Malcolm Wicks (Minister of State (Energy), Department for Business, Enterprise & Regulatory Reform; Croydon North, Labour)

This takes us on to a new section of our legislation, concerning offshore electricity transmission. Clearly, given our discussion about the importance of offshore wind to our renewables strategy—and perhaps one day, hopefully, that of marine energy, wave and tidal—this is a significant and quite technical part of the Bill.

We are putting in place a framework to encourage the development of electricity generation from offshore. There are already plans to develop more than 8 GW of offshore wind in UK waters, and in December last year my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform announced draft plans for developing up to a further 25 GW of offshore energy.

The UK has the best offshore wind resource in Europe, and an important part of the framework to utilise this resource is the effective development of offshore electricity networks, which are needed to ensure that electricity generated by offshore renewables can be delivered to shore. Under the Energy Act 2004, the Secretary of State already has powers to introduce a regulatory framework to govern offshore electricity networks connected to Great Britain. Those powers  allow for the Secretary of State to make changes to existing industry codes, agreements and licences for the purposes of regulating offshore transmission and distribution.

The Energy Act 2004 also amended the Electricity Act 1989 to provide for the authority—Ofgem—to make regulations facilitating the selection of an offshore transmission licence holder by a competitive tender exercise. The additional powers that we are seeking in the Bill supplement the Energy Act 2004 powers in relation to offshore transmission.

Since the Energy Act 2004 was passed, the Government have been working with Ofgem to develop the detail of the offshore licensing regime for Great Britain that will be implemented using the Energy Act powers. The regime we are developing will apply to the conveyance of electricity generated offshore by high-voltage lines, regulated as transmission. Once the regime comes into force, it will cover offshore lines of a nominal voltage of 132 kV or more.

We have been consulting with industry stakeholders and other interested parties on the policy options for the new licensing regime. The Government decided that an offshore regime that mirrors, so far as possible, the onshore regulatory regime—including a price-regulated approach—was most likely to assist the development of offshore renewable generation and would enable a co-ordinated approach to be taken to the building of new electricity connections needed to connect those projects to the Great Britain onshore grid. [Interruption.] I apologise; I confused the look of great interest with a possible intervention.

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