scale up. It needs targeted support to reach equity with the North sea. Having had only one successful floating offshore project in previous CfD rounds across the Celtic sea has knocked investors’ confidence, so although this is a fantastic opportunity, there is a risk that investors’ interest in the region could be lost if we do not progress quickly.

To support the development of floating offshore wind, we need upgraded ports, which requires significant capital investment. However, uncertainty about the development of FLOW has led to investors holding off from developing those ports until contracts for difference have been awarded. That has led to a mismatch of timelines, as ports need investment about five years before the project is built out. The floating offshore wind manufacturing investment scheme has provided financial support for Port Talbot, although I understand that it has not yet been deployed. However, other ports in the region are needed to deploy floating offshore wind.

A multi-port strategy needs to be pursued in the Celtic sea to make the most of all the existing ports and specialisms. We have a port in Falmouth, which is mainly why I am here, but there are others in Appledore, Plymouth and Milford Haven, so many ports and port clusters could be got up to speed to help develop floating offshore wind in the Celtic sea. Unfortunately, France is ahead of us; it has committed €900 million to the port of Brest, so we need to catch up. The Government’s £1.8 billion for ports in the national wealth fund could really help to provide the leading investment and certainty required to kick-start the port investment, if it is done quickly and in a strategic way.

The focus of developers in the Celtic sea is currently on the stepping stone, or test and demonstration, projects, which have an important role in giving confidence to the industry and reducing the costs and risk of future commercial-scale projects. There are currently two stepping stone projects in the Celtic sea that could be eligible to bid into the next contracts for difference auction round: Erebus and White Cross. However, both projects face challenges with planning issues, bottlenecks onshore in Devon, and investment.

Hexicon’s TwinHub project is the first and only FLOW project in the Celtic sea to win a contract for difference so far in allocation round 4. It consists of two turbines in Cornwall council’s Wave Hub. However, it now faces the same rising costs as the rest of the renewable energy sector, as well as the challenge of developing a supply chain in a region that has not yet had the opportunity to do so. The contract for difference price has become less viable over time. As a more expensive, smaller test model, it was never going to be commercially viable in that way, but as a stepping stone project, it is crucial to the development of FLOW and associated supply chains in the Celtic sea.

There are options available, such as making a deal with the end user for the energy or allowing TwinHub to rebid for a lower CfD price. A proactive and creative solution needs to be found to make those test and demonstration projects viable, and to scale them up in the long run. A consistent pipeline of leasing rounds in CfDs is key to scaling up skills and supply chains ahead of commercial projects coming forward for development. They would encourage developers to commit to the region, lay down roots, and plan ahead and invest.

Annual option fees also have an impact on developers’ ability to use local supply chains that need more time to establish. That increases costs and pushes projects towards using overseas supply chains, removing the benefits for local communities and investments into the region. More could be done by the Crown Estate to support local supply chains, and once the Crown Estate Bill has become law and investment funds are set up between developers and the Crown Estate, that could change. Falmouth port is prepared to match Government funding to get up to speed to support the TwinHub project. There is a risk that the economic benefits of the project may go overseas without additional funding to help develop the supporting onshore industry.

The development of FLOW in the Celtic sea will need huge amounts of mooring line, electric cables and anchors, which the region is currently not ready to supply. A unifying strategy is needed to encourage the necessary investment to develop those capabilities, along with others across the region. The floating offshore wind taskforce has identified realisable UK value in key components for floating wind, such as installation, mooring and anchors, concrete platforms, steel platforms, operation, maintenance and development services, ports and logistics, and array cables.

At present, the national grid is a large barrier for projects. The TwinHub project has been struggling to get the full grid capacity that it needs until 2037. We need a far-sighted and co-ordinated approach from the National Energy System Operator, which has been newly nationalised. NESO is beginning a holistic network design with the Crown Estate, but that needs to happen quickly and to be scaled up. The Celtic sea is a nationally, and potentially globally, important infrastructure project, and as such, it requires a specific strategic focus from central Government.

Having a GB Energy strategy on Celtic sea FLOW, with hopefully a presence in the region—maybe in Cornwall—would support co-ordination of infrastructure, industry and workforce. However, a complex set of stakeholders is involved, including government at all levels: national, devolved, Welsh nation, and different levels of south-west councils, as well as The Great South West, which is a pan-regional economic partnership. There is also Celtic Sea Power, and the newly set up Cornwall FLOW Commission, which has already done some of the work required to co-ordinate the supply chain and work out how to produce a skilled workforce—this needs a concentrated focus. There is currently no joined-up spatial strategy for the Celtic sea. Consultation on that strategy for the ocean, with fishers, conservationists and scientists, needs to be done very soon.

Having a unified strategy would enable phased development and, crucially, would support the prioritisation of investment in infrastructure and the local supply chain. It would also help streamline planning. Current planning and consent is too slow. A project currently takes an average of 15 years to move from leasing to operation. To reach the Government’s net zero goals, we need to speed up the process. For example, the White Cross test and demonstration project in north Devon has been struggling to get planning consent for more than 18 months.

What do we need? What are the key asks to get this going? A one-size-fits-all approach for the UK has not produced the necessary investment to get floating offshore wind off the ground in the Celtic sea. By putting it in direct competition with the North sea, the Celtic sea is likely to continue to lose out and the UK will lose the opportunity to harness all the benefits FLOW can bring. AR7 could, and should, ringfence funding for floating offshore wind, along either geographical or technological lines. Geographical ringfencing would remove direct competition with the North sea. Technological ringfencing would improve the competitive position of the test and demo stepping stone projects, which are so crucial to getting commercial sites up and running and which play a critical role in maintaining investor confidence in the region.

To overcome the challenges of developing onshore supply chain capabilities to deploy FLOW in the Celtic sea, the Government could support collaborative and strategic investment in ports, rather than putting them in competition with one another as FLOWMIS did. A specific targeted wealth fund could be created to invest in infrastructure, supply chain and to lever in private investment, with particular focus on ports. In the short term, we can have logistics hubs and technologies to include temporary portside space like Tugdock in the south-west. But long term, we need to invest not only in our ports and infrastructure, but in our rail, road and digital.

A co-ordinated approach to how the Department for Energy Security and Net Zero, the Crown Estate, GB Energy and the national wealth fund exercise their procurement and auction processes, and the use of World Trade Organisation and trade and co-operation agreement exceptions for reasons of national energy security and net zero targets, could give freedom to add clauses into contracts and leases to encourage local supply chain building and workforce training investment by developers. Some developers have expressed interest in doing that and are even setting up headquarters to co-ordinate it. The Crown Estate’s option fees and the rules around how they are used could be reconsidered, so that they could be deployed as a catalyst for greater investment in that regional supply chain. DESNZ and the Crown Estate could put supply chain social value and biodiversity net gain incentives directly into those local delivery mechanisms.

We have world-class further education colleges in Cornwall that are ready to step up and provide the specialisms and scale of the workforce we need, but we need direction, funding and a long-term career pathway. We have discussed previously a FLOWmark programme to build up those skills specifically for this industry in our region.

In summary, we need a unified national strategy for floating offshore wind and a regional masterplan for FLOW in the Celtic sea. Without the strategy, we risk losing out on the benefits of this nationally important infrastructure project, including its export potential. We risk the goal of reaching clean energy by 2030. There is a huge future in the Celtic sea, and we need to reach out and grasp it.

--- Later in debate ---

[Jayne Kirkham]

Thank you, Mr Efford; I certainly will not take 27 minutes. I thank the Minister and everybody who has come to this debate. I can tell by the passion how much we want this for the region, as has been set out by so many Members. We have some really deprived, post-industrial areas where we are, and, particularly in Cornwall, they have been post-industrial for a lot longer than other places. We could be a renewable gold mine. If we look at critical minerals, there is so much potential in Cornwall. It has become so desperately important that we start to realise some of those benefits, and there is enough for the whole of the region, for the south-west and for Wales. It is really important to note that this is a huge project.

My hon. Friend the Member for Mid and South Pembrokeshire (Henry Tufnell) and I have taken over the APPG for the Celtic sea from the previous Member for North Devon and my predecessor in Truro and Falmouth, who did a lot of good work on it. It is brilliant to be able to take that work forward as fast as we can. The social value of this will be huge. I will emphasise again and again how important it is that we get there with the jobs and the supply chain and in bringing in some of that fabrication, if we can, such as the manufacturing, the operations and the maintenance, so that we do not have to tow things across the sea.

The clean industry bonus that the Minister spoke about is brilliant, but I want to emphasise how important the contracts for difference will be. They can be used and ringfenced to try to push forward some of the test and demo models; we will have the capacity to do that, if they are used properly to take forward the stepping stone projects. I was really pleased to hear what he said about ports. Our ports are ready to build, for so many reasons; floating offshore wind is one of them, but there are many others. The port task and finish group will be so important, as will having national and regional strategies for how our ports will work together.

On the supply chain and the workforce, I want to emphasise again the possibility of using contract clauses in the auction rounds. We are able to do that, despite World Trade Organisation rules, and perhaps we should think again about the option fees and how they could be ploughed back into areas to build the supply chain and stimulate local operations, assembly and fabrication.

I am very pleased to hear about the discussions with NESO and GB Energy, because the grid has been holding back so many projects across the country. It seems that those projects have been put in chronological order, rather than order of merit or importance. It is good that NESO is looking again at that. A completion date of 2037 for one of the projects was just crazy—we cannot be doing that. It has to change.

To finish—I certainly have not gone on for 27 minutes—I will say that we really need a unified strategy. The hon. Member for North Cornwall (Ben Maguire) was right about bringing people with us, including our fishers and environmentalists. There is huge space in the ocean for all of this to be done successfully, but it really needs championing and leading.

I accept the point about how politically dispersed we are in the south-west compared with regions such as Scotland, which has a national Government who can work with the UK Government. We do not have that in the south-west; we have councils and we have Wales, which is a devolved nation. It is harder to put everything together in one place, and various organisations, such as Celtic Sea Power and the new Cornwall FLOW Commission, are starting to do that, but leadership will be so crucial as we move forward. Finding out where that will come from—whether it is national leadership or regional leadership—will be a very important function of what we do going forward.

I thank you for your time, Mr Efford, and I thank all hon. Members for participating in today’s debate.

Question put and agreed to.

Resolved,

That this House has considered floating offshore wind in the Celtic Sea.