Marine Renewables Industry

Lorraine Beavers Excerpts

Thursday 16th January 2025 Westminster Hall

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I beg to move,

That this House has considered Government support for the marine renewables industry.

I thank the Backbench Business Committee for the allocation of time for this important and, as we head towards allocation round 7, timely debate. I hope that we will be able to influence some of the Minister’s thinking. It is good to welcome him to his place in the Chamber.

It is also good to welcome you to the Chair for the first time, Ms Jardine. You and I have known each other for many years, and I anticipate—I might yet be shown to be horribly wrong about this—that the next few hours may witness the longest I have ever been able to speak in your presence without interruption. [Laughter.] I should also place on the record that my hon. Friend the Member for Taunton and Wellington (Gideon Amos) is celebrating a significant birthday today. What better way to celebrate the acquisition of a bus pass than an afternoon spent in Westminster Hall?

This debate is particularly timely. As well as coming in the run-up to AR7, we anticipate in the next few weeks the publication of a fairly comprehensive piece of work by one of Scotland’s finest universities, the University of Edinburgh. Its school of engineering is about to publish a report on the future economic potential of tidal stream and wave energy in Scotland. I will not spike the release of the report, but it is an enormously significant piece of work, which will significantly progress the debate as we head towards AR7.

Among the headlines from that report may be an indication of the potential of tidal stream and wave energy in Scotland and across the whole United Kingdom. Marine energy could contribute £37 billion gross value added to Scotland’s economy by 2050, and £28 billion of that, most significantly, is from exports. When the Minister speaks to colleagues in Government about the opportunities to grow our manufacturing base, contribute to the economic growth to which we are all committed and, as a consequence, improve export performance, this is the direction in which he might want to point them. Marine energy has the potential to create 62,400 jobs—to put that in context, the wind industry currently supports in the region of 20,000 jobs—and we have the potential in Scottish waters alone to deploy 9 GW of tidal stream and wave energy by 2050.

The opportunities for tidal stream generation come from the fact that as a brand-new industry—how often do we get to say that?—we can shape the supply chain and then export the expertise and products from that supply chain around the world. Tidal stream is not unique to Scotland or the United Kingdom; when we show that it can be done here, others will want to do it in other parts of the world. Devices that are currently in the water have produced a UK supply chain input in the region of 80%. Not many technologies are in a position to make that boast.

The vibe in the industry, if I can put it like that, is fairly positive and upbeat: there are opportunities coming down the road. However, this “overnight success” has been at least 20 years in the making. It has been a long march, and progress is never linear. We have had false dawns and disappointments, but in the last few years it has been demonstrated beyond any measure of doubt that obvious and visible demonstrations of Government support make a real difference in getting this industry towards the point of commercialisation and the opportunities that that will bring.

At the time of the fourth allocation round, the then Government committed to the first ringfenced pot for tidal stream generation. That had a massive impact, not just as a consequence of the opportunity that it provided, but as a signal that the technology was taken seriously by Government and was being given opportunity and support from Government. It is to that series of signals that we now need to look, because although we have made significant progress, we are not yet at the point of commercialisation. We do need to do a little bit more in order to get there happily.

[Lorraine Beavers (Blackpool North and Fleetwood) (Lab)]

Does the right hon. Gentleman agree that the Government need to give leadership and clarity to the tidal sector, including by explaining whether the criteria for well developed tidal range proposals published by the last Government are being taken forward by the current Government, so that projects like the Wyre tidal barrage in my constituency will be better informed when going forward with their proposals?

[Mr Carmichael]

I do agree. I suspect that I do not have as much expertise as the hon. Lady in tidal barrage—or whatever we are calling it these days. Most of the interest I have developed over the years is in tidal stream, but there is never going to be a single technology or a single silver bullet here; there has to be an opportunity for all the different technologies to contribute. The USP of tidal energy, however we capture it, is of course its predictability, so it can contribute to baseload. I will discuss later how the industry is able to engage with Government, because there are parallels to be drawn with what has been done in the past for the oil and gas industry, which might now be done for renewables, particularly marine renewables.

I shall first dwell briefly on the progress we have made thus far. Orbital Marine Power, for example, now deploys the world’s most powerful tidal turbine—in Orkney, obviously. It is estimated that that device, manufactured in Dundee, has on its own created something in the region of 80 full-time equivalent jobs across the United Kingdom. Since its incorporation, Orbital has raised and deployed £84 million of capital. It won two contracts for difference in round 5, totalling £7.2 million, on top of the £7.4 million that it had been awarded in AR4. It is expected that the first power from these contracts will be collected in 2026. These are serious companies doing serious business. This is no longer a sort of aspirational, slightly hippy niche subject; these are serious businesses that require serious attention from Government and regulators.

Nova Innovation, which operates in Shetland, as it happens—I am told other island groups are available—installed the world’s first offshore tidal array in Bluemull sound between Yell and Unst in Shetland. It has six two-bladed horizontal axis tidal stream turbines and is the largest array yet deployed. In AR6 Nova secured three 15-year contracts totalling 6 MW of tidal energy capacity. As a consequence of the last allocation round, the UK is on track to have in excess of 130 MW deployed by 2029. Nova is also involved in floating solar developments, and it is estimated that floating solar has the potential to produce 9.343 TWh in the future. That is the scale of the opportunity that presents itself.

The real catalyst of this serious and determined progress was the setting up in 2003 of the European Marine Energy Centre in Orkney, a body that had its roots in a report of the Science and Technology Committee of this House, which was taken up and driven by Highlands and Islands Enterprise and then the Scottish Executive. I pay tribute to my predecessor in this House, Lord Wallace of Tankerness, who as Deputy First Minister of Scotland saw the opportunity, got the resource and the political drive behind it, and set up EMEC, which is the facility for demonstrating and testing wave and tidal devices.

EMEC’s operations since 2003 have contributed £370 million GVA to the UK economy. EMEC’s success is due in no small measure to Neil Kermode, its director since 2005. I am not going to turn around because he is in the Gallery and I know that he will be staring daggers at me for singling him out, but Neil’s contribution to the success of that institution must not be underestimated, as it shows the difference that one person in the right place at the right time can make.

Another significant driver of progress in Orkney is Heriot-Watt University’s campus there, the International Centre for Island Technology. In recent years, its postgraduate taught courses in renewables have grown a skills base at postgraduate level which has been an important part of driving the progress we have seen. We cannot make progress without skilled people; we can get in all the investment we like, but it will only take us so far if we do not have people who are capable of using and developing it. Despite that, in 2019, the Scottish Funding Council grant scheme that had supported the tuition for these postgraduate taught courses ended. That has precipitated a fall in student numbers.

Although this issue is principally within the Scottish Government’s remit, I want to put it on the Minister’s radar, because if achieving development and deployment goals is part of UK Government policy, there must be a means of finding UK Government money for these courses. Whether it is done by sponsorship of places or some other means, the cost of 20 students a year at £9,200 each would be £920,000 over a five-year period. Think about that in the context of the numbers that I have spoken about—the potential that the sector adds to the UK economy. If we do not make this investment now, we will be penny wise but pound foolish.

I have some key asks of the Government as co-chair of the all-party parliamentary group on marine energy, in consultation with the Marine Energy Council, Scottish Renewables and RenewableUK. The most important thing, as we head towards allocation round 7, is an increase in the ringfenced budget for marine energy. The last three consecutive ringfences for tidal stream through contracts for difference have delivered an unprecedented deployment pipeline, but the last round saw a fall in the contracted amount at a point where we really needed to build momentum for the sector. I am told by those in the industry that there is sufficient eligible capacity to ensure that there would be competition for a ringfence set at that level. Scottish Renewables and the Marine Energy Council believe that the UK Government should set a £30 million ringfence for tidal and a £5 million ringfence for wave energy in this year’s round—a round, incidentally, that they described to me as “crucial”.

We also look to the Government to enable support for marine energy through GB Energy and the national wealth fund. High capital costs and unconventional risk profiles are hindering some of the progress in securing adequate finance for a move towards large-scale commercial construction. GB Energy and the national wealth fund could accelerate deployment of and embed UK content in marine energy projects. They could provide finance under commercial terms for viable projects that have secured a CfD. That is not asking them to make a particularly risky investment, but it would allow them to bring to final investment decision, and thus construction, some of those projects in this parliamentary term.

The third ask is to provide a voice for marine energy with a marine energy taskforce, which brings me back to my answer to the hon. Member for Blackpool North and Fleetwood (Lorraine Beavers). In addition to supporting investment, both the Scottish and UK Governments have an important role to play in bringing key stakeholders together. Again, it is about sending signals. Scottish Renewables and the Marine Energy Council believe that the UK Government should establish that energy taskforce to develop a strategic road map, to tackle barriers to deployment, to secure investment, to increase innovation funding and to deliver value for money.

When I was in Government, we set up a body for the oil and gas industry called PILOT. It was essentially the forum in which all the various majors, and those with any production interests in the UK continental shelf, could sit down and inform Government on the progress of their industry, and on the strengths, weaknesses, opportunities and threats. That was a formal body, so that there was a degree of transparency associated with it. If PILOT could be set up for the oil and gas industry in the past, a similar body for marine renewables would be a particularly positive development. Again, it is about sending signals to the markets to give them the confidence to make the necessary investment.

We are looking for the Scottish Government—this is obviously not a point for the Minister—to prioritise marine energy in their energy strategy; for the Minister to speak to his colleagues in other Departments as we get the industrial strategy; and for both Governments to set bolder targets, which we believe would boost investor confidence. These asks do not come with particularly large price tags attached. The CfD levels would of course be a significant increase, but that is money that is already there and accounted for. Everything else is essentially about sending signals. We saw at the time of the creation of the first ringfence, at AR4, that sending these signals can be an enormously significant catalyst for investment.

There are a couple of issues that I want to put on the Minister’s radar. They do not necessarily fall under his portfolio, but I know that Ministers talk to each other. First, as the deployment of marine renewables and offshore wind continues to develop apace, there has to be some mechanism for holding the ring between renewables and other users of the sea and the seabed. The Minister knows that I have big concerns about the role that has been given to the Crown Estate Commission as owners of the seabed. I would like to think that the commission would be a body that could hold the ring, as it owns and licenses the use of the seabed, but experience tells me that it does not always work out like that. If we give the powers to the Crown Estate Commission that are anticipated in the Crown Estate Bill, which is going through the House, while retaining the obligation on it as a primary duty to maximise return to the estate, then there could be an issue. To be successful, we have to be able to bring island and coastal communities along with us, otherwise this becomes another thing that is done to those communities, rather than something in which they feel they have a role.

Finally, if we are going to deploy more resource at sea—and obviously, I think we should—we have to take the question of cable security seriously. We have to look at what happened just before Christmas, when the Russian so-called ghost fleet cut the cable going into the south of Finland. We know that Russia has had some activity, which we believe to be malign, in the UK continental shelf, so let us get ahead of the game and take that seriously.

The placing of cables on the seabed will only become more significant. I recently met Xlinks, which is bringing a significant amount of solar energy from Morocco to the United Kingdom via a subsea cable, which it is burying as it goes. It is at these points that we realise that with every opportunity there is a threat, and we must take the threats seriously. That is not within the Minister’s purview, but at the end of the day it has to be part of the way that we approach the outcomes.

Thank you for the opportunity to bring these concerns to the House, Ms Jardine. I am thankful that a good number of colleagues have stayed here on a Thursday afternoon. I appreciate their commitment, and I hope it will bear fruit.

Oral Answers to Questions

Lorraine Beavers Excerpts

Tuesday 17th December 2024 Commons Chamber

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

9. What discussions he has had with Cabinet colleagues on potential opportunities for industry under the national wealth fund.

[Lorraine Beavers (Blackpool North and Fleetwood) (Lab)]

10. What discussions he has had with Cabinet colleagues on potential opportunities for industry under the national wealth fund.

[Euan Stainbank (Falkirk) (Lab)]

19. What discussions he has had with Cabinet colleagues on potential opportunities for industry under the national wealth fund.

--- Later in debate ---

[Sarah Jones]

My hon. Friend is a great champion for her area, and we have talked about the opportunities of Falmouth and the surrounding areas previously, and I am sure we will do so again. For too long, our coastal areas have lacked the jobs and opportunities they deserve, and we are determined to change that. Through the national wealth fund we will invest in our ports, and Great British Energy will look to crowd in private sector funding to emerging technologies such as floating offshore wind. We are developing our strategies and working as fast as we can.

[Lorraine Beavers]

I welcome the Government’s publication of the “Clean Power 2030 Action Plan” last week. It will mark a transformative shift towards clean energy that will bring good jobs and industry to the whole country. The plan proposes the use of the national wealth fund to explore nascent renewable generation projects. The Minister will know of the potential for tidal range on the west coast. What steps is the Department taking to explore that potential? Will she meet me to discuss the potential for tidal range projects in my constituency?

[Sarah Jones]

I would love to hear more, as I am sure would the Minister for Energy, my hon. Friend the Member for Rutherglen (Michael Shanks). We are committed to all forms of renewable energy if they are economical, which is why we ringfenced tidal in the latest contracts for difference auction, which resulted in six tidal projects being successful, securing up to 28 MW. We continue to look at what more we can do to support this more nascent technology, including the role that GB Energy can play in the future.