Swansea tidal lagoon agreement on the horizon

An agreement on the Swansea Bay Tidal Lagoon project could be reached soon, as the subsidy cost for a megawatt hour (MWh) of the lagoon’s power has recently been discussed in terms of extending the duration of the subsidy period from 35 to 90 years.

Tidal Lagoon Power, the company behind the project, has been negotiating the subsidy with the UK Government from March last year, and postponed the construction of the project due to delays in agreeing the subsidy price.

Reportedly, the price being discussed for a subsidy period of 35 years is £168/MWh, and should the period be extended to 90 years, it would fall to £100/MWh, and possibly even less, the Welsh media writes.

Given that the lifespan of Tidal Lagoon Power’s project is expected to be 120 years, a time-frame of 90 years in which the project’s power cost would be subsidized would allow for a lower price per megawatt hour, as well as reduce the overall subsidy cost.

According to Swansea Council leader Rob Stewart, Tidal Lagoon Power never submitted the price of £168/MWh as a proposal to the government. “I think they are a lot closer to a deal,” Stewart is quoted as saying by South Wales Evening Post.

Recently, the UK’s Prime Minister David Cameron said his enthusiasm towards these kinds of projects is slightly reduced, since the cost would be quite high. “The problem with tidal power, simply put, is that at the moment we have not seen any ideas come forward that can hit a strike price in terms of pounds per megawatt-hour that is very attractive. That is the challenge for tidal. Maybe they can come up with something,” Cameron said.

“As far as I’m concerned once that strike price comes below £100 – and I’m assured it will be – it becomes a no-brainer,” Wales Online quoted Sir Terry Matthews, chair of the Swansea Bay City Region board.