The government has announced it will not support the £1.3 billion Swansea Bay tidal lagoon project. What does this mean for tidal lagoon power? David Blackman investigates.

Hopes for marine renewable energy looked sunk after last week’s move by the government to scuttle plans for a £1.3 billion tidal lagoon project in Swansea Bay.

Business secretary Greg Clark announced last week that the government would not support Tidal Lagoon Power’s watery project.

The decision to pull the plug on Swansea spells curtains for tidal lagoons as an option, argues Doug Parr, head of policy at Greenpeace.

“We are not talking about rejecting a project but rejecting a technology unless something marvellous comes out of Ecotricity,” he says, referring to the green energy supplier’s rival plans for a lagoon project.

And extending the secretary of state’s value for money logic, it is hard to see any other marine renewable technologies competing with offshore wind, says Richard Howard, head of research at Aurora Energy.

The decision to axe, which followed nearly a year and a half’s procrastination by ministers over a government commissioned review that recommended approval, was justified by Clark on value for money grounds.

He told MPs that the same amount of electricity that could be delivered by the £1.3 billion tidal lagoon plant would require £400 million worth of offshore turbines at today’s prices, which are widely expected to fall further.

And the minister said the £50 billion estimated cost of the six lagoons is around two and a half times that of EDF’s new nuclear power station at Hinkley for a similar output of electricity.

Using a mix of offshore wind and nuclear wind farms to provide the full fleet’s 30 TWh per year of generation capacity would cost up to £20 billion less, equating to an additional £700 on the average British household’s bill over a 20-year period, according to the department’s analysis.

At a recent hearing of the BEIS (business, energy and industrial strategy) select committee, TLP’s chief executive Mark Shorrock admitted that the strike price for Swansea Bay would be £150/MW hour if it were delivered on the same terms as Hinkley without the £200 million support offered by the Welsh government

Richard Howard, head of research at Aurora Energy says: “These are expensive electrons to spend consumers’ money on.”

“Other forms of low carbon electricity are cheaper and getting cheaper every day,” he says, claiming that the £150/MW hour strike price is four times what onshore solar and wind could achieve if they were allowed to bid in CfD auctions.

The climate for all low carbon electricity has inevitably been transformed by last September’s auction CfD (contract for difference) auction for so called ‘less established’ renewable energy technologies.

The strike price of £57.50 achieved by offshore wind during this exercise was “probably the final nail in the coffin’ for the Swansea bay project, says Howard: “Relative to that Swansea Bay looks incredibly expensive: that was a complete paradigm shift.”

Romantic appeal

Former MP Tim Yeo, a who now heads New Nuclear Watch Europe, says that while the lagoons have a “romantic appeal”, the project doesn’t stand up to “hard-headed analysis”.

And while offshore wind construction costs have fallen dramatically, analysis conducted for the department suggests that the price of future lagoons would only be five per cent lower than the Swansea Bay pilot project.

Howard says: “We won’t see the cost declines on tidal lagoons that we’ve seen on solar where there is huge production in China and it gets cheaper all the time. Tidal lagoons will be bespoke massive civil engineering projects which don’t tend to get cheaper over time.”

TLP was quick to cry foul following Monday’s announcement. While Swansea Bay may be expensive in per MW hour terms, it will end up costing consumers far less than Hinkley because it is much smaller: 30p as opposed to £12, which Shorrock described as a ‘small bet’ on homegrown and reliable energy.

Even building out the whole fleet of lagoons proposed by TLP around the Welsh coast would only add 30p per annum to the average consumer’ electricity bills, the company claimed.

And the figures cited by Clark in his statement were the worst-case scenario outlined in the value for money assessment of the project published by the department.

Labour’s energy spokesperson Alan Whitehead argues that TLP’s proposal cannot be judged on a level playing field with offshore wind and nuclear.

“In the short term it doesn’t compare well with some other forms of power but Swansea Bay is not short term, it’s a structure that will last for 120 years.

“As a long-lasting scheme, it needs to be looked at longer time scale than some other projects,” he says, pointing to figures in the government’s Hendry review that show the lagoon paying back after 30 to 40 years of operation.

Testbed project

While the first generation of onshore wind farms are nearly worn out after two decades of use, the tidal lagoons have a planned 120-year lifespan.

Greenpeace’s Parr questions whether a project like the Swansea bay lagoon should even be paid for out of consumers’ electricity bills via CfDs.

As a testbed project it should be financed via a different mechanism, he says: “The bar for a first in the world seems to be that it has to be cheaper than Hinkley. If this is innovation funding it would normally come out of tax.”

And Whitehead believes that last week’s Committee on Climate Change (CCC)annual progress report underlines the strategic case for lagoons, which Labour has gone out on a limb to back.

The CCC’s concerns about a lack of progress on decarbonising heat and transport point to electricity generation continuing to supply a disproportionate chunk of the UK’s required emissions savings, he says: “Swansea Bay would be one of the main areas of possible further decarbonisation.”

And lagoon projects will take a relatively short time to build compared to nuclear power stations, meaning that they could help plug the emerging gaps in the low carbon electricity generation mix, Whitehead adds.

“It would give you some very solid, low carbon power in the early 2020s so would make a direct dent in those figures and enable the power sector to carry more of the load into the future.

“This move has closed off a major option that could ease some of the problems that the CCC have raised about decarbonisation.”

Differing opinions

But Richard Black, director of the Energy and Climate Intelligence Unit doubts that the lagoons will generate a game changing amount of electricity given that the total generating capacity of TLP’s six lagoons equates to a single large nuclear plant.

“It’s difficult to make a case that we need tidal lagoons so the question is whether they are a useful addition.”

But while opinions even in the low carbon camp are divided over whether the TLP’s project is worth supporting, there is greater consensus over the whiff of hypocrisy that hangs over Clark’s statement on value for money.

The elephant in this particular room is the even cheaper low carbon generation that can be delivered by onshore wind and solar power.

Whitehead says: “They are making solemn strictures about value for money while removing the most value for money mature technology: onshore wind, which will probably be cheaper than gas over the next period. It doesn’t make much sense.”

And Parr worries that the project’s cancellation is a harbinger for a less favourable approach to renewable energy in a post-Brexit Britain.

He doubts whether renewable energy, which now accounts for nearly a third of total electricity generation according to the most recent BEIS statistics, would have taken off so rapidly if the government had not been pushed into deploying it by EU directives.

“In the absence of that I suspect it wold not have found favour in the UK,” he says, suspecting that UK energy policy is reverting to type following Brexit.

“The status quo ante way of considering energy projects is reasserting itself.  It’s difficult to imagine that the government would have funded renewables to a significant degree without that.”

Given the rich energy sources waiting to be harvested off the UK’s coast, the UK is missing out on a huge opportunity, he says: “The next one will be cheaper but you will never know if you don’t build one.”