Plans including proposal for £1.3bn scheme in Swansea now ditched after business secretary says project does “not meet the requirements for value for money”
The government has pulled the plug on plans for a fleet of tidal lagoon schemes across the UK, saying they are too expensive to use taxpayers’ cash.
Speaking in the House of Commons yesterday, energy secretary Greg Clark said the public purse would not be helping bankroll a £1.3bn scheme in Swansea being developed by Tidal Lagoon Power Limited.
Three years ago, Laing O’Rourke was named as preferred bidder for the £200m contract to deliver the lagoon’s 410m turbine house and sluice structure block.
Work had been expected to start the following year under the direction of Tidal Lagoon Power’s then director of construction and engineering, former Balfour Beatty chief executive Andrew McNaughton.
At the time, O’Rourke’s project lead on the job, Jonathan Adams, hailed the award: “Today, the Swansea Bay Tidal Lagoon is the talk of the international construction industry and we are thrilled to be playing a part in its delivery.”
But Clark has now said the six lagoons – five others were planned round the coasts of Wales, Somerset and Cumbria – were not value for money and would be better spent on other schemes such as offshore wind farms.
He added: “The project and proposed programme of lagoons do not meet the requirements for value for money and so it would not be appropriate to lead the company [Tidal Lagoon Power] to believe that public funds can be justified.
“The proposal for the Swansea tidal lagoon would cost £1.3bn to build. If successful to its maximum ambition, it would provide around 0.15% of the electricity we use each year.
“The same power generated by the lagoon, over 60 years, for £1.3bn, would cost around £400m for offshore wind even at today’s prices, which have fallen rapidly, and we expect to be cheaper still in future. At £1.3bn, the capital cost per unit of electricity generated each year would be three times that of the Hinkley Point C nuclear power station.”
An independent review back in January last year, carried out by former Tory energy minister Charles Hendry, said the Swansea plan was a “no regrets option” and the government should get on and commit to it.
But Clark said: “If a full programme of six lagoons were constructed, the Hendry Review found that the cost would be more than £50bn and be two and a half times the cost of Hinkley to generate a similar output of electricity.”
The Confederation of British Industry said it was disappointed by Clark’s decision and warned it could put off others from pressing on with their own energy initiatives.
Its director for Wales, Ian Price, said: “All major infrastructure projects require large amounts of time, energy and money, only for many to then fail to get the green light. There must be a smarter way of approaching such projects that does not discourage innovative entrepreneurial new firms from entering the marketplace.
“The newly established National Infrastructure Commission for Wales should lead a cross-agency review into all stages of this project and identify ways both governments can speed up the process for future energy infrastructure projects and remove barriers to entry for other firms.”
Once Swansea had been built, other lagoons were planned for Newport and Cardiff and a site across the Severn Estuary at Bridgwater Bay on the Somerset coast. Two more were planned for Colwyn Bay in north Wales and at a site in Cumbria.