Plans invited for new lagoon plan
INVESTORS and developers are being invited to come forward with new plans to realise a tidal lagoon project off the coast of Swansea.
However, any new project [s] that could emerge is unlikely – although there could be a change of UK Government – to receive a strike price or guaranteed amount for each megawatt hour of energy produced from the current Tory government.
It comes after it was confirmed last week that the company behind the initial £1.3bn Swansea Bay tidal lagoon project Tidal Lagoon Power (TLP) had been looking for a £261.1m equity investment from the Welsh Government.
This was on top of a publicly disclosed request for a £200m loan from the Welsh Government.
The UK Government rejected TLP’s bid to secure a strike price of £92.50p of energy produced per megawatt hour.
TLP, whose registered address is now Swansea Council’s civic offices, has struck a deal with creditors through a company voluntary arrangement giving it breathing space to work up new plans.
A taskforce, set up by Swansea Council leader Rob Stewart, has spent the past three months reevaluating and looking at alternative options.
Mr Stewart said it has already received expressions of interest from prospective funders and developers, leaving him to believes that a major renewables project can still be realised.
A prior information notice (PIN) has now been issued stating that the Swansea Bay City Region is seeking a partner or partners to undertake the delivery of the development, either through a partner development arrangement or joint venture.
The council leader said any new project taken forward could still receive the offer of a £200m loan from the Welsh Government, but that it could also be funded entirely from private sector financial sources.
However, unless the cost of a new lagoon project is far cheaper, the arithmetic of making it commercially viable without a strike price will be challenging - even if a regional supply chain of energy customers could be established.
Mr Stewart said: “I remain optimistic that we will get a solution to deliver this project.
“We will have to wait and see what comes forward, but it might not need any Welsh Government support, but be entirely funded by the private sector.
“There is an opportunity to enhance the scheme [previous project] by improving revenues and cutting the time that investors will get a return.”
He said the taskforce could, having evaluated suggestions, invite separate funders and construction firms to team up.
Based on response he said the taskforce would make any recommendations to the Welsh Government early next year.
He said that TLP could also submit new plans to the PIN process.
Mr Stewart said it was possible that other renewable technologies, including solar, could come forward to compliment a tidal lagoon, a well as being it being an infrastructure project too.
“We are not being prescriptive here, “said Mr Stewart
He added: “Despite the UK Government not supporting Tidal Lagoon Power’s proposals, we want to deliver this ground-breaking project in Swansea Bay.
“We’ve spent the past three months re-evaluating the project and agreeing the best way to structure deal that will deliver a tidal lagoon. Unlike the previous proposal, we believe it should be a private sector-led development that doesn’t rely on government or local government subsidy to pay for it.
“That’s why we’re now testing the market to see which companies are interested in helping to deliver the lagoon. This could range from large financial institutions who want to invest in the project to major construction companies who want to build the lagoon. Once we know the type and level of interest from the private sector, we can consider the best route to take to ensure we deliver this project and pave the way for a new industry where Swansea Bay, Wales and the UK can be a global leader.”
The partner or partners will be required to conclude the detailed planning, design and licencing, obtain all appropriate permissions and secure funding for the realisation of the lagoon.