The rise and fall of Swansea's tidal lagoon

Labour are committed to restarting South Wales' massive energy infrastructure project, but is it good value for money?

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In a year of mass, global climate change activism, a recent Opinium poll found that 54 per cent of Britons say environmental issues will affect the way they vote in the coming election. And with a legally binding target for the UK to achieve net-zero emissions by 2050, the major parties have been setting out their stalls on clean, renewable energy.

Early in the election campaign, the Conservatives announced a moratorium on fracking, though the promise seemed to have been contradicted by documents released just days later. The party also promised a £500m investment in electric vehicle charging points. The Liberal Democrats say they will aim for 80 per cent of energy to be generated by renewables by 2030. Labour, meanwhile, are promoting their Green Industrial Revolution programme, with major investment in wind, solar power, and electric vehicle infrastructure. In their manifestos, both the Lib Dems and the Greens mention tidal energy in a list of alternative sources of power, but Labour’s plan includes a commitment to a tidal power project with a history. Swansea Bay tidal lagoon will “be at the forefront of the green revolution,” Geraint Davies, MP for Swansea West, told Spotlight.

Tidal energy is harnessed by building artificial barriers around areas of water and allowing incoming and outgoing tides to turn underwater turbines, generating electricity. In South Wales, the Swansea Bay proposals are seen not just as a low-carbon energy opportunity, but as key to local regeneration.

So far, the path to the scheme has not been smooth.  Designated as part of the national infrastructure plan in 2014, and granted planning permission in 2015, in June last year the Welsh government offered to contribute £200m to the £1.5bn project. That same month, however, then business secretary, Greg Clark, shelved the plans. He cited concerns over the future price of energy that the project would generate. The business case had “not demonstrated that it could be value for money,” Clark told parliament. In response, Carolyn Harris, Labour member for Swansea East, told the business secretary that he “would never understand the frustration and anger felt in my city today.” Leading Liberal Democrats also expressed frustration at the decision.

Tidal Lagoon Power (TLP), the company behind the proposals, had asked for a guaranteed £168 per megawatt hour (MWh) for electricity generated for a period of 35 years. That price was described by Citizens’ Advice as “appalling value for money” that would be “against the interests of consumers”. It is over three times the cost of the UK’s current wholesale electricity price
(£50/MWh), twice the cost of energy from Hinkley point (a project described by the National Audit Office as “risky and expensive”), and four times the cost of offshore wind energy, which has fallen dramatically in recent years.

So why is Swansea’s tidal lagoon featuring in Labour’s flagship green growth policy four years later? Proponents contend that the high initial 35-year cost is misleading because tidal barrages can last for over 100 years, and that the electricity would actually work out cheaper over time. Modelling the costs of tidal power over shorter periods makes it appear far more expensive. Those who support the Swansea project also argue it would give a major boost to the South Wales economy and that it would act as a pilot. If successful, other lagoons could be explored, with the eventual cost falling once the technology is scaled.

“It doesn’t follow, what the Tories say, that if it’s more expensive than the cheapest source then it isn’t worthwhile,” says Davies. “Clearly we should be looking at the economics over a 120-year lifespan, not over the 30-year comparison with Hinkley.”

For Labour, Swansea’s tidal lagoon represents a new model of state-led, publicly developed and British-owned energy projects. In the same month that the plans were rejected, Jeremy Corbyn tweeted that “Swansea tidal lagoon would harness Wales’ natural resources, reduce reliance on fossil fuels and create thousands of jobs.” An accompanying Labour Party video criticised the UK’s current model for investment in renewables, with infrastructure owned by the private sector and foreign state-owned energy companies.

The problem for Labour is that TLP, the main driver of Swansea’s lagoon project, is not a state-owned or municipal firm, but a private limited company. In 2018, questions were raised about information its founder, Mark Shorrock, gave a parliamentary select committee. The former set location manager and film producer has consistently denied misleading them. The previous year, an alleged £4m worth of transactions between entities involving Shorrock and a firm founded by his wife, Juliet Davenport, were described as being on “unjustifiable” terms by a rival renewable energy executive, who said they had led to “a significant loss of shareholder value”. Davenport’s firm, Good Energy, denied allegations and said dealings with her husband’s companies represented a “great deal for shareholders”.

Charles Hendry’s 2016 report into the role of tidal lagoons, which was generally positive about the prospects of the technology,  recommended that TLP “secure a delivery partner with a track record in building major energy or infrastructure projects,” implying the firm had little track record. The final report also questioned whether “government energy policy [should] be led by a developer who comes forward with a particular concept,” such as TLP, or whether it “should be managed in a more strategic way, with government taking the lead”. Hendry recommended that the government not discourage private initiative and entrepreneurialism, but said they “must consider whether a more strategic approach… would be most beneficial.” Following the rejection of its proposals last year, TLP has attempted to revive the project using private money.

“I don’t think it’s going to be anything to do with Mark Shorrock,” Davies suggested, following confirmation that plans for the Swansea Bay lagoon would be included in the Labour manifesto. He mentions the possibility of a government bond issue to finance the project. “The previous model that was done by Shorrock was assuming very high rates of return for investors that the public would then have to pay through energy prices… We shouldn’t have to be playing the private marketplace with risk-based venture capitalists.” The TLP did not respond to requests for comment as we went to press.

If the UK is to meet its net-zero emissions target, massive investment in renewable infrastructure will be required. For Labour, tidal power and the Swansea Bay scheme will be integral to that, says Davies. “Our plan is to reduce some of the UK’s energy need with energy efficient homes, but we’ve still got to fill a big gap for when we don’t have fossil fuels,” says Davies. “Not all of that gap will be filled with solar and wind, and tidal has got to have its place.”

Jonny Ball is a Special Projects Writer for Spotlight and the New Statesman

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