Government rejects Swansea Bay Tidal Lagoon project

The government has refused to support the Swansea Bay Tidal Lagoon project, saying that the project and proposed programme of lagoons do not represent value for money.

The project, which would generate electricity from the natural rise and fall of tides across Swansea Bay in Wales, is being pioneered by Gloucester-based Tidal Lagoon Power who say it would attract £40 billion of capital investment.

An independent review of tidal lagoons by Charles Hendry was published in January 2017, and the government has taken over a year to assess his report before making its final decision.

In the review, Charles Hendry said: “Power from tidal lagoons could make a strong contribution to UK energy security, as an indigenous and completely predictable form of supply.” However, he also concluded that a programme of tidal lagoons that could deliver constant, or as near as possible to constant, power would be an absolutely huge undertaking, requiring tidal lagoons around much of the country.

In the 2017 review, he said: “It is my belief that this is too ambitious a goal to be set at this time, before even one has been built, and could only be considered properly when more progress has been made on building a number of tidal lagoons.’

In a statement to Parliament, Business and Energy Secretary Greg Clark said that the capital cost per unit of electricity generated per year would be three times that of the Hinkley Point C nuclear power station.

“Swansea tidal lagoon would cost £1.3 billion to build,” he said. “If successful to its maximum ambition, it would provide around 0.15% of the electricity the UK uses each year.

“The same power generated by the lagoon, over 60 years, for £1.3 billion, would cost around £400 million for offshore wind even at today’s prices, which have fallen rapidly, and we expect to be cheaper still in future.

“At £1.3 billion, the capital cost per unit of electricity generated each year would be 3 times that of the Hinkley Point C nuclear power station.

“If a full programme of six lagoons were constructed, the Hendry Review found that the cost would be more than £50 billion and be two and a half times the cost of Hinkley to generate a similar output of electricity.

Enough offshore wind to provide the same generation as a programme of lagoons is estimated to cost at least £31.5 billion less to build.”

Mark Shorrock, Founder and Chief Executive, of Tidal Lagoon Power, rejected the government's figures. He said that Swansea Bay Tidal Lagoon will add just 30 pence to consumers’ bills whereas Hinkley Point C will add £12 or more to bills.

“The offer to the UK government for Swansea is at the same price as nuclear for a small pathfinder which as he acknowledges is 0.15 per cent of the UK’s energy requirements. The UK’s second proposed tidal lagoon at Cardiff would be 88 times less expensive for consumers than Hinkley. Furthermore, the £1.3 billion build cost of Swansea is privately funded. It is not a cost to consumers as suggested by Mr Clark."

Greg Price added that the fact that this proposal has not demonstrated that it could be value for money does not mean that its potential is not recognised.

“My department is also in receipt of proposals from other promoters of tidal energy schemes which are said to have lower costs than the Swansea proposal, although these are an earlier stage of development,” he said.

But Ian Price, the CBI’s Wales Director, said: ““It is disappointing that a financially viable model for the Swansea Bay Tidal Lagoon project has not been possible.

“We appreciate the effort and energy made by politicians from both governments who have worked tirelessly to try and make this project a reality. At the end of the day any project has to be affordable for consumers.

“Harnessing tidal power from the Severn Estuary remains a sound concept for many reasons. While it is disappointing for Tidal Lagoon Power and their many supporters, we are pleased to hear the UK government is not closing the door to future proposals to harness this excellent source of renewable energy.”

The MP for Gloucester and Chair of the All Party Parliamentary Group on Marine Energy & Tidal Lagoons, Richard Graham MP, is asking for further government explanation and debate. He said: “We need a proper response from the government to the Hendry Review that recommended the project – including a detailed breakdown of all its financial assumptions. This is not the end of the journey.”