£200m incentive offered by Welsh government to secure tidal lagoon project
The Welsh First Minister has promised a £200m investment package to fund the world’s first tidal lagoon project in Swansea Bay in an attempt to convince Westminster not to give up on the project.
The project, which is expected to cost around £1.3bn in total, uses the power of tides to generate electricity and is thought to be less expensive than both offshore wind and nuclear power over the first 60 years of their 120-year life, according to a review of the technology last year.
Tidal lagoons are also seen as a good way to provide consistent, baseload electricity, unlike other forms of renewable energy like solar and wind, but the UK government has been reticent to give its final approval.
Last month Business, Energy and Industrial Strategy minister Lord Henley said any decision would have to represent value for money for taxpayers and consumers.
Labour’s Carwyn Jones offered a “substantial” investment by the Welsh Government “if that would enable the project to move forward”.
Welsh Secretary Alun Cairns has warned the numbers involved in the scheme “are awful” and there been speculation Business Secretary Greg Clark will reject the plan.
In a letter to Clark and copied to Prime Minister Theresa May, Jones said a “full and final offer” from both governments was needed soon to “put an end to the ongoing uncertainty” over the future of the project.
He wrote: “As I have repeatedly made clear to the UK government, I am prepared to consider a substantial equity and/or loan investment by the Welsh government in the Swansea Bay tidal lagoon if that would enable the project to move forward.”
Officials are understood to have been aware of the £200m on offer previously, but sources said it does not address the “size or scale of the financial requirements” of the £1.3bn scheme.
Jones called for the UK government to commit to a “contract for difference on the same terms as that offered to Hinckley Point C”.
The nuclear power station being built in Somerset secured a £92.50 megawatt hour so-called strike price, a guaranteed amount for the future electricity generated.
In an email seen by BBC Wales, Cairns said the lagoon would cost “twice the price of nuclear”.
He wrote: “No decision has yet been taken and I have been an advocate from the outset, but numbers are awful - twice the price of nuclear, without the prospect of any significant savings from lessons learned on first.”
Jones said further work would be needed on plans for both governments to make a joint offer to Tidal Lagoon Power, the company behind the scheme, but the move would “strike an appropriate balance” between supporting a low-carbon energy generation project while providing value for money.
A Department for Business, Energy and Industrial Strategy spokesman said: “The government is considering the findings of Hendry review into tidal lagoons and an announcement will be made in due course.”