Swansea Lagoon: An unjust decision

 
David Clubb reflects on the UK Government’s decision not to invest in the Swansea Bay Tidal Lagoon. 

“If we burn our bridges on tidal lagoons, our future will be a little colder and a little darker.”

I wrote these prescient words in August 2016 as Charles Hendry was carrying out his research into the viability of tidal lagoons in the UK.

Fast forward two years, and we now know that Wales’ most iconic infrastructure proposal, the Swansea Bay Tidal Lagoon, will not be receiving UK Government support. The statement, given to Parliament at 5pm on 25 June by Greg Clark, dashed the hopes of hundreds of thousands of supporters from across Wales and beyond, and has plunged the prospects of the project into doubt.

The announcement seems to have been based on a six-page ‘value for money’ assessment, which has – to put it generously – inconsistencies in its assessment, and is a true wonder of brevity given that it took 81 weeks to produce following the receipt of the Hendry Review.

The project, almost uniquely in Wales, received all-party support in the National Assembly, and also benefited from strong backbench support in Westminster. On receiving the all-clear from the Hendry Review – which called the Swansea project a ‘no regrets’ option – many thought that the project would receive the go-ahead.

It was not to be, and the hopes of developing a global manufacturing and supply chain company, operating from southern Wales, with all the employment and skills opportunities that entails, have been lost.

The already-wealthy regions of London and the south east of England benefit hugely from infrastructure spend generally, and most recently via Heathrow and Crossrail. The citizens of West Wales and the Valleys, one of Europe’s poorest regions, could therefore be forgiven for smelling more than a hint of neglect having seen the cancellation of electrification of rail beyond Cardiff, and now the rejection of a tidal lagoon.

On taking office as Prime Minister, Theresa May talked about the ‘precious, precious bond between England, Scotland, Wales and Northern Ireland’; and about being driven not by the interests of a privileged few. Many in Wales will wonder about the value of that bond, and the nature of privilege, when they look at wealth being distributed unto wealth in London, but see little evidence of it trickling westwards.

What could have been

It’s worth remembering what could have happened had the original timescale of Tidal Lagoon Power been met.

Having received its Development Consent Order in 2015, the project was more or less on schedule – pending environmental permits from Natural Resources Wales, and the decision on awarding public subsidy from UK Government.

Had both the other pieces of the jigsaw been delivered that year, the project could conceivably have been generating electricity early in 2019 – just next year – with completion later that year.

In stating that only 28 long-term jobs would be created as a result of the development, the office of the UK Government in Wales has stretched credulity beyond breaking point.

Tidal Lagoon Power’s economic analysis – based on modelling carried out independently by the Centre for Economics and Business Research – suggest that the local and national benefit would have been significant.

 
During construction, Swansea would have seen the creation of 2,232 direct jobs, and long-term there would have been 181 direct, indirect and induced jobs. Swansea would have seen the impact of an estimated 100,000 visitors per year. With local hotel capacity overwhelmed, major tourism developments would have been likely – as well as the prospect of local AirBnB hosts benefiting from short stays.

The opportunities for further development were impressive, with a prize of up to seven new manufacturing facilities in Wales helping contribute to 23,000 FTE jobs in Wales on completion of four projects in Welsh waters. With a potential global market, the potential for job creation could have reached still further.

Response

There has been an anguished response from many quarters.

Chair of the National Assembly’s Climate Change, Environment and Rural Affairs Committee, Mike Hedges AM, called it a ‘huge missed opportunity’, and ‘deeply disappointing and extremely concerning’. Stephen Kinnock, MP for Aberavon, called the announcement ‘devastating’.

Simon Thomas, Plaid Cymru’s environment spokesperson, said that Greg Clark was ‘not just pulling the plug on this one project but on the whole potential of tidal range energy in Wales and the UK’.

The Welsh Conservatives called the decision ‘depressing’. And Grenville Ham, leader of the Green Party in Wales, summarised it with “Wales wants a dam, UK Govt doesn’t give a damn”.
From the business community, FSB Wales said they were ‘bitterly disappointed’, South Wales Chambers of Commerce called the decision ‘short-sighted’ and a ‘bitter pill’.

We have yet to hear from Tidal Lagoon Power itself, so we can only speculate as to whether the company will proceed with the Swansea – or any other – tidal project.

Conclusion

The UK Government said that the project did not meet the three tests of having dependable electricity, provided by low-cost and low-carbon sources.

In making this decision, the UK Government seems to have used double-standards on comparing the lagoon with nuclear. For example, in only considering capital costs, the decommissioning cost of nuclear has been conveniently air-brushed from the equation. That’s 100 years of employment plus capital expenditure quietly deleted. In comparing output in TWh, and then bringing up Capacity Factor, they have conflated two issues which don’t belong together.

 
The comparison with offshore wind, a mature market which benefited from generous subsidy to become established, is also unfair. The proposition with the lagoon is not solely based on electricity cost, but the potential to generate a whole new industrial sector.

And on cost, how on earth did the UK Government come to the conclusion that the cost to Welsh householders would be £15,000, when the Hendry Review said that the cost would be a pint of milk to every household in the UK per year?

It’s as if there are two lagoons in Swansea.

The first, promoted by the company and recognised by every Welsh political party and the independent Government-commissioned Hendry review, produces affordable electricity for a hundred years, kick-starts a local economy, and supports a manufacturing and supply chain to employ thousands.

The other, recognised only by the UK Government, employs 28 people and bankrupts householders with unsustainable electricity bills.

Whilst the truth is surely somewhere between the two, most reasonable people will recognise where the balance lies.

The original piece was first published on the Institute of Welsh Affairs (IWA), and was shared on MarineEnergy.biz with theirs, and the permission of the author.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of MarineEnergy.biz.