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Tidal power review: a battle for technologies?

Energy providers are squaring off over rival technologies. Mark Leftly investigates

Swansea natives have gathered by the Welsh coastal town’s waterfront to show their support for a first-of-its-kind technology they believe will heat their homes for 120 years. They have also signed a petition that has gone directly to prime minister David Cameron, hoping this will persuade him to intervene at a time when hopes for Tidal Lagoon Power’s Swansea Bay have been fading.

The world’s first man-made, energy-generating lagoon is supposed to provide enough electricity for 155,000 homes and pave the way for the technology to be used in other watery enclaves in Somerset, West Cumbria, and elsewhere in Wales. The team behind the scheme believe they are on the cusp of a technology that will help the government to achieve its renewable energy targets, while financial backers include Infrared Capital, insurance giant Prudential and 26 banks willing to lend up to £800m.

But some experts have questioned the engineering behind putting 16 turbines a mile out to sea, while the strike price – the minimum price guaranteed for electricity produced – is an eye-wateringly high £168 per megawatt hour. By contrast, the strike price at the proposed Hinkley Point C nuclear reactor has been heavily criticised at just £92.50, while the falling oil price makes the economic justification even more difficult. 

Last month, the government ordered an independent review into the scheme – Tidal Lagoon had originally hoped to start construction this spring. Yet in Northern Ireland, preparations are moving apace for a deeper water scheme, where turbines will take advantage of faster-moving waves, devised by Cork-based DP Marine Energy. This team hopes to start construction by 2018.

Lagoons vs offshore technology

There seems, then, to be a sea battle between two related, but subtly different, technologies that is seeing lagoons bloodied by their deeper water, offshore rivals. Although backed by big money, Gloucester-based Tidal Lagoon is not a huge company and it is feared that heavy delays could put the project in danger even if the government ultimately gives it the go-ahead.

But talking to Infrastructure Intelligence, energy secretary Amber Rudd says she is unaware of the Belfast scheme and insists she is “still interested in lagoon technology”. She adds: “We’ve had a number of people contact us about different projects and if any of these are to go ahead we’ve got to be clear about what’s in the market. In tidal we’ve got various proposals, and that’s why I want an independent report into what’s going on.”

One of these proposals is from green energy company Ecotricity. It claims it can build tidal lagoon energy sites in Britain for almost half the price proposed for the Swansea Bay project.

“This is a first-of-its-kind project, it has planning consent, we’ve got funding, we’ve taken the risk. We need an indication from government that they’ve got a framework for us. " Keith Clarke, Tidal Lagoon Swansea Bay

Welcoming the government’s review of tidal lagoon energy, the company has urged the Department of Energy & Climate to ensure value for money from the fledgling tidal industry.

Ecotricity founder Dale Vince said: “The government has been agonising for a while about what level of support to give to the first tidal project in Britain. They’re clearly interested in the technology, which is a good thing, but they’ve been put off by the price tag of £168/MWh proposed by Swansea Bay – that’s understandable.

“We welcome the review, because we are confident that tidal power projects can be built around Britain at much closer to £90/MWh – that’s the same price the government are paying to support nuclear energy, but without the risks or clean-up costs.” 

Rudd confirms that price is a key concern. “I’ve seen they [Swansea Bay] have raised quite a lot of money recently. They have their issues, I have my issues of the consumer to look after. We have spoken about this, and they are aware that we need to do this.”

The indication that Rudd is approaching this review, which is expected to last until autumn, with an open mind is a welcome one for Tidal Lagoon, yet an adviser to the energy department insists: “There has been a huge degree of scepticism [within the department] about whether this is a runner from day one. The price of other renewables is coming down all the time, so there is the pure economic perspective of whether it stacks up.”

Life cycle over 90 years

The strike price debate irks Keith Clarke, the chairman at Tidal Lagoon Swansea Bay, who is convinced that his team have proved the environmental case for the project. 

He is frustrated that the government uses a framework in which the guarantee has to take place over around three decades, when this would be considerably lower if the guarantee lasted for around 90 years.

Clarke says: “This is a first-of-its-kind project, it has planning consent, we’ve got funding, we’ve taken the risk. We need an indication from government that they’ve got a framework for us. 

“The 35-year framework is for something like a wind farm, so they’re trying to fit the framework onto the wrong asset class, because this is a 90year life cycle. With this project, energy is predictable. There are 14 hours a day when it would make power, and we can tell you when those 14 hours are forever. We would like an indication that we would go into formal [strike price] negotiations or not by the summer.” 

“The tidal lagoon in Swansea Bay is a litmus test of this government’s position on green energy. Britain could be the world leader in green technology if government would back the industry.” Lib Dem leader Tim Farron

That indication would also mean Tidal Lagoon could get under way with plans for a £7bn sister scheme in Cardiff that would produce enough electricity to heat all the homes in Wales. Further, Tidal Lagoon has claimed that technology could become a great export, with other countries keeping a close eye on the project to see if it works, though it is again thought that some civil servants question this.

Stephen Kinnock, MP for Aberavon and parliamentary private secretary to shadow business secretary Angela Eagle, insists the lagoon could boost Wales’ ailing steel industry. Tata recently announced more than 1,000 job losses at Port Talbot Steelworks, and Kinnock says: “The casings for the turbines are in line with what Port Talbot can produce. There is significant value for the steel industry in this project.”

Liberal Democrat leader Tim Farron goes further, arguing that “the tidal lagoon in Swansea Bay is a litmus test of this government’s position on green energy”. He adds: “I am concerned that this recently announced review could just be used as a smokescreen to try and justify even more cuts to the green energy sector. Britain could be the world leader in green technology if government would back the industry.”

A senior engineering source says nearly all major water barriers take “20plus years” to move from conception to completion, and Swansea Bay was first thought up only six years ago. He adds: “We’ve got a really good democracy in the UK, but that democracy presents certain challenges – everything seems to be delayed. For this type of big-ticket infrastructure item, the UK’s got to start making its mind up how important they are as a top-down policy issue.”

A spokesman for Fairhead Tidal, the special-purpose vehicle behind the Northern Irish scheme that is jointly owned by DP and Bluepower, says it is preparing to submit a planning application for “an array of turbines about a kilometre off the coast of County Antrim” this summer. This will provide enough electricity for 70,000 Northern Irish homes by 2020.

Says the spokesman: “The fundamental difference [between the schemes] is that Swansea is looking at a shallow tidal movement in a broader area. Ours is in deeper water, but the tidal movement is much faster. The Crown Estate, which owns the seabed, has identified absolutely prime areas for this.”

The turbines for this scheme have also been rigorously tested for about five years. This means that Fairhead is now choosing between three or four second-generation turbines. 

Hopes for Swansea Bay, then, are not forlorn, but it has to compete against rival technology. Rudd does not speak like someone who will be rushed into a decision, but the energy secretary has least suggested that she is considering the case for lagoon and broader tidal energy.

Mark Leftly is deputy political editor at The Independent on Sunday and associate business editor at The Independent

If you would like to contact Jon Masters about this, or any other story, please email jmasters@infrastructure-intelligence.com.