Offshore Wind

Lord Harries of Pentregarth Excerpts

Monday 11th September 2023 Lords Chamber

[Lord Callanan (Con)]

The noble Lord asks a lot of different questions within what he said. I think his figure of £65 billion refers to the cost of upgrading property to EPC level C, which is a long-term aim. His separate question on hydrogen for heating is indeed a controversial subject. We will make a decision on whether to go ahead with a hydrogen village trial by the end of the year. Similarly, another issue facing us is whether to allow blending of hydrogen into the gas network; you can blend up to about 25% with the current network. Again, that is an issue where, frankly, there are a lot of pros and cons on both sides of the argument. We will make a decision on that by the end of the year as well.

[Lord Harries of Pentregarth (CB)]

The next round comes in six months’ time. Are the Government confident that the price will be set at the right level to attract a good number of significant bids?

[Lord Callanan (Con)]

Of course, that will be our aim. As I said, we want to see more projects consented to and we will try to get the balance right. We will certainly learn the lessons from this round. It is obviously disappointing that we did not attract bids this time, but the offshore wind industry has been a tremendous success for the UK. We have by far the largest capacity in Europe. We have the largest offshore wind farm in the world, the second largest, the third largest and the fourth largest. One reason that developers were unable to proceed this time was pressure in the supply chain. There is pressure in the supply chain because every other country in Europe wants to copy our example, because they can see the success we have made of the offshore wind allocation rounds through the contracts for difference price system. Most other European countries are trying to adopt the same model; they are a long way behind us but trying to adopt the same model now. Of course, that brings pressure in the supply chain, which, adding in the Covid pressures as well, contributes to the increase in costs that industry is experiencing.