News story

Commercial negotiations to start on Swansea Bay Tidal Lagoon

The Government is moving to the first phase of commercial negotiations on a Contract for Difference with the developer of a proposed tidal lagoon at Swansea Bay.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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As set out in the National Infrastructure Plan, we are exploring the potential of a future tidal lagoon programme. Tidal power is a major economic and energy opportunity for the UK – and tidal lagoons could form a key element of this . The proposed six-mile horseshoe shaped sea wall scheme in Swansea Bay could generate around 500GWh per year, enough to power almost 120,000 homes.

Energy and Climate Change Secretary Ed Davey said:

“Britain has some of the best tidal resources in the world – tidal lagoons could provide 8% of our electricity needs, replacing foreign fossil fuels with clean, reliable home-grown electricity and creating fantastic economic opportunities.”

Contracts for Difference are part of the Government’s radical reforms to the energy market. They provide developers with more price certainty for the electricity generated by the plant, stimulating significant investment in renewable energy projects.

The negotiations will establish whether a Contract for Difference (CFD) for a potential tidal lagoon at Swansea Bay is affordable and value for money for consumers. Any decision to offer a CFD for the Swansea Bay Tidal Lagoon project would be subject to strict value for money considerations, the funds available within the Levy Control Framework (LCF) at the time of a decision, and to State aid approval.

The project is also still subject to a planning decision. Negotiations are separate from and without prejudice to this planning decision.

Further information

DECC recently published a stakeholder engagement document, which sought views on the process that we intend to follow in negotiations. You can now read the Government response.

On 10 March DECC received the Planning Inspectorate’s report and recommendations in respect of the application made under the Planning Act 2008 for development consent. The Minister responsible for making the planning decision has up to three months from that date to reach a final decision on the application. The process for a CFD is completely separate from that related to the determination of the development consent application and will not affect that determination.

Published 18 March 2015