My attention was drawn yesterday to a piece in the Sunday Telegraph, by Emily Gosden the Energy Editor, about the proposed Swansea Bay tidal lagoon. (Read it here.) The ST piece itself did little more than quote from a report, ‘Response to call for evidence on Swansea Bay tidal lagoon proposals’ produced by Citizens Advice and submitted to an unnamed agency, presumably a UK government department t
hat had requested submissions, possibly the Planning Inspectorate. (Read it here.) A similar piece, attributed to ‘Rupert Denholm-Hall Business Reporter’, was in this morning’s issue of Llais y Sais, and WalesOnline. (To be found here.)
According to Citizens Advice, the price guaranteed – by the UK government – for electricity generated by the Swansea Bay installation will be higher than other forms of generation and is therefore a bad deal for the consumer. In addition, alleges Citizens Advice, the process for arriving at the agreed price is unduly secretive. All damning stuff from experts in the field. For the alternative interpretation, check out the developers’ – Tidal Lagoon (Swansea Bay) plc – website here, pay particular attention to the ‘Project benefits’ section. Now I’m going to make a few contributions of my own in response to Citizens Advice.
The Citizens Advice report is very narrow in its vision, and simplistic and superficial in its conclusions. It says, basically, ‘This is big business ripping off Joe Public when there are cheaper ways of generating electricity’. It focuses exclusively on price. So my first response would be that this price is not set in stone, so don’t get your knickers in a twist over something that hasn’t yet happened and can be changed. If this is a ploy to pressurise the UK government into hard bargaining with the developers, then fine, though my worry is that Citizens Advice may be acting in the interest of discredited forms of electricity generation such as wind and solar: expensive, unreliable, and offering none of the benefits of a tidal lagoon in Swansea Bay. Benefits that the Sunday Telegraph overlooked, but I would have expected to be highlighted by the ‘National Newspaper of Wales’.
So what are these benefits’ of which I speak? Well, to begin with, let’s us look at the alternatives. Oil supplies are finite, as is gas (unless we rely on Mr Putin, and successors who may be even more unfriendly towards the West), 
many people are unhappy with nuclear energy, there is opposition to fracking, coal is being phased out, wind and solar energy are expensive and unreliable . . . which leaves us with, what? Well, there is a reliable source of energy that can – unlike wind and sunshine – be predicted years in advance and harnessed at countless points around our coasts. Swansea Bay is ideally located because it has the second highest tidal range on earth – so why not harness this power?
Then, the lagoon is going to be a big contract, providing over a thousand jobs during construction, using local suppliers, and putting a lot of money into the local economy. There will even be permanent jobs, on site, when the contract is completed. This is a direct benefit of the kind that is never provided by wind and solar ‘farms’. As this is a relatively new technology Swansea Bay could build up a wealth of expertise, both human and corporate, that could bring considerable economic benefits to an area where they would be most welcome. Benefits that need not be confined to Swansea Bay.
Staying local, the lagoon fits in well with other developments on Swansea’s hitherto neglected East Side and the docklands east of the river Tawe, while further infilling the gap between Swansea and Neath Port Talbot (the most obvious of all council mergers). Not only does it complement the SA1 development (see image) but the lagoon will also reach to the new Swansea University Bay Campus, which actually lies outside the city boundary in Neath Port Talbot.
As the images also show, the lagoon will be rather more than a generating plant. It will be an amenity for local people, where they can go walking, cycling, angling, etc; the lagoon itself would provide a perfect location for water sports. (Obviously the lagoon will have to compete with all the fun-filled leisure opportunities available at power stations, open-cast sites and wind farms, but I think it will manage such competition.) And those amenities will not just be for local people, for I can see the lagoon becoming something of a ‘celebrity’, attracting visitors from a wider area, and from around the world. In fact, the Swansea Bay tidal lagoon could be viewed as a leisure and recreation facility that just happens to generate a lot of electricity as well!
And who’s to say that the lagoon won’t become known to a wider audience who may never even visit the area. For Swansea Bay has a growing reputation as a location for movies and television series. The old Ford plant on Jersey Marine, which would overlook the lagoon, is now being used as a studio, and the steelworks in Port Talbot are an old favourite for ‘inferno’ backdrops and dramatic night skies. Then there’s Gower . . . Yes, Swansea Bay is more than Twin Town, great though that movie was.
Finally, despite what Citizens Advice would have us believe, the Swansea Bay Tidal Lagoon is not entirely a conspiracy of big business against the downtrodden masses of energy consumers. The project invited local investors, and I have family and friends back home who have put in thousands of pounds. Obviously most of the funding will come from institutional investors, but don’t overlook the Jack pound. A lot of local people, of modest means, are also backing this project.
For these reasons I tell Citizens Advice to report the whole picture, not focus on one aspect and, by so doing give a very selective and prejudicial view, that risks creating the impression that the project is being slammed in order to promote discredited hippy technology or the Severn Barrage. I’m sick and tired of Wales being ordered by Englandandwales organisations, however worthy and well-intentioned.
And to those running parent company Tidal Lagoon Power Ltd I say, having your corporate headquarters in Gloucester, with subsidiaries such as Tidal Lagoon (Swansea Bay) plc being no more than parentheses is a big mistake. The project upon which the future of your company hangs is Swansea Bay, so stop acting in a colonialist manner and get your corporate presence down there and recruit local staff!
The idea is, once the Swansea test run is complete, to jigsaw similar projects around the UK. Swansea is essentially a prototype. Severn barrage is a one-off “big idea” that would provide little in the way of technical lessons for the future…there are few equivalent sites around the UK. Combine Swansea’s essentially low-cost construction with future demand for sea-defences and you have an exportable business plan. (Though I’d still swap it for enough sunshine to do PV farms and grow peaches in the garden. And olives. And pomegranates.)
I was surprised about this Jac, that you were backing it, but it also makes sense as it would be unavoidably good for Swansea. It’s demonstrably better than other forms of renewables (although i admit i generally support those too). The cost is expensive but its for an innovative and lasting structure. Also, being in our notional territorial waters it’s a “Welsh” project potentially, territorially at least. Unlike a barrage which would further link us to England.
Some nationalists do ask questions of the national (sic) grid and our contribution to it. The SNP proposed an independent Scotland remaining in the GB “national” grid- anything else is impractical and would be against Scottish consumers interests. Or so they claimed. I am almost certain Wales would have to do the same. There would be several independent states involved in running a shared/joint grid. Much as there are two states on Ireland running a shared grid there, and in fact Ireland (rather, companies based in Ireland) want to supply to the GB grid as well.
These are thorny issues but need to be grasped.
As I’ve said, I’m not opposed to renewable energy per se. But wind and solar have the major drawback of relying on unreliable sources, and that’s without considerations of visual impact and, in the case of wind turbines, the massive disruption to upland ecology that results in flooding at lower levels.
The Swansea lagoon by comparison relies on an entirely predictable power source. Yes, it will have a visual impact but I think it’s quite pleasing. The estuaries of the Tawe and the Nedd will be left free so I think that river anglers may be worrying over nothing, while sea anglers will be able to reach marks previously inaccessible without a boat. And on top of it all, local people will have a wonderful sporting and recreational facility right on their doorstep.
OK, there may be an issue with the initial price being demanded for the electricity produced, but that can be negotiated, and the price is guaranteed to come down as lessons are learnt and bigger and more efficient lagoons are constructed.
Looking at 4.2 of the documentation, the £168pMWh feed in price made up by “Citizens Advise” is misleading. The requirement is for a floor based on retail price. We know the power output, as the moon will continue in orbit.
The £168 is only true if you assume the Net Present Value of the capital expenditure today will be the same as the value of the revenue stream earned up to year 2050. It’s a capital project funded over 35years for an up-front spend of £910 million. To obtain the £168pMWh floor you need to assume that the wholesale price of electricity in year 2050 will be the same as it is now. This is a ridiculous assumption. “Citizens Advise” should be ashamed of making such a crass calculation.
An internationally accepted assumption on energy is that the wholesale value of energy will be seven times the current value by mid century, and this calculation is used for measuring viability, for example, of LNG ship construction, or oil exploitation in Alaska.
Using this standard, and dividing by 7, we would get an average NPV of only £24pMWh in subsidy, at today value. This IS worth £168, but only in year 2050. The average value of the subsidy is considerably less than all forms of other renewable energy streams. Comparison to nuclear is meaningless as the escrow provision for nuclear waste disposal is underwritten by central government. Also, the capital cost is actually only £850m. The £60m top up is the developer fee, which should be excluded from amortisation over the pay-back as this is ‘up-front risk’. The subsidy floor should be based on capital cost only and fluctuate with wholesale price over the asset lifespan.
I hope Welsh Ministers will consider these points, and Wales is not fooled into future revenue guarantees based on incorrect projected NPVs. This mistake can be witnessed when crossing the Severn Bridge. The tolls collected have already paid for the project, twice over.
As for Emily Gosden who wrote the article for the Daily Telegraph, maybe she should have studied Civil Engineering or Finance at university. Instead, she studied History and Politics at Oxford, then she claims to be an authority on tidal power in Swansea?
I notice that business secretary, Greg Clark in the House of Commons made told a number of lies in turning down the Swansea Lagoon.
Lie1.
He claimed that nuclear lasts for 60years, in fact, as in the case of Wylfa, it is only about 40 years, construction started 1963, opened 1971, closed 2012/2015. It’s wrong to include the construction years as ‘operational life’.
Lie2.
That the lifetime of the lagoon was calculated at 35years, in effect claiming the tides will stop in 2055 as the moon and it’s influence over the oceans will be lost.
Lie3.
That the amount of electricity generated from the tidal llagoon will decrease over time because of silting as in the case of an existing estuary barrage in France. Not the same as the Swansea lagoon is not across the river Tawe, but isolated on the eastern side of the bay.
Lie4.
When questioned by John Redwood (remember him) on whether it would be more prudent to amortise the capital cost over the full lifespan of the project he said, no. and that it’s usual to ‘front load’ the amortisation. Whilst this applies to private sector investment this does not apply to government investment underwriting, the classic examples being crossrail or channel tunnel.
Strike Price with realistic amortisation.
£160.00 Offshore Wind (20years)
£140.00 Onshore Wind (25years)
£95.50 Hinkey Point Nuclear (40years)
£77.50 Wylfa Nuclear (40years)
£168.00 Swansea Lagoon (35years)
£89.90 Swansea Lagoon (front weighted 90years)
£89.90 Swansea Lagoon (flat 120years)
It is clear that the UK government has deliberately sabotaged the Swansea Tidal lagoon presumably as a way of reserving investment for London at the expense of Wales. Keep them starved of investment, keep them poor.
good to see that you’ve prompted some good and bad guys to come out of the woodwork on this topic. My only real concern about projects of this sheer scale is that they inevitably get undertaken by large scale organisations, or businesses heavily indebted to the institutions, either way corporate members of the ruling elite. Financial institutions will probably find investments such as lagoons, barrages, or any similar infrastructure project as a promising means of extracting money from the public purse and stashing it offshore in a suitably opaque, tax dodging account ! If there was a way of getting these projects funded on rational, equitable basis then they would be “no-brainers”
Just repeating the Citizens Advice report and also ignoring the benefits.
http://www.adamsmith.org/blog/energy-environment/no-we-really-shouldnt-build-the-swansea-tidal-lagoon/
Writer, Tim Worstall, does a copy and paste of the Citizens Advice report. It’s no surprise that Worstall is against the Swansea Lagoon as he’s anti Severn Barrage, anti-wind power, anti-solar power and anti-recycling.
The only things Worstall admire are Tax Avoidance, Wealth for No Effort, UKIP and the Plutocracy.
“He [Worstall] has just one aim – to allow tax abuse that let’s the rich get richer at the expense of all the rest of us. He can’t even be honest about his motive.” – Richard Murphy of Tax Research UK.
Isn’t the Mw/Hr price quoted considerably higher than that agreed for the new nuclear build? And that’s subsidised to hell and back,
Good and timely piece Jac – dont be surprised if you get a Green party membership application form through your door in the coming days 🙂 Renewables and in particular projects such as this are the way forward for electricity generation in Wales – we dont need or want nuclear or fracking and the risks and dangers they bring!
Almost 40 percent of Scotland’s electricity is now being generated fron renewables, and theres no good reason why we in Wales cant do the same. Though we would prefer it where possible to see community owned renewable projects rather than privately owned ones, which has thus far tended to be the case in Wales and is of course the case with swansea’s propsed tidal lagoon. In contrast in Europe community owned renewable energy schemes are commonplace and so wind farms for example are far more popular.
http://agreenwales.blogspot.co.uk/2015/02/wales-needs-more-renewables-not-nuclear.html
don’t ask this lady to quote you a price for building a lagoon anywhere !
http://www.lbc.co.uk/incredibly-awkward-interview-with-natalie-bennett-105384#KBiswSjQ6LtMIy9D.97
now waiting for the most “original” explanation for this pile of gaffes !
The key to understanding this technology, and in particular the costs quoted, is to look at the time frame.
Essentially, the construction cost of a tidal lagoon (or a barrage, for that matter) is indeed very large, but what is built then lasts for a very long time. With proper maintenance, the embankment structure should last at least 100 years, perhaps 150 years, perhaps longer. Equivalent structures have been around for a long time: the Cob at Porthmadog is now some 200 years old, the causeway at Conwy is some 190 years old, Holyhead harbour breakwater is some 150 years old.
The cost quoted (£168/MWhr) is based on levelizing the costs over a 35 year period. But, after this, the lagoon will continue to generate electricity for probably another 100 years at a very low cost (i.e. the cost of maintenance, together with periodic renewal of the turbines). So in the long term, tidal lagoons will produce electricity more cheaply than almost any other form of generation.
To Daley, I would say that a similar lagoon near Cardiff it isn’t a question of either/or. We can have both. In fact, we could have half a dozen … look at the map in this post. The project at Swansea is quite small scale (320 MW), which partly explains the comparatively high price. The Pöyry Report says that the cost for larger lagoons is lower. A 1500 MW lagoon would cost £130/MWhr and an 1800 MW lagoon would cost £92/MWhr over the same 35 year initial period.
One obstacle to a lagoon in Cardiff could be those still pushing for a Severn Barrage.
whatever technology you elect to adopt there will always be a group of people who will adopt a contrary stance, on emotional, ideological, personal (nimby) or even a data rational basis.
It is quite likely that the initial price for Lagoon power is carrying an excessive premium but any procurement/ commissioning authority should have the commercial wit to either dilute that price before finalising a deal, or if persuaded that the early-stage risks involved merit some premium, construct a contract which has a taper in it whereby the price falls at regular intervals after the initial phase. It’s all about the numbers ( and their accuracy at the outset ) but if calculating a reasonable rate of return long term is beyond so-called experts on either side of the deal then the wrong people are in those jobs.
Similarly the environmental impact reports tend to be a tug of war between those wildly in favour and the other extreme who see everything as a threat to the environment. If migration of fish is an issue then go to see how it’s done in other large scale infrastructure developments and test the science. This lagoon could become a working example of how to do things “right” but it takes some extra brain work and maybe less mouth work !
Whether the technology is right or not is a distraction. The reality we face, must confront, is that the juice-guzzling population of Wales and the wider UK needs its energy from a wide range of sources and a number of marine/tidal energy technologies are becoming increasingly attractive as the weakness of other options become more vividly apparent.
I don’t think that the parent company of the lagoon venture will relocate to Swansea, though it could be persuaded to set up its long term marketing and development activity there as it will sit upon a demonstration project that will assist in persuading other communities that they too should get a similar investment. Beats having a nuclear power station up the road any day ! I live along that coast and I know where my preferences lie.
Pontardawe and Swansea Angling Society have picked so many flaws in the developers environmental impact assessment, you have to question the competence of those behind this scheme.
http://www.pasas.org.uk/lagoon1.html
And what do the local sea anglers say? Swings and roundabouts.
Small-minded. Selfish. Biased. They do canoeing too.
Opinion appears mixed.
http://www.worldseafishing.com/forums/threads/swansea-bay-lagoon.1599019/#post-5232231
The possible extinction of salmon and sewin in the rivers Tawe and Neath can hardly be dismissed as just ‘swings and roundabouts’.
If Pontardawe and Swansea Angling Society is worried about fish numbers, they should stop killing them.
Maybe PSAS would prefer more pollution in the environment and rising energy prices due to numerous factors involving fossil fuels?
Because of declining numbers nationally mostly through illegal over fishing at sea, very few game fish other than stocked trout are killed by anglers any longer.
Many clubs now have a compulsory catch & release policy for salmon.
I thought the whole point of ‘renewable energy’ was to protect the environment not wilfully destroy it for profit.
The businesses behind this scheme are morally no better than the 19th century industrialists that left the lower Swansea valley a toxic, moonscape for future generation to sort out.
I’m not sure about the extinction of salmon and sewin in the Tawe and the Nedd. The plan of the lagoon clearly shows both estuaries being unaffected. Which is not to say there might not be silting, but that will have to be dredged anyway. http://j.mp/1FTAFOC
Yes the Severn Estuary has one of the highest tidal ranges in the world – about 15 metres.
But the tidal range in Swansea is only 10 metres because it is at the mouth of the estuary.
Remember that’s UP TO 10 metres.
Usually it’s less than that. (I think the average is about 8 metres).
But the turbines will not be at the mouth of the river. The lagoon juts out into the Severn Sea and the turbines are located on the seaward side of the lagoon, a couple of kilometres from land, so as to catch both the flowing and the ebbing tides.
I think you misunderstood my use of the word ‘estuary’.
I meant where the Severn Sea opens out. Rather than further up the Severn Estuary where the channel narrows and causes the higher tidal range (around Barry and Cardiff)
The turbines will be driven by water flowing in and out of what is essentially a large reservoir. So tidal range is important
So, you want the lagoon in Cardiff? All that you have to do is convince Tidal Lagoon Power Ltd that it should ditch Swansea in favour of further east.
Regarding output: It’s not just tidal range, it’s the number of units of electricity that can be generated using an array of turbines.
Jac: When I saw this article flagged on another blog, I expected something negative. You’ve surprised me.
An project using clean, renewable and reliable energy that has massive potential as a local resource in Swansea plus future exports running into £billions.
I’m not opposed to renewable energy per se, all I ask is that it works, that it’s reliable, predictable. And this is where wind and solar fail against tidal power.
Talking of Cardiff, I’m beginning to wonder if someone isn’t trying to derail the Swansea Bay tidal lagoon. First, there was the non-story from Cornwall about villagers angry over stone being quarried and shipped to Swansea. Reported here in WalesOnline http://j.mp/1zc8an9. I call it a ‘non-story’ because the only people quoted were actually in favour of quarrying, That was last Tuesday; then on Monday, we had the story about the excessive costs. Here, again, is the WalesOnline link http://j.mp/1EqxRHl
Now the Western Mail has always been the mouthpiece of the Cardiff business community, which is still backing the Severn Barrage, so we can safely assume that they are against the Swansea Bay tidal lagoon. And who else is involved with the Severn Barrage? Why, it’s our very own Peter Hain, MP for Neath, on Swansea Bay. Now wouldn’t THAT be a story! Not that the ‘Welsh’ media would touch it.
Daley Gleephart. If you’re referring to my comment I didn’t say I wanted the lagoon in Cardiff. I was just querying the statement about second highest tidal range.
They can put their lagoon in Jac’s bathroom as far as I’m concerned.
Never!!!
“15. The case that Swansea Bay could meet “strict value for money considerations” looks very weak. The prices being quoted by the developer of £168/MWh exceeds every technology for which strike prices have been published by DECC,”
From the Citizens Advice report
Wholessale price now is under £46
http://www.telegraph.co.uk/finance/personalfinance/energy-bills/11329893/Energy-prices-tumble-so-how-far-will-gas-and-electricity-bills-fall.html
Why should Welsh people pay £120+ per MWh in order to free up some cheaper energy for England?
But it doesn’t work like that. The electricity produced goes into the ‘national’ grid and everything evens out. If the UK government does agree a price of £168/MWh to help a fledging industry it will almost certainly have to ensure that such prices are not passed on to the consumer. Are you opposed to the lagoon?
But Wales is already a net exporter of energy and yet we have the highest energy bills.
Yet they want to use Wales as a guinea pig for a lagoon that will produce energy at over three times the wholesale price. What’s not to like?
I agree that Wales being exploited is a major issue but has to be addressed by political action. Once it is we can benefit as a country from the Swansea Bay lagoon and all the other examples from Tryweryn to Milford Haven. But in this particular case, the tidal range on Swansea Bay, second highest in the world, makes it the obvious site for such an installation whatever the constitutional arrangement. Your objective should be to ensure that by the time your kids are paying electricity bills this and other resources will be under Welsh control.
To be utterly cynical, and parochial, consider this. The cost of the electricity generated on Swansea Bay will be ‘evened out’ across the UK, but it will be the people living near the lagoon that can best enjoy the benefits it will offer.
Evened out? Who are you and what have you done with Jac?
As for the benefits, what about any negative consequences that may occur?
A tidal barrage in Swansea could effect the beaches for hundreds of miles around.
I assure you it is me. (Though for some reason this post has surprised a few people.) I know what you’re saying about beaches, but this is one the great imponderables. There has been a debate for decades about whether dredging out in the channel is affecting Gower’s beaches, but is this debate anywhere near being resolved?
This lagoon is breaking new ground and, despite what supporters and opponents argue, no one really knows what the consequences might be. It’s a case of suck it and see.