Will Swansea Bay Tidal Lagoon Disappear Under The Waves?
By Paul Homewood
The “Independent” reports:
We should hear plenty about infrastructure investment in George Osborne’s Spending Review and Autumn Statement, with the High Speed 2 railway, “Northern Powerhouse” and a fleet of new nuclear stations all likely to be name-checked.
But one notable omission in the Chancellor’s speech a could be the Swansea Bay tidal lagoon. This £1bn project is the brainchild of Gloucester-based Tidal Lagoon Power (TLP) and is backed by around £200m of equity cheques from the Prudential and InfraRed Capital Partners.
The first of its type in the world, a man-made breakwater would create power from tidal movement, with hydro-turbines generating electricity when water flows through the blades. Once operational, TLP executives hope to roll out another five of these plants along the west coast of England and Wales and generate around 8 per cent of the UK’s electricity.
The idea is unique and therefore unproven, so, unsurprisingly, it has been hit by difficulties. Planning permission was obtained in June, but the start of construction has been delayed from spring next year to 2017.
There have been protracted talks with officials at the Department of Energy and Climate Change (DECC), and these could be slowed still further by the cull of 200 civil servants – one in eight of the department’s staff – as part of the settlement that Energy Secretary Amber Rudd has negotiated with the Treasury.
Although the project would replace dated carbon-based power plants and so help the Government meet renewable energy targets, the DECC is nevertheless vetting some of TLP’s claims. Officials want to make sure that dumping construction materials into Swansea Bay will not have too many ill-effects on fish and the broader ecosystem, and also want to verify the private investment case for a project whose price tag has nearly doubled from the initial estimates.
Most important, they are unsure about suggestions that this technology could be Britain’s next great export, and need to be convinced that overseas governments really are interested in snapping up TLP’s intellectual property once Swansea Bay is operational and proven to work.
TLP and the Government would liked to have confirmed some advances in the project as part of the announcements, which also come in the week before the Paris climate change talks. Billed as one of the most important environmental summits in history, showcasing the turbines would have been a boon for the Government’s green credentials.
In many ways this feels a bit of a fantasy project, but behind the scenes the lagoon is starting to make progress. For example, the Crown Estate, which owns the seabed, and the Welsh government are both thought to be close to granting the licences needed for work to start, with confirmation likely in the new year.
Just as important, well over 30 banks have expressed an interest in providing the £800m of debt needed to fund Swansea Bay, meaning TLP will be able to spread the debt among several institutions, so lessening their risk and the interest repayments.
Apparently this is what passes for “Business journalism” at the Independent these days!
Just as a reminder for those who may have forgotten, the Tidal Lagoon project is looking for something in the region of a guaranteed price of £168/MWh, for every unit of electricity they produce, indexed linked for the next 35 years.
This compares to a current market price of under £50/MWh.
And for what? The lagoon will produce about 429 GWh a year. In comparison, the new 880 MW gas-fired plant, currently being built at Carrington, is capable of generating 14 times as much.
Furthermore, the lagoon cannot even generate power all the time when we need it.
As for the idea that anybody else in the world would want to buy our “intellectual property” in how to produce electricity at three times the normal cost, the mind boggles!
So we will end up paying a guaranteed subsidy of £50 million a year to a project which will actually generate little more than a pittance in terms of electricity.
It is hardly surprising the banks are hovering like flies around a jam jar!
Fortunately, we no longer have Ed Davey in charge of the asylum. I predict that this time next year the scheme will have been dumped once and for all, no doubt much to the anguish of our friends at the Guardian and the “Independent”.