Energy Secretary rejects proposed Swansea Bay tidal lagoon project

On 25th June 2018, the Secretary of State for the Department for Business, Energy and Industrial Strategy made a long awaited oral statement on the £1.3bn Swansea Bay Tidal Lagoon project. Mr Clark set out Britain’s energy policy regarding energy generation which is based around meeting three needs: secure and dependable energy supply; minimum cost to consumers and taxpayers; and meeting our greenhouse gas emission reduction obligations.  In addition, through the Industrial Strategy, policy surrounding energy generation must also secure long-term economic benefit, in terms of jobs and prosperity.

In Mr Clark’s Oral Statement, he relayed the analysis his department had conducted on the programme of 6 tidal lagoons proposed by Tidal Lagoon Power Limited, with particular emphasis on the first proposed project at Swansea. The key finding was that, for the quantum of energy generated by the proposed tidal lagoon over 60 years, the cost of £1.3 billion was too high and that an equivalent quantum of energy could be generated by an offshore wind farm for a much lower cost over the same period, in the region of £400 million. The cost to build all 6 of the proposed lagoons is reported to be in excess of £50 billion, which is two and a half times the cost of the Hinkley Point C nuclear power station to generate a similar output of electricity. Moreover, the tidal lagoon would only produce a maximum of 0.15% of the electricity the UK uses each year.

In addition, according to the Hendry Review, the Swansea lagoon would support only 28 jobs directly associated with operating and maintaining the lagoon in the long term. As such, the project did not demonstrate value for money for consumers and public funds, nor did it meet the some of the key aspects to Britain’s energy policy regarding energy generation.

The reaction in the House to Mr Clark’s announcement was one of disappointment by MPs of all parties. Labour MP for Sefton Central, Bill Esterson, responded (on behalf of Dr Alan Whitehead, Shadow Minister for energy and climate change who was unable to attend), “I am afraid that this statement is evidence of yet another failed Government policy; it is a missed opportunity for the domestic economy and for our export potential…Approving the lagoon would have been a positive step, taken by a Government with a clear vision for the future, willing to lead the way in new, innovative technology and strongly supporting British industry”.

A major supporter of the project, Conservative MP for Preseli Pembrokeshire, Stephen Crabb, asked Mr Clark to confirm that the announcement does not mean that Government has closed the door on future investment in wave power. Mr Clark confirmed that the Government is still open to investment in tidal power but the proposals would need to meet the Government’s policy on energy generation activities.

Labour MP and BEIS Committee Chair, Rachel Reeves, asked why it had taken the Government five years to make this decision and what the Government has learnt from this process. Ms Reeves also stated that “Frankly, a lot of effort has been put into this project by business, the Welsh Government and others, and I think that many people have lost confidence in the Government’s programme for renewables because of this”. Mr Clark responded that Government evaluated every aspect of the process and that Government’s decision and process will be found to be exhaustive and rigorous when it is scrutinised by the BEIS Select Committee.

Former Secretary of State for Energy Sir Edward Davey criticised the decision. He said there is evidence that the price of future tidal lagoons would fall dramatically after the Swansea Bay Tidal Lagoon, and asked for all of the evidence and analysis to be published. Mr Clark responded that the technology used for the project is not subject to the same degree of cost reduction as other energy technologies and all analysis will be published.

Following the statement, Welsh Secretary Alun Cairns said: “I realise the disappointment this decision may cause, but ultimately this project did not meet the threshold for taxpayer value.” First Minister Carwyn Jones tweeted that it was a “crushing blow to Wales”.

Overall, a final decision on the project has been welcomed, even though it is not necessarily the desired outcome for the project’s supporters. Such is the popularity of the project in Wales, that the decision itself and the drawn out decision-making process has caused much frustration. Supporters of the project argue that this is a loss for the Welsh people, the UK’s steel industry and UK consumers as a whole. There is now an even greater need for industry to continue to focus on innovation to reduce the costs of construction to make wave and tidal power more competitive.

UKES continues to believe that Wales and the rest of the UK can be established as a world leader in tidal and wave technology, providing a competitive source of low-carbon energy, but any future scheme will need its promoters, industry and Government to work together to make the most compelling and attractive proposition. UKES would be delighted to help similar schemes in the renewable energy sector by supporting their promoters’ Government engagement and strategic communications with industry to put together the attractive proposition to which Government can say ‘yes’. To find out more about how UKES can help you, please email cara.meadows-smith@ukenergystrategies.com.

To watch Mr Clark’s statement on energy policy, please follow this link –

https://www.parliament.uk/business/news/2018/june/statement-on-energy-policy-25-june-2018/

To read the transcript, please follow this link –

https://hansard.parliament.uk/commons/2018-06-25/debates/02B6422D-3556-4219-B419-5D4942F7FC53/EnergyPolicy

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