Swansea Bay Tidal Lagoon project hit by delays

Work on building the Swansea Bay Tidal Lagoon has been delayed to spring 2017 because the government is taking “longer than expected” to finalise a contract for difference (CfD), Tidal Lagoon Power has said.

A spokesperson for the firm said it would be ready to build once the remaining permissions have been secured and financial close with investors is achieved. However, “the Board of Tidal Lagoon Swansea Bay [the company created to own and operate the lagoon] has concluded that this won’t be possible by year-end, ruling out the start of marine works next spring”, they added.

“A new timetable has therefore been agreed with tier one contractors: targeting financial close next summer. Our aim is to then start the initial civil works on site in autumn 2016 in order that the marine works can start in spring 2017. As a result, target power on moves to 2021.”

Tidal Lagoon Power engineering and construction director Andrew McNaughton said he was “confident” that financial close would happen by next summer, but that marine contractors had to start on site in spring for weather reasons, meaning the project will have to be moved back to spring 2017. He has urged the Welsh public to “stay with us and stay behind us”.

A Decc spokesperson said: “Tidal Lagoon Power are seeking a significant amount of financial support from consumers for their proposed project in Swansea Bay and we need to carefully consider whether it is in the best interest of bill payers.

“At present there is no timeframe for how long the negotiation process for Swansea Bay tidal lagoon may take. It depends on a number of factors, many of which are outside the control of the government.”

The estimated strike price for the lagoon project is £168 per MWh, considerably more than wind or solar power and almost double the cost of Hinkley Point C.

However, speaking at a recent conference in Berlin, Swansea Bay Tidal Lagoon chief executive Mark Shorrock assured that with each lagoon built, costs would come down. “Because [the tidal lagoon] has such a long life, we can end our subsidy period, whatever duration that is, and can contract to give money to the government per MWh that we produce.”

He told Utility Week the company is “driving this process as if the [contracts for difference auction] has happened”, finishing the advance works phase next month and looking to engage with the banking community in January next year to “drive towards financial close” in July.

But the Welsh Liberal Democrats have warned there is a danger that the proposed £1 billion Swansea Bay Tidal Lagoon project will not be built following the delay on a decision.

Liberal Democrat Peter Black said: “I am a big supporter of the Swansea Bay Tidal Lagoon, but it is quite clear that the failure of the UK government to agree the price for the electricity it will generate within the original timetable has led to this delay.

“The danger now is that the project will lose momentum and that investors will take their money elsewhere.”