Government blamed for tidal lagoon cash freeze
INVESTORS have put further funding for the £1.3bn Swansea Bay tidal lagoon on hold. More than £200m has been provisionally pledged by backers led by Prudential, the large UK insurer, with Macquarie and Investec, two other major financial institutions, ready to raise hundreds of millions more in debt and equity, according to a report in the Financial Times (FT).
But investors are refusing to pledge even more cash as the Government is yet to approve the scheme, despite backing in a report by Charles Hendry, the former Minister of State for the Department of Energy and Climate Change.
The situation was criticised today by Swansea East MP Carolyn Harris.
She said: “I am really really disappointed the Government has taken the time they have to make the decision.
“I intend to lobby the Prime Minister and we are putting together a letter with the crossparty MPs and we have applied for a slot to present it before recess.
“The letter is all ready, with the support of the Greens, the Libs, the Tories and Labour.”
She claimed the Government’s “hesitancy” was costing jobs.
“They have all the evidence – at this time we need to do the right thing.”
David Stevens, chief executive of Admiral Insurance, who has poured millions of pounds of personal wealth into the project, told the FT: “If there’s no evidence that the Government is committed, then at some point the patience of investors will be exhausted.
“An opportunity will have been lost and it will be very hard to piece together again in future.”
Werner von Guionneau, chief executive of InfraRed Capital Partners, which has pledged £100m, said Government indecision was undermining investor confidence.
“We cannot hang around forever,” he told the FT.
“The Government promised a decision and they are letting us down by not making it.”
Keith Clarke, chairman of Tidal Lagoon Power, the company behind the Swansea scheme, is also reported as saying: “The credibility of independent reviews rests on the Government making a decision on the back of Hendry.
“Otherwise it will look like more can-kicking as we’ve seen with [the proposed third runway at] Heathrow.”
The 320-megawatt Swansea scheme, involving a 9.5km seawall embedded with turbines, was given the green light for planning permission in 2015.
But it will only become commercially viable with Government backing to ensure a subsidised price of electricity from the facility.
The proposal by Tidal Lagoon Power called for a guaranteed “strike price” of £160 per megawatt hour of electricity for 35 years, well above the £92.50/MWh promised to the Hinkley Point nuclear plant in Somerset, which has been branded as too expensive.
But supporters of the Swansea scheme said it should be measured over a longer period because tidal lagoons could operate for more than 100 years – decades longer than wind farms and nuclear plants.
The latest proposal by Tidal Lagoon Power involved a strike price of £89.90/MWh guaranteed for 90 years, with the prospect of lower prices for subsequent lagoons.
A 60-year deal was recommended by the Hendry review and said that over that period tidal power would be “less expensive than offshore wind and significantly less expensive than nuclear”.
Mark Shorrock, chief executive of Tidal Lagoon Power, said recently that a decision was needed this summer for work to start in 2019, with an aim for completion within four years.
The Department for Business, Energy and Industrial Strategy told the FT it was still considering the Hendry review’s findings and would publish its response “in due course”.
A spokesman said: “We will require time to assess the merits of such a programme and determine what is in the best interest of the UK energy consumer and taxpayer in the long term.”