Utility Week

UTILITY Week 9th October 2015

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18 | 9TH - 15TH OCTOBER 2015 | UTILITY WEEK Operations & Assets U K electricity demand is rapidly increasing while the generating capacity of ageing power infrastruc- ture is in decline. The country will lose 21GW of installed capacity over the next nine years, and this, Mark Shorrock warns, has to be replaced somehow. Shorrock is chief executive of Tidal Lagoon Swansea Bay, a company whose sole purpose is to build the UK's first tidal lagoon generating station, with an installed capac- ity of 320MW and the capability of generat- ing electricity for 14 hours every day. At a recent conference in Berlin, Shorrock emphasised the reliability of this method of generating power. "You put this infrastruc- ture in and it goes and goes and goes," he said. If you want cheap renewables from the sea, he said, "you have to build bigger lagoons". In fact Shorrock intends Swansea to be the pilot project for an even bigger lagoon, at Cardiff Bay. It will be built by parent com- pany Tidal Lagoon Power (also headed by Shorrock) and have an installed capacity of 1.8-2.8GW. However, concerns have been raised about cost, specifically the estimated strike price of £168/MWh for Swansea Bay. When chancellor George Osborne announced in the March budget that the government had opened talks on the provision of financial support for the project, consumer group Citi- zens Advice said it was "appalling value for money" for consumers. Unsurprisingly, Shorrock disagrees. "Because it has such a long life, we can end our subsidy period, whatever duration that is, and we can contract to give money to the government per megawatt-hour produced," he says. "We've said to the government, 'we can give you £10 on Cardiff or one of the big lagoons', and in real numbers, we would pay back more to the consumer or the govern- ment than we would receive in subsidy." He says it's all about scale. If the Cardiff lagoon produces 6,500GW over its 120-year lifetime, and receives a government subsidy over 30 years, it can spend 90 years "putting money back in the public purse". Recent reports in the Welsh media sug- gested that negotiations on Swansea Bay had hit delays, and that construction would not now start until March 2017. Undaunted, Shorrock clearly has a definite timetable. "We're finishing the advance works phase next month," he says. "We then do the real detailed design. We will engage with the banking community in January next year and drive towards financial close [in July]." For its part, the Department of Energy and Climate Change insists there is "no time- frame for how long the negotiation process could take". The Crown Estate estimates that tidal lagoon power could contribute up to 25TWh of renewable electricity to the UK every year, meeting 8 per cent of demand. But time and tide wait for no man, and first of all the tech- nology will have to prove it works. Is the tide right for lagoons? The company building the Swansea Bay tidal lagoon insists it will be a pilot for larger projects at Cardiff and beyond. Critics call the cost of Swansea Bay 'appalling'. Lois Vallely reports. Timeline 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 £1bn cost of building Swansea Bay 320MW installed capacity of the 16 turbines 120 years expected life of the lagoon 4 years number of years before the lagoon becomes carbon neutral £168/MWh estimated strike price for Swansea Bay £92.50/MWh strike price for Hinkley Point C 236k tonnes of CO2 saved each year NUMBER CRUNCHING Analysis Jan 2016: investment discussions with banks July 2016: financial close due to be reached Autumn 2016: initial civil works on site due to begin 2010-2012: feasibility studies for Swansea Bay Tidal Lagoon project begin Oct 2012: submission of environmental impact assessment and scoping report for Swansea Bay to planning inspectorate Dec 2012: environmental impact assessment begins Jul 2013: formal consultation begins Feb 2014: application for development consent order to the planning inspectorate and submission of marine licence to Welsh government 20 Oct 2014: financial services company Prudential invests £100 million in scheme 2 Dec 2014: UK government includes plans for Swansea Bay lagoon in its National Infrastructure Plan 5 Feb 2015: project secures £100 million funding from InfraRed Capital Partners, matching an investment made by Prudential 2 Mar 2015: submission of environmental impact assessment report to the planning inspectorate for Cardiff Tidal Lagoon 18 Mar 2015: chancellor George Osborne confirms UK government is opening talks with Tidal Lagoon Power on providing financial support for the Swansea Bay 24 Apr 2015: Energy UK's Barbara Vest hails tidal lagoon power as "absolutely fabulous" when asked at Utility Week Live 3 Jun 2015: China Harbour Engineering Company named as preferred bidder of £300 million contract to provide a marine works package for Swansea Bay 9 Jun 2015: development consent order awarded for Swansea Bay project 2 Oct 2015: Tidal Lagoon Power announces delays to Swansea Bay until spring 2017 Oct 2015: advance works phase due to end 2021: Swansea Bay lagoon begins producing power Spring 2017: marine works scheduled to start

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