UK review backs £1.3bn tidal lagoon project in Swansea Bay

Electricity generated by tidal power schemes will cost consumers “less than a pint of milk” a year, according to an independent review backing a £1.3bn project in Swansea Bay.

Tidal lagoons would prove more cost-effective over 60 years than other forms of electricity generation such as offshore wind and nuclear power plants, although they would be more expensive in the earlier years, Charles Hendry, a former energy minister under the coalition government, has concluded.

A proposed 320 megawatt pilot project in Swansea Bay, which was awarded planning permission by Amber Rudd, then energy minister, in June 2015, has a projected lifespan of 120 years. The project would involve building a six-mile horseshoe-shaped seawall with underwater turbines that would enclose part of the bay.

Mr Hendry has concluded the Swansea scheme would cost households on average an extra 35p-45p a year through their energy bills in the first 15 years, and between 20p-30p when the scheme has been in existence for between 30 and 60 years. Electricity generated after 60 years would be “subsidy free”, said Mr Hendry, who was asked by the government last year to investigate the cost-efficiency of tidal lagoons.

Larger projects would cost between £1.85-£2.10 in the earlier stages and 50p-£1.40 in later periods, according to the review. By contrast, offshore wind projects on an equivalent scale would cost bill payers £1.55-£1.75 in the first 15 years of a project, £1.06 over a 30-year period and 54p over 60 years, according to the review’s analysis.

A new report has suggested the UK should embrace the power of the sea and invest in a novel form of electricity generation – the tidal lagoon. Pilita Clark discusses the merits of the idea with the FT’s Nathalie Thomas, Jonathan Ford, Jonathan Guthrie.

Tidal Lagoon Power, the company behind the Swansea Bay proposal, says it could act as a pilot for larger schemes in Cardiff, Newport, Colwyn Bay, Somerset and Cumbria.
Mr Hendry called the Swansea lagoon proposal a “no regrets policy” at an estimated cost to households of about 30p over 30 years.

But he has recommended that no large projects should go ahead before it has been up and running for at least a year. In the meantime, a National Policy Statement identifying further suitable sites for development should be set out by government to give confidence to potential investors in the technology.

An arms-length Tidal Power Authority should also be created to maximise the potential opportunities for the UK from developing a tidal lagoon industry, Mr Hendry said. UK-based manufacturers are keen supporters of the Swansea Bay project.

Tidal Lagoon Power has been seeking a contract with the government for Swansea that would involve the taxpayer agreeing to buy electricity for 90 years at a certain price, called the strike price.
A 90-year contract would be more than two and a half times longer than the one agreed by the government last year for the Hinkley Point C nuclear power station in Somerset. Under that deal, EDF, the French utility, will receive £92.50 per megawatt hour of electricity produced for 35 years. Offshore wind projects are supported by a subsidy contract of 15 years.

Under Tidal Lagoon Power’s analysis, the strike price that would be required to support larger scale projects in locations such as Cardiff, Newport and Bridgwater in the first year of operation could be as much as £120 per MW/h. The company believes, however, that it would be able to identify areas where costs could be reduced after building the Swansea pilot.

A proposed Cardiff tidal lagoon in the Severn Estuary could potentially have a strike price over the course of a long-term contract of £70.40 per MW/h, the company says.

Mr Hendry argued the cost-effectiveness of tidal lagoons should be considered over their 120-year lifespan — and in that light they come out favourably against other forms of power generation. “We are simply not comparing like with like,” he said.

Mr Hendry would not comment on a potential strike price for Swansea Bay as Tidal Lagoon Power is yet to agree a deal with government and commercial sensitivities apply. He has, however, proposed a subsidy contract of “no more” than 60 years for the pilot project.

A number of critics remain unconvinced by tidal lagoon technology. Richard Howard of the Policy Exchange think-tank has called the Swansea project a “folly”, arguing that levy-funded energy policies push up bills for households.

The Royal Society for the Protection of Birds, which has thwarted other renewable energy schemes because of their impact on bird habitats, has also been lukewarm on tidal lagoons. It warned the Hendry review that the ecological impacts of tidal power schemes were “not well understood” and “have the potential to cause significant adverse impacts to key wildlife sites”.

Greg Clark, business secretary, said the government would consider Mr Hendry’s recommendations.

Tidal power scales up

Tidal power has been harnessed on a small scale in Britain since the Middle Ages, when as many as 200 coastal mills used the ebb and flow of the ocean to turn waterwheels for grinding corn.
However, plans to use the sea as a large-scale source of renewable energy have kept rising and falling as consistently as the tides themselves for many decades.

The Swansea Bay project is the latest in a long procession of schemes since the county surveyor for Gloucestershire proposed a barrage across the Severn Estuary in 1849.

Most of the projects have been in the Severn and the adjoining Bristol Channel because the funnel-like stretch of water has the world’s second-largest tidal range, with a 15m difference between high and low water.

An 11-mile barrage across the Severn proposed in 2012 was designed to meet 5 per cent of the UK’s electricity needs but the scheme was scrapped, like others before it, because of its hefty £25bn price tag and disruptive impact on wildlife and shipping.

Advocates for the Swansea Bay scheme — and several others planned around the UK coastline — believe tidal lagoon power is more realistic because it involves damming smaller areas of water, reducing the cost and environmental impact.

The technology, which harnesses energy from the tide to turn large turbines embedded in a concrete barrage, has been used successfully in the Rance estuary in Brittany, France, since 1966, and at the slightly larger Sihwa Lake power station in South Korea, completed in 2011.

Champions of marine energy say the UK has a chance to become a global leader in the technology owing to its big tides and waves on the edge of the turbulent north Atlantic.

Barrages are not the only way to harness tidal power. A company called Atlantis Resources began generating electricity late last year from a “tidal stream” project in Scotland involving turbines fixed to the seabed in an area of fast-flowing tidal water.

The MayGen scheme between the Scottish mainland and Orkney Islands is the biggest of its kind in the world with planned capacity for up to 398MW, compared with Swansea Bay’s 320MW, Sihwa Lake’s 254MW and La Rance’s 240MW.

Wave power — using floating devices to harness energy from the ocean swell — is seen as another promising technology for the UK. An Australian company called Carnegie Wave Energy is pushing a £60m project at Hayle, Cornwall, and there are several schemes in Scotland, although these have been beset by problems with financing and developing technology resilient enough to survive in stormy seas.

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