Is Swansea tidal lagoon now dead in the water?
Alarm bells are ringing over the future of the Swansea Bay tidal lagoon. The £1.2bn project was noticeable by its absence from the Chancellor’s Budget speech yesterday, and for many in Wales the omission was the biggest disappointment of the afternoon.
Worse, the Treasury produced a document saying that there would be no new money for renewable energy projects before 2025, leading many to conclude that the Government had turned its back on the scheme.
Supporters were quick to reaffirm their faith in the project. Richard Selby, director of Monmouth shire based Pro Steel Engineering, asked if it was now the end of the road for the scheme and added: “It would be such a shame if it is.”
It’s more than 11 months since the Hendry Review gave a ringing endorsement of the ambitious scheme and urged the Government to pursue negotiations on a subsidy with developer Tidal Lagoon Power (TLP) as swiftly as possible.
Since then there has been no apparent progress and supporters of the project had hoped the Budget might contain something that gave hope for movement. But there was nothing.
On Budget day, TLP appeared sanguine despite the disappointment.
A spokeswoman said: “Back in its 2015 Budget statement, the Government recognised the significant potential of tidal lagoons for the UK and announced the start of contract negotiations for a pathfinder tidal lagoon at Swansea Bay.
“Two and a half years and one incredibly strong independent review later, we anticipate the Government will very shortly be in a position to conclude those negotiations.”
TLP’s hopes would appear to rest on next year’s round of auctions for renewable energy subsidies, worth £557m. The lion’s share of this year’s CfD round went to three giant offshore wind farms in the North Sea, and there are expectations that the same will be true next year.
In any case, it’s likely the next round will be highly competitive. Meygen, a tidal energy project in Scotland being developed by Atlantis Resources and already under construction, had to drop out of the auction because it couldn’t keep up with the falling cost of offshore wind.
The price of the subsidy to the two largest wind farms in this year’s round was just £57.50 – substantially below the £89.50 cited for the lagoon. TLP may be hoping that Swansea’s status as a pathfinder project will allow it to argue for the higher price – that and the promise that later lagoons at Cardiff, Newport and Colwyn Bay will come with a cheaper price tag.
The Treasury’s “no new money till 2025” policy does not mean delay for those bigger projects. The Government confirmed that it can continue to negotiate price agreements with developers on projects that won’t start generating until after 2025.
Janet Jones, FSB Wales policy unit chair, said she was “dismayed” that there had been no movement on big-ticket items for Wales such as the lagoon.
She said: “FSB Wales has been calling for a decision on the Swansea Bay Tidal Lagoon… for some time, as has much of the business community in Wales.”
David Morgan, RICS (Royal Institution of Chartered Surveyors) policy manager for Wales, said he was disappointed by the omission of the Swansea Bay lagoon and reiterated the organisation’s call for action on the project.
Plaid Cymru Shadow Energy and Climate Change Secretary Simon Thomas said: “A Wales in control of its own resources would have long ago given the go-ahead to the tidal lagoon in Swansea Bay.
“Within a generation our electricity could easily come from wind, solar and marine. No need for fossil fuels or a nuclear industry corrupted by nuclear weapons.
“I’ve described this failure to back the tidal lagoon project as the biggest betrayal of our natural resources since Tryweryn.
“Having reneged on their absolute commitment to electrify the rail track to Swansea, the Tories seem uninterested in anything west of Cardiff.”
But Whitehall insisted that the Government’s position on the lagoon has not changed and it is still considering the Hendry Review’s findings.
A Treasury spokesman said: “The independent Hendry Review examined some of the complex issues and set out recommendations which the UK Government is considering in detail before responding. We think taking time to do so will ensure that any decision is made in the best interests of the UK and represents value for money for the consumer.”