Hendry: Swansea Bay to cost a pint of milk on bills for next 30 years

Charles Hendry

Plans for a £1.3bn tidal lagoon in Swansea Bay have been backed by a government-commissioned review. Charles Hendry's independent report into the technology's viability said it would make a "strong contribution" to the UK's energy supply and was cost effective and would bring "significant economic opportunity".

Speaking before his report was released, Hendy equated the cost of the Swansea Bay Tidal Lagoon to a pint of milk on bills for next 30 years. Hendry said that moving ahead with a pathfinder lagoon off the Swansea coast should be seen as a "no regrets" policy. Advocates of such schemes hope to develop a network of larger lagoons around the UK coast, harnessing power from the ebb and flow of the sea's tides. However, Hendry said that at this stage this was "too ambitious a goal" before even one had been built and "could only be considered properly when more progress had been made".

Speaking to the BBC Today programme, commenting on the costs involved in the scheme, Hendry said: “What we have concluded as the best way to look at this is the cost as subsidy spread over the lifetime of the project because otherwise we are trying to compare a product which lasts 30 years with a lagoon that lasts for 120. If you look at the cost over 120 years you get a very much lower figure than almost any other source of power generation. If we go ahead with Swansea as a pathfinder, then that would be about the cost of a pint of milk a year on people’s bills for the next 30 years.”

Turning to the costs of the project and the subsequent cost of energy, Hendry made it clear that the “traditional approach [of cost evaluation] is an inaccurate way of looking at it. We should not be looking at previous cost evaluations over 30 years, with the lagoon coming in at over £120 per megawatt hour while Hinkley comes in at £92 per megawatt hour. This is an unfair comparison since it does not consider lifespan. Because a tidal lagoon essentially gives you 60 years of free electricity – you have paid off all your costs, there is no subsidy – there is this very very long tail. I think we can get a very different figure,” Hendry said.

The lagoon is anticipated to be the first of its kind worldwide and Hendry said that any increased costs of the scheme were justifiable given the insights the project will bring for subsequent lagoon projects along the coastline. “You learn a huge amount. We believe the cost will come down significantly from a pathfinder project and then when you go to bigger projects you get huge economy of scale. We believe that these can come in lower than nuclear and lower than offshore wind over the course of the lifetime.”

It is worth noting that Hendry's argument, founded on economies of scale, is reliant on more lagoon projects being undertaken in the near future. While the report urges that the Swansea Bay tidal lagoon is given the green light, other schemes will only progress if Swansea proves successful and viable.

Commenting on Hendry's annoucement, Anil Iyer chief operating officer at the Association for Consultancy and Engineering, said: "ACE is pleased to see that the government has made a positive decision with regard to the tidal lagoon project in South Wales. This will make an important contribution to the UK’s energy security for the foreseeable future, and will go some way to ensuring that the energy mix is sufficient to meet base and peak demand levels. It is also an important signal that the government recognises tidal energy as a viable source of future energy generation, meaning more projects of a similar nature can come forward.

“With the confidence and certainty provided by this decision, our sector can now ensure that the resources needed to deliver this scheme on time and on budget are effectively allocated. It will also enable further financing packages to be assembled and we would encourage all parties to begin this process as soon as possible to ensure momentum is maintained.”