Government backing for tidal lagoons could hold the key to the Gupta family’s decision on whether to bid for Tata Steel’s UK business.
Jay Hambro, a member of the Gupta Group’s strategic board, told Construction News that the potential buyer had cited the importance of tidal lagoon power to a potential bid, during talks with the government.
Gupta-owned Liberty House is the only bidder to have expressed an interest in buying Tata’s UK operation, including the steelworks at Port Talbot – potentially saving thousands of jobs.
The Indian-based firm bought Newport’s Alpha steelworks from Russian firm Libala in 2013, and last month added two mothballed Tata plants in Lanarkshire to its portfolio.
The Gupta family holds a “substantial stake” in Tidal Lagoon Power after it invested £10m in the firm in February.
But Mr Hambro, who is also chief executive of the Gupta family’s Simec energy and mining divisions, said driving down energy costs through use of tidal power would encourage a bid for the wider Tata business.
“In our conversations with government we have stressed the importance of tidal lagoon power to our plans and how it solves a problem that the government has and the steel industry has in terms of the cost of power,” Mr Hambro said.
“Does [a deal] become more appealing if the government supports tidal lagoon? Definitely, yeah.”
Liberty House founder Sanjeev Gupta has previously said he would remodel Port Talbot as a more energy-intensive electric arc furnace plant, rather than use its current blast furnace system. However, high energy costs could be a stumbling block to the plan.
Mr Hambro said Liberty was looking at ways to bring down energy costs for its business, with tidal energy identified as a long-term solution.
“We are moving our demand picture,” he said. “We see the long-term solution for a power source being tidal lagoon. It is substantial in its generation capacity, it is almost baseload. Tidal is absolutely critical to the future of British steel.”
Tidal Lagoon Power plans to build six tidal barrages, starting with its pilot project at Swansea Bay, followed by Cardiff Bay and the Severn Estuary near Newport.
Liberty House plans to use the proposed Severn Estuary tidal barrage as the main energy source for its Newport steel plant. However, work will not start at either Cardiff Bay or Newport until a strike price for Swansea Bay is agreed.
Last June, energy secretary Amber Rudd gave the green light for construction to start on the £1bn Swansea Bay Tidal Lagoon project. But the project has since stalled, with the government and developer failing to agree a strike price.
In October, the project was delayed by a year after the government rejected the £160/MWh price put forward by Tidal Lagoon Power.
Further doubt was cast over the scheme in February when the government announced it would be reviewing the tidal energy programme.
Mr Hambro said the situation was “frustrating” and criticised the government for not yet announcing who would chair the review team. It is understood the government will announce members of the team later this week.
In February, the Gupta family invested £10m into Tidal Lagoon Power, taking a substantial stake in the business.
Mr Hambro said: “If we were given more comfort on government’s support for tidal power we would be up there moving [the projects] forward. We have the ability to be in the water very quickly.”
He added that the Guptas’ involvement as an investor, user and strategic partner on tidal lagoon projects had given the government more assurance that the project would go ahead.
“Government’s concerns are twofold,” Mr Hambro said. “The first is cost and the second is if they support the cost argument on Swansea they need comfort that the two follow-on two lagoons at Cardiff and Newport will happen.”
He added that as well as funding the projects in Cardiff and Newport, the investor would be playing a key role “in the assembly” of the Newport lagoon.