Government rejects Swansea £1.3bn tidal lagoon plans on cost grounds

In a blow to renewable energy generation and 18 months after an independent government review strongly backed the scheme, plans for a £1.3bn tidal lagoon in Swansea Bay have been rejected by the government.

Ministers claimed that he project was too expensive compared with offshore windfarms and nuclear power because the project would have had to receive subsidies via domestic energy bills for decades. Speaking in parliament, business secretary Greg Clark said that he had gone to very great lengths in considering whether to support the scheme but concluded that “the cost that would be incurred by consumers and taxpayers would be so much higher than alternative sources of low-carbon power that it would be irresponsible to enter into a contract with the provider”.

Rejecting the plans, Clark said supporting the lagoon would cost the average consumer £700 more by 2050, when compared with offshore wind and nuclear power. The capital cost for the lagoon per unit of electricity generated would be more than three times as much as the Hinkley Point C nuclear power station, said Clark, and therefore could not be justified.

The government’s decision was slammed by the renewable energy industry, green groups and MPs. Mark Shorrock, chief executive of the company behind the project, Tidal Lagoon Power, said: “This is a vote of no interest in Wales, no confidence in British manufacturing and no care for the planet.” Opposition MPs were also critical, with shadow business secretary Rebecca Long-Bailey saying: “The Tories have defied all logic and failed to make the right decision for our economy, the people of Wales and the future of our planet.”

Trade body RenewableUK said it was disappointed by the rejection, while Green party co-leader Caroline Lucas said the decision was doubly bad as jobs and green energy production would be lost.

Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering, also expressed his disappointment at the government's decision. "The decision to decline the Swansea tidal lagoon scheme, an innovative and sustainable solution to our energy needs, is a major disappointment and a missed opportunity for the infrastructure industry and the drive towards more renewable energy in the UK," he said. "The government should have taken a longer and more far sighted view and that it hasn't means that the UK has lost an opportunity to lead the world in this type of renewable technology," Ogunshakin said.

Clark said that the government was still committed to renewable energy but that the high subsidies involved in making the tidal lagoon viable were a step too far. 

The author of the 2016 independent report that backed the Swansea scheme, Charles Hendry, told the Guardian that the government had failed to recognise the longer lifetime of lagoons compared to alternatives. “The offshore wind turbines will have to have been replaced three or four times during the lifetime of a lagoon; a nuclear plant would only last half as long,” he said.

The Swansea project was based on a U-shaped breakwater built across the bay and the tide passing through 16 turbines, generating power for 155,000 homes. Originally proposed in 2011, the lagoon won backing from the then chancellor George Osborne.

Greg Clark said that the door was not completely closed on schemes like Swansea and that if future tidal lagoons could demonstrate value for money, the government would consider them.  It’s highly likely, however, that the government’s decision to reject the scheme will deal a hammer blow to the prospects of similar lagoon schemes in the UK.

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