UK insurer Prudential has been named a cornerstone investor in the £1.0 billion (€1.3 billion, $1.6 billion) Tidal Lagoon Project, located in Swansea Bay, Southern Wales.
Prudential declined to disclose financial details on the transaction but a source close to the matter told Infrastructure Investor the firm had agreed to invest up to £100 million in the project. It is also understood the investment would comprise a mix of equity and project finance debt, with the respective proportions of each yet to be determined.
The plant, which will have a capacity of 320 megawatts (MW), is set to become the world’s largest tidal energy provider when it becomes operational in 2018. It will also form the first step in the development of a network of coastal lagoons which could eventually generate up to 8 percent of the UK's electricity needs.
The plant itself will generate more than 495 gigawatt-hour (GWh) of electricity annually for 120 years, enough to provide nearly all of the domestic electricity for the Swansea Bay region. Construction of the project is scheduled to start in 2015.
“Such investments provide our customers with strong and sustainable returns, create good jobs and increase productivity and economic competitiveness,” said Tidjane Thiam, group chief executive of Prudential.
The company, alongside Legal and General, Aviva, Standard Life, Friends Life and Scottish Widows, was one of six UK insurers to pledge a total of £25 billion of investment in the country’s infrastructure over the next four years. It will be investing via M&G Investments, its European asset management arm.