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Energy: Wind Farms

Volume 705: debated on Monday 17 November 2008

asked Her Majesty’s Government:

How they intend to ensure the commercial development of wind farms and other renewable energy sources in the light of the withdrawal of Shell from wind farm development.

My Lords, the UK is fully committed to meeting its share of the EU 20 per cent renewable energy target by 2020. The Government have committed to a comprehensive package of reforms to provide a stable regulatory environment for investors. Despite the current economic climate, the UK remains a good place to invest in renewables, and we have seen four significant acquisitions in the UK offshore wind market in the last month alone.

My Lords, I apologise for not having declared my interest as a member of the renewable energy committee under the chairmanship of the noble Lord, Lord Freeman.

I thank the Minister for his Answer but he has not answered the Question about Shell. Perhaps I can help him by saying that the original announcement on behalf of Shell that it had withdrawn was countermanded later the same day by a statement that was very ambiguous. It said not that it was withdrawing, but that it had not yet completed negotiations for the sale of arrays in this country that would have meant it had withdrawn. It also said that it was dissatisfied by its array in Blackpool lying in the flight path of the airport. Have the Government done anything to address that problem on its behalf? A similar set of complaints arises from BP, which even more unfortunately withdrew a few days later—a far bigger calamity—because it does not have the same fiscal advantages here as in the USA. Will the Minister tell us more about that whole concept?

My Lords, I think not. These are commercial decisions of the companies concerned. I understand that, in the statements, Shell acknowledged the support that the Government had given in taking the project so far. The Government are concerned about ensuring that such projects go ahead, so far as possible, which is why we have welcomed other companies that have come in to take up those possibilities.

My Lords, is my noble friend aware of the shortage of turbine manufacturing facilities in the United Kingdom? Will he join the British Wind Energy Association in trying to convince Vestas and Siemens that they should build plants in the United Kingdom?

My Lords, my noble friend will know that a particularly critical decision has to be made by Siemens shortly. I very much echo his remarks. There is a shortage of manufacturing capacity in the world. We think that the UK can provide an effective and excellent manufacturing base, and—

My Lords, is not one of the main reasons that renewables will be successful is that it is economic to have them? There is a commercial case, as the Minister says. When we have Brent crude at just above $50 a barrel, whereas in the summer it was three times that, is there not a real risk that investors will look outside the renewables area? Have the Government a target price for oil? How do they expect to achieve it?

No, my Lords. The noble Lord would not expect me to respond in any other way. Of course, he is right that prices go up and down; they have an impact on investment. The Government are strongly committed to the target. Renewables have a huge role to play in this country in terms of both generating capacity and jobs. We are confident that the incentives that we put in place will enable us to meet those targets.

My Lords, I apologise for getting up too early, before the Minister had sat down; that was rude of me. Now that we know that BP, like Shell, is pulling out of investing in wind farms in the United Kingdom and investing in the United States of America instead—which, as the Minister says, it is quite free to do—does he agree that if the UK is to keep the lights on and tackle carbon emissions, the Government must ensure a stable investment climate?

My Lords, I agree that a stable investment climate is essential. We believe that we can provide it in this country, together with the skills and technology that go with it. It is worth pointing out that at the same time as those decisions by Shell and BP, other companies have come into the UK because they see it as providing the kind of conditions she has called for.

My Lords, Shell and BP are engineering companies. The fact that they have pulled out may mean that they know something, maybe that offshore wind is the most expensive and impractical of all the large-scale renewable energy possibilities. The new commitment we have made of 25 gigawatts by 2020 means, in effect, installing 10 huge generators every day. There are only 60 days in the North Sea when the weather makes that possible, and we have only one barge that can put up these wind generators. Would it not be better if the Government looked to some other renewable sources of energy and ceased to place so much emphasis on offshore wind?

My Lords, of course the Government do not see offshore wind as the sole provider of renewable energy. We provide support and encouragement in many different sectors of renewables. However, we should not ignore the potential capacity that offshore wind can provide. The third competitive round of bids for development rights to build offshore is under way. I understand the question of barges, and the Government are working with industry on that, but we have just overtaken Denmark as the world leader in offshore; surely it is good to invest in that area.