The government is making a “historic mistake” by rejecting the Swansea Bay tidal lagoon project, Ed Davey has warned, following reports of its imminent demise.
The MP and former energy secretary said tidal lagoons are the “obvious next step in Britain’s renewable power revolution”.
“The Conservatives’ decision to reject the Swansea Bay pilot against all the evidence, not least in the excellent review by Charles Hendry, is a historic mistake,” Davey said in a statement.
“This will mean more expensive electricity in the future for British consumers and will leave others to lead the world’s tidal industry – the opposite of what we thought ministers meant by industrial strategy.”
His comments followed a series of the reports this week that ministers will give an answer shortly on whether or not they will offer support to the £1.3 billion pilot project. They have stayed tight-lipped since the release last year of an independent review by former energy minister, Charles Hendry, which recommended the scheme as a “no regrets” option.
The Business, Energy and Industrial Strategy (BEIS) Committee has been conducting an inquiry into the project, but ministers from the department it oversees declined to make an appearance at a hearing held last month.
However, a source quoted by the Telegraph on Monday said they had agreed to come before the committee following the parliament recess in mid-June as “they’ll have plenty to say then”.
“The implication is that they’ll have made a decision by then, and be happy to answer questions,” the source added.
The Financial Times reported earlier today (1 June) that the government will turn down the proposals due to concerns over its cost. When asked what the likelihood is of the project going ahead, a senior government figure told the paper there is not a “cat’s chance in hell”.
Reacting to the news on Twitter, Labour shadow minister for energy and climate change, Alan Whitehead, said if the reports are correct the country will lose the opportunity for a “British built, first of a kind, precision engineered, exportable, clean technology”.
The decision is expected to accompany the release of an outline funding agreement for the proposed Wylfa Newydd nuclear plant in North Wales.
In a letter to prime minister Theresa May in January, Wales’ first minister Carwyn Jones said the Welsh government would help pay for the project if Westminster agreed to offer a guaranteed price for the electricity it generates.
At the time, the developer Tidal Lagoon Power was seeking a 90-year Contract for Difference with an average strike price of £89.90/MWh, starting at £123/MWh in the first year and steadily falling to £43/MWh by the end of the period.
But responding to questions from the BEIS Committee at the May hearing, chief executive Mark Shorrock said the company was now looking for an equivalent 60-year contract in line with the recommendations of the Hendry review.
When asked what strike price would be required in the absence of support from the Welsh government, Shurrock said it would need to average £92.70/MWh. He was forced to admit that an average strike price of around £150/MWh would be necessary for a 35-year version.
In a blog post in February, Carwyn Jones said Welsh government funding would enable the company to accept “exactly the same terms” as the contract offered to Hinkley Point C – a 35-year agreement with an ascending index-linked strike price of £92.50/MWh – an assertion which Shurrock confirmed.
Shurrock denied the support offered by the Welsh government amounted to a subsidy, saying the administration would instead be investing in the pilot project on a commercial basis and would be “fully repaid”.