Hendry Review supports Tidal Lagoon Energy

This article was first published in Marine and Maritime Gazette.

On 12 January 2017, the Government released the findings of the independent review it commissioned into the feasibility and practicality of tidal lagoon energy in the UK ('the Review'). The Review was led by former energy minister Charles Hendry and concluded that the 'tidal lagoon programme could play a competitive role as part of the UK’s energy mix alongside low carbon energy from nuclear and offshore wind.' 

The Review also strongly supported the construction of a smaller pathfinder project (under 500 MW) as soon as is reasonably practicable. Urging the Government to capitalise on work already done in respect of the proposed Swansea Bay Tidal Lagoon, Hendry recommended that the Government now move to a timely ‘final-stage negotiation’ to explore robust and satisfactory terms that might be acceptable to both the developer and the Government.

The Government is currently considering the recommendations of the Review following which it will “determine what decision is in the best interests of the UK energy in the long term.” (Secretary of State for Business, Energy and Industrial Strategy, Greg Clark). The Government's response will then be published.

Proposed Tidal Lagoons

The Swansea Bay Tidal Lagoon, received consent through a Development Consent Order in June 2015 (a marine licence is still required). If constructed, it will be the first tidal lagoon in the world and the UK will be well placed to become world leaders in the field. It is a 350 MW pathfinder project, of 16 hydro turbines in a 9.5 km breakwater wall, which its developer's say would generate electricity for 155,000 homes for the next 120 years. The scheme cost is approximately £1.3 billion and forecasts indicate that the lagoon could bring 2,200 jobs in the five years it would take it to be built. If the project is  successful, there are a further five larger tidal lagoon projects planned at Cardiff, Newport, Bridgwater, Colwyn Bay and West Cumbria.

Further conclusions of the Hendry Review

Further key recommendations and conclusions from the Review include:

1. The potential impact on consumer bills of large scale tidal lagoons appears attractive, particularly when compared to nuclear projects over a long time period; and that a measure of Contract for Difference (CFD) cost per MWh over project lifetimes indicates that a tidal lagoon programme has potential to be very valuable and competitive.
2. That the pathfinder project (recommended to be Swansea Bay) should be commissioned and be operational for a reasonable period before financial close is reached on the first larger-scale project (allowing better understanding of their full impact (including environmental) and how the programme can be improved going forward).
3. To help achieve maximum UK advantage, the Government should make it clear that its support for tidal lagoons is, in part, based on the supply chain opportunities and the wider industrial and economic benefits such a programme would bring.
4. The Government should establish an arms-length Tidal Power Authority with a clear purpose and the resources necessary to deliver results.
5. Going forwards, the tidal lagoon consenting process should be informed by a National Policy Statement similar to nuclear new-build, where specific sites are designated by the Government as being suitable for development.
6. Competition should be a driver for efficient project design, engineering, procurement, risk allocation and financing package. All of this feeds into the price required for electricity produced. Therefore competition should be for the government package of support (CFD and associated contracts).
7. A ‘use-it or lose-it’ approach should be adopted, so that prospective developers could not simply lock out other developments by winning a competition and not progressing the project. If they cannot show real progress to develop a facility within an established timescale, then the offer of support should be withdrawn.

What Next

Although it may be some years, before a largescale Tidal Lagoon is constructed in the UK, the construction and operation of the pathfinder lagoon at Swansea Bay would make the UK leaders in the field and represent a huge and exciting step forward for the UK Energy Market. Therefore it is hoped that the Government will follow the Review recommendations and that the required marine licence is granted shortly by Natural Resources Wales, allowing construction to commence in 2017.