By Paul Homewood
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From the Guardian:
The £1.3bn Swansea tidal lagoon faces a major blow as the company behind the scheme braces for significant job cuts if UK and Welsh government talks on the project fail to yield a breakthrough.
Tidal Lagoon Power has waited for 15 months since an independent review backed the scheme as a “no regrets” source of clean and reliable energy.
In December, the Welsh government offered equity or a loan if Whitehall would support the plan with a subsidy. UK–Wales talks have since intensified, but are yet to yield a result.
The financial stress of waiting for government funding means the company may be forced to lay off staff within weeks, substantially reducing the size of its operations this month.
A source at Tidal Lagoon Power said: “It [the company] is being put in a difficult situation by the UK and Welsh governments.” They said it was crunch time for the project, and the headcount of 50 staff would have to be reduced if support from Whitehall does not materialise.
Running down to a skeleton operation would make it harder to later resuscitate the scheme by 2020, when planning permissions expire.
More than 50 Conservative MPs, Labour, the Liberal Democrats, the Green party and unions have urged the business secretary, Greg Clark, to back the project in principle.
But Clark has told Carwyn Jones, the Welsh first minister, that any public subsidy for the lagoon would have to protect consumers from high energy bills and consider the falling costs of alternatives.
In a letter to Jones in January, Clark described tidal lagoons as “an untried technology with high capital costs and significant uncertainties”.
Richard Graham, the Conservative MP in whose Gloucestershire constituency Tidal Lagoon Power is based, said last week that the company was looking at a subsidy deal no more expensive than the one awarded to EDF Energy for the Hinkley Point C nuclear power station. “It’s a clone of that contract,” he said.
However, the price the government has guaranteed to buy power from developers building offshore windfarms in the early 2020s has already undercut Hinkley by 38%. Similarly, nuclear developers have been told they must come in well under the Hinkley price for future atomic power stations.
The Swansea tidal scheme would harness the ebb and flow of tides in Swansea Bay, providing a predictable and low-carbon source of power for 120,000 homes. It is intended to be the first of six lagoons at sites on Britain’s west coast, including Cardiff.
Tidal Lagoon Power has spent more than £53m developing the lagoons. But the government has yet to issue a response to the review by the former energy minister Charles Hendry, which warmly backed the Swansea project in January 2017.
Hinkley Point has an index linked contract, currently worth £97.14/MWh and guaranteed for 35 years.
Originally, Tidal Lagoon Power wanted much more. Recently they have been in negotiations with the Welsh Government, with a view to a cheap loan or equity funding, which they hope will reduce the strike price they need.
The Welsh Government and some MPs are getting excited about the number of jobs this £1.3bn project will support.
But we need to bear in mind that, with a capacity of 320 MW, Swansea Bay will only intermittently produce about 400 GWh a year. This is just 0.1% of UK generation, and is worth only £18 million at wholesale electricity prices.
It seems that matters may be coming to a head.
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April 2, 2018 at 11:36AM
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