The economic benefits of Tidal Lagoon Power’s (TLP) programme would not have outweighed the most optimistic estimates of the additional costs for electricity customers if it had been built, according to government correspondence published on Friday (19 October).
The government has lifted non-disclosure agreements on several documents relating to its decision in June not to support TLP’s proposals to build a pilot tidal lagoon power project in Swansea Bay.
The £1.3 billion Swansea Bay project, which TLP said would generate 572GW of electricity per annum, was intended as the first of a series that would harness tidal power around the Welsh coast.
In a letter to the House of Commons’ Business, Energy and Industrial Strategy (BEIS) and Welsh Affairs select committee from Claire Perry, the energy and clean growth minister writes that government estimates of the programme’s economic benefits worked out at between £0.4 billion and £1.2 billion.
“Even at the higher end of this range, the estimated wider benefits were less than the most optimistic impact of TLP’s lagoon programme on the costs of the electricity system – a cost of £2 billion to 2050.”
Perry adds that the cost of electricity generated by the lagoon would be “more expensive” than alternative low carbon sources.
The letter also outlines the key points of TLP’s request for financial support from the Welsh government.
The company requested £200 million loan funding from Welsh government at a two per cent interest rate and up to £261.1 million in annual equity down payments over 35 years.
In return, TLP offered the Welsh government 90 per cent ownership of the lagoon at the end of the 35-year project’s proposed contract for difference when it would still owe up to £822.3 million worth of outstanding debt.
The Welsh government would have also taken on the costs of maintenance and turbine replacement after about 50 years of operation as well as any decommissioning liabilities.
Responding to the publication of the documents, BEIS committee Rachel Reeves chair, said: “The decision-making process around the Swansea Bay tidal lagoon project has been glacial and lacking in transparency.
“The saga of the decision around the project offers little encouragement that the government is equipped to take timely, clear action on future schemes. Investors and the public deserve clearer decision-making and better communication about government intentions on projects such as the Swansea Bay tidal lagoon.”