Wales offers funding for world's first tidal lagoon project

LONDON (Reuters) - Wales has offered 200 million pounds ($268 million) in funding to help build the Swansea Bay tidal lagoon ahead of a UK government decision on whether to fund the 1.3 billion pound renewable energy project.

FILE PHOTO: First Minister of Wales Carwyn Jones speaks before the UEFA Champions League semi-finals draw in Nyon, Switzerland, on April 21 2017. Reuters/Pierre Albouy/File Photo

Britain is considering building what would be the world’s first such project - a 9.5 km (6 mile) horseshoe-shaped sea wall to capture tidal power - in part to replace aging coal and nuclear plants set to close in the 2020s as well as cut carbon emissions.

But the project’s costs have cast doubt on its viability, despite the backing of an independent government-commissioned review last year carried out by former energy minister Charles Hendry.

The offer to provide a loan or to take an equity stake came from the Welsh Assembly and was made by Wales First Minister Carwyn Jones in a letter to British Business Minister Greg Clark.

It also called for a minimum price guarantee for the electricity the project produces of 92.50 pounds per megawatt hour, the same as that awarded to France’s EDF for power from the Hinkley Point C nuclear plant project.

A spokesman for Britain’s Department for Business, Energy and Industrial Strategy said it was considering the findings of the Hendry review, and that an “announcement will be made in due course”.

Project developer Tidal Lagoon Swansea Bay Plc said it hoped the UK government would look positively on the proposed joint funding deal.

“The proposal for a joint deal with this structure is extremely constructive. We are eager to engage on it with all parties and it is a proposal we’d be delighted to take to our Board,” Tidal Lagoon Chairman Keith Clarke said in a statement.

The project in south Wales was due to start construction in 2018 and is expected to take four years to complete.

When the tide drops, the difference between water levels inside and outside the lagoon causes water to pass through turbines to produce electricity. Similarly, when the tide rises, power would be generated as water fills the lagoon.

While tidal changes have been harnessed before to generate power, mostly deploying a barrage across a stretch of water, this would be the first to enclose it, effectively creating a man-made lagoon.

($1 = 0.7455 pounds)

Reporting by Oleg Vukmanovic and Susanna Twidale; editing by Louise Heavens and Jason Neely