Image copyright TLP Image caption The Hendry review said the lagoon would make a "strong contribution" to energy supplies

Plans to build the world's first tidal power lagoon have been thrown out by the UK government.

Business and Energy Secretary Greg Clark said the £1.3bn project was not value for money, despite claims by developers Tidal Lagoon Power (TLP) a revised offer made it cheaper.

The decision has been slammed by local politicians across the parties, including the Conservatives.

The scheme off Swansea Bay had £200m backing from the Welsh Government.

But the UK government said it would not pay TLP the fee it wants for energy.

TLP claimed no talks have taken place for more than a year and said supporters of the project have vowed to do what they can to make it a reality.

Mr Clark told the Commons: "Securing our energy needs into the future has to be done seriously and, when much cheaper alternatives exist, no individual project, and no particular technology, can proceed at any price."

Government analysis estimated that the lagoon would cost the average British household consumer an additional £700 between 2031 and 2050.

But TLP chief executive Mark Shorrock said the figures were wrong, adding that offshore wind projects had received £8bn in subsidies and the "path finder" tidal lagoon project needed £25m a year "in order to kick start an industry".

"It's a very, very sad day for Wales, for Swansea," he told BBC Radio Wales' Good Evening Wales programme.

First Minister Carwyn Jones tweeted that it was a "crushing blow to Wales".

Media playback is unsupported on your device Media caption Carolyn Harris: "You will never understand the frustration and anger in my city"

Welsh Secretary Alun Cairns said: "I realise the disappointment this decision may cause, but ultimately this project did not meet the threshold for taxpayer value."

There have been a number of calls among Labour MPs for Mr Cairns to go but he told the BBC Wales Today programme he was proud of his record.

Finance Secretary Mark Drakeford, speaking in an interview on Good Evening Wales, said: "Wales has not had an effective voice at the cabinet table."

Plaid Cymru's energy spokesperson, Liz Saville Roberts MP, said the UK government's "decision demonstrates the need for Wales to gain greater control over its own future".

Welsh Liberal Democrat leader Jane Dodds called the decision a "disgrace", as did Gower Labour MP Tonia Antoniazzi.

The announcement brings an end to 18 months of waiting since an independent review, commissioned by the ministers, recommended building the lagoon.

TLP chairman Keith Clarke said: "In light of today's statement and having heard next to nothing from government for two years, the board will be meeting in two days' time to consider its next steps."

Media playback is unsupported on your device Media caption Greg Clark said the lagoon did not meet "value for money" requirements

The review by former energy minister Charles Hendry said Swansea should be used as a test of the technology, before allowing other developers to bid to construct further schemes as part of a competitive tendering process.

The UK government has been accused of dragging its heels since then, during which time they repeatedly stated the scheme must prove "value for money".

Image copyright TLP

TLP claims the Swansea project would provide power to 155,000 properties in Wales and is cheaper than nuclear power.

The developers had previously asked for a 90-year contract with the UK government with an average strike price - a guaranteed price for the electricity generated - of £89.90 per megawatt hour.

The new nuclear power station at Hinkley Point C in Somerset was given a strike price of £92.50/MWh for 35 years.

Media playback is unsupported on your device Media caption Watch Tidal Lagoon Power's video of how the turbines would work

Analysis by Brian Meechan, BBC Wales business correspondent

This was a project that seemed at one point to have widespread and almost universal support in Wales.

It required the UK government to agree a significant strike price - a subsidy paid by consumers through energy bills - although the exact amount varied depending on the length of time that price was set for and whether other taxpayer funding was invested in the project.

The independent report by Charles Hendry was very supportive of the tidal lagoon. However, it also said that doing a full, value for money, assessment was beyond its scope.

In recent months, some in the business community have been privately raising concerns about the cost of the project and its impact on energy bills.

While Tidal Lagoon Power and the Welsh Government now say it is the same price as nuclear power, the UK government insist it is double.

However, the goalposts have moved. There was huge criticism of the UK government over the price for energy struck for the new nuclear plant across the water at Hinkley Point. With a pledge not to commit bill payers to such costs again, even getting the cost of the lagoon to a similar figure was unlikely to be good enough.

It seems, ultimately, that UK ministers do not have confidence that the lagoon developers are able to deliver the project at the price they now think is reasonable for consumers to pay. Especially as other options such as wind energy come in at a much lower cost.

Tidal lagoon: The timeline

2003: Plans first emerge for a £30m tidal power project in Swansea Bay from a green energy charity

2006: Tidal Electric Ltd prepares a scoping report for a lagoon to take the project on but it is put on hold

2012: Tidal Lagoon Power (TLP) unveils its ambition to develop a breakwater and power generation

2013: TLP starts developing its plans

2014: Plans submitted to Planning Inspectorate with a cost of £850m

2015: Proposals get backing of UK government, subject to subsidy agreement - hope it could be operational by 2018

2016: Report warns of impact on fish. Charles Hendry is appointed to lead independent review into £1.3bn lagoon's viability

2017: Hendry review backs the lagoon as a "no regrets" option but the UK government is still to decide

2018: Delays, mostly believed to be over arguments over value for money. Welsh Government also offers substantial investment, as does Wales Pension Partnership

Ian Price, director of business group CBI Wales, said: "We appreciate the effort and energy made by politicians from both governments who have worked tirelessly to try and make this project a reality. At the end of the day, any project has to be affordable for consumers."

David Clubb, a director at RenewableUK Cymru, the trade body for all renewable energy, said: "This means that the region will not benefit from many thousands of jobs from the project and the associated supply chain."</s>The UK Government has confirmed it is not prepared to back the Swansea Bay tidal lagoon project. The company behind the scheme, Tidal Lagoon Power, wanted subsidies similar to those for new nuclear power to build the £1.3 billion scheme, consisting of a U-shaped sea wall with turbines in Swansea Bay. The lagoon had been backed as a "pathfinder" project to develop the tidal technology by an independent review for the Government. But Business Secretary Greg Clark said however "novel and appealing" the project did not meet the requirements for value for money.

He said the electricity generated by the lagoon programme by 2050 could cost up to £20bn more to produce compared to generating that same electricity through a mix of offshore wind and nuclear. That would cost the average British household consumer up to an additional £700 between 2031 and 2050, he said.

The company behind the £1.3bn project say the lagoon would power approximately 155,000 homes in Wales each year. It is thought it bring more than 2,000 jobs in construction and manufacturing and would attract 100,00 visitors to Swansea Bay annually. Thirty five million pounds has already been privately spent on project development. Tidal Lagoon Power said the British coastline, which has one of the highest tidal ranges in the world, is an 'untapped energy source with huge potential'. But government were reported to be questioning the the project in terms of costs, long-term subsidies and the environmental impact. The First Minister said he has previously written to the Energy Secretary Greg Clark urging him to give the project the green light and pledged £200m of investment. Reacting to the news, he described the decision as 'short-sighted.'

Criticism of the decision came from across the political parties. Labour MP for Swansea East Carolyn Harris said to the Business Secretary he will "never understand the frustration and anger felt in my city today" and called for the Welsh Secretary Alun Cairns to resign.</s>The UK Government has rejected plans for the world's first tidal energy lagoon, saying the project in Swansea Bay would be too expensive.

The Swansea lagoon had been described as a "pathfinder" project, with plans for a further lagoon between Cardiff and Newport.

Developers, Tidal Lagoon Power, wanted subsidies similar to nuclear power to build the £1.3 billion scheme.

But, almost 18 months after a government commissioned review called the lagoon a "no regrets policy", the Business Secretary Greg Clark says it "does not demonstrate value for money".

Responding to the news, Swansea Council leader Rob Stewart said the UK government had made a huge mistake.

He said: "As a pathfinder project Swansea would pave the way for an entirely new industry where Wales and the UK would be a world leader.

“The UK Government has spent 18 months on this decision and after all that time they have made the wrong call.

“They are removing nearly £2bn of investment from Swansea and South Wales."

Cllr Stewart said he was working with the Welsh Government to find alternative ways of delivering the lagoon.

Alun Cairns, Secretary of State for Wales, said: "I realise the disappointment this decision may cause, but ultimately this project did not meet the threshold for taxpayer value.

"The reality is the consumer and industry would have been paying disproportionately high prices for electricity when cheaper alternatives are available.

I was an early and consistent supporter of the scheme – and took it to Number 10 – but after months of hard work by officials - the conclusion when taking a responsible approach to taxpayers money - is it just did not stack up.

Plaid Cymru have formally tabled a vote of no confidence against the Welsh Secretary following the decision.</s>The UK government has rejected the development of the proposed £1.3bn Swansea Bay Tidal Lagoon project in Wales, claiming that it would be too costly.

Claimed to be the largest tidal power plant in the world, the Swansea Bay Tidal Lagoon will generate low-carbon electricity by capturing high tides and releasing it through turbines. The tidal lagoon hydropower project was proposed to come up at Swansea Port.

UK Business and Energy Secretary Greg Clark said: “The project and proposed program of lagoons do not meet the requirements for value for money, and so it would not be appropriate to lead the company to believe that public funds can be justified.”

According to the analysis, the cost of the power generated from offshore wind farms or the Hinkley Point C nuclear power station would be much cheaper.

The proposed Swansea tidal lagoon project generates power which corresponds to 0.15% of power used currently by the country annually, the government said.

Clark added: “The same power generated by the lagoon, over 60 years, for £1.3 billion, would cost around £400 million for offshore wind even at today’s prices, which have fallen rapidly, and we expect to be cheaper still in future.”

Additionally, the capital cost per unit of electricity generated annually from the proposed project would be three times higher when compared to that of the Hinkley Point C nuclear power station.

Clark said: “If a full program of 6 lagoons were constructed, the Hendry Review found that the cost would be more than £50 billion, and be 2 and a half times the cost of Hinkley to generate a similar output of electricity.”

Hendry Review is an independent review of tidal lagoons, led by former Energy Minister Charles Hendry.

Commenting on the decision, Ocean Energy Europe said it regrets the UK government’s decision to reject the tidal lagoon project.

Ocean Energy Europe CEO Rémi Gruet said: “The benefits of tidal lagoons were well recognised, the cost of support comparatively cheap, and the long-term perspective very promising. Today’s decision is therefore regrettable.

“The UK government should now make sure it doesn’t miss out on other emerging technologies such as tidal stream or wave energy.”</s>The government will not back a £1.3bn tidal lagoon project in Swansea Bay on cost grounds, Business Secretary Greg Clark confirmed today.

The proposal by Tidal Lagoon Power, which had provisional backing of £200m from the Welsh Government, involved building a six-mile horseshoe-shaped seawall with underwater turbines generating energy on the outgoing tide.

Clark told the Commons: "Securing our energy needs into the future has to be done seriously and, when much cheaper alternatives exist, no individual project, and no particular technology, can proceed at any price."

The Department for Business, Energy & Industrial Strategy confirmed today "the same power generated by the lagoon over 60 years for £1.3 billion, would cost around £400 million for offshore wind even at today’s prices," which have fallen rapidly and are expected to continue to drop.

"At £1.3bn, the capital cost per unit of electricity generated each year would be 3 times that of the Hinkley Point C nuclear power station" Clark said in his address to parliament.

Read more: City of London Corporation is making a switch to renewable energy

Ian Price, CBI Wales director said “it is disappointing that a financially viable model for the Swansea Bay Tidal Lagoon project has not been possible.

“We appreciate the effort and energy made by politicians from both governments who have worked tirelessly to try and make this project a reality. At the end of the day any project has to be affordable for consumers."

First Minister Carwyn Jones tweeted that it was a "crushing blow to Wales".</s>I would like to make a statement about the proposed Swansea Bay tidal lagoon.

Britain’s energy policy towards electricity generation is based on meeting 3 needs:
• ensuring that we can count on secure and dependable supplies of electricity at all times
• minimising the cost of supplies to consumers and taxpayers; and

To these 3 requirements we have added, through our Industrial Strategy, a further ambition:
• to secure long-term economic benefit, in terms of jobs and prosperity, from decisions we make

Our policy has been successful. Britain has one of the most secure and reliable electricity supply sectors in the world. Last winter, one of the coldest in recent years, the margin of capacity in our electricity generating system was over 10%; around twice what it was in 2016 to 2017.

We have the strongest record in the in reducing our greenhouse gas emissions. Between 1990 and 2016, the UK reduced its emissions by over 40%.

We have massively increased our deployment of renewable generation. Renewable electricity now makes up almost 30% of our generation, our renewable capacity has quadrupled since 2010, and the auction prices of offshore have fallen from £114 per to £57.50 per within 2 years.

Coal – the most polluting fuel – contributed less to generation in Britain last year than in any since the Industrial Revolution.

This has been achieved while the UK has maintained a position in the overall cost to households of electricity well below the average for major European countries.

But the cost of electricity is nevertheless a significant one for households and for businesses, and the policy related-costs have been growing. We have made a clear commitment to bear down on costs.

It is in this context that the government has assessed whether it should commit consumer or taxpayer funds to the programme of 6 tidal lagoons proposed by Tidal Lagoon Power Limited, the first being the proposed project at Swansea.

We believe in renewable energy and we believe in the benefits of innovation.

The conclusion of this analysis – which has been shared with the Welsh Government – is that the project and proposed programme of lagoons do not meet the requirements for value for money, and so it would not be appropriate to lead the company to believe that public funds can be justified.

The proposal for the Swansea tidal lagoon would cost £1.3 billion to build. If successful to its maximum ambition, it would provide around 0.15% of the electricity we use each year.

The same power generated by the lagoon, over 60 years, for £1.3 billion, would cost around £400 million for offshore wind even at today’s prices, which have fallen rapidly, and we expect to be cheaper still in future.

At £1.3 billion, the capital cost per unit of electricity generated each year would be 3 times that of the Hinkley Point C nuclear power station.

If a full programme of 6 lagoons were constructed, the Hendry Review found that the cost would be more than £50 billion, and be 2 and a half times the cost of Hinkley to generate a similar output of electricity.

Enough offshore wind to provide the same generation as a programme of lagoons is estimated to cost at least £31.5 billion less to build.

Taking all the costs together, I have been advised by analysts that, by 2050, the proposal that has been made – which would generate around 30 per year of electricity - could cost up to £20 billion more to produce compared to generating that same electricity through a mix of offshore wind and nuclear, once financing, operating, and system costs have been taken into account.

That could cost the average British household consumer up to an additional £700 between 2031 and 2050, or the equivalent of £15,000 for every household in Wales.

However, in recognition of the potential local economic benefits that might result from a lagoon in Swansea, I asked officials to go back and consider what additional benefit could be ascribed to a number of other factors, including a beneficial impact on the local economy.

For £1.3 billion a Swansea lagoon would support, according to the Hendry Review, only 28 jobs directly associated with operating and maintaining the lagoon in the long term.

Officials were also asked to make an assessment of the potential for valuable innovation and cost reductions for later lagoons that might come from embarking on a programme of construction.

Independent advice concluded that the civil engineering used in Swansea Bay offers limited scope for innovation and capital cost reduction – estimated at 5% - in the construction of subsequent facilities.

I asked for an assessment of the export potential of embarking on a programme of implementing the technology, but the Hendry Review concluded that it would take a “leap of faith to believe that the UK would be the main industrial beneficiary” of any such programme.

In terms of energy reliability, the generation of electricity would be variable rather than constant with a load factor of 19% compared to around 50% for offshore wind and 90% for nuclear.

The inescapable conclusion of an extensive analysis is that however novel and appealing the proposal that has been made is, even with these factors taken into account, the costs that would be incurred by consumers and taxpayers would be so much higher than alternative sources of low carbon power, that it would be irresponsible to enter into a contract with the provider.

Securing our energy needs into the future has to be done seriously and, when much cheaper alternatives exist, no individual project, and no particular technology, can proceed at any price. That is true for all technologies.

The fact that this proposal has not demonstrated that it could be value for money does not mean that its potential is not recognised.

My department is also in receipt of proposals from other promoters of tidal energy schemes which are said to have lower costs than the Swansea proposal, although these are an earlier stage of development.

Any proposals must be able credibly to demonstrate value for money for consumers and public funds.

I am sure that many people in the House and beyond would wish that we were in a position today to say yes to the Swansea proposals.

I have appreciated the contribution of Charles Hendry, whose constructive report led to this further analysis being made, and to the engagement of the Secretary of State for Wales and members of the Welsh Assembly, including the First Minister and the Leader of the Welsh Conservatives, Andrew RT Davies.

But all of us have a requirement to be responsible stewards of taxpayers’ and consumers’ money and to act at all times in their interests. It is in discharging that responsibility rigorously that I make this statement today, and I commend it to the House.</s>The company behind plans for a North Wales tidal lagoon that could create 20,000 jobs and generate more than £11 billion for the regional economy has vowed to press ahead with the scheme.

Henry Dixon, the chairman of North Wales Tidal Energy (NWTE), the group leading the project, said he was not deterred by the UK Government’s decision to reject a tidal lagoon project in Swansea.

In announcing the decision, Business and Energy Secretary Greg Clark said the Swansea scheme was not value for money.

According to Mr Dixon, the numbers do stack up for the £7 billion North Wales plan which would generate more energy and more revenue than the shelved Swansea lagoon.

He believes the lagoon, which would stretch from Llandudno eastwards towards Talacre, could be built and begin generating power within 10 years.

It could pump 2.5 gigawatts of electricity into the National Grid every year - and provide power to more than a million homes.

Project leaders also say it would also safeguard homes, businesses and infrastructure along the North Wales coast from flooding.

Mr Dixon said: “At long last, the UK Government has come off the fence and delivered its decision on the Swansea Bay tidal lagoon.

“That it has made the wrong decision on the development of the pathfinder lagoon in South Wales is tragic but cannot and will not stop North Wales Tidal Energy & Coastal Protection Ltd (NWTE) continuing to develop and promote a North Wales tidal lagoon.

"As recognised by the Minister himself in his statement and by MPs questioning his decision, tidal energy and tidal lagoons offer many advantages to Wales and the UK including energy security, renewable energy and jobs in key areas of the country.

“NWTE’s initial proposals demonstrate that the performance of a North Wales tidal lagoon will significantly surpass the projected output from Swansea.

“The enhanced power output and revenue generated delivers a business plan that we believe will meet many of the Minister’s concerns.”</s>It was a project which would power 150,000 households for 120 year, a program of lagoons at Swansea, Newport, Cardiff and Colwyn Bay which would create over 34,000 jobs in Wales alone. And Wales does need jobs. It was championed by the Lib Dems in Government, but, as has happened with so many Lib Dem ideas, it’s been cancelled today by the Tories.

Coming on the same day as the the vote on Heathrow expansion, you would be forgiven that the Tories really didn’t give a hoot about what David Cameron is alleged to have once described as “green crap” – and he was one of the more progressive ones.

The Welsh Liberal Democrats have condemned the decision as a huge missed opportunity and another example of the Conservatives’ neglect of Wales.

The lagoon was strongly backed by the government commissioned Hendry review in January 2017 and is supported by businesses, councils, MPs and AMs from all parties. The lagoon would have acted as a pathfinder project for other lagoons across Wales including Newport, Cardiff and Colwyn Bay.

Welsh Liberal Democrat Leader Jane Dodds was furious that the opportunity to make Wales a world leader in green energy had been thrown away:

The Conservatives’ rejection of the Swansea Tidal Lagoon is a disgrace. The Swansea Tidal Lagoon would be a vital first step in making Wales a world leader in green energy, bringing untold environmental and economic benefits to the community, Wales and the UK. The Welsh Liberal Democrats have consistently supported the Swansea Tidal Lagoon as a key part of our plans to develop an innovative, radical and ambitious green economy in Wales. It is deeply disappointing the Conservatives do not share our ambition.

When Ed Davey was Secretary of State for Climate Change he was totally behind the project. He called the cancellation an “historic mistake.”

As Secretary of State I consistently supported the Swansea Tidal Lagoon, it is deeply disappointing the Conservatives are making a historic mistake by rejecting it now. This is yet more evidence that only the Liberal Democrats can be trusted to prioritise the environment and green energy. It is a myth that the lagoon would be too expensive. Government concerns about the cost ring hollow considering the strike price for the lagoon would be no more than the Government were willing to pay for nuclear power at Hinkley. Wind power is now the cheapest source of energy available because we invested in it in Coalition. The same will happen with tidal energy if we only invest in it now. A series of tidal lagoons would provide cost-effective, reliable and green energy for generations to come.

Peter Black, who represented the area in the Welsh Assembly and is still a Swansea Councillor said the decision proved that the Conservatives didn’t care about Wales:

The rejection of the Swansea Tidal Lagoon is a bitter pill to swallow. This is yet another betrayal of the people of Wales and particularly South Wales by the UK government. Whilst they cancel rail electrification to Swansea and reject the Swansea Tidal Lagoon, the Conservatives have no problems finding money for projects in South East England. This lays bare just how little this Conservative UK Government cares about Wales.

Vince took to Twitter to voice his disapproval:</s>The UK government has rejected price support for Tidal Lagoon Power's (TLP) proposed 320MW Swansea Bay project.

BEIS Secretary Greg Clark told Parliament the scheme represents poor value for money for UK consumers.

“The inescapable conclusion of an extensive analysis is that however novel and appealing the proposal, the cost that would be incurred by consumers and taxpayers would be so much higher than alternative sources of low carbon power that it would be irresponsible to enter into a contract with the provider,” he said.

Clark said the lagoon failed to meet the government’s so-called triple test for support: maximum carbon emission reduction, a clear cost reduction pathway and potential for the UK to be a world leader in a sizeable global market.

The Swansea pilot would create only 28 jobs, he added.

TLP had sought an at least 35-year Contract for Difference from BEIS plus an £200m equity and/or loan investment by the Welsh government.

Trade body RenewableUK expressed disappointment with the decision not to proceed with the project.

“We know that with the right support, tidal energy can quickly become competitive on cost with other renewable and low carbon power like nuclear.”

The so-called pathfinder project was backed last year in former energy minister Charles Hendry’s independent review into tidal lagoons commissioned by the UK government.

The project has yet to secure a seabed licence from The Crown Estate or a marine licence from Natural Resources Wales.

Scottish Renewables senior policy manager Hannah Smith said the UK maintains a world lead in developing wave and tidal energy.

"We would strongly encourage both the Scottish and UK governments to continue working with industry in order to determine the best way for our wave and tidal sectors to reach their full potential.”

Ocean Energy Europe chief executive Rémi Gruet said the decision to reject the project was “regrettable”.

“The UK government should now make sure it doesn’t miss out on other emerging technologies such as tidal stream or wave energy,” he added.</s>Plans for a £1.3 billion ($1.72 billion) tidal lagoon in Swansea Bay in Wales have been rejected by the U.K. government.

 

 If built, the proposed project would have been the world’s first tidal lagoon power plant. Tidal Lagoon Power, which is behind the project, claimed it would produce enough electricity for 155,000 homes over the next 120 years. 

 

 In a statement to parliament on Monday, however, Business and Energy Secretary Greg Clark rejected the scheme.

“The inescapable conclusion of an extensive analysis is that however novel and appealing the proposal that has been made is, even with these factors taken into account, the costs that would be incurred by consumers and taxpayers would be so much higher than alternative sources of low carbon power, that it would be irresponsible to enter into a contract with the provider,” he said.

 

 The news was met with dismay by those behind the project. “In light of today’s statement and having heard next to nothing from government for two years, the board will be meeting in two days’ time to consider its next steps,” Keith Clarke, the chairman of Tidal Lagoon Power, said.

 

 “Any new industry needs a pathfinder and that can only be Swansea Bay Tidal Lagoon,” Clarke added. “If government is serious about energy diversity and the potential of tidal lagoons and marine energy more generally, it needs to get serious about delivering Swansea Bay Tidal Lagoon. The entire industrial strategy of employing British manufacturing to harness British tides relies explicitly on delivery of a pathfinder at Swansea. Without it, we will again export jobs that could and should stay here.”

 

 The government’s decision was also criticized by politicians and environmental organizations. Carwyn Jones, the first minister of Wales, described it as “short-sighted” and “another crushing blow to Wales and the Swansea community.”

 

 Haf Elgar, director of Friends of the Earth Cymru, said that the government’s decision to pull the plug on its support for the project was a “kick in the teeth for the region — and a massive blow for the development of Wales’ huge renewable energy potential.” Elgar described the scheme as a “ground-breaking opportunity to create jobs and harness the power of the second largest tidal range in the world."

Hugh McNeal, the chief executive of trade association RenewableUK, described the decision as “deeply disappointing” and one that showed a lack of vision.
The government of the United Kingdom announces the cancellation of the Swansea Bay tidal lagoon project, prompting ire from Welsh officials.