Utility Week

10 | 12th - 18th MAY 2017 | UtILItY WEEK Generation Review T he potential of tidal power in the UK has been explored before. In 2007, the Labour government launched a feasi- bility study into the economics, environmen- tal impact and benefits of building a tidal barrage across the Severn Estuary. The 16km dam would have extended from Weston-super-Mare to Cardiff, with the 12.8m tidal range on which it would draw expected to generate up to 5 per cent of the country's energy needs. For a country seeking to invest in new renewable energy technology, the Severn Estuary proposal had significant potential. But with an estimated cost of £30 billion and the realisation that it could be developed and built only with significant government funds or subsidies, it was determined to be too expensive. Announcing that it would not be progressed in October 2010, energy secre- tary Chris Huhne said there was no "strategic case" for the scheme and suggested tidal's future lay in the hands of the private sector. Now, nearly seven years a–er those plans were shelved, the private sector has come to the fore. Tidal Lagoon Power has secured £1.3 billion in private investment to construct an 11.5km 2 tidal lagoon in Swansea Bay, with its 16 turbines operating 14 hours a day with a maximum output of 320MW. Capable of powering 155,000 Welsh homes, the Swansea Bay Tidal Lagoon is a substantial enterprise in itself; but with the location drawing on a tidal reach second only to that of a site in Nova Scotia, Canada, it is as much about demonstrating the over- all potential of tidal power in the UK. No-regrets in pushing ahead The project's role as a pathfinder has been endorsed in the recent government-commis- sioned review of tidal power, conducted by former energy minister Charles Hendry. He called it "a no-regrets policy". "A–er years of debating, the evidence is, I believe, clear that tidal lagoons can play a cost-effective part of the UK's energy mix," he said. According to the review, the cost to the public, paid through a price for electricity from Swansea Bay agreed up front to secure its development, would be 30p per house- hold for its first 30 years to get the project up and running, which with its expectation of an operational life of 120 years, would, in Hendry's view, be a price worth paying even if no further plants were built. But that is not his preference. Both Hen- dry and Tidal Lagoon Power see Swansea Bay as a frontrunner followed by a series of bigger projects soon a–er its feasibility has been demonstrated. For Tidal Lagoon Power, this vision takes the form of five large devel- opments in Swansea's wake. There is already a proposal for Cardiff with an installed capacity of 3GW and an investment potential of about £8 billion. If Swansea Bay prompts further develop- ments, the costs of each as a proportion of output are expected come down as the ben- efits of industrial growth and the domestic supply chain increase. A report by the Infrastructure Inspector- ate set out these arguments, and estimated that although the cost for the first project would likely be £168/MWh, it would fall to £92/MWh by the time the third came online, with ample scope for increased competitive- ness with other power sources as technology and the industry develops. Potential large and small And the potential of tidal energy is not only in major infrastructure projects such as Swansea Bay. Off the North Coast of Scot- land in the Pentland Firth, the MeyGen tidal stream project recently reported that its first Government support A pathfinder project Swansea Bay will, say its proponents, be in the vanguard of a series of bigger, more cost-effective projects. Environmental concerns Apart from the economic and policy argu- ments that need to be won before tidal power can assume a prominent role in the UK's future energy mix, environmental concerns also have to be addressed. Environmental groups such as the Wildfowl & Wetlands Trust have said they are "cautiously" excited about tidal power, but they have lingering concerns about the impact of tidal energy technologies on fish and birds. They advocate a slow and steady approach to the deployment of the technol- ogy, alongside ongoing, detail impact studies of relevant ecosystems. Developers of tidal energy schemes will need to remain mindful of these requirements and continue to work with environmental groups if they are to gain marine licences. Tidal lagoon strike price T he exact level of subsidy that Tidal Lagoon Power (TLP) is currently seek- ing for the Swansea Bay project is unclear. At the launch of his review into tidal lagoons earlier this year, former energy minister Charles Hendry refused to be drawn on a figure, saying he couldn't comment because of ongoing negotiations. TLP initially called for a strike price of £180/MWh over a 30-year contract for differ- ence (CfD) but a report commissioned by the firm later suggested £168/MWh over a 35-year agreement. As detailed in the Hendry review, TLP is now seeking a lower strike price but over a much longer 90-year contract. In February last year, the Financial Times reported a fig- ure of £96.50/MWh as part of this proposal. This compares with the 35-year strike price of £92.50/MWh offered to EDF for Hinkley Point C. However, unlike existing CfDs this would not be fully linked to inflation, meaning the real value of the strike price would fall over time. TLP has revealed estimates for the larger lagoons, which could follow on from Swan- sea Bay if the pathfinder project proves successful. The company said its proposed Cardiff project would need a starting strike price of £113/MWh, if it could achieve a capital cost reduction of eight to ten per cent between first and second projects. The real value would fall to £96.10/MWh by the first year of operation in 2027. TLP said the contract would be the equiv- alent of a fully indexed agreement with a starting strike price of just £70.4/MWh. Note: All figures quoted in 2012 prices. CfDs

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