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Tidal Lagoon Swansea Bay project would welcome foreign investment, says construction director Andrew McNaughton

Tidal Lagoon Swansea Bay director of construction Andrew McNaughton has said the project and five other planned Tidal Lagoon power stations would welcome foreign investment.

However, the former Balfour Beatty chief executive insisted the selection of a Chinese firm for a major contract on the £1bn project was not intended to attract investors from the country.

“We have an open expectation [around overseas investment],” Mr McNaughton told Construction News.

“We know there’s a lot of money around the world seeking to invest in infrastructure, particularly when you look at energy.

“Tidal Lagoon has a great potential for the future because ultimately it’s a low-cost source of fuel; the variability is very low so it’s a very attractive investment proposition over the long term, so we are seeing interest from all over the world.

“But do we place any extra store in Chinese investment? No.”

In June, China Harbour Engineering Company was picked to carry out a £300m marine works contract on the 320 MW project.

Asked about the significance of turning to a Chinese firm for the job, Mr McNaughton said: “We had an open competition for the marine works.

“The marine capability sits in the world’s largest dredging organisations and those are internationally based.

“China Harbour are one of the world’s largest dredging companies. The truth was they put forward the best and most economic proposal. We did not set out a strategic intent to do that.”

Swansea Bay is still negotiating with government over the strike price for energy produced by the power station.

It is understood Tidal Lagoon is seeking a strike price of £168 per MWh – more than 80 per cent higher than the £92.50 strike price agreed with EDF for the Hinkley Point C nuclear power station.

Mr McNaughton would not be drawn on negotiations over the strike price, but did insist that the price of power would reduce as the larger fleet of six stations come online, as planned.

“There is a scale factor for the lagoons,” he explained.

“What we’re building is a source of power generation that will last for 120 years.

“Fossil fuel is going to come offline so when you’re looking at long-term baseload production of energy, you’ve got nuclear power with a forecast life of 60 years and we’ve got tidal power that will be a very, very low-cost form of energy generation which could produce up to 8 per cent of this country’s energy needs.”

Highlights from the Summit

Watch now: Andrew McNaughton talks at the Construction News Summit about what attracted him to the Tidal Lagoon role and his passion for the benefits that infrastructure can bring to communities.

Mr McNaughton spent 30 years working for construction firms, including 17 years at Balfour Beatty, where he was chief executive between 2013 and 2014.

He said this gave him a clear understanding of what Tidal Lagoon will require from contractors on Swansea Bay.

“We’re going to be delivering the project management in-house ourselves, so what we’re looking for is contractors that can work in a multi-disciplinary team.

“We’re looking for contractors who have experience of working on complex infrastructure with broad-based teams.”

Mr McNaughton also rejected the view that there was a looming capacity issue facing contractors working to deliver major infrastructure across the UK.

“As soon as an upturn comes everybody says there’s going to be a shortage [but] individual contractors will develop their business to respond to particular projects.

“I haven’t seen an infrastructure programme that has failed to proceed because of a lack of capacity in the supply chain.

“There’s been talk about it for 30 years, but there are different solutions and different timescales for projects.

“I don’t believe the major infrastructure schemes coming forward will suffer from a lack of competition in the market.”

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