Commercial negotiations to start on Swansea Bay Tidal Lagoon

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The Government is moving to the first phase of commercial negotiations on a Contract for Difference with the developer of a proposed tidal lagoon at Swansea Bay.

As set out in the National Infrastructure Plan, we are exploring the potential of a future tidal lagoon programme. Tidal power is a major economic and energy opportunity for the UK – and tidal lagoons could form a key element of this . The proposed six-mile horseshoe shaped sea wall scheme in Swansea Bay could generate around 500GWh per year, enough to power almost 120,000 homes.

Energy and Climate Change Secretary Ed Davey said:

Britain has some of the best tidal resources in the world – tidal lagoons could provide 8% of our electricity needs, replacing foreign fossil fuels with clean, reliable home-grown electricity and creating fantastic economic opportunities.”

Contracts for Difference are part of the Government’s radical reforms to the energy market. They provide developers with more price certainty for the electricity generated by the plant, stimulating significant investment in renewable energy projects.

The negotiations will establish whether a Contract for Difference (CFD) for a potential tidal lagoon at Swansea Bay is affordable and value for money for consumers. Any decision to offer a CFD for the Swansea Bay Tidal Lagoon project would be subject to strict value for money considerations, the funds available within the Levy Control Framework (LCF) at the time of a decision, and to State aid approval.

The project is also still subject to a planning decision. Negotiations are separate from and without prejudice to this planning decision.

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