A New Dawn Breaks over Swansea Bay
Against an uncertain political and regulatory back-drop it has been difficult to finance and build established renewable plant like wind turbines, let alone bring new ideas and entrants to the renewable energy market. There has long been talk of tidal being a ‘game-changing’ technology, yet with so much uncertainty no one has had the brains or the bottle to bring a scheme to planning.
With controversy as to the level (or even existence) of a subsidy mechanism raging around him, for three years Mark Shorrock and his team have worked away at the Swansea Bay scheme (which is intended to be followed by four other schemes around the coast). The goal has been to find the solution to finally harness the power of one of the UK’s most obvious renewable energy sources – the tide.
Swansea Bay Lagoon has the potential to generate 420GWh of power per year with a capacity of 320MW. It’s predictable, reliable, renewable energy for 120,000 homes, 14 hours a day for 120 years. There are also loads of benefits for the local area, not just in terms of construction and operations jobs, but in terms of sports and leisure facilities and a long-term land(or maybe sea) mark to attract visitors to the area. They are even planning an oyster farm.
Not surprisingly, 86% of local people support the project.
Inevitably there will be complex planning issues to overcome with a project of this scale, but provided they have been adequately dealt with in the application, this project must surely receive a positive response (on the planning) from the Sec of State next year.
While that is going on, it’s all about the money.
There are two limbs to funding the project: (i) getting an adequate subsidy from the government to make the revenues from power generated by the project attractive to investors; and (ii) convincing investors that the technical solution – ie. the double regulated bulb turbines – work so that the power will be consistently generated at the levels required to make the scheme profitable.
That is where my concern lies. World firsts are fantastic stories for everyone except banks. The fact that this has not been tried before will mean there will be queries over the technology. If there is any doubt over the reliability or suitability of the turbine, or the long-term viability of the turbine manufacturer then the project may become difficult to finance.
I willing to be optimistic about this. If Macquarie are backing the scheme then there must be a high degree of confidence that the turbines are ‘bankable’. We will find out later this year.
At the same time as asking banks to take a risk, TLSB will need to make a strong enough case to persuade the Secretary of State to give up a mighty chunk of his renewable energy budget. With EU state aid lawyers circling and fierce competition from other renewable techs for this subsidy money, that is not going to be easy. The subsidy level will need to be agreed and signed before banks commit, so a protracted negotiation with the Sec of State may hit the project programme and put pressure on cash flows.
So there remain significant challenges for this project beyond planning. However we should celebrate the achievement of Mark and his team in getting this smart, sustainable (and for energy geeks at least) sexy project to the planning stage. All the political and social stars are aligned for this project. It is only the planning and economic aspects to be resolved to begin construction.
Instead of sticking plaster adaptive measures like we are seeing in Somerset, the UK’s response to climate change should be big projects like Swansea Bay and its successors, as well as big offshore wind projects, nuclear and all the other parts of the low carbon energy mix.
Solutions to our energy needs like Swansea Bay are long overdue.
As Mark himself says:
“Had we invested in tidal lagoons in the 1980s, by now, and into the next century, we would be generating cheaper power than any other form of supply.”