Energy Infrastructure

Selaine Saxby Excerpts

Wednesday 5th July 2023 Commons Chamber

[Selaine Saxby (North Devon) (Con)]

Net zero by 2050 is not an arbitrary target but a scientific assessment of what is needed to limit the impacts of climate change. It will require significant economic changes. The Government are rightly not making uncosted spending commitments but providing a signal to business and letting the market do the heavy lifting. Despite huge progress being made on net zero, investors need reassurance that the UK will continue to be a leader.

I rise to speak about the potential of the Celtic sea and the possible lost opportunity if we do not speed up the process to get projects floating. As chair of the all-party parliamentary group for the Celtic sea, I strongly support the Government’s target of having 5 GW of floating offshore wind by 2030, and I am delighted that the Celtic sea has been identified as a key development opportunity to complement existing deployment in the North sea for the simple reason that the wind blows the other way round there. We need to develop both areas to optimise wind energy production.

I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb)—we work together on the APPG—for securing this important debate as the development of FLOW is a once-in-a-generation industrial and levelling-up opportunity for communities right the way around the Celtic sea, from his constituency and along the south Wales coast to mine in North Devon and down through to Cornwall. While I welcome the £160 million floating offshore wind manufacturing investment scheme, which opened for bids this spring, I look forward to seeing a fair share coming to key Celtic sea ports. Funding decisions on FLOWMIS should be made as quickly as possible to allow our ports and supply chains to gear up for this huge opportunity.

The sector presents enormous economic opportunities for the UK, with recent estimates suggesting that it could add 29,000 jobs and bring £43.5 billion in gross value-added to the UK by 2050, with investment particularly concentrated in the North sea and, hopefully, the Celtic sea. It is for those reasons that I am passionate about FLOW in the Celtic sea as it presents an opportunity to create an industrial renaissance of our ports and supply chains in south-west England and Wales.

Despite the success of the twin hub project in Cornwall in allocation round 4, the ambition to have the Celtic sea as a key contributor to reaching the 5 GW target for 2030 appears to be delayed, with the announcement of the results of AR5 not coming until September, and it looks increasingly likely that AR6 will also be behind its original schedule. It is important to note that those investing in such schemes are international companies and that there are growing overseas opportunities available to them.

RenewableUK and the wider industry advised that the administrative strike price was possibly too low to make some bids commercially viable in AR5. The process is obviously still ongoing, but I hope that the Department is taking steps to ensure that the strike price in the next leasing round takes into account the rising global pressures of the last 12 months plus the price of developing an innovative new technology in a region that has not yet had the opportunity to develop a supply chain, as this is a new industry for the Celtic sea. Since AR4, the global picture has changed markedly with industries such as FLOW now facing unprecedented global economic pressures, which have led to construction costs rising by 20%.

The UK is in a race against global competitors. Only 200 MW of FLOW is deployed worldwide, and 40 MW of that is in the UK, but if we do not act decisively, we could lose out to pressure from the US and the EU. AR5, as designed, may secure only about 30% of all the available shovel-ready projects. If projects do not begin building, it is questionable whether the supply chain and ports will have sufficient confidence in the sector to start investing. In that situation, there is a risk that we will have 2 GW less floating wind by 2030 than the original target and projection, which will be detrimental to both the UK’s supply security and the cost of energy.

The auction also potentially puts £20 billion of short-term investment into the UK at risk, as well as thousands of jobs, which will disadvantage us globally. If the UK is to compete globally, strike prices must be set appropriately to kick-start this emerging industry into a sustainable source of jobs, skills development and value, and not only in the Celtic sea but across the United Kingdom as a whole.

An additional financial challenge has been the delays to the commencement of the much-anticipated Celtic sea leasing round, which is managed by the Crown Estate. Although I warmly welcome yesterday’s confirmation of new sites, developers need certainty as quickly as possible to develop a full business case and make applications to future allocation rounds and auctions. At this stage of technology development, it is essential that innovation projects start their journey now if they are to succeed and help grow a flourishing UK supply chain.

Initial opportunities must be maximised to develop the capabilities to secure the economic benefits of the subsequent large-scale FLOW projects, so that in future we can maximise exports to the growing global market. However, industries have not been provided with the certainty they need as, despite yesterday’s market update from the Crown Estate, there appear to be delays in bidding due to spatial and policy issues. I ask the Minister once again for an urgent meeting with the Secretary of State to discuss the future delivery of FLOW in the Celtic sea.

If FLOW is not successful in AR5, there is a risk that we will have 2 GW less floating wind by 2030 than the current target and projection—detrimental to both the UK’s supply security and the cost of energy. FLOW in the Celtic sea is in danger of not realising its full potential and not making the meaningful contribution it rightly should to the UK’s 5 GW target by 2030.