LONDON — The U.K. company planning the world’s first tidal-lagoon power station said its next plant may generate electricity at almost half the price.
Tidal Lagoon Power Ltd. is in talks with the government to agree on a power price for its first development, a 320-megawatt project in Wales that Poyry Oyj estimates will need 168 pounds ($248) a megawatt-hour. A second, bigger plant would need only about 90 pounds to 95 pounds a megawatt-hour, Andy Field, a spokesman for Tidal Lagoon, said Thursday in London.
That price for electricity would put tidal energy on a par with nuclear output, adding a new form of generation to the country’s power mix as it seeks to meet demand and climate targets. Tidal-lagoon power plants, which release water from a pool through turbines, are designed to be less damaging to the environment than tidal barrages, which are similar to dams.
Tidal Lagoon’s first project will act as a template for future plants, helping to drive down costs through economies of scale, Field said. “Once we’ve proven the concept and set up the supply chain, future facilities are just a replication of the first, but each will need to make its own environmental case to proceed,” he said.
The company plans to build its first plant in Swansea Bay and its second, a 2,800-megawatt facility, 35 miles away in Cardiff. A price of 90 pounds to 95 pounds for its power would compare with the 92.50 pounds that the government offered Electricite de France SA for its Hinkley Point C nuclear station.
The project would use 90 turbines installed between Cardiff and Newport and have a lifespan of 120 years. Hinkley Point C would have a 3,200-megawatt capacity and operate for about 60 years.
Chancellor of the Exchequer George Osborne said yesterday in his budget speech that the government is opening negotiations with Tidal Lagoon on its first project.
“We’re now in the latter stages of tendering for the facility, so once we have all of the contracts in place with suppliers we will have certainty of the costs involved and that will feed into the strike-price negotiations,” Field said. The government said it will assess the 1 billion-pound plant for affordability, value for money and whether it will drive down the cost of future facilities.
The tidal developer is seeking premium power payments under the government’s contracts-for-difference system, a program that guarantees a set price for each megawatt-hour of electricity produced, regardless of prevailing market prices.
Final consent for the first project is expected in June. Equity of about 200 million pounds has been secured from institutions including InfraRed Capital Partners Ltd. and Prudential Plc and Tidal Lagoon is now seeking about 800 million pounds in debt. Macquarie Group Ltd. is running the process and 29 banks have expressed an interest, Field said.
The company has begun early feasibility work on four other tidal lagoons in the U.K., at Newport, west Cumbria, Colwyn Bay and Bridgewater Bay. If all six facilities are built, they could supply as much as 8 percent of Britain’s electricity. They may add as much as 27 billion pounds to the economy over 12 years, according to a report last year from the Centre for Economics and Business Research.
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