The review comes amid fears about the future of tidal power following Prime Minister David Cameron’s lack of enthusiasm for the world-first Swansea Bay Tidal Lagoon project, for which discussions are ongoing.

Tidal Lagoon Power, developer of the Swansea Bay Tidal Lagoon, alongside other industry stakeholders is expected to take part in the review which will consider whether tidal lagoon contributions to the future of the UK’s energy mix are cost effective and present “value for money”.

In addition to the cost-effectiveness of tidal lagoon power the review will also consider supply chain opportunities, possible finance structures and whether a competitive framework could be put in place for the delivery of projects.

The Prime Minister recently expressed concern that the cost of the technology may be too high. The estimated strike price of £168/MWh for Swansea Bay had already come under fire, with consumer group Citizens Advice calling it “appalling value for money” for consumers.

However, having assessed the levelised costs of power from tidal lagoons, consulting firm Poyry has suggested the strike price would fall to £130/MWh for lagoon two and £92/MWh for lagoon three.

Energy Minister Lord Bourne said: “Tidal lagoons on this scale are exciting, but as yet an untested technology. I want to better understand whether tidal lagoons can be cost effective, and what their impact on bills will be – both today and in the longer term.

“This review will help give us that clarity so we can determine what role tidal lagoons could have as part of our plans to provide secure, clean and affordable energy for families and businesses across the country.”

Tidal Lagoon Power chief executive Mark Shorrock welcomed the review as a “clear signal that it sees potential advantage for the UK energy consumer in very long-dated tidal energy infrastructure assets”.

However, he expressed concern about the continuing delay to a decision on Swansea Bay.

“It is imperative that we conclude our structuring and commercial negotiation with government within the next six weeks,” he said. “If tidal lagoon power at scale is to be a real option for the longer term, we need to start work on Swansea Bay Tidal Lagoon now. Otherwise the opportunity will be lost and the review will be all for nothing.”

The review will take place in consultation with the Department of Energy and Climate Change (Decc) and the Treasury for financial aspects. 

Saffron Johnson

This article first appeared on edie’s sister title Utility Week

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