Swansea Bay: £1.3bn tidal lagoon project earns much-needed backing from Hendry Review

Plans to build the world's first tidal lagoon-based renewable energy system in Swansea Bay have today (12 January) received support from a long-awaited, Government-commissioned review assessing the viability of the project.

Led by former Conservative Energy Minister Charles Hendry, the independent report considered whether the potential contributions of tidal lagoons to the future of the UK’s energy mix are cost-effective and represent “value for money”.

The Hendry Report finds that the Swansea Bay project does indeed have the potential to be cost-competitive with other clean energy technologies by the mid-2020s, concluding “beyond question” that the project would bring “very real” economic benefits for the regional and national economy. (Scroll down for summary of recommendations).

Commenting on his report, Hendry said: “I believe that the evidence is clear that tidal lagoons can play a cost-effective role in the UK’s energy mix and there is considerable value in a small (less than 500MW) pathfinder project. I conclude that tidal lagoons would help deliver security of supply; they would assist in delivering our decarbonisation commitments; and they would bring real and substantial opportunities for the UK supply chain.  

“Most importantly, it is clear that tidal lagoons at scale could deliver low carbon power in a way that is very competitive with other low-carbon sources.”

‘Watershed moment’

Mark Shorrock, chief executive of the Swansea Bay project’s developer, Tidal Lagoon Power, said: “With the publication of the Hendry Review, we’ve hit ‘peak consensus.’

“The Review has set the final piece of the jigsaw in place: a watershed moment for British energy, British manufacturing, British productivity and our coastal communities. We look forward to working with Ministers and Officials to bring this new industry to life.”

The Swansea Bay tidal lagoon would be situated on the eastern side of Swansea Bay, between the docks and the new university campus. Using the fully-predictable daily motion of the tides, the lagoon would provide clean, home-grown electricity 14 hours a day for 120 years, requiring Government support for less than a third of its lifespan. 

When fully operational by the year 2023, the lagoon would have an installed capacity of 320MW – enough to generate renewable electricity to power the equivalent of 155,000 homes, which represents more than 90% of homes in the Swansea Bay area. 

The project is viewed as a prototype for even larger lagoons in the UK, with proposed installations off the coast of Cardiff, Newport, Somerset, Colwyn Bay and west Cumbria all hoping to generate a significant chunk of the UK’s electricity needs.

‘Get on with it’

Welcoming today’s Hendry Review, Greenpeace UK chief scientist Dr Doug Parr said: “Tidal lagoon energy is the most reliable source of renewable energy for the UK and the Swansea Bay project is an opportunity to lead in generating clean power from Britain’s tides.

“Up to now, cost has been considered a barrier but the Hendry report suggests that tidal lagoons can potentially play a cost-effective role in the UK energy mix. And the Government should get on with it because it could be the first of a wave of tidal lagoons across the UK, and even internationally.”

Juliet Davenport, chief executive of renewable electricity company Good Energy – one of the first investors in the Swansea Bay project – said: “By kicking off a British tidal lagoon industry we are presenting the world with another awesome low-carbon option, and its British know-how that will be called upon should other countries look to take up that option. Tidal lagoons are a brilliant way for Britain to diversify its energy mix and keep the lights on. They will also create a whole new industry and thousands of jobs as well.”

Value for money?

There are still some significant hurdles that the Swansea Bay project’s developer, Tidal Lagoon Power, needs to overcome before putting steel in water. First, the company must negotiate a price-support contract with the Government to deliver the project, and a marine license also still needs to be approved.

Critics of the project have expressed concern that the cost of the technology may be too high. The estimated strike price of £168/MWh for Swansea Bay, delivered through the Government’s Levy Control Framework (LCF), has already come under fire due to fears that this could have negative implications for the amount of financial support available for other clean technologies. Consumer group Citizens Advice has labelled this level of financial support “appalling value for money” for consumers.

Moreover, the developer’s latest estimates that the Swansea project would cost £1.3bn to construct is more than a 40% increase compared to an earlier estimate, which assumed a much lower capital cost of £913m.

Writing in a blog post for Policy Exchange yesterday, the think tank’s head of environment and energy Richard Howard said: “Swansea Bay Tidal Lagoon makes wind, solar, carbon capture and storage, and nuclear look cheap. Moreover, if the question is whether tidal lagoons could play a ”cost-effective role”, then it is worth considering even cheaper ways to cut carbon emissions, such as improving energy efficiency.

“It would be far better to spend the £1.3bn insulating our homes properly. Backing an expensive technology such as tidal lagoons would leave less space within the LCF funding envelope to spend on other, cheaper technologies.”

The Hendry Review: Summary of Recommendations

Luke Nicholls & Geirge Ogleby

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