Tidal lagoons and UK energy strategy
This Commons Library Debate pack was prepared for a debate on Tidal lagoons and UK energy strategy which took place in Westminster Hall on Tuesday 6 December 2016.
This debate pack has since been superceded by the Library briefing paper on Tidal Lagoons.
This pack is about tidal lagoon energy which is a type of tidal range technology and is different from tidal stream energy. The summary and press articles in this debate pack focus on tidal lagoons but also include some press coverage of tidal stream projects in Scotland and elsewhere in the UK.
Planning permission was granted to Tidal Lagoon Power for a tidal lagoon in Swansea Bay in June 2015. However, the company are still in negotiations with the Government about a strike price. It is unlikely to be agreed until the Hendry Review of tidal lagoons, commissioned by the Government, is published. It is expected to be released by the end of the year.
1.1 The technology behind tidal lagoonsTidal energy is created by the constantly changing gravitational pull of the moon and sun. It is a reliable source of energy because tides are predictable, and never stop. Tidal resources are at their best when there is a good tidal range and the speed of the current is amplified by the funnelling effect of the local coastline and seabed. Tidal devices work well in narrow straits and inlets, around headlands, and in channels between islands. A diagram showing the tidal flows involved in tidal lagoon technologies is available on The Conversation [1].
There are different types of tidal energy: tidal stream energy and tidal range technologies such as tidal barrages and tidal lagoons. There have been suggestions of a tidal barrage in the Severn Estuary (the second highest tidal range in the world) for over thirty years. Projects for tidal lagoons in the UK are more recent and were deemed by some experts as a more economical, technically feasible and environment-friendly alternative to tidal barrages [2], though this view is not universal[3].
How does a tidal lagoon work?A tidal lagoon generates electricity twice in one tide – once when the tide is coming and once when it is going out.
They work in a similar way from barrages by “capturing a large volume of water behind a man-made structure, which is then released to drive turbines and generate electricity.”[5]
As summarised by Carbon Brief:
The movement of the tide in or out means that a difference in water levels builds up in the lagoon, compared to the water around it, in much the same way as a man-made lock on a river does. Once the difference is big enough, sluice gates are opened – allowing water to rush through the gaps, turning big turbines installed underwater. The rotating turbines generate electricity.[6]
1.2 The potential for tidal lagoon energy in the UK The Swansea Tidal Lagoon projectOn 9 June 2015 planning consent was given for what the Government described as ‘the world’s first Tidal Lagoon’ for generating energy in Swansea Bay. The application, made by Tidal Lagoon Power (TLP), was to construct a man-made, 320MW (megawatt) tidal Lagoon, averaging 14 hours of generation every day.[7]
Potential benefitsTidal range technologies are still at an early stage of development and deployment is yet to begin. The Severn barrage plan was fiercely opposed by wildlife charities like RSPB and criticised in an Energy and Climate Change Committee report which concluded that the case for the ‘economic, environmental and technological viability of the project’ was ‘unproven’.[8] The project was eventually dropped.
The main obstacles to tidal lagoon technology deployment are financial and political. Some have estimated that the technology has the potential grow; the Centre for Economics and Business Research (CEBR) estimated that
A fully operational tidal lagoon infrastructure industry (as represented by the six proposed lagoons) could produce as much as 8% of the UK’s electricity needs – enough to power 7.9 million homes.[9]
The same research found that up to 6,400 jobs could be created in the UK to operate and maintain the six lagoons that Tidal Lagoon Power Ltd plans to build. Benefits expected from the Swansea Bay lagoon itself include the creation of over 2,800 construction jobs as well as up to 40 permanent roles in tourism related industries. Overall the construction of multiple lagoons could boost investment and GDP according to the research,
The same research suggested 30 TWh of electricity per year could be generated for 120 years (the lagoon’s lifespan), which could help reduce fossil fuel imports by £0.5 billion by 2030 and reduce the UK’s annual emission target by 0.9%.[10]
Research from The Crown Estate reached more conservative conclusions and found that tidal lagoons could generate up to 25 TWh per year.[11] This is enough to supply around 12% of UK electricity demand (at 2013 levels) according to the Government.[12]
Due to the predictable pattern of tides, tidal lagoon technology is also hailed as a way to increase UK energy security with a reliable supply of energy that does not suffer from meteorological conditions like wind or solar power.[13]
Tidal Lagoon Power recently produced a new analysis that claims that the lifetime cost of Swansea Bay tidal lagoon would be the same as Hinkley Point C’s (£25.78/MWh).[14]
Financial challengesThe strike price and the investment costs have both been cited as challenges to the deployment of tidal lagoons in the UK.
Construction of the Swansea Tidal Lagoon would be a major infrastructure project with overall estimated costs for the project of £1 billion. Funding has been and is being sought from private investment.
The project also requires subsidy from the Government in the shape of a strike price[15] under the Contracts for Difference scheme.[16] In 2014, the company Tidal Lagoon Power initially argued that it needed a strike price of £180 per MWh for 30 years.[17]
It then requested a strike price of £168/MWH for 35 years (still far above that of other forms of renewable energy or Hinkley Point’s £92.50).[18]
It was reported that the Government rejected this price, which led the energy firm to ask for £96.50/MWh.[19]
A strike price and contract has yet to be agreed with the Government. On 10 February 2016, the Government announced an independent review into the feasibility of Tidal Lagoon energy in the UK. Originally it said the review was expected to report in autumn 2016.[20] However it is yet to report.
Political concernsThe Government had expressed some concerns about the value for money of tidal range technologies in the Severn estuary (where the Swansea tidal lagoon project is located):
The 2-year cross-government Severn tidal power feasibility study could not see a strategic case for public investment in a Severn tidal scheme in the immediate term, though private sector groups are continuing to investigate the potential.[21]
Nevertheless, Tidal Lagoon Power obtained planning permission for this project in June 2015 (see below). The Government submitted it to review in February 2016 on the basis that more work needed to be done to understand how cost-effective this technology could be the for the UK energy mix. The results of the Hendry review are expected to be published before the end of the year. This is covered in section 4 of this debate pack.
In a Written Statement on 5 October 2016, the Welsh Government set out its position on the Swansea Bay Tidal Lagoon, Ken Skates, Cabinet Secretary for Economy and Infrastructure said:
[Extract]
Our commitment to renewable energy projects, including tidal lagoons, is set out in our new Programme for Government, “Taking Wales Forward”. We support tidal lagoons because they provide an opportunity to grow a vibrant Welsh industry that delivers prosperity aims in parallel with directly delivering against our decarbonisation commitments.
The energy sector is a key sector for the Welsh economy based on our natural resources, the long tradition of generation and a pipeline of major future investment. This includes the first of Tidal Lagoon Power’s projects, Swansea Bay Tidal Lagoon, which is estimated to create 1,900 jobs during construction with significant opportunities to develop supply chains for the wider community.
We have been engaging with Swansea Bay Tidal Lagoon for a number of years across a range of areas and we continue to do so during the current Hendry Review, the UK Government’s Independent Review of tidal lagoons, to ensure Welsh businesses and the local economy gain maximum benefit. We are servicing this important project in a cross-government manner and have already provided support on a range of areas including skills and the supply chain.
The tidal lagoon has the support of the Swansea Bay City Region Board and other partners in the region who recognise the potential value of the project to Swansea, the Swansea Bay City Region and Wales as a whole.
Whilst I recognise the project requires a number of agreements yet to be reached, I am excited at the prospect of placing Wales at the forefront of the development of a tidal range sector across the UK.[22]
In the Westminster Hall debate on 8 March 2016, the Minister of State at DECC set out the UK Government position as follows:
[Extract]
Let me be clear that this Government continues to recognise the potential for the deployment of tidal lagoons in the UK. The scalability of the technology is of genuine interest to us. We are attracted to the proposed Swansea bay tidal lagoon because of its potential to unlock larger, more cost-effective developments elsewhere in the UK.
There is speculation, following recent announcements, that this Government have kicked the project into the long grass. The simple truth is that the developer’s current proposal for a 35-year contract is too expensive for consumers to support, and the deliverability of the wider lagoon programme is too uncertain at this point.
In parallel, there will be an independent review to assess the strategic case for tidal lagoons and whether they could represent good value for consumers.
The Government have already requested a supply chain plan and map from the developer. We are very pleased that the UK content of the project is likely to be up to 65% and that the Welsh content is likely to be about 50%.[23]
[1] ‘How lagoon power works’, George Aggidis, published in The Conversation, ‘How artificial lagoons can be used to harvest energy from the tides’, 5 March 2015
[2] Carbon Brief, ‘A rough guide to tidal lagoons’, 7 February 2014
[3] RSPB, ‘What are we doing about tidal lagoons? – guest blog by Dr Sean Christian, RSPB Cymru’, 19 May 2015
[4] BBC News, ‘The ebb and flow of tidal power’, 12 June 2008
[5] Tidal Lagoon Power, Tidal Technology, accessed 1 December 2016
[6] Carbon Brief, ‘A rough guide to tidal lagoons’, 7 February 2014
[7] Department of Energy and Climate Change, Swansea Bay Tidal Lagoon project gets green light on planning 9 June 2015
[8] Energy and Climate Change Committee, A Severn Barrage?, 21 May 2013, Vol. I, para.117
[9] Centre for Economics and Business Research, The Economic Case for a Tidal Lagoon Industry in the UK, July 2014, p.10
[10] Ibid.
[11] The Crown Estate, UK Wave and tidal key resource areas project – Summary report, October 2012
[12] Department for Energy and Climate Change, Guidance – Wave and tidal energy: part of the UK’s energy mix, 22 January 2013
[13] Centre for Business and Enterprise Research, The Economic Case for a Tidal Lagoon Industry in the UK July 2014
[14] reNEWS, ‘Lagoon cost ‘same as Hinkley’’, 11 July 2016
[15] Contracts for Difference (CfD) work by fixing the prices received by low carbon generation, reducing the risks they face, and ensuring that eligible technology receives a price for generated power that supports investment. CfDs also reduce costs by fixing the price consumers pay for low carbon electricity (known as the strike price). This requires generators to pay money back when electricity prices are higher than the strike price, and provides financial support when the electricity prices are lower. For more information, see House of Commons Library, Energy Policy Overview, 23 June 2016.
[16] Department for Business, Energy and Industrial Strategy, Electricity Market Reform: Contracts for Difference, 26 February 2015. More information on Contracts for Difference can be found in the House of Commons Library note on Energy Policy Overview.
[17] The Times, ‘Giant lagoon to generate power and pleasure’, 7 February 2014
[18] BBC News, Swansea Bay's £1bn tidal lagoon hit by delay 2 October 2015
[19] Financial Times, ‘Tidal power’s potential faces a review as £1bn lagoon stalls’, 9 February 2016
[20] Department of Energy and Climate Change, Review of Tidal Lagoons 10 February 2016
[21] Department for Energy and Climate Change, Guidance – Wave and tidal energy: part of the UK’s energy mix, 22 January 2013
[22] Welsh Government Written Statement Swansea Bay Tidal Lagoon 5 October 2016
[23] 08 Mar 2016 | House of Commons | 607 cc65-91WH