Swansea Tidal Lagoon

Carolyn Harris Excerpts

Tuesday 8th March 2016 Westminster Hall

[Byron Davies]

Indeed; I totally agree with my hon. Friend, who makes a valid point.

A study by the Centre for Economics and Business Research has found that a national fleet of six tidal lagoons would contribute something in the region of £27 billion to UK GDP during construction, as well as creating or sustaining 35,000 jobs on average and roughly 70,000 jobs at its peak. When operating, the fleet would contribute just more than £3 billion per annum to UK GDP.

I am sure Members will be aware that Gower was the first area of outstanding natural beauty in the UK. It is a great tourist attraction, and I am sure that the development of the tidal lagoon will add to that. Swansea bay tidal lagoon would be the birth of a new industry based in Wales, and it now needs our support to get it into construction. Where that project leads, others will follow.

[Carolyn Harris (Swansea East) (Lab)]

Does the hon. Gentleman agree that, since the mention of a tidal lagoon being in Swansea, his constituency, my constituency and the constituency of my hon. Friend the Member for Aberavon (Stephen Kinnock) have seen a great increase in the feel good factor and a driving of the agenda to take forward other projects that would be less exciting without a tidal lagoon?

[Byron Davies]

The hon. Lady makes a good point. The tidal lagoon has great benefits, including from a health point of view.

Tidal Lagoon Power started work on Swansea bay in 2011 and has spent more than £30 million on the project to date. The company has been wholly privately financed by a number of private individuals, and more recently by a small number of institutional investors. The enterprise is therefore a purely UK-led initiative in the area of tidal power.

In February, the Department of Energy and Climate Change announced an independent review of tidal lagoon energy, which I support and believe is the right decision. Swansea bay tidal lagoon has development consent, while the other projects do not. This has to be looked at in the round, and DECC is making the right decision in considering it properly. Tidal Lagoon Power has welcomed the review as a clear signal that tidal lagoons are being taken seriously and are no longer simply a footnote to UK energy policy. With negotiations on Swansea bay progressing in parallel, it should be possible to sustain investor confidence and ensure that this first-of-its-kind project at Swansea bay is ready to go, should the review conclude that the UK needs tidal lagoons.

In conclusion, I am concerned that the project has been used as a bit of a political football locally. We need to come together on a cross-party basis to provide the project with the support it needs. I know there is support in the Swansea area from other politicians. We all want to see the project develop for the benefit of our communities and the Welsh economy, so we need to lay aside political differences and have a serious and sensible dialogue, as we are today, on the way forward for the lagoon.

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[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.

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[Carolyn Harris (Swansea East) (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 obtaining the debate. The issue is close to my heart, and the heart of my hon. Friend the Member for Aberavon (Stephen Kinnock).

We have heard that Tidal Lagoon Power is entirely privately owned, so when in February the Department of Energy and Climate Change announced an independent review of the tidal lagoon project I was shocked and disappointed, because the Government have been in talks with the company for more than a year. What stone has been left unturned? Surely we must all acknowledge that the tidal lagoon is a new approach, which will bring considerable environmental and social advantages to every region in the United Kingdom. There are plans for future lagoons. Tidal Lagoon Power is developing five full-scale tidal lagoons to employ the blueprint that needs to be established in Swansea bay. Between them, those projects would represent more than 15 GW of installed capacity, 8% of the UK’s total electricity requirement, and more than £40 billion of capital expenditure. Each project would secure a home-grown power supply for 120 years. Those are phenomenal figures.

The economic case is astounding. Six tidal lagoons would contribute £27 billion to UK GDP during construction, creating nearly 36,000 jobs on average, and 71,000 at the peak. Once in operation, the fleet would contribute £3.1 billion per year to UK GDP and sustain or create as many as 6,500 jobs. What region can afford not to welcome that? What Government can afford to risk that potential? As to the UK supply chain, Tidal Lagoon has set a target to achieve 65% of project spend in Swansea bay on UK content; with 50% of that staying in Wales. Wales cannot afford to miss this opportunity. There are phenomenal financial implications, with turbines, generators and turbine houses to be manufactured locally in Pembroke, Llanelli and Swansea. Detailed plans are in place for a turbine manufacturing plant in Swansea docks—a part of the city that has been left for a considerable time, since the decline of the dock—heavy fabrication in Pembroke and generator manufacture in Rugby and Newport. The turbines and generation package for Swansea bay are worth £300 million with almost all the parts to be UK-sourced.

As for employment, up to 1,900 full-time equivalent jobs will be created and supported during construction, and up to 180 will be created and supported through the operational life of the lagoon. There will be up to £316 million of gross value added during construction. So it goes on; the figures just keep coming. The project is a win-win all round, for Swansea East, Aberavon, the Gower, Wales and the UK—we all gain from every aspect of the project. The region needs the project, and so does my city—and the UK. It is an opportunity for us to become global leaders in a new and exciting technology; let us not let anything stop that.

[Mr Graham Brady (in the Chair)]

I propose to take the winding-up speeches at 3.30.

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[Andrea Leadsom]

I will answer the hon. Gentleman’s point, which I know he has made twice already. I will come to it in a moment.

There is speculation, following recent announcements, that this Government have kicked the project into the long grass. The simple truth is that the developer’s current proposal for a 35-year contract is too expensive for consumers to support, and the deliverability of the wider lagoon programme is too uncertain at this point. The developer is seeking a very significant amount of financial support for the project from consumers, and its most recent proposals for a longer contract would be a significant deviation from where Government policy is just now.

For that reason, it is only right that we take more time to consider the proposals. As I have said, the Government cannot support the technology at whatever cost to the consumer. It must represent good value for money and be affordable. We have told the developer that Department of Energy and Climate Change and Treasury officials stand ready to continue discussions. In parallel, there will be an independent review to assess the strategic case for tidal lagoons and whether they could represent good value for consumers.

The independent strategic review was mentioned by my hon. Friends the Members for Gower (Byron Davies), for Eddisbury and for Montgomeryshire (Glyn Davies), as well as the hon. Member for Ceredigion (Mr Williams). It will consider a number of issues, including the potential scale of the opportunity in the UK and internationally, including, importantly, supply chain opportunities.

Shortly, we will set out more details about the review, including the name of the person who will lead it. I hope that it will be possible to complete the review by the autumn. It will help us to consider further what role tidal lagoons could have as part of our plans to secure clean and affordable energy for families and businesses across the country.

[Carolyn Harris]

Can the Minister confirm that there will be somebody from Wales on that committee?

[Andrea Leadsom]

As I say, the make-up of the committee is being discussed right now, and I will certainly take that point away. I am quite sure that there will be someone from Wales on it, but I cannot say for certain because we have not got the names of individual members yet. I am grateful to the hon. Lady for making that point. As I was saying, we will not be able to make a decision about whether to award a CfD to Swansea bay until the review has been completed.

My hon. Friend the Member for Carmarthen West and South Pembrokeshire suggested an intergenerational CfD for up to 90 years, as did the hon. Member for Aberavon (Stephen Kinnock). We will consider this and other means of financing this type of project as part of the review. However, hon. Members will appreciate that a 90-year CfD, or a CfD for even longer, is a very, very long-term intergenerational funding commitment that is not something that the Government have looked at so far. It requires further review; it is not something that we can simply pick up.

One of the very important reasons for the widespread interest in the proposed Swansea bay tidal lagoon and of course the wider lagoon programme is the potential for significant economic growth and job creation. We are taking this opportunity very seriously. If a decision is taken to award a CfD to this project, the Government will look to maximise the potential economic benefits as far as humanly possible. I can tell hon. Members that consideration of the supply chain is always a key part of a CfD negotiation, and the Government have already requested a supply chain plan and map from the developer. We are very pleased that the UK content of the project is likely to be up to 65% and that the Welsh content is likely to be about 50%.

That is good news, but hon. Members—in particular, my hon. Friend the Member for Carmarthen West and South Pembrokeshire, and the hon. Members for Aberavon, for Salford and Eccles and for Swansea East (Carolyn Harris), and my hon. Friend the Member for Gower—asked, “What do we get from this, especially for the steel industry and so on?” I can tell all hon. Members that in the context of offshore wind, where there is a very clear commitment to further growth, I am pushing extremely hard to maximise the opportunity for the UK supply chain, and if this tidal project goes ahead I will be like a Rottweiler and absolutely fighting for as much UK content as possible. That is a very important point to make to all hon. Members.