Renewable Energy in the East of England

Peter Aldous Excerpts

Tuesday 11th July 2023 Westminster Hall

[Derek Twigg (in the Chair)]

I will call Peter Aldous to move the motion and then call the Minister to respond. There will not be an opportunity for the Member in charge to wind up, as is the convention for 30-minute debates.

[Peter Aldous (Waveney) (Con)]

I beg to move,

That this House has considered renewable energy in the East of England.

It is a pleasure to serve with you in the Chair, Mr Twigg. The transition to a zero-carbon economy in which the UK’s energy supply is in future sourced from low-carbon and renewable sources, puts the east of England right in the vanguard of the UK’s energy system. Last year, East Anglia’s renewable and low-carbon energy portfolio powered the equivalent of 32% of UK homes. The Opergy Group of energy advisers estimates that by 2035 that figure could rise to 90%. That dramatic transformation— I do not think it wrong to describe it is a revolution—presents our region with a once in a generation opportunity to drive inward investment, create exciting and enduring careers, and play a major role in delivering the UK’s net zero goals.

With wages in the east of England relatively low compared with those in other regions, and with pockets of deprivation, particularly in coastal areas such as my constituency of Waveney, it is vital that we grasp this opportunity. In many respects, a good start has been made, with energy companies setting up bases in the region, such as ScottishPower Renewables in Hamilton Dock in Lowestoft; new training facilities being provided by East Coast College at the energy skills centre in Lowestoft and at the eastern civil engineering campus in Lound; and EDF partnering with the Suffolk chamber of commerce to ensure that local businesses have every opportunity to be part of the supply chain for the construction of Sizewell C.

Up until now, the process has been developer led, with each developer focused on the delivery of their own individual projects. That is no criticism of them; they have simply been responding to the rules of the game laid down by the Government. That approach, however, is no longer viable. The scale of the planned development is such that a more strategic approach is needed. The Government need to recognise the enormity of the task they are asking the eastern region to perform, and they need to put in place the necessary policies, and provide the necessary resources, so that we can help them to meet their statutory targets.

We need a laser-like focus on delivery, which requires the Government to work in partnership with business, councils, and universities and colleges. Adopting such an approach gives us a good chance of delivering for the east, providing people with the skills to take up the new jobs, giving local businesses the opportunity to be part of strong and vibrant supply chains, and putting in place the necessary infrastructure. Infrastructure, whether in our ports or in the transmission networks that run through our region transporting electricity, hydrogen and water, is critical. If it is inadequate, we will fail in our objectives.

I shall focus on three technologies: offshore wind, nuclear and hydrogen. I shall set out the changes that I believe need to be made to the national energy policy framework, what we need to do to provide the necessary enabling infrastructure, and the investment that is needed in schools and training. Generally, Government energy policy has served the UK well over the past decade in promoting low-carbon energy technologies. In today’s geopolitical environment, however, with other countries—in particular the US and the EU nations—seeking to attract investment from globally footloose investors, the UK’s policy framework needs some adaptation to continue to be attractive. Keith Anderson, the chief executive of ScottishPower, writing in The Sunday Times this weekend, said of the US:

“We can’t possibly hope to outspend them. What we can do is outsmart and outpace them.”

That is the approach that we should have in mind when considering amendments to the Energy Bill.

With regard to nuclear, we are moving very much in the right direction by passing the Nuclear Energy (Financing) Act 2022 last year and creating Great British Nuclear this year. The Sizewell C project is gathering pace, and every effort should be made to fast-track early construction works, to make opportunities for significant local job creation.

In offshore wind, the Energy Act 2013 and the contracts for difference mechanism have served the UK well, and the industry is a major British success story, but the policies now require adaptation. Measures that should be considered include an increase in the contracts for difference budget, which RenewableUK has called for, to reflect increased supply chain costs and higher interest rates. In addition, a permanent investment allowance should be introduced for clean energy generators. Such capital allowances would support the growth of clean energy supply across East Anglia and throughout the UK.

The southern North sea currently hosts 37% of the UK offshore wind portfolio, with over 5 GW of capacity. That is due to expand to 15 GW, taking into account projects that are already in the pipeline, but nothing else is planned for after those projects have been delivered. If nothing is done, investment off the East Anglia coast could fall off a cliff edge after 2032. That is a disincentive to continued investment. To address the problem, the East of England Energy Group, Opergy, Cefas, the Offshore Renewable Energy Catapult and other partners are developing proposals with the Crown Estate that involve innovative proposals for seabed and marine habitat restoration integrated with subsea energy storage, which, importantly, do not require new grid connections. When they come forward, I urge my right hon. Friend the Minister to give them full consideration.

The UK’s hydrogen strategy is still in its early stages and is very much focused on industrial clusters. It must be structured in such a way that it can evolve to kickstart investment across more dispersed regions like East Anglia, where there is enormous potential for the industry and where we have three anchor assets. First, there is the Bacton gas terminal in the constituency of my hon. Friend the Member for North Norfolk (Duncan Baker), which can be a piece of strategic national infrastructure for transporting hydrogen around the UK. Secondly, we have Freeport East at Felixstowe and Harwich, which can play a major role in decarbonising the international freight logistics and transport sectors. Thirdly, there is the region’s primary industry, agriculture, in which hydrogen can serve three purposes: as fuel for tractors and combines; for producing fertiliser; and for heating and air-conditioning in the chicken-rearing units that are found across the region. To enable the hydrogen sector to grow, my sense is that we do need the hydrogen levy, as well as a contracts for difference mechanism for hydrogen.

At the moment, the enabling infrastructure required to support these projects, which in international terms are enormous, is woefully inadequate. The Government need to recognise the role being taken on by the east of England of hosting various power stations in the funding made available and by adopting a strategic approach to the provision of utility networks. To date, the process has been piecemeal, with each development being left to secure its own connections. We now need a much more joined-up discussion on future energy infrastructure. That could involve an independent strategic network architect working with the Government, private sector grid operators and project developers to plan the long- term future grid options and connectivity across all utilities, including electricity, hydrogen, water and digital communications.

The Government are beginning to put in place the jigsaw pieces required to enable such an approach to be pursued, with an amendment to the Energy Bill reforming Ofgem’s remit and the Government’s electricity networks commissioner, Nick Winser, due to publish his report on expediting grid development in the coming weeks. A consultation on community benefits is also under way. National Grid is consulting on the Norwich to Tilbury grid proposals, which would provide 180 km of new pylon infrastructure across Norfolk, Suffolk and Essex. Understandably, there has already been much opposition to the proposals, although National Grid has rightly emphasised that it is very much in listening mode. The detailed design of the proposal is a debate for another day and for those MPs whose constituencies the route runs through to lead. There will also of course be a public inquiry.

That said, I shall lay down some possible guiding parameters. First, it is important that the communities that house such infrastructure get a fair deal. There should be an enhanced package of benefits, and Government should look to overcome the technical obstacles that prevent discount electricity prices from being offered to local communities. Secondly, as well as National Grid, it is important that UK Power Networks, as the local distribution network operator, is included in the discussions. In doing so, we can explore ways of adapting the plans for the national grid so as to help to unlock investment and job creation opportunities in the region, which are currently constrained by inadequate power supplies. Thirdly, in the detailed design of the layout of such routes, it is important that steps are taken to mitigate the impact on high-quality and environmentally sensitive landscapes, undergrounding cables where necessary, and using newer pylon designs, such as the T-pylons being installed in the south-west.

It is important to comment on port infrastructure. Freeport East in Felixstowe and Harwich will play a role on the global trade stage, and ports such as Lowestoft will play a bespoke role in securing the transition to low-carbon energy. Associated British Ports has exciting investment plans for its £25 million Lowestoft Eastern Energy Facility, but to make that commitment, it needs clarity and certainty on future offshore projects. A small ports grant, a reinvigoration of the local enterprise zone or a fiscal measure, such as a revenue guarantee, would help, acting as a catalyst for that development.

Skills should be the topic of a dedicated debate, with another Minister from another Department being beamed down to take the place of my right hon. Friend the Minister. To a certain extent, we had that debate last week with the estimates day debate on further education colleges and lifelong learning, during which colleagues from across the House emphasised the need for a significant increase in revenue funding. The construction and operation of such a wide variety of energy generators presents the east of England with a great opportunity to provide local people with the skills required for the exciting new jobs that are emerging.

Some great initiatives have been put in place by inspirational local leaders, such as Stuart Rimmer, the principal of East Coast College, who has brought together energy colleges and trainers from all around the UK in the national energy skills consortium to share best practice. In addition, the coastal energy internship programme, supported by the Ogden Trust and founded by John Best, has made great strides over the past eight years in enabling students to undertake energy internships during the summer months. Given the volume of future energy and infrastructure projects in the east, we need much greater investment in energy-related skills right across civil, electrical and mechanical engineering. Skills can only be addressed locally, in places such as Lowestoft and Great Yarmouth, but there is a desperate need for much greater national and regional co-ordination and investment funding. Local skills improvement plans will help, but I believe the Department for Education made a major tactical and strategic error in not approving the eastern region’s bid for the Institute of Technology.

In conclusion, the energy transition presents the east of England with a once-in-a-generation opportunity to spread economic growth and prosperity right across the region, reaching areas that have felt overlooked and forgotten for too long. A lot of people are working incredibly hard locally to make the most of the opportunity, but as matters stand, I fear we will not realise its full potential. To do so, we need to pursue a strategic approach. Government must provide the necessary resources and work with local government and business to set up a delivery taskforce. If we do that properly, we can lay down a global exemplar of how to carry out the net zero transition, which will not only benefit East Anglian people, but can be replicated across the UK and around the world.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 4th July 2023 Commons Chamber

[Grant Shapps]

The whole House will welcome the hydrogen economy as an important way to store power. It is becoming increasingly apparent that that power is most likely to be used in heavy industry as well as heavy transport. This Government are committed to hydrogen power, but we are also keen to ensure that it does not impact on people’s energy bills, just as those bills are starting to fall thanks to the support that we provided families with this past winter.

[Peter Aldous (Waveney) (Con)]

T8. The contracts for difference auctions have been very successful in kickstarting the British success story that is offshore wind. [Interruption.] However, the mechanism now needs adaptation to maximise job creation in places such as Lowestoft and to ensure that we adopt a strategic approach to the provision of enabling infrastructure such as ports and the grid. I would welcome an update from my right hon. Friend on the Government’s work on this important issue.

[Graham Stuart]

I could only just hear my hon. Friend’s question, as the shadow Secretary of State made it quite hard to hear. The Government recently completed a call for evidence on this very subject, looking at the introduction of non-price factors in the contracts for difference scheme so that it values things other than just cost deployment. My hon. Friend, like all Members on the Government Front Bench, wants the maximum number of jobs created and retained in this country.

Energy Bill [Lords]

Peter Aldous Excerpts

2nd reading
Tuesday 9th May 2023 Commons Chamber

[Peter Aldous (Waveney) (Con)]

I welcome you to your place, Madam Deputy Speaker.

This Bill is welcome, and it can play a key role in delivering a cheaper, cleaner energy system, promoting investment in clean technologies and enhancing our energy security by deploying more home-grown power. The UK has been a global leader in promoting renewables such as offshore wind, but we cannot rest on our laurels. If we do nothing, we will be left behind in the race to attract global investment, which is very much footloose.

The US Inflation Reduction Act and the EU green deal industrial plan throw down the gauntlet, to which we must respond, not necessarily with like for like but by ensuring that we have a regulatory and policy framework that gives investors confidence and certainty. At the same time, we must not forget the demand side. We should be doing better, and we are still searching for the catalyst that will unleash a retrofitting revolution.

I will briefly go through some of the initiatives that are needed to provide the clarity and certainty everyone seeks. First, a duty is needed for Ofgem to consider net zero. It is vital that we keep costs as low as possible for consumers, but expanding Ofgem’s remit to include net zero would unlock more anticipatory investment, which would enable grid reinforcement. This is currently particularly important in East Anglia.

Secondly, introducing a competitive market for major onshore electricity transmission networks is welcome and can deliver real consumer benefits by driving both innovation and downward pressure on costs. Thirdly, the establishment of an independent system operator and planner with responsibility for whole energy system strategic planning is a positive and welcome step towards an improved governance framework.

Fourthly, we need to remove the obstacles that currently block community energy schemes from realising their full potential, and I thus urge the Government to give full consideration to retaining clauses 272 and 273, which were introduced by amendments in the Lords. One of the great challenges of transforming our energy system is that so many people and communities feel as if something is being done to them—as if a burden is being imposed. Community energy schemes enable local people to be part of the solution by participating in the benefits, thereby showing that we are all in it together. As we have heard, hydrogen will be crucial to achieving net zero, and locally, in East Anglia, it has a key role to play. It is very much the new kid on the block. We do not yet know the precise role it will play and, as we have heard, there is a dispute as to who will pay the hydrogen levy. Different views are being expressed on that and it is necessary to consider carefully how best to proceed.

It is also important to send a strong signal to investors by introducing a sunset clause on the powers assigned by the Secretary of State in the Energy Prices Act 2022, which have had an impact on investor confidence, with companies falling out and leaving the sector. The Bill provides an opportunity to amend that Act so as to enable the Government to respond quickly in the short term without unnecessarily impacting on investor confidence in the long term.

My final point comes back to demand-side measures and the need to address the challenge presented by our leaky buildings. Clause 204 is the result of an amendment in the Lords and gives the Secretary of State six months to publish a comprehensive plan to improve UK buildings’ energy efficiency. I urge the Government to commit to doing that and providing firm policies to incentivise improvements across all domestic and commercial buildings.

In conclusion, there are many issues the Government need to clarify, but it is vital, as Energy UK points out, that this Bill is passed with the utmost haste. The pressing need for reasonably priced electricity, for enhanced energy security and to meeting the challenge of climate change head on, together with the opportunity to create exciting and sustainable new jobs in coastal communities such as the one I represent, means that there is no time for delay.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 18th April 2023 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Amanda Solloway)]

We have announced an unprecedented £20 million investment in the development of carbon capture, utilisation and storage and a £185 million extension to the industrial energy transformation fund, and confirmed the first winners of the £240 million net zero hydrogen fund. In addition, this Government have provided more than £2 billion since 2013 to energy-intensive industries to make electricity costs more competitive.

[Peter Aldous (Waveney) (Con)]

T8. Maximising investment in renewables is vital to bringing new jobs to coastal communities such as Lowestoft. I would be grateful if my right hon. Friend confirmed that he is working closely with the Treasury to prepare a comprehensive fiscal strategy that will form part of the autumn statement, and that it will include tax incentives, the reform of capital allowances and measures to unlock private investment in ports.

[Graham Stuart]

My hon. Friend will be pleased to hear that we always work closely with our Treasury colleagues. We launched the floating offshore wind manufacturing investment scheme—FLOWMIS—on 30 March, which is worth up to £160 million and will support investment in port infrastructure precisely to unlock floating offshore wind investment and deployment. The spring Budget set out the Government’s plans to launch the refocused investment zones programme to catalyse 12 high-potential growth clusters across the UK.

Powering Up Britain

Peter Aldous Excerpts

Thursday 30th March 2023 Commons Chamber

[Graham Stuart]

I thank my hon. Friend for his question. Let me follow up with him to talk about more of the details, but I welcome, as he does, the success of the Gigastack Phillips 66 project, the initial hydrogen project. We are leading the world and, having met with Phillips 66, I know that that type of refinery of the future has a real opportunity to play an important part in delivering the green transition on a number of fronts. It is fantastic to see it successful in today’s announcements.

[Peter Aldous (Waveney) (Con)]

I welcome my right hon. Friend’s statement. This strategy rightly focuses on security of energy, its cost and decarbonisation. I would be grateful if he could confirm that the Government will also concentrate on the enormous opportunity to create jobs, and that they will come forward quickly with both a skills strategy and a plan for investment in infrastructure, which should include both the grid and ports such as Lowestoft?

[Graham Stuart]

I thank my hon. Friend for his constructive contribution, as ever. I co-chair the green jobs delivery group. We are working closely with industry to ensure that we get the signals from them across multiple trades, and engaging with the Department for Education to ensure that it can use those inputs to construct various courses to support that. We are absolutely focused. The reason we have a Minister for nuclear and networks is that we recognise that we have to get that infrastructure right. If we get it right—look at the success we have already had and at our investability going forward—it will be a tremendous transition, generating lower-cost energy and making us one of the most competitive economies in the world.

Oral Answers to Questions

Peter Aldous Excerpts

Tuesday 28th February 2023 Commons Chamber

[Grant Shapps]

As I was trying to explain earlier, it is a work in progress. We will make sure that those who suffered are recompensed. What happened was indeed a scandal. I could not have acted faster in this job to fix it and I described the three different parts of activity I undertook, which brought it under control.

[Peter Aldous (Waveney) (Con)]

T8. Offshore wind is a great British success story, but fiscal and regulatory action is urgently required if the UK is to remain an attractive place to invest. Can my right hon. Friend thus confirm that, ahead of the Budget, he is working with the Treasury to introduce new tax incentives and to reform capital allowances so that the UK can compete with other countries, such as the US and those in the EU?

[The Minister of State, Department for Energy Security and Net Zero (Graham Stuart)]

I am sure my hon. Friend is as delighted as I am that the United States and the EU are now following our lead in developing renewables, including offshore wind. We work closely with the Chancellor to ensure that the UK remains, as it has been consistently under this Government, the best place in the world in which to invest in offshore wind.

Independent Review of Net Zero

Peter Aldous Excerpts

Thursday 9th February 2023 Commons Chamber

[Peter Aldous (Waveney) (Con)]

My right hon. Friend the Member for Kingswood (Chris Skidmore) and his team are to be congratulated on carrying out the herculean and timely task of reviewing the UK’s legal commitment to net zero greenhouse gas emissions by 2050. Generally, I agree with his findings and recommendations, and I urge the Government to consider them carefully and to respond to them proactively. This must not be a document that gathers dust on a bookshelf, or to which occasional reference is made in preparation for debates such as this. Instead, it must mark a sea change in how we set about ensuring that the UK realises the full potential of the growth opportunities that net zero presents.

My right hon. Friend’s review calls for action on the “key 25 for 2025 recommendations”. Each of these proposals warrants a debate of its own, but what I shall briefly do is home in on one subject that is not only very important to delivering net zero, but already bringing significant job opportunities to areas such as Waveney and Lowestoft and, with the right policy framework, can deliver even more. What I am talking about is the offshore wind industry.

Offshore wind has come a long way in the past decade. At the outset, 10 years ago, there were many Doubting Thomases questioning whether the industry had a future, saying that, as a technology, it was way too expensive. However, the industry, working with Government, has proved them wrong. It is now an undoubted British success story, with everyone wanting a slice of the action. As a result, the Government have set very ambitious targets for 2030 and 2050 for the amount of electricity that offshore wind will generate.

The industry has brought significant benefits to East Anglia, with half of the nation’s offshore wind fleet anchored off the Suffolk and Norfolk coast. Its construction is being project managed from ports such as Lowestoft, where ScottishPower Renewables and SSE Renewables also have their operations and maintenance bases, and where Associated British Ports has obtained planning permission and is designing its Lowestoft Eastern Energy facility.

This success can be attributed to a combination of the ingenuity of business and the foresight of Government, who, in the Energy Act 2013, set down a policy framework that has been an undoubted success. However, times change. In many respects, offshore wind is a victim of its own success. The scale of the Government’s vision for the future of the industry means that a more strategic approach to its future development is now required. The Russian invasion of Ukraine and the ensuing global gas crisis mean that other nations, in particular the US with its Inflation Reduction Act 2022, are upping their game in developing their own renewable energy strategies. All of a sudden, the UK, which is still the No. 1 world leader in offshore wind, is at risk of being an also-ran. Energy is a globally footloose industry, and it is vital that we respond to ensure that the UK retains its pole and premier position.

I shall briefly outline how I believe this can be done. First, there is a need to streamline the planning process. A more co-ordinated and efficient planning system is required if we are to achieve the 50 GW 2030 target. The establishment of the offshore wind acceleration taskforce will help achieve that, but its reforming work does need to take place at a greater pace.

Secondly, and in the same vein, we need to speed up the development of the grid system, so that offshore wind projects can be delivered more rapidly. We require a new model of grid development where critical investments are accelerated by Ofgem and the transmission owners. To deliver this step change in grid development, the Government should reform the remit of Ofgem through an amendment to the Energy Bill, as recommended by my right hon. Friend the Member for Kingswood and his team.

Thirdly, there is a need for a stable and attractive fiscal framework that enables businesses to make what are enormous investment decisions with confidence. It would be wrong to get into a bidding war with the US, the EU and other nations, but we do need a taxation regime that encourages investment through a compelling range of capital allowances. I urge my right hon. Friend the Chancellor to introduce these in the forthcoming spring statement.

Fourthly, although the framework set down in the Energy Act 2013 has served us very well, it does need considered reform to take account of the harsh new global economic reality. Due to inflation and supply chain constraints, it is necessary for Government to adjust the parameters for future contracts for difference auctions, both with regard to their overall budget and the strike prices that are set. In the longer term, it is necessary to reform the contracts for difference allocation process so as to better balance price and supply chain considerations. In doing so, we will be able to maximise the opportunities that offshore wind presents for economic regeneration and job creation in places such as Lowestoft.

[Wera Hobhouse]

Does the hon. Member agree that one of the biggest problems that we encounter is not so much the CfDs, but the delay that is caused by grid access? The National Grid cannot develop new grid infra- structure until projects have come on board.

[Peter Aldous]

I agree with the hon. Lady. The industry faces a whole range of challenges. The contracts for difference one is very important at the moment, with developers putting forward their bids, but the grid is an important issue. As I have said, the industry has been a victim of its own success. The point-to-point approach to making connections into the grid, which we have had up until now, is, I fear, no longer sustainable and we need to move on to that more strategic approach.

My fifth and final point is that it is important that the Government act as a catalyst for investment in key infrastructure, particularly in ports. That is vital in order not to deflect investment overseas. Such leveraging could include revenue guarantee support for investors for a limited period, to overcome the risk gap at the time of final investment decisions, and looking to see what the UK Infrastructure Bank can do to crowd in private investment.

In conclusion, as I mentioned at the outset, offshore wind has come a long way over the past decade. In many respects it is now the UK’s star player in mission zero. It provides hope and opportunity for communities all around the UK. The existing partnership between business and Government, which culminated in the sector deal signed in Lowestoft nearly four years ago, has served us well. However, the regulatory and policy frameworks now urgently need reviewing if the UK industry is to retain its premier position. If we do not do that—my apologies for this metaphor, Madam Deputy Speaker—there is a risk that we will have blown it.