UK government set for imminent nod to £1.3bn tidal project

Backed by Infracapital and InfraRed, the Swansea lagoon was recommended by an independent review in January but has since been waiting for a government response.

A tidal lagoon power project in Wales worth £1.3 billion ($1.6 billion; €1.5 billion) is expected to receive its long-awaited government approval in the next couple of months, the project developer’s chief executive Mark Shorrock said.

Shorrock, head of Tidal Lagoon Power, believes the timeframe for the approval to be “reasonable”, he told the UK’s National Infrastructure Forum this week, after a government-commissioned review led by former Energy Minister Charles Hendry recommended the 320MW project in January.

He told Infrastructure Investor that civil servants and government figures have since been working on the process for several months and that the result of last week’s snap election would cause no more than a small delay, with most ministers in the UK energy team remaining in place following a slight Cabinet reshuffle. Some of the delay has resulted from concerns over the expense of the project, with the lagoon yet to receive a strike price as a result.

The Conservative manifesto gave lukewarm backing to the lagoon, saying the government will “explore ways to harness Welsh natural resources for the generation of power”.

The flagship scheme was backed by Infracapital with a £100 million equity investment in October 2014, a move that was followed on four months later with an additional £100 million pledged by Infrared. Macquarie Capital is responsible for arranging £1.1 billion of debt for the plant, a process that started with a shortlist of nearly 40 banks but which is understood to have now been whittled down to about nine institutions.

Tidal Lagoon Power is hoping to use the Swansea Bay site as a pathfinder for a wider industry in the UK. A 3GW project worth about £8 billion in Cardiff is targeted as a follow-on while Shorrock also plans to build five new hydropower plants in the UK over the next 15 years.