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Welsh first minister Carwyn Jones has urged the UK government to stop “dragging its heels” and give the go-ahead to the proposed Swansea Bay tidal lagoon.
Writing to prime minister Theresa May, Jones said the Welsh government would help pay for the £1.3 billion project if Westminster agreed to provide subsidies through a Contract for Difference.
“This would be the world’s first tidal lagoon power plant, which would create thousands of high quality jobs, supply a significant proportion of the UK’s energy needs and position Britain as a world leader in a new global industry,” Jones said separately in a statement.
“And, yet, the UK government has been dragging its heels for over a year. This is leading to a growing sense of frustration among the Welsh business community and an increasing risk that the lack of a decision will turn into a decision not to proceed.
“Now is the time for the UK government to stop stalling and get on with agreeing a strike price so we can make this transformative project a reality.”
In his letter to May, Jones wrote that the project enjoys genuine cross-party support, both amongst Welsh Assembly members and local MPs. He said there was “a real sense of disappointment” when a decision to proceed was not announced in November’s budget.
“The key to enabling the Swansea Bay project to proceed lies, of course, with the UK government agreeing an appropriate Contract for Difference arrangement,” he added. “However, I want to make clear that I am prepared to consider a substantial equity and/or loan investment by the Welsh Government if that would enable the project to move forward.
“This investment could help to reduce the cost of capital for the project and hence reduce the subsidy requirement over the lifetime of any Contract for Difference. Any investment by the Welsh Government would, of course, be conditional on the UK government agreeing to an appropriate Contract for Difference arrangement and the project securing any necessary licenses and consents.”
Tidal Lagoon Power chief executive Mark Shorrock commented: “This is the breakthrough our project has needed. We thank the first minister and his team for their leadership.
“We look forward to working alongside the Welsh Government to now close the deal for Swansea Bay tidal lagoon with the UK government.”
Tidal Lagoon Power has asked the government for a 90-year Contract for Difference with an average strike price of £89.90/MWh, starting at £123/MWh in the first year and falling steadily to just £43/MWh by the end of the period.
The offer of financial support from the Welsh government comes almost a year after the publication of the Hendry review, which concluded that large-scale tidal lagoons could “play a cost-effective role in the UK’s energy mix” and deliver power a lower cost than all low-carbon alternatives when measured over their full lifespans.
Critics say the rapidly falling costs of other technologies such as wind and solar mean they would be cheaper. Their argument has been bolstered by results of the most recent Contracts for Difference auction in which two offshore wind projects secured 15-year agreements at a strike price of just £57.50/MWh.
The UK’s first subsidy-free solar farm was officially opened by climate change minister Claire Perry in Bedfordshire in September. The following month developers revealed plans to build the country’s largest ever solar farm in Kent, also without subsidies.
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