Plans including proposal for 拢1.3bn scheme in Swansea now ditched after business secretary says project does 鈥渘ot meet the requirements for value for money鈥

Swansea tidal lagoon

The government has pulled the plug on plans for a fleet of tidal lagoon schemes across the UK, saying they are too expensive to use taxpayers鈥 cash.

Speaking in the House of Commons yesterday, energy secretary Greg Clark said the public purse would not be helping bankroll a 拢1.3bn scheme in Swansea being developed by Tidal Lagoon Power Limited.

Three years ago, Laing O鈥橰ourke was named as preferred bidder for the 拢200m contract to deliver the lagoon鈥檚 410m turbine house and sluice structure block.

Work had been expected to start the following year under the direction of Tidal Lagoon Power鈥檚 then director of construction and engineering, former Balfour Beatty chief executive Andrew McNaughton.

At the time, O鈥橰ourke鈥檚 project lead on the job, Jonathan Adams, hailed the award: 鈥淭oday, the Swansea Bay Tidal Lagoon is the talk of the international construction industry and we are thrilled to be playing a part in its delivery.鈥

But Clark has now said the six lagoons 鈥 five others were planned round the coasts of Wales, Somerset and Cumbria 鈥 were not value for money and would be better spent on other schemes such as offshore wind farms.

He added: 鈥淭he project and proposed programme of lagoons do not meet the requirements for value for money and so it would not be appropriate to lead the company [Tidal Lagoon Power] to believe that public funds can be justified.

鈥淭he proposal for the Swansea tidal lagoon would cost 拢1.3bn to build. If successful to its maximum ambition, it would provide around 0.15% of the electricity we use each year.

鈥淭he same power generated by the lagoon, over 60 years, for 拢1.3bn, would cost around 拢400m for offshore wind even at today鈥檚 prices, which have fallen rapidly, and we expect to be cheaper still in future. At 拢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.鈥

An independent review back in January last year, carried out by former Tory energy minister Charles Hendry, said the Swansea plan was a 鈥渘o regrets option鈥 and the government should get on and commit to it.

But Clark said: 鈥淚f a full programme of six lagoons were constructed, the Hendry Review found that the cost would be more than 拢50bn and be two and a half times the cost of Hinkley to generate a similar output of electricity.鈥

The Confederation of British Industry said it was disappointed by Clark鈥檚 decision and warned it could put off others from pressing on with their own energy initiatives.

Its director for Wales, Ian Price, said: 鈥淎ll major infrastructure projects require large amounts of time, energy and money, only for many to then fail to get the green light. There must be a smarter way of approaching such projects that does not discourage innovative entrepreneurial new firms from entering the marketplace.

鈥淭he newly established National Infrastructure Commission for Wales should lead a cross-agency review into all stages of this project and identify ways both governments can speed up the process for future energy infrastructure projects and remove barriers to entry for other firms.鈥

Once Swansea had been built, other lagoons were planned for Newport and Cardiff and a site across the Severn Estuary at Bridgwater Bay on the Somerset coast. Two more were planned for Colwyn Bay in north Wales and at a site in Cumbria.