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Mr Alistair Carmichael (Orkney and Shetland) (LD)
I beg to move,
That this House has considered Government support for marine renewables.
It is a pleasure to serve with you in the Chair, Mr Hollobone, and I am grateful to see a number of colleagues here this morning. I would like to place on record my appreciation, as ever, of the support that those of us who are part of the all-party parliamentary group on marine energy received in preparation for the debate, with very comprehensive briefings from RenewableUK, the UK Marine Energy Council and companies such as Orbital Marine Power and Nova Innovation.
I want to start by giving credit to the Government for the decision they took last year to introduce a ringfenced pot of £20 million for tidal stream generation as part of the contracts for difference allocation round 4. In particular, I want to place on record that the right hon. Member for Spelthorne (Kwasi Kwarteng), in his time involved with the sector, understood the opportunities for the United Kingdom presented by its development and used his time in office to drive policy in a way that has empowered the sector to develop, grow and continue to innovate as it proceeds along the road to full commercialisation. I fully appreciate that when the biographers eventually come to write the chapter on the right hon. Member’s legacy, that may not be the headline, but it was a significant contribution that is understood and appreciated nevertheless.
The Government’s decision last year unlocked investment in four projects this summer, as a result of which we will be able to obtain 41 MW of clean energy for United Kingdom households. Orbital Marine Power was awarded two contracts for difference totalling 7.2 MW of tidal energy deployments at the European Marine Energy Centre’s Fall of Warness site in Orkney. SIMEC Atlantis secured 28 MW to further develop the MeyGen site in Caithness, and in Wales, Magallanes was awarded 5.6 MW for a tidal energy project at Morlais in Anglesey.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
I was delighted to have the opportunity to visit the European Marine Energy Centre in Orkney when I came to the right hon. Member’s constituency a couple of years ago. The work done at EMEC is really important for delivering cheaper, greener energy. Does he agree that, in the light of the energy price crisis, this research could be vital for delivering affordable energy to Scottish homes and businesses?
Mr Carmichael
I very much agree, and I should acknowledge the support that the hon. Lady has given to EMEC over the years. I am grateful for the support from across the political spectrum, all parties and none, and I will come on to talk quite a lot about EMEC later on.
It is worth reflecting for a second on how we have reached this point. Despite the fact that these are significant commercial enterprises—essentially competitors—the companies working in the sector have presented a united and strategic case to Government and investors. That has been enormously important, and since we still have some way to go, I hope that approach will continue. Trade bodies RenewableUK and the UK Marine Energy Council have also been critical in maintaining that unity of purpose and message, as has, in our own small way, the all-party parliamentary group on marine energy, under the chairmanship of the hon. Member for Gloucester (Richard Graham), who I am delighted to see in his place.
It is invidious to single out individuals when the story is one of team success, but the leadership that Neil Kermode has given as director of the European Marine Energy Centre in Stromness in Orkney has allowed that body to fulfil the role it was set up for almost 20 years ago. I do not think the Minister has yet visited EMEC, but he may wish to make his way there once we are through the winter and the days are slightly longer again, so that he can see for himself the work that has been done and continues to be done not just at EMEC but on the Heriot-Watt campus at the International Centre for Island Technology and the full range of private companies that have been established as spin-offs from these bodies.
I mention EMEC, and am keen for the Minister to visit, not just to give it the recognition it has earned, but to engage the Minister’s attention in the issue of funding. EMEC’s success has been built on Interreg funding, which was a dependable source of funding for as long as long as we were part of the European Union; it was an easy fit. Since we left the European Union, however, the shape of future support that replaces what came through Interreg is still not clear, and for EMEC that could soon become critical. My first ask of the Minister, therefore, is whether he will meet me and a delegation from EMEC so that we may identify future sources of funding.
The Government have now made a significant commitment to marine renewables through the fourth allocation round, and EMEC remains central to delivering the full potential of the Government’s commitment. That may be in the Department for Business, Energy and Industrial Strategy or the Department for Levelling Up, Housing and Communities, or it may fall within the remit of the Scottish Government—perhaps it is some combination of them all—but having come so far we cannot now allow that critical operation to fall between the gaps of Government.
I hope this morning’s debate will be an opportunity for us to stop and take stock of where we have got to, to explore some barriers that remain on the road to development and commercialisation, and to look forward to where we go from here—in particular, to what decisions we need to see made as we move towards the next round of contracts for difference allocation round 5.
It is worth reminding ourselves what is at stake. The United Kingdom has the potential to develop about 1 GW of tidal stream energy by 2035 and up to 11.5 GW by 2050. That is equivalent to over three times the generation capacity of Hinkley Point C. The costs of technology have fallen significantly in recent years. Analysis published by the Offshore Renewable Energy Catapult this autumn showed that that tidal stream can become not only a significant part of our future energy mix, but a cost-competitive one. If the sector is supported, by 2035 tidal stream could provide power at £78 per megawatt-hour; compare that to Hinkley Point C at £92.50 per megawatt-hour. By 2042 that figure could be £60 and by 2047 we could be looking at something in the region of £50. That is about £10 per megawatt-hour more than wind and solar today but, importantly, without the challenges of unpredictability.
The real opportunity that comes from the development of tidal stream power in particular is the chance to develop the baseload capacity that will be so important and to remove the intermittency of renewables. For so long the missing link has been the funding that would give wave and tidal energy the chance to develop commercially, and, as we know from other renewable technologies, once the process of the commercial roll-out is under way, the costs fall like a stone.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the right hon. Member for bringing forward this debate. He rightly makes the comparison with nuclear strike rates, but in doing so we should remember that the £92.50 strike price for Hinkley Point C is a 35-year contract, whereas tidal stream is a 15-year concession so it is even better value for money. Does he agree?
Mr Carmichael
That is a perfectly fair point. I make the comparisons, but I do not want to set one technology off against another; that is not in the interests of the industry. It is important that the figures are taken in the round when we look at getting value for money for the taxpayer.
Marine renewables is an industry that has the potential to support thousands of jobs across the United Kingdom—good-quality manufacturing jobs that bring with them the opportunities to grow an export industry, which would be an obvious route towards a just transition for many of those currently working in oil and gas. The oil and gas industry has been a critical part of the economy of the Northern Isles for the last 40 years, and I believe it will be a critical part of getting to net zero. Indeed, it is difficult to see how we could get there without having an industry on the UK continental shelf. The industry has a number of excellent apprenticeship programmes. When I talk to the young men and women who are undertaking those apprenticeships now, at the start of their career, I am struck by the fact that they tell me they believe that by the end of their working lives they will be working not in oil and gas, but in marine renewables.
David Duguid (Banff and Buchan) (Con)
I congratulate the right hon. Member on introducing this important debate. I could almost have written his speech myself. Like other Members, I have had the pleasure of visiting his constituency and the European Marine Energy Centre, very impressive as it is, and I agree that the oil and gas sector and oil and gas companies, which have the technologies, the expertise and the capital, have a vital role to play in the energy transition.
Mr Carmichael
If the hon. Member wants to send me his CV, I will keep it on file for when I next have a vacancy for a speech writer. I am at risk of being too consensual, but he knows my views on this and we have to find a way to recognise that in energy security there is no silver bullet. Contributions will be made by all sectors on the journey towards net zero.
The Offshore Renewable Energy Catapult estimates that the UK’s tidal stream industry could support 4,000 jobs by 2030 and 14,500 by 2040. Those high-wage, high-value jobs would be focused on coastal areas. UK tidal stream projects use an average 80% UK content in the world-leading arrays, creating supply chain with high rates of return on public investment. As with offshore wind, the supply chain is widely dispersed across the UK—for example, Leask Marine is a vessel charter, commercial diving and international marine construction service based in Kirkwall, but it operates around the world.
Being the world leader in developing tidal stream technologies, the UK is well placed to capitalise on exports to future global markets, including Canada and Japan, in which the sector has already secured export orders. Nova Innovation has a presence in Shetland, but, from its Edinburgh base, it is already working to export to Nova Scotia and Canada—part of a 15-turbine order.
Marine energy provides a particularly competitive solution for countries with islands or remote populations that depend on expensive and polluting diesel generation. The energy innovation needs assessment of tidal stream, commissioned by the Minister’s Department, estimated that growth of UK tidal stream exports could add more than £540 million gross value added and nearly 5,000 jobs per annum by 2050.
I hope the House will forgive me for labouring the point, but that is the potential that sits within our grasp. That is where we want to get to. The question, then, is how. The marine renewables sector has a number of clear and well-formed asks of the Government, one short term and three for the longer term. The most immediately important is the need for an early indication of the Government’s intentions with regard to the continuation of the ringfenced pot for tidal stream in their upcoming contracts for difference allocation round 5.
The creation of that £20 million pot has been enormously important to unlocking private sector finance for the sector, and the sector itself has been able to be creative in the financial instruments it has devised to take advantage of that. Maintaining that investor confidence is critical, and an early and positive announcement on allocation round 5 is essential for that confidence. I would be delighted to hear something about that from the Minister today, although I am prepared to be realistic even though it is almost Christmas. However, an indication of when an announcement might be made would be welcome not just in the House, but in the wider industry.
In the longer term, the industry is looking for contracts for difference options to be reformed in a way that rewarded projects with significant UK content, which would enable it to trigger new manufacturing investment or support innovation in the supply chain. It also seeks a commitment from the Government to a target of 1 GW of marine energy by 2035. Again, that would give confidence to investors that the UK intends to remain the leader in tidal stream.
That 1 GW represents a significant threshold, because it is the point at which it is forecast that tidal stream is expected to become lower cost than new nuclear. The United Kingdom, Scottish and Welsh Governments should work together to expedite the process for new tidal stream sites to ensure development can continue at pace. Pace is important, and the Minister can use his office to work across Government and between Governments to remove some of the forces that are currently a drag on the pace of development.
In its briefing for this debate, Nova Innovation called for the speeding up of CfD timescales and consent processing for tidal stream sites. Section 36 consent, which is required to qualify for a CfD, takes at least three years. That is driven by the requirement for two years of bird and mammal surveys and the nine-plus months it takes to receive a consent decision—it is often much longer in practice. In contrast, the EU target is three months for renewable energy project consent. Section 36 is required only for onshore projects greater than 50 MW, but the offshore limit is 1 MW.
Overall, it takes at least six years from conception to the commissioning of a UK tidal energy site. That timeline is similar across the nations of the UK. In contrast, developers in Canada can go from a greenfield site to first power in two to three years. That puts the UK at a competitive disadvantage for project investment and we risk losing our lead in tidal energy. We should also increase the pace and scale of investment in the UK’s electricity grid so it does not remain a constraint on renewable energy development.
EMEC provides state-of-the-art testing facilities for tidal stream and wave technologies. It plays a pivotal role in supporting the development of the UK’s marine energy sector. The UK leads the way in marine energy as a result of our innovative UK tidal and wave companies, our well-developed project portfolio and our excellent natural resources. EMEC’s activities have been made possible by the support it receives through EU structural funding—specifically funding from the EU Interreg programme. Between 2016 and 2020, that was £17.4 million.
Interreg projects account for 51.9% of EMEC’s overall funding. Obviously, that funding will soon come to an end, so it is imperative that a clear replacement is established to secure its long-term future. The discontinuation of our participation in the EU Interreg programme has presented EMEC with a cliff edge in access to the grant funding supporting the operation and growth of the test centre.
EMEC is taking proactive steps to mitigate the lost funding from Interreg, but—let’s be serious—it will not make good all the lost funds. Direct revenue funding of £1.5 million a year for four years to replace the Interreg gap will enable EMEC to preserve the high-quality jobs and the growth sector, supporting levelling up, protecting that internationally accredited and strategically located facility, and providing recognition as a national asset in pursuit of the UK’s aspirations to be a global research and development superpower. It will allow EMEC to enable further growth and diversification in new technology areas, including wave and tidal array testing, green hydrogen integration, maritime and aviation decarbonisation, and floating offshore wind research and innovation, all with the aim of developing the domestic supply chain and the manufacturing capability of UK plc as a whole in the pursuit of economic growth and reaching net zero.
The replacement of Interreg funding is something of a lonely child when it comes to Government responsibility; it seems to sit between a number of departmental responsibilities. Although the response today is from BEIS, I am aware that the Levelling Up Secretary has an important role. He will be coming to Orkney in January for the final signing of the much-welcomed islands growth deal, and I look forward to raising Interreg with him then if we have not been able to make progress beforehand. Officials in the Minister’s Department have been fully apprised of the situation, so I hope we will be able to work together to ensure EMEC’s critical work is allowed to continue and that the cliff edge in the funding set-up can be avoided.
The marine renewable sector’s asks are far from extravagant. This is the time to capitalise on the lead that the sector has given us as a country, commit to the policies that will expand our reach and make tidal stream innovation the icon of the UK economy that we know that it can be.
Mr Philip Hollobone (in the Chair)
The debate can last until 11 am, and I am obliged to call the Front Benches no later than 10.27 am. The guidelines are to allow 10 minutes for the SNP, 10 minutes for His Majesty’s Opposition and 10 minutes for the Minister. Alastair Carmichael will have three minutes or so at the end to sum up the debate.
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.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate, Mr Hollobone. The hon. Member for Gloucester (Richard Graham) is right—I will give my perspective on Strangford Lough. Helping to progress that is my objective in being here.
I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) for setting the scene so very well. Like everyone else in the Chamber today, including me, he is a champion of the coastal regions. On almost every occasion in this House, he and I have supported each other, whether that is on fishing issues or marine life issues. Since my election to this House, it has been my pleasure to work alongside him and learn from him. I thank him for that.
It is a pleasure to see the Minister in his place. I look forward to his response, which I know is always given with consideration and helpfulness. I look forward to the contributions from the two shadow Ministers for the SNP and Labour. They both have a deep interest in these matters, and they will add much to the debate.
Margaret Ferrier
Will the hon. Member for Strangford (Jim Shannon) give way before he starts on his amazing speech? The Narrows located between Strangford Lough and the Irish Sea make an optimal location for tidal energy research. As the hon. Gentleman knows, it has hosted a few projects in recent years. Will he speak to the benefits that projects in Strangford Lough have for his constituency and further afield?
Jim Shannon
The hon. Lady asks me to speak highly of Strangford Lough, and that will be done without question. I thank her for her intervention. The main issue is more than energy; it is the balance of life and the potential to provide safe, renewable energy. I speak to my mother regularly and she has always said that there are few absolutes in this world. One, pertinent for this time of year, is that “Jesus loves you, regardless of what you have done.” The other is that the sun will rise and set. Clearly, a very wise woman, for which I am so thankful.
The first maxim, demonstrated at this time of year, offers forgiveness and unconditional love in the birth of the Lord Jesus. As for the second, I believe we have an opportunity to harness that. If the sun rises, it means that the moon orbits, and the tides are as certain as the sun rising. We can and should use that to produce energy. If we had a thought for the day, that would be mine.
Strangford Lough was named by Viking invaders who noted the strength of the lough. That is where the “strang” came from, the Viking word for strong. They may not have been able to measure the tide as having a force of 7.5 knots on any given day, but they knew it was stronger than normal, stronger than anywhere they had been before. In 2008, a project to harness the power of Strangford Lough was started in the form of a tidal turbine. That was the world’s first commercial-scale tidal energy project.
I am very proud that was in my constituency, and I am keen to see that project go further. I have met some of those involved from the Queen’s University marine laboratory and the Minister back home from the Department of Enterprise, Trade and Investment. I am pleased to see this Minister is his place, and I will request a meeting about that project. We are keen back home to take it further.
I want to speak about that project and what it did, because it shows development potential that could be used for our betterment. It was commissioned in July 2008 by Marine Current Turbines, a subsidiary of British tidal energy company Siemens. The 1.2 MW project used MCT’s SeaGen turbine technology and required an investment of £12 million.
The pilot was successful, and I cannot understand why we have not moved beyond that. Perhaps we can now, because my discussions with the Department back home and the Assembly, as well as those involved with the project, indicate that that pilot project could be financially feasible. I think some of the investors come from Canada, and there is an interest in taking it forward.
The project involved installation of two 600 kW turbines producing 150 kW of electricity to the grid in July 2008. SeaGen generated electricity at its maximum capacity of 1.2 MW for the first time in December 2008. Another important milestone was reached in September 2012, with SeaGen producing 5 GWh of tidal power since its commissioning, which is equivalent to the annual power consumption of 1,500 households.
I could say a lot more; I am keen to see how we can take that project and its pilot scheme forward. The project has finished at the moment, but I cannot understand why further follow-ups have not taken place, to make the most of that tide, to ensure that the harnessing of marine energy is not detrimental to the fishing industry. I have been in contact with DAERA back home on the matter.
I make this request directly to the Minister today. If he is able to come to Strangford Lough, I am keen to take the opportunity to introduce him to people from Queen’s University marine laboratory and from the Department to see how the project can be progressed. I honestly believe it has so much potential. Obviously, we need the input of the Minister here today, but the Minister back home told me that some of the help comes from Westminster for that project, so there is governmental input here.
I recently read that tidal power could supply up to 10% of the UK’s energy within 10 years. SeaGen could play a part in that as it was more than four times as powerful as the world’s second most powerful tidal current system at that time—the 300 kW Seaflow that was installed off Lynmouth on the north Devon coast more than five years ago. We have that potential in Strangford Lough. It would be wonderful for us if we could use that green marine energy potential back home.
I am given to understand that, based on the Strangford Lough experience, the company plans to scale up the technology to build a 10 MW tidal power farm within the next three years. That is the kind of innovation that we in this great United Kingdom of Great Britain and Northern Ireland need to invest in and reap the benefits from. There is a delicate balance in our marine environment, but investment could see a balance being struck, with the ability to power homes, cutting down on reliance on fossil fuels from overseas and becoming self-sustaining.
Another good thing came from the SeaGen pilot scheme. We have a large seal colony in Strangford Lough, and the tidal scheme had protection for the seals, so lots of things were learnt from the SeaGen pilot scheme from 2008 to 2012, which is something that we should really look at. Importantly, it would also reduce costs for the working poor who are on wages that simply are not good enough at this time. We have a golden opportunity to develop the tidal energy system in Strangford Lough. I believe in my heart that that is the way forward. We must find a way and find it soon. The lessons learnt in Strangford Lough can provide a good foundation. Perhaps the Minister can give us the help that we need.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing this important debate.
Wales has 2,120 km of coastline and a marine area of approximately 32,000 km. We have immense offshore wind and tidal potential, with Welsh Government estimates setting our marine energy potential at at least 6 GW. The Swansea bay tidal lagoon was mentioned earlier. With tidal lagoons, there is also the potential for coastal protection and other benefits that we need to consider in the round. Although only a small number of projects have been built and deployed in Wales to date, the marine energy sector is already driving economic development and regeneration, with cumulative investment and spend in Wales amounting to £159.6 million, with Gwynedd, my county, benefiting from over £18 million. Marine Energy Wales believes that with the right support there is vast potential for the sector to grow. It estimates that it could deliver £603.3 million in economic benefits for Wales over the next five years.
I want to draw attention to a tidal energy project that is being developed at Ynys Enlli in my constituency of Dwyfor Meirionnydd. The Llif Llanw Enlli tidal project is being delivered by the Edinburgh-based company Nova Innovation in collaboration with the community energy company Ynni Llŷn, who are seeking to install turbines on the seabed and demonstrate that commercial devices at a small scale can indeed work before scaling up as the technology matures. It is their ambition for Ynys Enlli, a small island off the end of Llŷn, to switch from a dependency, as it presently has, on diesel to become the world’s first blue energy island.
A number of issues have already been mentioned, and I also have a list of asks for the Minister. I hope that they will co-ordinate with those that have already been aired. Nova Innovation is concerned that what is slowing down the development of marine technology across the UK is the slow route to market for projects. It is concerned that the timescales associated with contracts for difference and delays with securing consent for projects are contributing to delays. It has called for the introduction of a CfD innovation pot to support emerging technologies, and for the time between CfD award and the project’s start date to be reduced. When he winds up, I would be grateful if the Minister could let us know whether such matters are to be considered.
On CfDs, I ask for clarity on whether—as with the fourth allocation round—tidal stream energy will continue to have ring-fenced funding into the fifth round. Having funding set aside specifically to support tidal stream is key to getting projects in the water and bringing costs down over time. There are pre-consented demonstration zones in Wales, such as Morlais in Ynys Môn, that are dependent on securing funding through the scheme to deploy. Finally, will the Minister clarify whether any consideration is being given to adjusting the CfD scheme so that it can support renewable energy hubs that contain multiple technologies by assessing together projects that are linked? Again, that would be very significant for many parts of Wales.
Of course, for Wales to realise our marine renewables potential, our grid infrastructure desperately needs to be brought into the 21st century. A recent report of the Welsh Affairs Committee on grid capacity in Wales warned that our renewable energy potential is threatened by UK Government inaction on improving grid connectivity. The inadequacy of the grid in Wales is a barrier to the decarbonisation of heat and transport across Wales, let alone to the future potential that we should be realising. It is well known that Wales exports more energy than it actually uses. I am very comfortable with that—I think Wales should be exporting into England and, in future, into Ireland—but we need to have the means to do that, and the grid structure does not permit that. It is not sufficient for our needs, let alone for the future.
Therefore, I ask the Minister how investment in grid infrastructure is to be accelerated. What consideration are the UK Government giving to the role that multi-connection substations could play in reducing the cost and the delays associated with grid construction? Importantly, that would also provide strong signals that would, in turn, engender confidence for local supply chains, particularly for marine renewables.
Before I bring my remarks to a close, I draw Members’ attention to the absurd situation in Wales whereby our seabed will be a key driver of our renewable transition, yet it is the UK Treasury that controls, directs and ultimately reaps the Crown Estate’s profits from the seas around Wales, out to a distance of 12 nautical miles. Management of the Crown Estate in Scotland has been devolved to the Scottish Government, and a ScotWind auction earlier this year raised almost £700 million for Scotland’s public finances, yet the UK Government refuse to devolve its management to the Welsh Government. That is an anomaly in our devolution settlement, which again leaves Wales the poorer, and I do not find a justification for it. I see no rational justification from the Government, save an obstinacy regarding changing the status quo—a status quo that disfavours Wales. Marine energy and offshore wind together represent a historic opportunity for the Welsh economy, and it is the people of Wales who should be able to direct how best to benefit from that economic opportunity, not Westminster.
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—
Mr Philip Hollobone (in the Chair)
Order. I have been generous in allowing the hon. Lady some breadth in her contribution, but this is a debate about marine renewables—I am struggling to see how community energy could possibly fit in. The hon. Lady might want to consider what she says next.
Wera Hobhouse
Thank you for your advice, Mr Hollobone.
I will wind up by saying one thing: I absolutely support the development of marine energy and welcome all the support the Government can give it. I look forward to the Minister’s response.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship, Mr Hollobone. Like everybody else, I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on bringing forward this debate. As with many Westminster Hall debates, the main thrust is clearly one that all contributors agree with—in this case, it is support for marine energy.
The right hon. Member for Orkney and Shetland is lucky to have the European Marine Energy Centre in his constituency, a facility I have visited. This world-leading facility came about partly due to the EU. As the right hon. Gentleman said, the EU funding scheme must be replaced by the UK Government to keep the centre going. The UK Government want to talk about levelling up, so there should be no ambiguity about providing replacement funding for the EMEC.
The right hon. Gentleman rightly highlighted the success of the fourth allocation round of CfDs, with Orbital Marine Power awarded 7.2 MW, SIMEC Atlantis awarded 28 MW through the further development of the MeyGen site—the world’s largest—and Magallanes, in Wales, awarded 5.6 MW. It was a pleasure last week to hear at a meeting of the marine energy APPG that all those projects are on track to deliver their AR4 commitments.
As the right hon. Gentleman said, the crucial things about tidal stream development are the jobs and manufacturing it creates in the UK, the export opportunities it provides, and that it forms part of the just transition for the oil and gas sector.
Mr Carmichael
The hon. Gentleman is absolutely right to draw attention to the fact that all these projects are on track with their timescale. However, the timescale we heard about at the briefing at the APPG meeting will still see the earliest device going into the water in 2027. That shows the problem with the pace of deployment.
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.
Alan Brown
Sorry, I need to go on.
It might have taken slightly longer to get to this point and there are good reasons for that, but Scotland leads the world in wave and tidal stream technology. The deployment of tidal stream to date has come about because of a combination of the tenacity and drive of the developers; Government support, particularly that of the devolved Administrations; and the presence and work of EMEC.
Of course, a big reason for our optimism about the future is the £20 million ring-fenced pot that was allocated in AR4. That sent a clear message to investors and allowed certainty for the market. The message is clear: continue this £20 million ring-fencing in AR5 and, as a minimum, do the same for AR6. However, what would really help industry is a long-term view of what funding could be available. Hopefully the Minister will confirm that AR5, which is due to be announced later this month, will contain some ring-fencing.
We know what happened with offshore wind, where pipelines of projects brought prices down dramatically and much quicker than was originally intended. That was a real success story and one that the UK Government are proud of. As we look to the future, there are some things that can be replicated with tidal stream. That can be as big a success, but one that is based on UK supply chains and that will lead to our exporting the technology and patents.
The UK has 11.5 GW of potential, which equates to 11% of the UK’s current electricity demand. It goes without saying that the flows of tides are entirely predictable, so if there is a belief in the need for so-called baseload, tidal stream can clearly be part of that.
Of course, it is the reliability and predictability of this green energy that is so important. As we have heard, it is also cost-efficient, particularly if given the right Government backing. The 40 MW allocation in AR4 will be delivered at £178 per MWh, which is already 15% below the administrative strike price and represents a 40% reduction in the levelised cost of energy since 2016. As we have heard, it could go as low as £78 per MWh by 2035 and below £50 per MWh by 2050. However, such cost reductions are possible only with continued Government backing.
As we have heard, those prices compare very favourably to the strike rate for Hinkley Point C, which is £92.50 per MWh, and, as I have said, that is a 35-year concession as opposed to a 15-year concession. If we work that 35-year concession backwards, tidal stream is already as cheap as nuclear, or cheaper, albeit not at the same scale, so I admit we are perhaps not comparing apples with applies in terms of output. Nevertheless, in that comparison, tidal stream is already cheaper than nuclear. Tidal stream does not have the backing of Sizewell C, which has just been allocated £700 million of taxpayers’ money just to get to the final investment stage. Again, what we are calling for is continued Government backing that will see tidal stream developed quicker and in a way that is much more beneficial to bill payers.
Given that time is running on, I will sum up by reiterating what the key asks are for industry. We must maintain the tidal stream energy ringfence in future renewable options, which is worth at least £20 million in AR 5. We want the Government to set a 1 GW target for 2035 to send, again, that strong signal to investors. Small modular reactors at Sizewell C will not be able to achieve that target in that timeframe. We want to expedite the route to market for UK projects. That goes to the point other Members have touched on about the consenting process, which needs to be sped up.
Other contributors have also said that the UK needs to increase the pace and scale of its investment in its electricity grid. We should do an exercise where we ask, “What does 2050 look like in terms of where energy generation takes place?” From that, we can map out what grid upgrades there need to be, instead of continuing to incorporate constraints, in the way that short-term lookaheads for grid upgrades have done.
We ask that a renewables investment allowance be created. When we are trying to embrace a renewables revolution, it makes no sense to have an oil and gas investment allowance, which offsets the massive profits that oil and gas behemoths are making, but not to have an investment allowance that encourages them to invest in renewable energy, to divest and to pursue that long-term just transition to net zero.
There really is a fantastic opportunity for renewables as a whole in the UK and a fantastic opportunity for tidal stream technology to continue to be world leading, to be manufactured here and to be exported to the rest of the world. It just needs that continued support, and hopefully the Minister will tell us that that is what it will get.
Kerry McCarthy (Bristol East) (Lab)
As always, it is a pleasure to see you in the Chair, Mr Hollobone. I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on securing the debate. We have had quite a tour of the UK today, from Orkney and Shetland down to the south-west of England via Wales and Northern Ireland. I smiled a little when the hon. Member for Strangford (Jim Shannon) said it was his desire to talk about Strangford lough that brought him here today, given how omnipresent he is in Westminster Hall debates, but as always his contribution was valued.
This is one of those ideal Westminster Hall debates, where everyone has something of real interest to say and is not political point scoring, but trying to speak with a common purpose, highlighting individual and local concerns. What has come through clearly is a desire for clarity from the Government and for support for the sector, so that it feels that the Government are behind the desire to harness our marine energy resources and we can expedite the roll-out. As has been said, value-for-money decisions or calculations that were made some time ago may need to be reassessed in the light of the current energy situation. The point was made that, once we get to a tipping point, things become a lot cheaper.
We know we need a diverse mix of energy sources if we are to get to net zero. It is always frustrating when clean energy sceptics say, “What happens when the sun doesn’t shine or the wind doesn’t blow?” and conveniently ignore the fact that our tides, as the hon. Member for Kilmarnock and Loudoun (Alan Brown) said, are a predictable source of energy and something we should be harnessing. We could also use hydroelectric reservoirs, which I do not think anyone has talked about, which release stored water and therefore generate energy at short notice.
I will pick up some of the points that other hon. Members have made as I go through my speech, but I want to start by talking about some of the really inspiring projects that are in the pipeline. The groundbreaking Blue Eden project in Swansea will generate 320 MW of energy, create 2,500 jobs and support another 16,000 in the supply chain. It was interesting to hear about the potential of the blue energy island, which is a small way to make a real difference.
In Merseyside yesterday, metro Mayor Steve Rotheram signed a deal with the South Korean state-owned water company, which owns and operates the world’s largest tidal range scheme, to develop the Mersey tidal power project, which could generate enough energy to power 1 million homes. It will create thousands of jobs and help the region get to net zero by 2040.
In Cumbria, where the Government are about to give the go-ahead to a new coalmine—I thought we might have had the news by now—there is the potential for thousands of jobs in green industries such as offshore wind, tidal power and green hydrogen. The choice facing us is whether we doggedly rely on dirty fossil fuels—hon. Members mentioned the investment allowances being put into new fossil fuel exploration instead of supporting renewables—or embrace the green industries of the future and the potential for jobs. The right hon. Member for Orkney and Shetland said that 80% of the content is UK-generated, which will have a great impact on the supply chain. It is a no-brainer that there should be Government backing behind that.
In my local area, the Western Gateway group of local authorities has set up a new commission to explore tidal options for the Severn. The hon. Member for Gloucester (Richard Graham) knows that that has been an ongoing discussion ever since we have been in Parliament. Talks stalled in the early years of the coalition Government. There was a feasibility study. There were concerns about the cost, and talk about whether a barrage or tidal lagoons would be the better option.
There were also valid concerns about the impact on the natural environment in the estuary. We have not touched on that much today, because people are so excited about the potential of tidal power, but we have to look at some of the possible negatives. In the case of the Severn, there were concerns about the impact on migrating bird life at the wonderful wetlands at Slimbridge, for example. Environmental campaigners have also expressed concerns about the Morecambe bay project.
I hope we can find a way through this and harness the potential of the Severn, which has the second-highest tidal range in the world, but we need to do so in an environmentally sensitive way. More generally, we need to look at preventing sea life from being caught in the blades of the turbines and to assess the impact of vibrations and noise on marine mammals that echolocate to communicate and navigate, such as whales and dolphins. Such things need to be taken into account.
I recognise that the costs of tidal stream are far higher at the moment than those of solar and wind, but they have fallen significantly in recent years and are expected to fall further still. The comparison was made with Hinkley Point C. As the right hon. Member for Orkney and Shetland said, it is not about setting one off against the other and saying either/or; it is about making that comparison. If we are investing in Hinkley Point C, we should be looking at renewable options. It is estimated that, by 2035, tidal stream could provide power at £78 per MWh, which could fall to £50 per MWh by 2047 —quite a few Members have mentioned those statistics.
Alan Brown
The hon. Lady says it is not an either/or, but the reality is that if too much money is invested in nuclear, its generation capacity means that there is not enough scope for renewables coming on to the grid, so in some cases it is an either/or.
Kerry McCarthy
The hon. Gentleman answered his own question earlier by flagging up the investment allowances attached to the windfall tax that are being given to the fossil fuel companies. That money should be directed towards this investment and not towards fossil fuels. It is not money for nuclear versus money for renewables; it is money for fossil fuels versus money for clean energy sources.
We have talked about the UK having the potential to develop around 1 GW of tidal stream by 2035 and up to 11.5 GW by 2050. National Grid’s future energy scenario models up to 3% of UK electricity demand being met by marine renewables by 2050, but we need to do more to release that potential. According to Energy Monitor, 14 GW of planned UK power capacity has been cancelled, is dormant or is stuck in the early stages of development but, as has been said, lack of investment and of a clear sense of direction are not the only barriers.
The grid has been talked about—it is a massive issue—and we have heard about the Welsh Affairs Committee report. The same issues come up time and again when I talk to people as part of my shadow role: long waits—sometimes of up to 10 years—to connect clean power sources to the grid, delays to projects and investors being deterred.
Kerry McCarthy
I am conscious of the fact that the Chair said I have only 10 minutes. I am already nine minutes in, so I think I need to crack on. I want to hear what the Minister has to say about what we are doing to sort out the problems with the grid. I am sure he is well aware of them.
We also need action across the board to simplify and streamline the planning system, not in the way proposed by the previous, short-lived Administration, who were all about scrapping vital environmental protections and riding roughshod over the wishes of local communities, but by ensuring we do not place unnecessary burdens on renewable energy developers that delay or even derail new projects.
Other Members have mentioned the UK Marine Energy Council’s suggestions for speeding up approval for tidal stream projects—for example, reducing baseline surveys, decreasing the regulatory review from nine months to three and so on. I look forward to hearing what the Minister has to say about that.
We hear good things from around the country—for example, what the Labour-led authority in Merseyside is doing. Labour has made a plea for certainty and clarity from the Government, and I hope the Minister is looking at what Labour has said about the drive for a clean power system by 2030, a national wealth fund and establishing Great British Energy to help give investors that certainty. GB Energy would have a remit to invest in marine and tidal power to harness the huge potential of this island nation. We would support new marine energy projects, and we need to see something similar from the Government that would give people a signal that those projects are very much on the radar, rather than coalmines and fossil fuel exploration.
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.
Liz Saville Roberts
It is evident that the Minister understands the potential associated with marine energy for the levelling-up agenda, which I really appreciate. Could he give me a sense of what will happen in Wales with the national grid? Improvements to the grid will be critical if we are to increase generation in Wales, and the timetable for that is essential, because otherwise these are just abstract concepts.
Graham Stuart
The right hon. Lady is absolutely right. Since taking this job—about three months ago now—I have been seized with the centrality of that issue. For all the fascinating issues with the different forms of deployment, if we do not have the grid to bring it all together, we will not have a successful system. I am co-chairman of the offshore wind acceleration taskforce as we seek to move from 13 GW of offshore wind, or whatever it is today, to 50 GW by 2030. That is our ambition, and one of the biggest challenges to that is making sure that we have the grid in place to do it, and are carrying colleagues with us while we do so. I am meeting with a group of colleagues today from East Anglia to discuss the onshore impact of that technology.
Graham Stuart
I am still answering the question posed by the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). The offshore wind acceleration taskforce has been working really hard with the regulators, including Scottish and other devolved regulators, because they have their own systems and agencies. We are trying to make sure that we streamline and avoid duplication, and that anything that can be done in parallel is done; we are looking to improve that.
In a sense, offshore wind has been an exemplar for the overall grid system—that is not really the focus of this debate, but we are absolutely focused on that. We have got something called the holistic network design, trying to look at this issue in a more joined-up way for the first time, rather than just linear connections for individual ones, with the grid responding. We are looking at more of a planned approach, and the second holistic network design will come out soon. Floating wind in the Celtic sea, for instance, will be included in that design.
Jim Shannon
I thank the Minister for his comprehensive, detailed and helpful response. I just have one very quick question: if at all possible, could he facilitate us with a visit to Northern Ireland? We would be very pleased to show him Strangford lough—the narrows, the waters, and what they can generate. In my discussions with the relevant Minister in the Northern Ireland Assembly, he indicated that there needed to be a direction from Westminster as well, so that would be extremely helpful. I am asking in all honesty whether the Minister, in the generosity of his position, could facilitate that.
Graham Stuart
I have a serious problem with the hon. Member for Strangford (Jim Shannon), which is that he is a very hard man to say no to—I do resent that. I will certainly try; I think other duties may take me to Northern Ireland, and perhaps that is something I could fit in. I will certainly try to do so if I possibly can.
Let me pick up on a few of the points that have been made. I want to say a bit more on EMEC.
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—
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.
Mr Carmichael
I offer myself as an interlocutor for the hon. Member for Gloucester (Richard Graham). His entreaty to the Minister was that we should not forget England. Between now and Saturday that would take some doing.
Those who know me will understand that the message of this debate is simple. I will not expand on the reasons why I keep messages simple, but let me reiterate them for the Minister. We need early clarity on the AR5; support for the industry will be massively important for investor confidence. The machinery of government must stop acting as a brake in relation to the consenting process. There is opportunity for reform with the contract for difference.
The importance of a 1 GW target in the medium to long term is going to be critical in continuing to provide that investor confidence. If the Minister can drive those modest asks forward, I have no doubt that he, too, will one day earn the praise that we have lavished on the right hon. Member for Spelthorne (Kwasi Kwarteng).
Every day is a school day in Westminster Hall. The right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) told us that the coastline of Wales was 2,120 kilometres. I observe that that puts the entirety of Wales a mere 1,462 kilometres behind Orkney and Shetland.
Mr Hollobone, we will return to this matter. We look forward to the Minister’s early announcements. I am grateful to all who have taken part in the debate.
Question put and agreed to.
Resolved,
That this House has considered Government support for marine renewables.