Marine Renewables: Government Support — [Mr Philip Hollobone in the Chair]

Part of the debate – in Westminster Hall at 10:43 am on 7 December 2022.

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Photo of Graham Stuart Graham Stuart Minister of State (Minister for Climate) 10:43, 7 December 2022

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 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.