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Swansea Bay £1.3bn tidal lagoon 'to be scrapped'

Plans to build a £1.3bn tidal energy project across Swansea Bay could be scrapped next week, according to reports.

The Financial Times reported that ministers may formally reject the Swansea Bay Tidal Lagoon project as early as next week due to concerns over cost.

The FT said the announcement was likely to come at the same time the government gives the go-ahead for the planned £15bn Wlyfa nuclear power in Anglesey.

The government would not confirm whether a decision had been taken on Swansea Bay’s future, but said it had a duty to “minimise the impact on consumer bills”.

A Department for Business, Energy and Industrial Strategy spokeswoman said: “The Swansea proposal is more than twice as expensive as the Hinkley power station.

“Any decision on the Swansea Bay tidal lagoon project will have to represent value for money for the UK taxpayer as well as the consumer.”

The decision by BEIS comes more than a year after a government-commissioned report called for the Swansea scheme to be given the green light.

The report by former energy minister Charles Hendry said backing Swansea Bay should be seen as a “no-regrets policy” for the government, and it should be used as a “pathfinder scheme” to develop future tidal schemes.

Since then, BEIS and Swansea Bay developer Tidal Lagoon Power have been unable to agree on a suitable strike price – the money the government pays for each unit of energy produced.

Latest reports suggest that Tidal Lagoon Power’s current offer stands at £89.90 per MWh over a 90-year period.

Hinkley Point C’s strike price is £92.50 per MWh across 35 years.

Responding to the reports today, Tidal Lagoon Power criticised the government’s lack of communication, saying it remained “blind” over Whitehall’s intentions.

A TLP spokeswoman said: “We have repeatedly offered to meet BEIS ministers and have not been given the opportunity to do so.

“We are therefore blind with regards the department’s intent on timing or content of any announcement.”

She added that the unit price of Swansea Bay need not cost any more than Hinkley Point C and the construction of Swansea would pave the way for other projects to follow at “88 times less subsidy than Hinkley”.

“We look forward to learning from government what would be an appropriate unit price for both the pathfinder tidal lagoon and the full-scale tidal lagoons it allows to follow,” she said.

In January, the Welsh Government promised a “substantial investment” towards the construction of the £1.3bn scheme, with first minister Carwyn Jones urging Theresa May to give the project the go-ahead.

The scheme also has financial backing of around £200m from financial institutions led by Prudential.

Speaking to the FT, Mr Jones said the rejection of the scheme would represent another “kick in the teeth for the Welsh people”, as the project was set to create 1,000 jobs in construction and manufacturing.

The decision would come as a blow to Laing O’Rourke, which was chosen for the £200m main civil engineering package in 2015, and Tarmac-owned Alun Griffiths, which was contracted to deliver the £25m public realm works package.

Readers' comments (2)

  • thousands of pounds wasted by potential supply chain on schemes for the build of this - no chance to recover out of pocket expenses and the government just cancel it. typical of a government who tell us they want to help construction and then kick it in the teeth...

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  • Least surprising project cancellation ever.

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