InfraRed invests in Swansea’s £1bn tidal lagoon

The fund manager’s £100m commitment, which matches an earlier pledge by UK insurer Prudential, confirms full equity funding for the renewables project.

InfraRed Capital Partners (InfraRed) has become the second equity investor to back Tidal Lagoon Swansea Bay by investing up to £100 million (€133 million; $152 million) in the renewables project.

The London-based firm’s commitment matches an earlier investment by UK insurer Prudential, which pledged up to £100 million to the lagoon last October. About £22 million of additional equity are provided by developers, a spokesperson for Tidal Lagoon Power, the Gloucester-based renewable energy company behind the project, told Infrastructure Investor.

Following InfraRed’s investment, the tidal lagoon has reached its target of raising £200 million of equity funding from UK institutions.

The balance of the project’s cost will be covered by debt, with a financial close expected in the summer and construction to begin shortly thereafter. Twenty-nine banks have so far expressed interest for contributing to the financing package, the spokesperson said.

The plant, which will generate about 500 gigawatt-hour a year during an expected lifetime of 120 years, is set to become the world’s largest tidal energy provider when it becomes operational in 2018. If successful, it will also be the first step towards the development of a network of six coastal lagoons which could eventually generate up to 8 percent of the UK's electricity needs.

“The power station is unique in that it not only leverages the estuary’s second highest tidal range in the world but it will also make a material contribution towards both the local economy in South Wales and the long term stability of sustainable energy supply in the UK,” said Werner von Guionneau, chief executive of InfraRed, in a statement.

The five other schemes would each have an installed capacity of 2,000 megawatts. Four of the projects would be in the Severn Estuary, the other in north-west England.