← Back to Westminster Hall Debates
Contracts for Difference Scheme
19 October 2023
Lead MP
Jim Shannon
Strangford
DUP
Responding Minister
Graham Stuart
Tags
ClimateNorthern IrelandEnergy
Word Count: 11980
Other Contributors: 4
At a Glance
Jim Shannon raised concerns about contracts for difference scheme in Westminster Hall. A government minister responded.
Key Requests to Government:
Shannon requests the Minister to investigate providing Northern Ireland with access to join the Contracts for Difference scheme. He argues that including Northern Ireland would benefit everyone and help meet net zero targets across the United Kingdom.
How the Debate Unfolded
MPs spoke in turn to share their views and ask questions. Here's what each person said:
Lead Contributor
Jim Shannon is concerned that the Contracts for Difference scheme has made Northern Ireland a less attractive place to invest in renewables, with only 18% of renewable developers seeing Northern Ireland as an attractive investment area. He mentions examples where the UK Government imposed legislation on Northern Ireland without an Assembly and suggests these actions show there are ways forward for the CfD issue. Shannon highlights that since 2019-20, opinion has changed regarding the inclusion of Northern Ireland in the GB scheme, with a consultation finding 92% agreement.
Alistair Carmichael
Lib Dem
Orkney and Shetland
Carmichael congratulated Jim Shannon on securing the debate, highlighting the success of contracts for difference in renewable energy growth. He urged better dialogue between Government and industry to meet net zero targets and enhance energy security. Carmichael emphasized the importance of marine renewables, particularly tidal stream energy generation, noting that £20 million allocated in AR4 was transformative. With £10 million minima in AR5 leading to 50 MW capacity deployment exceeding the minimum target, he called for larger minima in the next round and a route to market for wave power. I urge the Minister to engage with industry, noting that the absence of a gigabit target for this technology is problematic. It becomes increasingly difficult to argue against offshore wind's viability in subsequent allocation rounds.
Jeff Smith
Lab
Manchester Withington
The contracts for difference scheme has incentivised renewable energy investment but failed to attract offshore wind bids in the recent auction round, resulting in a significant drop in capacity awarded. The failure is attributed to higher inflation and unrealistic strike prices despite warnings from industry experts. This missed opportunity will lead to increased dependency on expensive fossil fuels, higher energy bills, weakened energy security, fewer jobs, and climate failure.
Peter Aldous
Con
South Suffolk
CfDs have enabled the UK to become a leader in offshore wind, but round 5 was unsuccessful due to market pressures. He calls for clarity and certainty with regard to long-term projects, incentives for infrastructure investment, and adjustments to address market confidence. There should be a ringfenced pot for offshore wind to reflect current pipelines and targets. I am concerned that offshore wind was not successful in AR5, leading to increased costs in future allocation rounds. Industry feedback suggests that these developments cannot be isolated from global events.
Steven Bonnar
SNP
Glasgow North East
Mr. Bonnar expressed concern over the fifth round of contract for difference allocations, stating that it was a tragedy for climate and bill payers in Scotland. He highlighted the failure to secure any offshore wind projects due to an unfeasibly low strike price, which could result in up to £2 billion per year being spent on gas generation instead. Bonnar called for offshore wind to be returned to a separate pot to ensure adequate funding and incentives for further innovation.
Government Response
Graham Stuart
Government Response
I join others in applauding the Scottish National spokesperson, the hon. Member for Coatbridge, Chryston and Bellshill (Steven Bonnar), and his support for extending the GB contracts for difference scheme to Northern Ireland. The CfD scheme was introduced in 2014 and is designed to support new low-carbon electricity generation projects in Great Britain through annual auctions. Industry has consistently suggested that prices are too low, but the Government's approach has led to a 70% reduction in costs for offshore wind. I regret that we did not get bids from industry for offshore wind last year, but moving to an annual system will allow us to quickly move forward and set parameters based on real-world data. Northern Ireland is exploring its own bespoke support scheme for renewables due to significant challenges of integrating into the GB CfD model. While I do not believe extending the GB CfD scheme to Northern Ireland is viable, we remain open to discussions with those in Northern Ireland to find solutions. The development of a bespoke support scheme offers the best and quickest way for Northern Ireland to secure investment in renewable electricity generation needed to achieve its net zero goals.
▸
Assessment & feedback
Summary accuracy
About Westminster Hall Debates
Westminster Hall debates are a chance for MPs to raise important issues affecting their constituents and get a response from a government minister. Unlike Prime Minister's Questions, these debates are more in-depth and collaborative. The MP who secured the debate speaks first, other MPs can contribute, and a minister responds with the government's position.