The government has confirmed it will not offer bill payer support to the proposed tidal lagoon in Swansea Bay.
Energy secretary Greg Clark said the decision not to back the scheme was made on grounds of cost and value.
He told the Commons “the programme of six tidal lagoons, the first of which is Swansea Bay … does not meet [government] requirements for value for money.” He said it would therefore “not be appropriate to lead [the developers] to believe public funds could be justified”.
Clark said nuclear and offshore wind could deliver more reliable power for less money. He said the costs were “so much higher than alternative sources of low carbon power, that it would be irresponsible” to award a contract.
Tidal Lagoon Power (TLP) had been lobbying for a 60-year bilateral contract for difference (CfD), a mechanism which guarantees a set price for power.
The Welsh government was also reportedly prepared to invest nine figures of taxpayer cash into the scheme. With that support, CEO Mark Shorrock recently told MPs that the lagoon could deliver renewable power at the same per megawatt subsidy as bilaterally awarded in 2013 to EDF for Hinkley Point C (£92.50/MWh rising with inflation).
However, when pressed for a like-for-like comparison over 35-years, Shorrock said the required strike price would be “about £150/MWh”.
The developers had argued that the project would create jobs, further development opportunities, including a 3.2GW lagoon at Cardiff, and potentially export revenues for the UK. The scheme appeared to have partisan support from several members of the usually independent Beis Select Committee.
However, 18-months after former energy minister Charles Hendry’s review unequivocally backed the proposal, government has finally rejected its conclusions, which, without a radical rethink, may leave the lagoon dead in the water.
Watch Clark’s statement, and opposition reaction, here.