Plans for the £1.3bn Swansea Bay Tidal Lagoon project have been scrapped after the government confirmed it was not willing to support the scheme.
Energy secretary Greg Clark revealed the government would not provide funds for Tidal Lagoon Power’s Swansea Bay scheme or its five other planned tidal projects, due to concerns over value for money.
Speaking in the Commons today, Mr Clark said: “The conclusion of our analysis is the project and programme of the tidal lagoons planned do not meet the requirements for value for money, and so it would not be appropriate to lead the company to believe that public funds could be justified.”
The £1.3bn Swansea Bay project was given the planning green light three years ago by the then energy secretary Amber Rudd, but Tidal Lagoon Power (TLP) has been unable to agree a strike price – the money the government pays for each unit – since then.
Mr Clark said it would be “irresponsible” for the government to enter a contract with TLP over schemes which he claimed would cost taxpayers and consumers more than other low-carbon energy sources, such as offshore wind and nuclear.
He said: “The same power generated by the lagoon, over 60 years for £1.3bn, would cost around £400m for offshore wind even at today’s prices.
“At £1.3bn, the capital cost per unit of electricity generated each year would be three times that of the Hinkley Point C nuclear power station.”
The Swansea Bay scheme was to be the first of five UK tidal projects planned across the country.
Others included an £8bn lagoon across Cardiff Bay, as well as schemes in Newport, Colwyn Bay, West Cumbria and Bridgwater Bay.
The government’s decision not to back them comes nearly 18 months after former energy minister Charles Hendry published his government-commissioned report calling for Swansea Bay to be supported.
Mr Hendry called support for the construction of Swansea Bay as a “no-regrets policy” for the country.
Elaborating on the government’s decision, Mr Clark told the Commons today: “If a full programme of six lagoons were constructed, the Hendry Review found that the cost would be more than £50bn, and be two-and-a-half times the cost of Hinkley to generate a similar output of electricity.
“Enough offshore wind to provide the same generation as a programme of lagoons is estimated to cost at least £31.5bn less to build.”
The energy secretary also raised concerns about how consumers might pay for the planned lagoon programme, saying the work would cost each household in the UK £700 between 2031 and 2050.
Despite the rejection of Tidal Lagoon Power’s proposals, Mr Clark did not rule out backing other tidal schemes.
He said: “The fact that this proposal has not demonstrated that it could be value for money does not mean that its potential is not recognised.
“My department is also in receipt of proposals from other promoters of tidal energy schemes which are said to have lower costs than the Swansea proposal, although these are at an earlier stage of development.
“Any proposals must be able credibly to demonstrate value for money for consumers and public funds.”
Responding to the announcement by Mr Clark, TLP chief executive Mark Shorrock called Mr Clark’s statement “misleading” and called it “sodden with regret”.
“The secretary of state is clearly misinformed as his briefing today was very misleading,” Mr Shorrock said.
“He says Swansea Bay Tidal Lagoon will cost three times nuclear. This is incorrect. Swansea Bay Tidal Lagoon will add just 30p to consumers’ bills, whereas Hinkley Point C will add £12 or more to bills.”
TLP also described the government’s lack of engagement as “highly disturbing”, saying it had not heard from the government in two years.
TLP chairman Keith Clarke said: “In light of today’s statement and having heard next to nothing from government for two years, the board will be meeting in two days’ time to consider its next steps.
“There has been no negotiation and it is not unreasonable to expect that government will now be willing to meet and discuss its position on Swansea Bay Tidal Lagoon in some detail.”
He added that the TLP board would be meeting in two days to consider its next steps.
Over recent weeks funders have rallied to save the scheme, offering financial support to get the project off the ground.
Last week the Wales Pension Partnership, which is made up of funds from workers across eight Welsh local authorities, said it would be writing to the Welsh and UK governments to confirm its backing for the £1.3bn scheme.
Welsh first minister Carwyn Jones also pledged £200m in funding from the Welsh Government to ensure Swansea Bay was built.
The decision by the government will come as a blow to Laing O’Rourke, which was chosen for the £200m main civil engineering package in 2015.
Tarmac-owned Alun Griffiths had been contracted to deliver the £25m public realm works package.
Chinese contractor Chinese Harbour Engineering Company had been set to carry out the £300m marine works package in 2015, but was removed in May 2016 after TLP found the designs had “limited workability”.