Swansea Tidal Lagoon

Antoinette Sandbach Excerpts

Tuesday 8th March 2016 Westminster Hall

[Stephen Kinnock (Aberavon) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Brady. I congratulate the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) on securing this debate. The presence of so many hon. Members here today shows why the project is of such importance. I rise today to urge the Government to give this vital project the go-ahead soon.

I believe that the tidal lagoon should be approved for the following reasons. First, it offers Wales, and the Swansea bay region in particular, an unrivalled opportunity to place itself at the forefront of what this year’s World Economic Forum in Davos called the “fourth industrial revolution”—an industrial revolution that will be characterised by new forms of renewable energy and by the exponential outward expansion of technological innovation. We can be at the vanguard of that revolution, and the Swansea bay tidal lagoon could be a catalyst for it.

To have the first project of this type in Wales—not only in Wales, but in my constituency of Aberavon and, I hasten to add, that of my hon. Friend the Member for Swansea East (Carolyn Harris)—would be a source of tremendous national and local pride. The project would also provide a significant alternative to carbon-intensive industry.

This is a chance to harness the natural environment and the unique nature of Swansea bay to our advantage. It is an opportunity to use the environment to protect the environment, power the local community and local homes and to save money—because, secondly, the tidal lagoon will help not only to tackle climate change, but to save money in the long run. The lagoon requires a strike price of £96 per MWh. That is 16% below the cost of any offshore wind farm ever granted a contract.

[Antoinette Sandbach (Eddisbury) (Con)]

I am interested in that strike price. Will the hon. Gentleman explain what period that is over? My understanding is that it is over a period of 90 years, rather than the 35 years that would apply, for example, in a wind farm contract.

[Stephen Kinnock]

The hon. Lady is correct. My argument is still that that strike price, as a unit price, is very attractive, particularly when we consider the economies of scale that would come from the construction of further tidal lagoons. We will see a downward trend in that strike price, which is a very convincing economic argument.

--- Later in debate ---

[Antoinette Sandbach (Eddisbury) (Con)]

I am grateful to my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) for securing this debate. I sat on the Environment and Sustainability Committee in the Assembly for a year and we did an inquiry into energy in Wales. I know very well the potential for tidal power in Wales, but I would like to sound a small note of caution. My hon. Friend made a very good speech that highlighted the sunny uplands, which will no doubt be reflected in the beauty of his constituency. However, on the plains of Cheshire, the concerns of my constituents are about the cost of electricity. I think this project is fantastic, but not at any price.

I currently sit on the Energy and Climate Change Committee, and I have real and substantive concerns about the reported strike price.

[Simon Hart]

My speech was not an entirely optimistic picture of energy production in the UK; I hope my hon. Friend accepts that. My point is that her constituents will not have any electricity at all, expensive or cheap, unless we fill the void that will be staring us in the face in about a decade’s time.

[Antoinette Sandbach]

I am grateful for my hon. Friend’s intervention. He will know about the excellent progress being made by the Horizon project and the Wylfa nuclear power station in north Wales, which will provide a large amount of generation. I am delighted because that is a very good project that will proceed at an even lower strike price than Hinkley Point’s, which is £92.50 per MWh. That is my real concern around this.

[Carolyn Harris]

Will the hon. Lady give way?

[Antoinette Sandbach]

I will just finish making this point. Citizens Advice has issued a report that highlights that, per unit of output, this would be the most expensive significant renewable energy project in Britain, with an impact on those who can least afford to pay the bills because, as was pointed out earlier, the project would be funded by a contract for difference, which gets added on to consumer bills. That means that the poorest and least able to pay would have the levy on their bills to pay for the project. I therefore welcome the review that the Government have announced, because there are other tidal projects and other forms of tidal energy and research coming forward.

Value for the taxpayer is absolutely key. As has been pointed out, the technology in itself is not new and would not attract a patent that could then be sold around the world. It may lead to some experts who could go and deliver that expertise elsewhere, but in terms of the unique deliverability of the technology, the project is using already established technology. There are no doubt potential benefits in relation to coastal protection.

[Carolyn Harris]

To go back to the hon. Lady’s comments on Wylfa and nuclear, does she not agree that the decommissioning costs of any nuclear project far outweigh any benefit that there would be in the on-costs to begin with?

[Antoinette Sandbach]

The hon. Lady will know that the strike price that has been agreed includes the decommissioning costs, and that Wylfa is a project that is very much welcomed in north Wales. Voters on the Isle of Anglesey are extremely supportive of the Horizon project going forward.

Citizens Advice said there was a danger that the project would repeat the mistakes that were made at Hinkley. It highlights an

“opaque negotiating process, lack of scrutiny of cost effectiveness and excessive politicisation of the decision”.

I am aware, as is every Member in the Chamber, that Assembly elections will take place in May. No doubt the project is being used to sell the dream. On behalf of my constituents, and particularly those who have difficulty in paying their bills, I welcome the review and urge an element of caution before we commit ourselves to a hugely expensive project. If it can deliver, and at the right price, it clearly needs to go ahead, because of the many advantages that have been and no doubt will be outlined in the debate. However, I want to say to the Minister that it should not be at any cost—only at a cost that is reasonable for the taxpayer. The clear, substantive advantages can be argued for, but I have concerns about the project.

[Jonathan Edwards]

The hon. Lady is making her point clear. Is she ideologically opposed to direct public investment, if she is opposed to the contracts for difference model?

[Antoinette Sandbach]

My understanding is that the rate of return to the investors in the project is 12% to 15%, which is very high. It is a very high cost to taxpayers and I query where else in the market anyone could get that kind of return. When we are talking about payments over 90 years, I urge caution. I do not say “Don’t go ahead”: I say that the review is appropriate. There could be clear advantages, and the boost that would be given to the steel industry and, no doubt, the domestic supply chain would be welcome. There are positives to be expressed, but there are also concerns, and it is right that if we are debating the project in the House we need to know some of the risks as well as potential rewards.