Three of the companies in the supply chain for the stalled Swansea Bay tidal lagoon power plant have gone bust while the government has been dithering over whether to back the project, its promoter has revealed.
Giving evidence at today’s first hearing of a joint investigation into the Swansea Bay project by the House of Commons Business, Energy and Industrial Strategy (BEIS) Welsh affairs select committee, Tidal Lagoon Power (TLP) chief executive Mark Shorrock said that three of the firm’s supply chain partners had gone into administration.
These include Sheffield-based engineering company Davy Markham which had been lined up to deliver the cases for the plant’s turbines.
TLP has been waiting for a response since January 2017 to former energy minister Charles Hendry’s recommendation that the 500 MWh project should be approved.
But he said that while TLP Itself had shed staff, the company had retained its core delivery team and its investors were “hanging in there”.
And Shorrock reported progress on the company’s efforts to secure a marine licence for carrying out work in Swansea Bay, having commissioned studies which show that its proposed development would have a ‘negligible’ impact on fishing there.
Hendry told the committee that discussions about the lagoon project are reaching “an end game” as BEIS officials digest the Welsh government’s offer to help bankroll the project in return for an equity stake.
TLP has said that a combination of low-cost Welsh government financing could help reduce the ‘strike price’ that the project must achieve in a CfD (contract for difference) auction to £92.70, which is around the figure agreed for the Hinkley C nuclear power plant.
Hendry denied that he was disappointed about the length of time it had taken the government to make a decision. “Disappointment to me would be if the government said no: it’s still in play.”
Arguing that the tidal lagoon project would help to ensure the UK’s future energy security and support the government’s industrial strategy, he said: “If we want innovation and to harness our own resources, we must accept that pathfinders will be more expensive but that it’s the way to bring costs down.”
And the ex-minister rejected a suggestion that the cost of the tidal lagoon power could be reduced by inviting other companies to submit proposals for projects.
He said: “If we start the process again, we will not have a tidal lagoon industry because people will walk away.”
Richard Howard, head of research at Aurora Energy, told the committee that he is “not convinced” the government would agree to another CfD deal as expensive as Hinkley following widespread criticism of how much the nuclear plant will cost energy bill payers.