Marine Renewables: Government Support

Richard Graham Excerpts

Wednesday 7th December 2022 Westminster Hall

[Richard Graham (Gloucester) (Con)]

I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this timely debate, and for his continued, strong advocacy for both marine energy in his constituency and the great work done by EMEC—which he has referred to—and, more widely, for the cause of marine energy across the United Kingdom. It is interesting that, in this small but passionate debate, we have representatives from constituencies across all parts of the United Kingdom; this is a sector that, in geographical terms, wonderfully complements the work that is being done on offshore wind on the east coasts of both England and Scotland.

I pay tribute—unusually, perhaps, in such a debate—to the Department. BEIS has played a huge role in recognising the value of tides and waves, and the cause of marine energy, to renewable energy made in the UK: it contributes to the energy baseload, domestic energy security, community sustainability—that is an aspect that should not be overlooked—and the creation of green jobs around the northern, western and southern coasts of our island. The work of the Department includes both officials, who have worked hard on the detail, and the commitment of Ministers. The right hon. Member for Orkney and Shetland may have referred to this, but that was epitomised by the visit of the previous energy Minister but two, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), to EMEC in summer 2021, and by the commitment of the Secretary of State at the time—the former Chancellor, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng)—who was absolutely committed to the business of recognising that support for marine energy would be one of the best long-term investments that this country could make. Of course, the truth is that, in adding a separate pot in allocation round 4, the Department effectively moved from philosophical understanding of the issue to practical assistance in a way that had never been done before and, for those not yet convinced about marine energy, not a penny of taxpayer funds is due until the energy is generated.

So far, so good—but what next? Without repeating too much of what the right hon. Member for Orkney and Shetland said, I will highlight four quick things. First, we must keep going; we need a continued pipeline of opportunities to stimulate manufacturing scale and innovation research. The work done on FastBlade by Babcock and the University of Edinburgh partnership at Rosyth, which I saw in the summer, is a model of its kind; it will help to both improve the technology and reduce costs. Secondly, we must reduce the hidden cost of process—that has been referred to in terms of some of the detail around marine licences and the section 36 consent. We can probably all agree that the process, as it is, is both opaque and slow, and could be made much less opaque and much faster. I propose the production of a combined paper on its details from the Marine Energy Council—the chair of which is well known to the Department—which the all-party parliamentary group on marine energy will give to the Minister by the end of January for discussion, consideration and, I hope, implementation as quickly as possible. The Minister has been a great supporter of green energy, work on climate change and the environment in general. I hope that, as soon as possible after he has seen the paper, he will happily come and discuss its implications and what might be done with the all-party group.

Thirdly, and curiously in this context, let us not forget England. One of the problems at the moment is that the strong support, particularly from the Scottish Government, but also from the Welsh Government, means that English bids for the CfD project are rather disadvantaged by not having the same amount of local financial support. A very good project from the Isle of Wight has been put forward. I encourage the Minister to look at that; it needs help to make sure that that area, too, can be levelled up and be competitive in this space. Some approvals are already in place, so it is a case of putting them into action.

The fourth point is to not forget tidal lagoons. I know the Department has a lasting bruise from the saga over the Swansea tidal lagoon project, in which I had a strong interest, because the business behind it was headquartered in Gloucester. Ultimately, that project fell partly on confidence in the management to deliver it, and partly on an assumption that the project was far too expensive. As the then Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May), recognises, it now looks pretty good value and—guess what?—it would have been up and running any moment now, had it been approved. There will be new and alternative ideas on tidal lagoons, which the Department should look at.

[David Duguid]

The hon. Gentleman is making an excellent speech. I hate to interrupt him, but I could tell he wanted a quick sip of water there; I was also going to ask whether he would agree that marine energy in general, and tidal stream energy in particular, has the opportunity to be an exportable commodity to the rest of the world, not only for Orkney and the rest of Scotland, but for the whole of the UK. Tidal stream for the UK could be what offshore wind has been for Denmark.

[Richard Graham]

I am grateful to the hon. Gentleman, both for the marine energy that I was able to take, and for his thoughts on exports. The Minister will know that the parts of the world that I am most interested in exporting to are in south-east Asia. By happy coincidence, huge opportunities for tidal stream energy have already been identified in Indonesia in more than one place, and potentially also in the north of the Philippines. There will be other places, but those two stand out at this time.

It would not be easy, but if we wanted to add a fifth point to my thoughts for the Minister to consider, that might be looking closely at how we can help exports of tidal stream capability and technology be part of a strategy to deliver more than just a huge contribution to domestic UK security. That would help to make sure that the manufacturing benefits stay within the UK, we keep Nova based here and we are able to export successfully both the skills and the manufacturing equipment that goes with them around the world.

There are huge opportunities here. The Government have been very supportive. It is a niche interest at the moment, but colleagues in Scotland, Northern Ireland—let us not forget Strangford Lough; I am sure someone will remind us of that—and Wales have all got an interest. It is a wonderful UK project, which, with the support of the Government, can become something to be very proud of.

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[Wera Hobhouse (Bath) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. Thank you for allowing me to be absent briefly from the debate. I was at an extraordinary meeting of the net zero all-party parliamentary group—I was needed to make sure that it was quorate.

The beauty of being called last is that one often repeats what has already been said, but I do not think it is necessarily bad that we all agree on many things. I congratulate my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) on bringing this very important debate to the Chamber. It is important that we say certain things again and again, because they need to be said again and again to put a bit of fire under this Government, who—although I believe we all agree on the targets—are not acting with the necessary pace of change that I would like to see.

Just to set the scene again, climate change is devastating the world. The abnormally hot and cold temperatures across the world contribute to as many as 5 million deaths a year. Limiting global warming to 1.5°C instead of 2°C could result in around 420 million fewer people being exposed to extreme heatwaves, yet too many politicians are still treating our vital climate net zero targets like a bus—if we miss one, we can catch another one. There will be no next time if we miss our net zero targets. Our reliance on fossil fuels is not only terrible for the planet, but bad for our energy security. Our constituents would not be paying the price for Putin’s war if the UK had moved towards renewables faster, harder and earlier.

The UK must rapidly diversify its energy through multiple forms of clean energy sources. Hydropower is a proven green technology. It can provide flexible storage to support the growth of wind and solar at scale. Hydropower is affordable and reliable, and can be ramped up at short notice when needed. Well-developed plans for tidal range projects on the west coast could mobilise and deliver at least 10 GW of net zero energy, with a construction time of five to seven years. The UK also has the potential to develop up to 11.5 GW of tidal stream by 2050, supporting over 14,000 jobs. I agree with everything that has been said today. We should support everything, including what the hon. Member for Gloucester (Richard Graham) said about tidal stream and lagoon energy.

The technologies are all there, but they could be developed much faster and more effectively if they did not always have to compete with fossil fuels or nuclear. The Minister knows that I am not a great supporter of nuclear, simply because it is a very expensive technology. If the nuclear industry had the same requirements for competitiveness as the renewables industry, it would not be able to compete in the same way. The renewable energy sector has to compete in a very competitive environment, which is good for our consumers—I get that—but let us apply the same rules to all energy sources, not just the renewable energy sector.

Committing to a target of 1 GW of marine energy by 2035 would send a powerful signal to investors that the UK is the best place to invest in tidal power. I continue to worry that the Government rely too much on fossil fuels. We are getting stuck in the transition. We are never getting out of it, and we will never end up in a net zero world. From 2016 to 2020, the Government provided £13.6 billion in support to the UK’s oil and gas industry. The Chancellor’s recent autumn statement confirmed that oil and gas giants will be allowed to continue offsetting taxes, while ordinary taxpayers foot the bill. Britain gives out the largest tax breaks in Europe to the oil and gas industry. Whose side are the Government on?

When I met the British Hydropower Association recently, it warned that weak grid capacity in some rural areas meant that not even one electric vehicle charging point could be installed. I agree that grid infrastructure is now the biggest issue holding back renewable energy developments in the UK. It must be prioritised. Where is the long-awaited reform of Ofgem’s remit?

[Richard Graham]

It is worth highlighting that the role of the all-party parliamentary group on marine energy—and the nature of this debate, which is on Government support for marine renewables—is to avoid an argument about which technology or type of energy is better than another. Our case is strongest when we focus on specific things that the Government can do. In this case, that is in the next round of the contracts for difference. A specific opportunity has been outlined for how the Government can help bring down the costs of our marine energy sector, where a lot of technologies are still in the early stages. We are not yet getting the advantages of scale from consolidating those technologies down to two or three that work really well that would make this as cheap and efficient as possible. The Government can help us do that. Does the hon. Lady agree that this is the right way forward for marine energy?

[Wera Hobhouse]

I absolutely agree, and I thank the hon. Gentleman for making that exact point. How can we make sure that renewable energy technologies get the same support that the Government are giving to other forms of energy? I like to think that we all agree on the need to accelerate and turbocharge our renewable energy sector. My criticism of the Government—and the Minister is aware of this—is that we are not prioritising getting away from fossil fuel energy as soon as possible. That is my point, and it needs to be made again and again. I make that point at every opportunity to ensure that the Government understand the urgency that the climate emergency requires.

While we are at it, I want to quickly mention one of my particular interests, which is community energy—

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[Alan Brown]

I agree with the right hon. Gentleman, and that is why further support is needed. In many ways, though, that also shows the pace of deployment to deliver these projects in the next few years. Looking at the Government’s overall renewable energy targets, it is really important that they back many sectors, particularly tidal stream.

I agree with the key asks mentioned by the right hon. Gentleman, including continuing the ring-fenced pots, reforming CfDs to continue to incentivise supply chain development, the 1 GW target for 2035 and, importantly, section 36 consent reform. I ask the Minister to work with the Scottish Government on that, because the regulations are reserved to Westminster.

I commend the hon. Member for Gloucester (Richard Graham), who chairs the marine energy APPG and does a lot of good work with it. It was good to hear him rightly commend the Scottish Government for our commitment to support in the 2022-23 programme for government and, although he did not say it, initiatives such as the Wave Energy Scotland technology programme, which committed £50 million for development of these technologies. It is not often that I say this in a debate, but I welcome and support the hon. Gentleman’s call for further investment in England, because that will help develop the supply chain right across the UK. Importantly, I agree with what he said about the need to support companies such as Nova Innovation to stay in Scotland and the UK.

[Richard Graham]

I thank the hon. Gentleman for all his comments. Will he pursue with Marine Scotland the anomalies in the speed of its processes, which seem to be holding up marine energy projects? For example, I understand that EMEC’s Billia Croo section 36 consent has only been sent on a year after it was ready to go for ministerial approval, and that the scoping opinion for EMEC’s 50 MW Fall of Warness consent application was completed in August, but the Marine Scotland team has still not forwarded the responses four months later. Does he agree that it is time for Marine Scotland to speed things up?

[Alan Brown]

I need to move on. However, if there are any blockages, I am happy to support streamlining. I know that Marine Scotland has massively increased its resource to try to speed things up in terms of its assessment and processing. However, if more needs to be done to streamline things, I support that. I remind the hon. Gentleman that, as I have said, the section 36 regulations are reserved to Westminster. However, I am happy to support any streamlining of the process to ensure we get deployment.

I congratulate the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on her contribution. She rightly highlighted that these technologies encourage redevelopment and regeneration. Energy Island is a fantastic development that will move from fossil fuels to renewable energy. I support the call for an innovation report for CfDs and the call for the ability to group multiple technologies together, because that would facilitate the development of green hydrogen as well.

As always, the hon. Member for Strangford (Jim Shannon) made a fantastic contribution to the debate. He talked particularly about the developments for Strangford lough in his constituency. I liked what he said about helping to support the working poor in a drive for wages.

I completely agree with the hon. Member for Bath (Wera Hobhouse) that when it comes to nuclear, there is a lack of competition to bring costs down. I support her call for community energy. That has happened in Orkney through hydrogen development and the roll-out of electric vehicles; party of that community energy comes from marine energy.

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[The Minister for Climate (Graham Stuart)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, and I thank all those who have participated in the debate. Westminster Hall often shows the House in its best light, as we are able to focus on a specific issue such as this, and we have heard thoughtful contributions from across the Chamber. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this important debate. He has continued to be a champion for his constituents on this issue.

The British energy security strategy affirms that the Government will aggressively explore renewable technologies, including the potential of tidal power to contribute to a net zero-compliant future. Members will have been delighted that the Government established a ringfenced budget of £20 million for tidal stream developments in pot 2 of the fourth contracts for difference allocation round—AR 4—which has been referred to.

The contracts for difference scheme is our flagship mechanism, and it has been mentioned that the Government are very proud of it. Well, we are very proud of it. It has helped the UK to move from a pretty pitiful position in—let me pick a year—2010, say, to a position today where, instead of less than 8% of our electricity coming from renewables, the figure is more than 40%. That is a transformation, and we have led Europe in that regard.

The CfD scheme is our flagship mechanism for supporting the cost-effective delivery of renewable energy. That support will ensure that the nation’s tidal stream innovators get the opportunity they need to bring their cost of energy down and learn the valuable and exportable —a point made by a number of hon. Members—lessons that come with being the first in the world to deploy a cutting-edge technology at scale.

I have watched the transformation of offshore wind from my constituency in East Yorkshire, and if there is one thing I bring to this role—which is pretty overwhelming in terms of deploying all the technologies at speed, the grid and all the rest of it—it is a desperate desire to see us ensure we maximise our industrial and service capability so that we not only deliver at home, but build up a capability that can export and bring prosperity and a solution to the challenges globally.

I welcome the contributions that have been made today by Members across the House, who have shared their passion for ensuring that we get our policies right so that we maximise the chances of companies staying in Scotland, Wales, England and Northern Ireland and maximise the economic benefits. As well as being good in itself, that will help us to maintain the coalition—this is quite unusual in this country—of the many people who agree that action on climate is the right thing to do and that it can bring prosperity as well as environmental benefit.

The Government have delivered for the burgeoning tidal stream industry. It is now time for the developers to push on, to make good on their promises and their potential and to demonstrate the value for money and scalability that we need from our renewable energy technologies as we transition to an efficient and net zero-ready power sector.

The fourth contracts for difference auction in July this year saw four tidal stream projects, totalling 40 MW, win contracts at a strike price of £178.54 per megawatt-hour. Three of the contracts were awarded in Scotland, to MeyGen and two Orbital projects in Orkney, and one was awarded in Wales, to Magallanes. To put that into perspective, only 36 MW of tidal stream has been deployed worldwide between 2010 and 2020. We really are making significant strides forward. This is the first time that tidal stream power has been procured at this scale, and it provides the industry with a golden opportunity to demonstrate the cost-efficiency and proof of scalability that we need from our sources of renewable electricity.

We hope that other technologies can follow offshore wind in its remarkable reduction in price over just two auctions—from 2015 to 2019 it went from £120 per megawatt-hour to £39.50—but we cannot assume that just because it happened with offshore wind, it will happen with everything. We want to create genuine competitive tension between the technologies because we want not only to take an accelerated path to net zero but to do so in a way that, in the end, brings the UK the lowest and most competitive electricity costs as a base part of our energy system. That will put us in a position to be able to keep energy affordable for families but also make us industrially competitive. There is so much to play for. We have got to get the balance right, and CfDs have done a great job so far.

[Richard Graham]

The Minister is absolutely right, but the challenge for the marine energy industry in delivering that scalability is the certainty that 2021 will not be a one-off but the beginning of a series of contracts that will enable it to develop. Does he agree?

[Graham Stuart]

The broad parameters of allocation round 5 will come out this month, and the more detailed criteria will come out on the eve of its launch in March. I can say no more than that, but I think the direction of travel is fairly clear.

The results of allocation round 4 confirm that tidal stream is a home-grown industry of considerable promise, as colleagues have noted. The UK remains the world leader in tidal stream technologies, with half of the world’s deployment situated in UK waters. Given my passion when I came into this job, the last thing I want to see is British research and development and British invention turned into billion-dollar businesses in other places rather than here in the UK, which is what has happened so often. I want that development to happen here in the UK, and I want to work with colleagues.

I congratulate my hon. Friend the Member for Gloucester (Richard Graham) on his chairmanship of the APPG, with the right hon. Member for Orkney and Shetland as his deputy chair. It is so important that we have these specialist interest groups, which can keep Government honest and act as a ginger group—a caucus—to make sure that we think about and get our policies right, so that the promise is delivered.

Europe’s foremost tidal and wave energy testing centre—the European Marine Energy Centre—is on Orkney, as the right hon. Member for Orkney and Shetland said. We have new marine energy hubs developing on Anglesey and the Isle of Wight. In answer to the question asked by the right hon. Member for Orkney and Shetland, I would be very happy to meet him and discuss EMEC and its future.

We have a raft of brilliant developers designing and building tidal stream devices in the UK. That picture is so positive in large part because successive Governments have provided more than £175 million in innovation funding, of which more than £80 million has come since 2010. In 2018, thanks to the extensive support afforded under the renewables obligation mechanism, we were able to build the largest tidal stream-generating array in the world in the fast-moving waters of the Pentland firth.

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[Graham Stuart]

I will not give way to the hon. Lady. We heard her generalised remarks earlier, and I think she had her opportunity.

There are two BEIS overseas funding streams that EMEC may be able to apply for in partnership with developers: the first is the £1 billion net zero innovation portfolio that provides support for research and development, and the second is the energy entrepreneurs fund, which provides small grants to developers of innovative energy technologies. In May this year, BEIS awarded a £5 million grant to a hydrogen technology developer based at EMEC. Two of the CfD AR4 projects are, of course, also based at EMEC, and will be paying lease fees to EMEC from 2026. There are a number of things there, but as I have said, I am happy to meet and discuss it.

Quite rightly, we talked extensively about export potential. We recognise the success of Nova Innovation and the supply of turbines to Canada, and note the support of UK Export Finance, for which I used to be the Minister responsible. I remember Nova coming over my desk and, notwithstanding some of the challenges, being keen to be involved. I remember saying, “If we can’t support someone like this, what are we here for?” I am pleased to see that UK Export Finance, our credit agency, has been able to support Nova.

With regard to further export potential, my officials have met their counterparts in Indonesia and the Philippines on the role of marine energy and what the UK can offer. We need a joined-up approach as we develop here. With the Department for International Trade and other colleagues, we are also reaching out across the world, to ensure that we can show that this is the place in which to develop these solutions and then export them.

I go back to the point about speeding up or expediting, as the hon. Member for Bristol East (Kerry McCarthy) referred to it. Government are working on reforming the planning and environmental consent system, to increase its efficiency and speed, while maintaining proper scrutiny of projects. That repeats what I have already said.

I thank my hon. Friend the Member for Gloucester, the chairman of the all-parliamentary group, for his kind words about my Department. I also thank the right hon. Member for Orkney and Shetland for his kind words about one of my predecessors, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng), and his interest in work here.

I look forward to receiving the paper in January. I have touched on the opportunities in Indonesia and the Philippines. I think I have dealt with the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on the CfD delays. I have probably mispronounced her constituency, but I will keep trying—she can tutor me. On the issue of multiple technologies, there are provisions in the Energy Bill, which I am delighted to say we are pushing forward. We are hoping, with cross-party support, to push that through Parliament as quickly as possible. It has a lot of enabling facilities in it—

[Richard Graham]

He will not forget about England, will he?

[Graham Stuart]

I am sorry. I could not hear my hon. Friend.

[Richard Graham]

Will the Minister give way?

[Graham Stuart]

No; I am going to bring my remarks to a close, under the Chair’s steely eye. Notwithstanding the chairman of the APPG’s efforts to get people not to make comparisons, we want to get proper tension in the system. One great thing about tidal technologies is that they could offer that dispatchable power—the kind of baseload needed to balance the system. It is necessary to compare apples with apples. It is that kind of tension we need to judge how much nuclear, for instance, should play in our system. I am pleased to say that the £92, or whatever was the strike price for nuclear, now looks a tremendous bargain. Even Scottish nationalists might recognise that.