In his pre-election Budget, Osborne confirmed negotiations will begin on the subsidy the £1 billion project could receive.
Trade association Renewable UK said that by opening talks with the developers, the government will “generate the confidence needed to attract investors into those future schemes in the UK”.
The Swansea Bay scheme is expected to have a capacity of 320MW and will act as a scalable forerunner to a project in Cardiff with a capacity of 2.8GW.
Renewable UK’s wave and tidal development manager Dee Nunn said: “By enabling this project to go ahead, the government will also unlock the potential for other, larger tidal lagoons to be developed.
“So a negotiated strike price is needed for this first project as it’s the trailblazer which will generate momentum to kick-start the full commercialisation of this part of the marine energy sector.”
It is thought that a strike price under the contracts for difference regime of £150/MWh would be needed to support the project, which could connect up to the national grid by 2018.
However, Nunn warned that pressing ahead with funding for Swansea Bay should not come at the expense of other renewable technologies.
“The government should ensure that other renewable technologies such as wind, wave and tidal stream are also allocated sufficient financial support, through an application process appropriate to their stage of development, to continue to develop to their full potential”.