The Government is backing plans for a £1 billion world-first scheme to provide green energy from the tides of the Severn Estuary.
In a budget that also supports fossil fuels with £1.3 billion of tax breaks for North Sea oil and gas, George Osborne said the Government was opening negotiations on subsidies for the world’s first tidal lagoon power plant in Swansea Bay, South Wales.
The scheme would involve a six-mile (9.5km) wall built around Swansea Bay to create a lagoon with turbines that can harness the incoming and outgoing tides to generate power 14 hours a day, providing renewable electricity for 155,000 homes for 120 years.
A report last March for Tidal Lagoon Power, the company behind the project, suggested subsidies for power from the lagoon would have to be around £168 per megawatt hour (MWh), making it significantly more expensive than other low carbon energy.
But its backers hope it will be the “proof of concept” project for five more tidal lagoons around the coasts of Wales and western England which could deliver around 8% of the UK’s electricity at a much lower cost.
Tidal Lagoon Power has already announced plans for a second, much larger lagoon in Cardiff, with subsidies – which are paid for through consumer bills – of around £95 to £105 per MWh across the two projects.
This would mean power from the first two tidal lagoons would cost around the same as the new Hinkley Point nuclear plant, on £92.50, and less than the newest offshore wind schemes which will receive £115 to £120 per MWh, but still well above the wholesale electricity price.
Mark Shorrock, chief executive of Tidal Lagoon Power, said: “The Swansea Bay Tidal Lagoon establishes a blueprint for a major new source of low carbon power.
“It’s a game-changer; in a single step it presents the option to harness indigenous, renewable electricity at a low cost and a nuclear scale. These projects can now be developed relatively quickly and will outlive all of us.
“We are already applying the Swansea Bay blueprint to the development of larger projects and working to ensure that the British supply chain mobilised for the first lagoon can scale accordingly.
“The Government recognises that we cannot afford to overlook these opportunities.
For more analysis on the budget, click here.
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