Floating Offshore Wind Projects

I beg to move,

That this House has considered delivery of floating offshore wind projects.

It is a pleasure to serve under your chairmanship, Sir Christopher, and I am grateful to have secured time for a debate on the delivery of floating offshore wind power, which is one of the most interesting and exciting energy developments in play. It is good to see colleagues from across the United Kingdom and I look forward to hearing their contributions. I put on record my thanks to RenewableUK, the Crown Estate and many of the developers for reaching out ahead of the debate to provide briefing and insight.

This is a timely moment to discuss the role of floating offshore wind in the UK’s energy mix and to consider what further steps the Government need to take to facilitate the emergence of that new industry. The twin challenges of net zero and energy security mean that the strategic imperative around this home-grown clean energy solution is becoming ever stronger.

Floating offshore wind—or FLOW, to use the shorthand—harnesses the power of wind by using turbines based on floating structures rather than fixed. It offers an opportunity to deploy enormous turbines in larger, deeper, more exposed offshore areas where the overall wind potential is higher and therefore more energy can be generated.

There is a high level of expectation that floating wind is going to become an increasingly important part of our energy mix. The Government have set a target of 5 GW of FLOW to be installed by 2030, and Offshore Renewable Energy Catapult estimates that we could have up to 95 GW of floating wind in UK waters by 2050. At that point, the majority of the wind turbines in UK waters would be floating, not fixed to the seabed as they are today.

The UK is already home to the largest floating wind farm in the world—Kincardine, off the coast of Aberdeen in the North sea—which is using the highest-capacity turbines ever installed on floating platforms. The success of Kincardine should give both industry and Government confidence that the technology works and is scalable, and that it can be replicated elsewhere.

Floating wind will be critical to achieving the Government’s energy security targets, and if we do not choose to industrialise FLOW we will have to generate at least 15 GW of power by 2035 using other means. Indeed, it is difficult to see how the overall expansion of offshore wind envisioned by the Government’s targets would be technically possible without doing floating wind in a very big way. That industrialisation of floating offshore wind will create the pathway for cost reduction, as has been proven with fixed-bottom offshore wind.

Floating wind offers a huge opportunity for the world to harness offshore wind power, not just those limited regions with shallow sandbanks close to shore. Globally, the UK Government have set the most ambitious targets for developing floating offshore wind, but other countries are catching up fast. Spain has announced a target of 1 GW to 3 GW of FLOW by 2030. Similarly, France, Norway, Japan, Ireland and parts of the United States have set clear and ambitious targets. The world will therefore develop floating wind for sure. The UK is well positioned as the leading marketplace for investors, but if those targets are not followed through, I fear that the UK is likely to be left behind as other countries move to seize on the new technology.

Along with parts of the North sea, the Celtic sea—located off the coasts of south-west Wales, Devon, Cornwall and southern Ireland—is one of those areas with the greatest potential to deploy FLOW. It is attracting enormous interest from developers and investors, and I am delighted that my hon. Friend the Member for North Devon (Selaine Saxby), chair of the all-party parliamentary group for the Celtic sea, is here today. I look forward to hearing her remarks.

Floating offshore wind in the Celtic sea represents a multibillion pound economic development and investment opportunity for Wales, the south-west of England and the whole UK. The area has excellent wind resource infrastructure and local industry for potential supply chain development. The Crown Estate’s Celtic sea leasing programme aims to deliver 4 GW of new floating offshore wind by 2035. It could provide power for almost 4 million homes, and the project will kick start an innovative new industry in the area, with the Celtic sea assessed to have the economic potential to accommodate up to an additional 20 GW by 2045. Just last week, the Crown Estate announced that it is seeking to accelerate the leasing process for that first stage of development, recognising the importance of bringing floating wind onstream as soon as possible, and will be looking to launch the tender process in the middle of next year.

For us in west Wales—I represent a Welsh constituency —floating offshore wind represents a hugely exciting and valuable prospect. It is another stage in the evolution of Milford Haven port in my constituency. Shared with my right hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart), Milford Haven is one of the UK’s most important energy ports, beginning in the late 18th century when whale oil was imported for use in streetlamps. The late 20th century brought oil refining and trade in petroleum products, and the early 2000s brought liquefied natural gas imports. Strategically, Milford Haven plays an incredibly important role in our energy mix, and I believe that the coming decades at Milford Haven will be about floating offshore wind and hydrogen.

Early analysis by Cardiff Business School suggests that floating offshore wind, hydrogen and sustainable fuels investment could add an additional 3,000 Welsh jobs to the 5,000 already supported by the Milford Haven waterway. Floating offshore wind will facilitate the transition to a vital new green energy era, supporting the continued evolution of that major hub for another 50 years. On the Milford Haven waterway, we already have a number of very active projects: we have Blue Gem Wind, a joint venture between Simply Blue and TotalEnergies, which is looking to establish the first demonstrator projects in the Celtic sea. We have DP Energy, a joint venture involving EDF, and RWE—which has a major gas-fired power station on the Milford Haven waterway—is looking at floating offshore wind opportunities, in conjunction with exploring the possibilities of producing hydrogen and moving its entire operation in Pembrokeshire to a lower carbon future.

Does my right hon. Friend agree that the much-rumoured and long-awaited freeport status for places such as Milford Haven—even in conjunction with Neath Port Talbot or similar—would accelerate all of the exciting initiatives he has referred to?

I will mention freeport opportunities a bit later, but my right hon. Friend is exactly right. So often when people talk about freeports, it is in the context of an answer looking for a question; what we have in Milford Haven—together with Port Talbot, I might say—is a solution. It is something that will help facilitate a new industry, and if we can use the freeport process to help support that—I am looking towards the Minister—then that would be excellent indeed.

The right hon. Gentleman is making an excellent speech, and I congratulate him on securing the debate. Building on his point about freeports, one of the key advantages of our freeport bid is that it is in synergy with the floating offshore wind opportunity. That will deliver a huge amount of added value through the manufacturing opportunities and long-term sustainable job opportunities that will come out of it, so the freeport offer is a strategic offer, not just transactional.

As is typical, the hon. Member has gone right to the heart of the matter. Floating offshore wind is going to happen in a big way in UK waters— I absolutely believe that. The challenge that we need to get our heads around is how much real economic value and content can be captured and secured for the UK. The hon. Gentleman is exactly right that a collaborative bid between Port Talbot and the port of Milford Haven provides a potential framework to allow that industrialisation and capturing of domestic content to happen.

FLOW presents an important economic opportunity for the whole of the UK—for ports, industry and energy infrastructure, and by driving up investment and regional and national growth, as well as increasing the numbers of skilled jobs and career opportunities. The levelling-up opportunities are enormous: tens of thousands of people are already working in the offshore wind industry and supply chain in places such as Hull and Hartlepool. That is the kind of domestic content and supply chain opportunity that we want to deliver for Wales and the whole of the Celtic sea region. With large-scale projects in the Celtic sea perhaps five to 10 years away, there is an opportunity now for the development of the appropriate infrastructure and supply chain capability, which will deliver significant local opportunities in the region and, in turn, drive regional economic growth.

While we are talking about Port Talbot, I should say that I was excited to see RWE recently announce a new partnership with Tata Steel in the constituency of the hon. Member for Aberavon (Stephen Kinnock). That will explore how steel manufactured in south Wales could be used for floating wind projects, which is exactly the kind of innovative thinking that we need to achieve everything to which we aspire.

I hope to have outlined the scale of the vision and opportunity in front of us. It is ambitious and exciting, and in my view it is achievable. There is enormous private sector interest. However, along with the scale of the opportunity, there is an enormous delivery challenge. Ensuring that we have the appropriate offshore and onshore capabilities to deliver this is a big and complicated challenge. The 5 GW by 2030 target is ambitious. The industry is confident that it can respond to the challenge, but it will require a lot of work. Think about the sheer scale of what we are talking about: hundreds and hundreds of enormous new turbines being manufactured and towed out to sea. We have also to think about all of the onshore infrastructure around the turbine: the port infrastructure, new grid capacity, new grid connections, all the supply chain work that we have talked about, the financial architecture around it—contracts for difference—and, of course, the planning regimes in which the projects operate.

The right hon. Gentleman is absolutely right about all of the wraparound and complexity. One thing he may have mentioned—I may have missed it—is maintenance and servicing. Once the structures are in place, they require regular maintenance and servicing, which in itself is a huge employment-generating opportunity.

The hon. Gentleman is exactly right about the operations and maintenance role. That is not just a job creator; they are valuable jobs. There is real economic value in those support services.

I come back to the delivery challenges around this big, complicated opportunity. The first challenge relates to leadership and co-ordination. As with the early development of fixed-bottom offshore wind, the support of the UK Government will be crucial in driving forward the political, regulatory and financial support frameworks that are needed to maximise the flow opportunities. I welcome recent positive statements by the Government, but there needs to be much more visible engagement from Ministers when it comes specifically to the Celtic sea opportunity. I have been impressed by the leadership that the Crown Estate has shown, and the work that it is doing to create robust frameworks around the tender process and environmental protections. However, there is a role for UK Government, over and above what the Crown Estate is doing, to push forward the Celtic sea programme. That role starts with setting credible, ambitious targets. We are in a relatively strong position when it comes to the UK’s clear pipeline of offshore projects, which is backed up by a firm commitment from Government. That is critical in increasing investor confidence in the UK market, but Ministers should be going further, perhaps by setting supplementary, longer-term targets to strengthen signals to investors and developers. Ministers should be clear about the UK’s intentions to scale up the sector rapidly in the coming 10 years.

The next area of challenge is getting the right financial architecture in place: a market environment that encourages price competition and industrial development. The contracts for difference have been incredibly effective at reducing the costs of renewable energy projects by reducing wholesale price risk, but the weakness of the structure of the CfD auction scheme is that it considers only the price of projects, and not wider industrial and economic considerations or future cost reductions. The Government should look to reform the CfD system to create a premium or incentive that recognises projects that make substantial commitments to industrial and economic development in the UK and to innovation in the UK. The aim of these reforms should be focused on fostering a market environment in which investment, innovation and economies of scale are incentivised. Consideration should also be given to what form of support can be provided to combined FLOW and hydrogen production projects, which cannot really be assessed alongside conventional FLOW from a cost perspective. I mentioned the work that RWE is doing in Pembroke, looking at the role of floating offshore wind to support hydrogen development, and there probably needs to be a different way of looking at that in terms of price support.

The right hon. Gentleman is being very generous in giving way, and I thank him for that. He is right that port infrastructure is vital, but another key part of our infrastructure is the national grid. Does he agree that there are real concerns about the capability of the national grid to deliver the power that we need from offshore wind, and that the UK Government need to get round the table with National Grid and Ofgem to make that happen?

I swear I have not shared a copy of my speech with the hon. Gentleman, but he anticipates the next section extremely well. I will just finish this point about the freeport bid. I am not expecting the Minister to comment—it is a live bidding process—but as I said on the Floor of the House yesterday in Levelling Up, Housing and Communities questions, I hope that Ministers will look closely at what is coming forward from Milford Haven, Pembroke Dock within that port, ABP at Port Talbot and the two relevant local authorities, because it is genuinely exciting and represents something different. We should not get hung up on freeport labels; it is about doing something innovative and collaborative that can help to unleash the full economic potential of this opportunity.

Let me get on to grids, before I bring my remarks to a close. The hon. Member for Aberavon (Stephen Kinnock) is exactly right: potentially even more challenging than delivering port upgrades is achieving a serious step change in the way we increase grid capacity and make available new grid connections here in the UK. The planning and consenting processes are ridiculously slow and difficult—they are not fit for purpose. We on the Welsh Affairs Committee in recent months have been taking evidence on the grid infrastructure in Wales. Our report on that will be coming out soon, so I will not pre-empt that. I was pleased in the evidence we took to hear about steps that are being taken by Government to reduce the offshore wind consenting times, but the truth is that we need to see far more urgent action from Government to address grid capacity. The danger is that developers will increase their capabilities and be able to construct and deploy large-scale renewable energy infrastructure way ahead of the planning process, and that cannot be acceptable. We need more anticipatory investment so that new grid networks are built in time for those major new sources of generation and for demand. We could talk about other planning challenges: in the Welsh context, we have the devolved body Natural Resources Wales. Developers are concerned that Natural Resources Wales should be fully equipped to be able to handle the volume and complexity of the planning jobs that they will be asked to do, to assess the impact on seabeds and things like that.

I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this vital debate.

If the last 12 months have taught us anything, it is that if we are to better protect ourselves from rocketing energy costs, as a country we must become more resilient and less exposed to fluctuating global energy prices. The good news is that the UK is well placed to do that, but we need a UK Government who will grasp the nettle and realise our potential.

A Labour Government will turn the UK into a green growth superpower through our green prosperity plan, by creating GB Energy, a new publicly owned clean energy generation company that will harness the power of the UK’s sun, wind and waves. We will establish the UK as a clean energy superpower, delivering a zero-carbon electricity system by 2030 and guaranteeing long-term energy security. It is only through a publicly owned company that we can ensure that communities and people across the country feel the benefits of the power created on our own shores through cheaper bills, good local jobs and putting money back into the public purse.

To achieve clean power by 2030, we will need to quadruple offshore wind. Floating offshore wind will be crucial in helping us achieve that goal. The Celtic sea will be a vital next step in that journey. The deployment of 24 GW of floating offshore wind in the Celtic sea presents a major opportunity to establish manufacturing and logistical support in south Wales. Port Talbot is ideally placed to be the hub for that activity, and a catalyst for the growth of FLOW in the region. Unlocking the Celtic sea’s potential requires ports that are capable of constructing foundation substructures, component storage and turbine integration, and continuous maintenance of those turbines.

Port Talbot’s deep sea harbour, with the land around it fully available for development, makes it the only port with capacity to combine FLOW fabrication, assembly, staging and flotation. The harbour is sheltered from high winds by a natural bay, and the space, size and water depth means that it can easily accommodate the substructure construction for the largest turbines in sufficient quantity to meet long-term Celtic sea demand.

There are four Back Benchers seeking to catch my eye, and we have about half an hour before the wind-ups.

It is a pleasure to serve under your chairmanship, Sir Christopher. I thank my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) for securing this important debate. I will reinforce and reiterate much of what he and the hon. Member for Aberavon (Stephen Kinnock) said.

I set up the all-party parliamentary group for the Celtic sea because the opportunities presented by the Celtic sea were apparent, but there was a disjointed approach, which many of my Welsh colleagues have discussed. I was concerned that we might miss out on the opportunity altogether in North Devon, and I am delighted that my hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) is here to put in a case for the south-west of England. If we are to deliver these projects, we need a strategic approach that takes into account all the ports, skills and opportunities right the way around the Celtic sea. This is a national and international opportunity, and I am delighted to have the support of the Celtic sea APPG secretariat here today. We have been working hard to drive forward the issue, and we now have a Celtic Sea Developers Alliance. We have now established that the wind blows the opposite way in the Celtic sea, so we are delighted to have an opportunity, alongside our Scottish counterparts, to work across the whole country to see how we can deliver these projects.

On the strategy, like others I am concerned about the UK supply chain, because pretty much everything that is planned is coming in internationally. We are not realising the economic benefits that these enormous turbines present. I have seen the work going on in Blyth, and it is clear to me that my beautiful constituency is probably not best placed to develop a big port. However, we are the closest port to the development sites, and yet I cannot see anything local that is developing the kind of maintenance system that we need to service the 250 floating offshore wind turbines that are coming at us in the next five to 10 years.

I am grateful to the hon. Lady for allowing me to intervene because she hits on an important point: the lack of co-operation and strategy. It is not just about cable corridors, important though they are. It is also about how floating offshore wind and, perhaps later, tidal stream generation sit with other users of the seabed. Fishermen in my constituency, and I do not doubt in hers, are already concerned about spatial squeeze. It should not be a barrier; it would be an unnecessary conflict if we do not take the opportunity now to do something meaningful, and hold the ring around the different people who want to use the sea and the seabed.

I thank the right hon. Gentleman for his intervention—I agree entirely. I am also grateful for the work of the Crown Estate in trying to tackle some of these matters. We need to take a far broader strategic approach when it comes to the ocean floor.

Once we have got things into a cable, hopefully in a corridor, and have connected into the grid, the grid is perhaps able to take 30 kW out of the Celtic sea, but is that the full potential? What work is being done to upgrade that grid? Why have we got small substations, such as the development site at Yelland, when potentially it could go into the main national grid? Alternatively, if Yelland is to become a proper substation, can we have a proper cable corridor, so that it has to go through our precious beaches only once?

I hope that as we move forward we can look at the full environmental impact, and properly cost some of those points into the next round of contracts for difference. It is important to recognise that it is not always about price. As touched on by my right hon. Friend the Member for Preseli Pembrokeshire, other factors could be considered when awarding the contracts.

My other big concern is skills. We do not have anyone to do any jobs in North Devon right now, to be honest. I would like to see skills incorporated in the contract for difference, and that we reward developers who are prepared to invest in science, technology, engineering and maths facilities along our ports, right around the Celtic sea, so that all of us along those patches are able to develop the next generation of engineers.

On strike price, I would highlight concern in the industry that the price was too low in the contract for difference auction round 4, because it took into account some of the infrastructure that was already present. That is not a true reflection of where the price would be moving forward. I urge the Minister, as we look to take advantage, please can we consider some of the other elements that have been discussed today, such as the supply chain, environment and skills, and not just price, as we look to develop contract auction round 5?