Contracts for Difference

Richard Tice Excerpts

Tuesday 3rd September 2024 Commons Chamber

[The Secretary of State for Energy Security and Net Zero (Ed Miliband)]

I congratulate you on your new role, Madam Deputy Speaker.

With permission, I would like to make a statement about the sixth contracts for difference allocation round.

It is less than two months since the Government came into office with a mandate to fix the foundations and make Britain a clean energy superpower. The last Government left this country exposed to international fossil fuel markets. As a result, every household and business paid the price in the worst cost of living and energy bills crisis in memory; because of Britain’s particular exposure, families and businesses in our country were hit harder than others.

The only way to provide this country with the energy security that the British people deserve is through home-grown clean energy that we control. That is the mandate on which this Government were elected, and that is what we will deliver.

Last year’s contracts for difference auction, under the previous Government, was a fiasco. No offshore wind projects were awarded, which was a disaster for the industry and for our efforts to move away from dependence on fossil fuels. In July, when we came into office, I made the decision to expand the budget for this year’s auction by 50% to maximise the amount of home-grown clean power we could secure while delivering value for the British people, and today the results are in.

I can announce to the House that we have secured a record-breaking 131 new clean energy projects: more projects for our country as a whole than any previous auction; more projects in England, more projects in Scotland and more projects in Wales than any previous auction; over two and a half times the capacity secured in last year’s auction; nearly 10 GW of clean, home-grown power, enough to power the equivalent of 11 million homes; the most successful renewables auction in British history; and a major step forward in our mission to make Britain a clean energy superpower and to help Britain get off the rollercoaster of volatile global gas markets.

Let me set out the results in detail. First, solar is one of the cheapest and most readily deployable energy sources at our disposal. We have secured a record 93 solar photovoltaic projects, the largest number of solar projects ever in an auction, unlocking 3.3 GW of new solar, which is a 20% increase on our installed capacity.

Secondly, we have secured almost 1 GW of onshore wind. However, I must report to the House that, thanks to the Conservatives’ near total ban on onshore wind, there was just one small onshore wind project in England of 8 MW. Their nine-year ban destroyed the pipeline of projects. That is why this Government lifted the onshore wind ban in England as one of their first acts. Our onshore wind taskforce will now go about the process of working with industry to rebuild the pipeline of projects.

Thirdly, this auction was a success for the emerging technologies that will serve our country in the future. Floating offshore wind offers a huge opportunity in every part of Britain. The last auction secured no floating offshore wind. On coming to office, I was presented with a budget that risked repeating the mistakes of the past, so I took the decision to more than double the budget that covers this cutting-edge technology. I can report to the House that today’s auction has secured a 400 MW floating offshore wind project, more than 10 times bigger than the previous biggest floating offshore wind farm in Britain.

[Richard Tice (Boston and Skegness) (Reform)]

At double the price.

[Ed Miliband]

At a lower price. This floating offshore wind farm alone is double the size of all of Europe’s installed floating offshore wind capacity. In addition, on tidal, where Britain has huge leadership opportunities, we have secured six new tidal stream projects at the lowest ever price.

Fourthly, on fixed offshore wind, in contrast to the zero GW secured in last year’s round, we have secured 4.9 GW of offshore wind, enough to power the equivalent of 8 million homes. That includes securing both the largest and second largest offshore wind projects in Europe—Hornsea 3 and Hornsea 4 off the Yorkshire coast. An industry flat on its back because of the mistakes of the last Government is back on its feet thanks to this Government.

I can also report to the House that across the whole auction all these results were secured at prices well below the maximum price limit—prices that demonstrate that wind and solar are the cheapest sources of power to build and operate in our country. For the House’s benefit, that means a clearing price for offshore wind that is five to seven times lower than electricity prices driven by gas at the peak of the energy crisis.

The success of this round does not just offer greater energy security for the British people; it also offers the possibility of good jobs throughout Britain. But that will not happen without action by Government, because we know that too often in the past renewable energy produced in Britain has not created enough good jobs in Britain. With Great British Energy and our national wealth fund, we will invest to make sure our clean power mission produces jobs in every corner of the United Kingdom.

This Government have been in office for less than two months. In that time, we have lifted the onshore wind ban, consented more nationally significant solar capacity in one week than the last Government did in 14 years, and now delivered the most successful renewables auction in the history of the country. And on Thursday we will debate the Second Reading of the Great British Energy Bill. This is a Government in a hurry to deliver our mission: energy security, lower bills, good jobs and tackling the climate crisis. I commend this statement to the House.

--- Later in debate ---

[Ed Miliband]

Again, my hon. Friend speaks with great expertise. Part of it is about is having a Government who are committed to a proper industrial strategy and have the levers to make that strategy happen. There was an interesting divide between the Opposition, when they were in government, and us. Although, of course, America is a different-sized country from us, we see the Inflation Reduction Act as offering real lessons to us about how we can lever in private investment. We will not be able to do it on the scale of that Act, but these interventions can make a difference. There is also this crucial point: we care where the manufacturing happens, and we are determined to make sure that it happens in the UK.

[Richard Tice (Boston and Skegness) (Reform)]

Will the Secretary of State, who is obsessed with renewable energy, actually be honest with the British people? The truth is that the offshore wind turbine bids today are some 20% above current prices. The floating offshore wind bids are some three times the current prices. His Department says that this requires subsidies of some £1.5 billion a year. That is before the extra transmission costs, before constraint payments, before compensation payments for blighting my constituents’ countryside, and before the cost of back-up when the wind does not blow and the sun does not shine. Why will he not be honest and tell the truth: that renewable energy is more expensive, not cheaper?

[Ed Miliband]

I am interested by the hon. Gentleman’s intervention, because his manifesto is basically higher bills and to make people poorer. We do not need to look into the crystal ball; we just need to look at the record. The truth is that the cost of living crisis—the energy bills crisis—casts a long shadow in this country. It was caused not by a dependence on renewables but by our exposure to fossil fuels. He just needs to understand this basic point: whether fossil fuels are produced in this country or internationally, they are sold on the international market, and that is why the British people paid the price and the Government forked out £94 billion. The only way to get off the rollercoaster of international gas markets and take back control is to become a clean energy superpower.