(Bloomberg View) -- The U.K. government is mulling whether to support a 1.3 billion pound ($1.6 billion) proposal to build a tidal lagoon in South Wales. It should stop dithering and subsidize the project to help meet the country's green energy goals, produce cheaper power, and establish Britain as the world leader in technology that harnesses the power of the tides to generate electricity.
The U.K. lost its energy independence in 2004, and now depends upon imports to meet about half of its energy needs. And while the contribution from renewable energy sources has climbed to a bit less than 10 percent from about 1 percent at the start of the last decade, the U.K. commitment to reduce carbon emissions to 57 percent of their 1990 levels by 2030 means even less electricity needs to come from coal-fired power plants.
QuickTake Subsidizing Renewable Energy
The Department of Energy and Climate Change last year commissioned Charles Hendry, a former government energy minister, to conduct an independent cost/benefit analysis of tidal power. His analysis, made public a few weeks ago, was unequivocal in its support for both the so-called pathfinder project and for the wider benefits of lagoon energy:
I believe that the evidence is clear that tidal lagoons can play a cost effective role in the U.K.'s energy mix and there is considerable value in a small (less than 500 MW) pathfinder project. I conclude that tidal lagoons would help deliver security of supply; they would assist in delivering our decarbonization commitments; and they would bring real and substantial opportunities for the U.K. supply chain. Most importantly, it is clear that tidal lagoons at scale could deliver low carbon power in a way that is very competitive with other low carbon sources.
The initial project, proposed by Tidal Lagoon Plc, would enclose part of Swansea Bay in a rock wall, using 16 turbines to generate 320 megawatts of power from the ebb and flow of the tide. Larger lagoons, including Newport, Cardiff and Bridgewater, have the potential to meet as much as 10 percent of the U.K.'s power needs by 2030, according to Aurora Energy Research.
The numbers behind Hendry's analysis suggest that turbines driven by the rise and fall of the ocean can, over time, deliver cheaper energy than either planting wind turbines off the coast or splitting atoms in a nuclear power plant. He calculates that the annual cost to households of subsidizing a large-scale tidal lagoon program would be 2.10 pounds in the first five years, in line with nuclear subsidies though above the 1.55 pounds for offshore windpower.
But over a 60-year lifespan, the tidal levy drops to 0.49 pounds, below the 0.54 pounds for wind and 1.40 pounds for nuclear -- and the longevity of a tidal scheme should stretch past a century, delivering even greater financial savings.
Moreover, the government has guaranteed an inflation-linked electricity price -- in so-called contracts for difference -- at 92.50 pounds per megawatt-hour for nuclear and 85 pounds for offshore wind. Once anticipated cost reductions of building the lagoons are applied -- the economies of scale from sharing common designs, standardization and automated manufacturing -- tidal power from future large-scale programs in Cardiff and Bridgewater generates cheaper power than either nuclear or wind:
Unfortunately, Hendry himself said last week that he doesn't know if government ministers will support the plans. "I don't have any insight either into where their thinking is at the moment or the timescale of a decision," the South Wales Evening Post reported him as saying. Prime Minister Theresa May was less than conclusive in an interview with Wales Online published on Jan. 23:
Now, obviously, the Government is sitting down and looking at that report very carefully and looking at the details of it and obviously we will respond to it in due course. But I think it's right that we look at it and consider it very carefully but with a view in mind obviously that we do want to ensure that we have sustainable energy supplies in the future.
The U.K. has the potential to exploit its geography as a small, wave-battered island nation to become a world expert in tidal technology. The Crown Estate, which owns the seabed surrounding the U.K., says it has leased more than 40 sites for both tidal and wave projects.
May says she wants a new industrial strategy for post-Brexit Britain. Investing in tidal power offers the U.K. an opportunity to be at the forefront of developing turbine technology, as well as delivering on its climate and energy goals. Harnessing water power is a no-brainer for a government that has so many fires to fight.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
To contact the author of this story: Mark Gilbert at magilbert@bloomberg.net.
To contact the editor responsible for this story: Therese Raphael at traphael4@bloomberg.net.
For more columns from Bloomberg View, visit http://www.bloomberg.com/view.
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