Offshore Wind Developments

Debate between Julie Elliott and James Gray

Tuesday 6th January 2015 Westminster Hall

[David Mowat]

I was listening carefully to the hon. Lady developing her point on Scotland. I thought that she was going to complete the point by mentioning the potential impact of independence, had it happened, on an environment in which one third of all subsidies are currently cross-border. I was wondering—

[Mr James Gray (in the Chair)]

Order. That would, of course, be quite wide of the mark. The hon. Lady might restrict her comments to the effect of CfDs on the offshore wind market.

[Julie Elliott]

I take that guidance from the Chair, but I will say that we won the referendum.

Given this Government’s refusal to set a 2030 power sector decarbonisation target or allow the green investment bank to borrow, it is unsurprising that investment in renewable energy has fallen. Furthermore, according to the Environmental Audit Committee, investment in clean energy is running at half the level necessary if we are to meet our carbon emission reductions. It is also worth pointing out that the majority of renewable energy projects that have come online since May 2010 started under the last Labour Government.

The offshore wind industry certainly welcomed the increase in the budget for less established technologies from £155 million to £235 million, although it was somewhat tempered by the downward revision in the reference price. Can the Minister confirm that the downward revision will have a significant impact on how much capacity is feasible for the same amount of budget? Currently, approximately 5 GW of offshore wind is in operation or construction, and about another 3.2 GW has been given final investment decision contracts. Do the Government have a fixed ambition for offshore wind, either by 2020 or another date, and can it be assumed that that ambition has been reflected in the allocation funding pot? Does the Minister share the view of industry experts who have projected that the £235 million equates to approximately 800 MW, and is he satisfied with the Government’s ambition for offshore wind in this allocation round? Those questions reflect some of the concerns expressed by hon. Members in this debate.

This Government’s mixed messages and active hostility to onshore wind and solar PV, the cheapest large-scale clean energy technologies, have acted as significant blows to investment in all clean energy technologies. In the last few months, the UK slipped to seventh place on Ernst and Young’s attractiveness index for investment in renewable energy, and Ernst and Young labelled the Government’s

“policy tinkering and conflicting signals”

as

“too much for investors…to handle”.

Does the Minister accept that the Government’s mixed messages have damaged investment?

Although offshore wind remains an area in which the UK proudly leads the world, employing thousands of people and generating the clean energy that we need to meet our carbon emissions commitments, it is clear that costs will have to continue to fall, and allocation rounds should be designed to reflect that priority.