The new, historic low, price of offshore wind can be replicated by tidal lagoon industry with the right government leadership, according to the Chairman of All-Party Parliamentary Group for Marine Energy and Tidal Lagoons Richard Graham.
Graham said the decline in offshore wind prices seen in the latest contracts for difference (CfD) auction , where offshore wind came in at £57.50/MWh, marked a good news for tidal lagoons.
“It shows that the leadership of this Government, working with the alternative energy sector, can bring costs down dramatically over time.
“The reward for the UK, after years of subsidies for offshore wind at more than double today’s prices, is to have created both a viable source of energy and a new industry in which we’re now the world leader.
“That gives us a strong precedent from which to explore other technologies, and if we take the same approach to tidal lagoons we can help create another new industry, bringing costs down for consumers in due course and generating a wider economic benefit as well,” Graham said.
Just over a year ago, the review of tidal lagoon industry conducted by Charles Hendry, former UK energy minister, recommended the UK government to commission a pilot project for the world’s first tidal lagoon in Swansea Bay – stating that it would be a ‘no-regrets’ policy.
According to Graham, an issue with the Hendry Review from a taxpayer perspective was the proposed 60-year finance structure, at a starting cost higher than the awarded CfD contract for the nuclear plant Hinkley Point C at £92.50/MWh – which Graham deemed as both ‘financially and politically challenging.’
“Tidal Lagoon Swansea Bay has now proposed exactly the same terms for the pilot project at Swansea as the government accepted for Hinkley Point (35 years, CPI inflation etc), and with a 65% British supply chain. It is no longer more expensive in the short term than nuclear, with huge potential for future efficiencies,” according to Graham.
Graham also highlighted recent developments that were seen as favorable for the UK to make positive decision regarding the lagoon subsidies, including the Welsh government’s pledge to lend business capital to the developer Tidal Lagoon Power to help cover construction costs.
“We can continue to increase our percentage of energy generated from domestic low carbon by replicating the future savings of offshore wind through tidal lagoons. The Swansea pilot project proposal is now affordable, has the support of the Welsh Government, and will transfer equity and dividends to Wales while establishing a UK supply chain for this new industry.
“What is now needed is for all of those involved to get around the table, and agree a sensible deal for investors, purchasers of the energy, and energy customers alike. Over a year on from the Hendry Review there is now an opportunity to take up its key recommendation,” concluded Graham.