The U.K. granted planning permission to the world’s first tidal lagoon power plant, a 1 billion-pound ($1.5 billion) development in Swansea Bay, Wales.
If built, turbines in the proposed six-mile (10-kilometer) horseshoe-shaped sea wall could generate about 500 gigawatt-hours of electricity a year, the Department of Energy and Climate Change said Tuesday in a statement on its website. That would be enough to power more than 155,000 homes.
Mark Shorrock, chief executive officer of Tidal Lagoon Power Ltd., said planning approval to install the tidal power-generation plant with a 120-year life is “a game-changer.” It’s a “scalable blueprint paving the way for a fleet of lagoons that can work in harmony with nature to help secure the nation’s electricity for generations to come.”
Tidal Lagoon Power still needs to negotiate a so-called contract-for-difference with the government to set the price it’ll receive for power from the turbines, the department said. A subsidy of 168 pounds a megawatt-hour will be needed for 35 years -- about double the rate for nuclear or onshore wind, according to a report last year by analysts at Poyry Oyj.
InfraRed Capital Partners Ltd. and Prudential Plc are both equity investors in the facility. Good Energy Plc, a British renewable power supplier, invested a half-million pounds in the venture last year and has an option to buy 10 percent of its output.
“This is a truly visionary project, providing an excellent opportunity for the U.K. to diversify its sources of renewable electricity and become more energy-secure as a nation,” said Juliet Davenport, CEO and founder of Good Energy. “This world-first project will also make an important contribution toward national carbon-emission reduction targets, saving over 236,000 tons of CO2 each year.”
Tidal Lagoon Power is currently in talks with the government on electricity subsidies for the facility, which has an approved capacity of 240 megawatts, according to the Planning Inspectorate. It’s seeking premium power payments under the contracts-for-difference system that guarantees the amount generators are paid for each megawatt-hour of power produced regardless of prevailing market prices.
Poyry Oyj’s estimate of 168 pounds for 35 years compares with the U.K.’s agreed-on rate of 89.5 pounds to 92.5 pounds for Electricite de France SA’s planned Hinkley Point C nuclear station. Onshore wind projects have won deals at about 82.5 pounds for 15 years.
Tidal Lagoon Power already has started planning its second project, a 2.8-gigawatt power plant that will generate enough electricity for every home in Wales. It’s also begun early feasibility work on tidal-lagoon projects in the U.K. at Newport, West Cumbria, Colwyn Bay and Bridgewater Bay. If all six planned facilities are built, they could supply as much as 8 percent of the country’s electricity.
The second plant would need a subsidy of about 130 pounds a megawatt-hour, declining to 92 pounds a megawatt-hour for the third plant, which would put it on par with that currently offered to nuclear, which also receives contracts for 35 years.
Tidal lagoons are areas of water separated from the rest of the sea. In a tidal-power plant, water is trapped and released from the lagoon through turbines, considered to be less damaging to the environment than tidal barrages. The U.K. in 2013 rejected plans for a barrage across the Severn River.
Installing tidal-lagoon plants at six sites across Britain may add as much as 27 billion pounds to the country’s economy over a 12-year span starting in 2015, according to a report last year from the Centre for Economics and Business Research.