Tidal Lagoons and UK Energy Strategy

Ian Paisley Excerpts

Tuesday 6th December 2016 Westminster Hall

[Several hon. Members rose—]

[Ian Paisley (in the Chair)]

Order. Because of the extensive interest in this subject, I have a list of at least nine Back Benchers to call to speak, so I am going to impose a four-minute limit on speeches. The Minister and shadow Minister have indicated that they have a considerable amount to say. With that in mind, we will move straightaway to Liz Saville Roberts.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Diolch yn fawr, Gadeirydd. I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this debate, which I hope we can use to build the cross-party consensus that we need to get moving on tidal lagoons, as well as many other much needed Welsh infrastructure projects. The Government seem to be rather caught in the headlights of Brexit.

I shall make my case for increased investment and urgency in the development of tidal lagoons in three parts. First, and most appropriately, I will outline the benefits of tidal lagoons for meeting current and future energy capacity requirements. I will then briefly touch on how they can contribute to our environmental targets, before finally outlining the economic benefits. Those Members who are familiar with energy policy will recognise my speech as an expanded response to what is known as the energy trilemma. I will conclude by highlighting the deficiencies in the Wales Bill and how it continues to hamper Wales’s ability to make use of its natural resources.

Eighteen major power stations, totalling 17,767 MW of capacity, have closed since 2012. By 2020, the amount of lost power is expected to rise to over 38,000 MW, representing more than a third of our current capacity. According to Tidal Lagoon Power, that means that, having put everything else into the mix, we will end up with a 32 GW deficit.

The 350 MW Swansea bay tidal lagoon will pave the way for projects between Cardiff and Newport, which are planned at equal capacity to Hinkley Point C. The projects will generate the lowest-cost electricity of all new power stations, and can be online in the mid-2020s. A 3,000-plus MW lagoon on the north Wales coast is planned for completion shortly afterwards, with two other projects in the pipeline for development slightly further down the line. As a fleet, the five scoped projects can generate secure, clean energy for 30% of UK homes for 120 years.

We face a clear and present risk when it comes to our long-term energy security. The highly predictable and secure energy created by tidal lagoons means that they face few of the uncertainties or dangers of other carbon-neutral technologies. A home-grown industry, producing power on our shores—what is more secure than that? What is there to like more than that?

I turn briefly to the role of tidal lagoons in meeting environmental targets, which is the second aspect of the energy trilemma. Whatever the impact of Brexit on the UK’s energy and environmental policy, under the Climate Change Act 2008, we are committed to reducing carbon emissions by 57% by 2030, on 1990 levels. As recognised by the Committee on Climate Change, it is likely that new technologies, including tidal lagoons, need to be implemented to meet that target.

In Wales, our abundant resources, particularly tidal energy, give us huge potential to become a world leader in carbon-neutral energy generation. However, Westminster is the dog in the manger when it comes to Wales’s abundant natural resources. For centuries we have been reined back from cultivating and benefiting from our own resources because of arbitrary restrictions from Westminster.

The third aspect of the trilemma is often referred to as energy equity—that is, the affordability of energy for consumers—but I shall also touch on the broader economic implications of tidal lagoons. As the first of its kind, Swansea bay tidal lagoon is undoubtedly more expensive than some of the rival technologies. However, as the project is small, its impact on household electricity bills will be small as well. For consumers, Swansea bay’s real benefits lie in its ability to act as a catalyst for an industry of cost-effective renewable energy in the form of future tidal lagoons.

That said, at a local level, during construction, Swansea alone will employ 2,323 workers, and 181 during operation. It will add around £316 million of gross value added throughout construction, and £76 million annually thereafter. We must also remember the possibilities for exporting the technology. At a time when exports are crucial to the future of the economy, why are the Government dragging their heels on the issue of getting shovels into the ground at Swansea? We can demonstrate to the world that we can lead the way on innovative technological solutions to our energy needs.

I conclude by highlighting the vicissitudes that Wales endures from Westminster. Despite Wales having a natural treasure trove of renewable resources, particularly tidal energy, Westminster refuses to let Welsh people benefit from their own environment.

Unlike under any other devolution settlement, under the current Wales Bill, there will be an arbitrary 350 MW cap on what our National Assembly can develop. That means that the lagoon in Swansea, which has already received planning permission, would have been a project decided on by Cardiff Bay, but any of the other larger projects would remain the preserve of Westminster.

My final plea to the Minister is this: allow the people of Wales to control their own natural resources, so they can make the best use—

[Ian Paisley (in the Chair)]

Order. The hon. Lady will resume her seat.

--- Later in debate ---

[Dr Alan Whitehead (Southampton, Test) (Lab)]

We have had an excellent debate, with contributions from Members on both sides of the Chamber indicating almost unanimous support for the Swansea bay tidal lagoon. That outcome—the clash of ideas in the white-hot heat of full agreement—should be impressed on the Minister. Even though there was what might be regarded as one dissenting view from the hon. Member for Eddisbury (Antoinette Sandbach), I think that she supports the idea. She made some important points about value of money and about how careful one needs to be to get that right.

We can, I think, say that there is agreement, more or less, about the principle of the Swansea bay tidal lagoon and full agreement, at least by the Opposition, about the practice. Indeed, Opposition turnout and the first-rate contributions made by my hon. Friends the Members for Aberavon (Stephen Kinnock), Swansea West (Geraint Davies), Swansea East (Carolyn Harris), Newport East (Jessica Morden) and Workington (Sue Hayman), and by the hon. Member for Aberdeen South (Callum McCaig), indicate just how full the support is on this side of the House, not just from south Wales Members but across the country. I think that is because we need to make it clear that support for Swansea needs to be based, as Members have emphasised, not just on whether we build that tidal lagoon but on what it means for tidal lagoon technology for the UK’s future and what it means also for the series of lagoons that can come about as a result of the Swansea proving lagoon.

That series of tidal lagoons is not a concept based on thin air; it is not about harnessing an as yet untried technology that might come from the middle of nowhere and save us as far as low-carbon power is concerned. Essentially, it works on a simple principle of proven, well-known technology, of water entering the lagoon subject to its flow through a turbine, both when it is coming in and on its release when the lagoon is full, that allows for the generation of some 14 hours of utterly predictable power. We know that the principle works well because, as the Rance barrage in France has shown, the technology is reliable over many years and, as has been mentioned, it is a power source with a lifetime far in excess of those estimated for wind, gas and even nuclear. It is likely also that the outage time over a long period will be relatively low.

Swansea is not a large lagoon in terms of what is possible. It will have an installed capacity of 350 MW, which is approximately a tenth of the most worked-up second lagoon, in Cardiff bay, which comes in at a capacity close to that of Hinkley Point C power station. However, it is the possibility of Swansea being the proving ground for a number of tidal lagoons that will not only be cheaper to construct and operate than Swansea but will open up the prospect of a large contribution—perhaps 10%—of our electrical power needs that ought to be a condition for supporting it. What we should be investing in as a country is not Swansea, but Swansea and the prospect of all the others as a major component of our future energy make-up.

As Members have mentioned, as far as our country’s overall energy make-up is concerned, power plant is going offline at an alarming rate, with 23 GW of conventional thermal plant being closed or mothballed since 2010, and a further 24 GW—mostly of coal and nuclear—to be closed by 2025. It is unlikely that nuclear will even begin to make up that gap. Hinkley is delayed by longer than seven years and will probably not be on line until 2026-27 and, according to the latest consultation, coal is due to come offline by 2025.

We need replacements for the lost capacity, and a lot of that will come from the aggregation of renewables, but at present the only plan appears to be that gas-fired power stations will be built out at some pace between now and the late 2020s. We know that gas power stations are not, at present, getting built and, indeed, the Government are pursuing expensive capacity market operations—with an auction today or thereabouts possibly costing us £2.5 billion—for capacity over the next period. That is the last chance saloon, one might say, for gas plant procurement under the present arrangements. Swansea, and other lagoons, would certainly serve as a substantial alternative to some of that build, which, if procured, would cost substantial amounts—something that needs to be taken into account where value for money is concerned. All energy, at the moment, is expensive to build. All energy, at the moment, is being subsidised in its build. It is not about considering just what Swansea might cost but about what the alternatives might cost as well. Under those circumstances, Swansea performs, in the long term, very well.

Within a few years, perhaps, a number of those replacement power stations will need replacing anyway. Meanwhile, Swansea and other lagoons would have sailed through the period, producing reliable ultra-low-carbon electricity. By the way, in terms of a larger lagoon strategy, they will be able to supply reliable and known amounts of power pretty much round the clock, for the simple reason that the time of high tide varies considerably along the UK coast. I always like to try to introduce a not very well known fact into my contributions and today it is that, right this minute—this very minute—it is high tide in Morecambe bay. That means that if there were to be a lagoon in Morecambe bay it would produce power for seven hours either side of its high tide.



It is not high tide in Swansea. High tide was at 10.20 am. Power could be produced seven hours either side of that high tide, which would overlap almost exactly with the power produced in Morecambe bay on its high tide. With a series of lagoons, there would be round-the-clock, reliable, known, predictable power that was just as predictable and round-the-clock as any nuclear power station or gas-fired power station that we might care to build in this country.

The benefits of developing Swansea and subsequent lagoons are manifest from a low-carbon energy point of view. As Members have alluded to, there would be considerable other benefits, too. Jobs and supply chains would be created, mostly in the UK. It is estimated that 65% of the pathfinder project spend will go on UK content, which is close to the figure achieved by the North sea oil and gas industry. There would be 200 jobs in Swansea and perhaps 11,000 jobs in Cardiff during construction, and several thousand jobs during operation. Developing Swansea is important for what UK plc should be doing to secure the exportable potential of those technologies in which we are world leaders. We certainly are leading in tidal, tidal stream and wave.

As the hon. Member for Aberdeen South said, we only have to look back a little to see how close we came to securing exportable UK industry in wind before we lost our lead and most of our manufacturing and expertise to others, most notably Denmark, because we did not back the development of our world lead through industrial strategy. Yes, I have mentioned the words “industrial strategy”. It appears in the title of the new Department—the Department for Business, Energy and Industrial Strategy—but there is still an absence of anything that looks like an actual industrial strategy from the Government. We were promised a Green Paper on industrial strategy would appear shortly. With lagoons, we have an industrial strategy in the round already, with jobs, a supply chain and exportability. It is running up to us, metaphorically asking us to bite its hand off, and at the moment we are not responding in a positive way.

In all of this, we have to consider the question of value for money, which the hon. Member for Eddisbury mentioned. Comparatively, lagoons provide value for money. Undoubtedly even Swansea will come in as better value for money for electricity-generating purposes than the deal we have concluded with Hinckley C. Comparatively it is in the same league as offshore wind. A series of lagoons would certainly be much better value overall, although we need to cast our minds towards the longer term in thinking about value. Swansea is asking for a CfD for 60 years. That is half the operating life of the lagoon, with payments reducing substantially over that period. Swansea is not asking for a block CfD degressing through future projects; it is asking for a CfD degressing within the project’s lifetime.

I know the Government have not been idle in all this, although on the surface not much has happened since general support for the idea of the Swansea bay lagoon was included in the Conservative party’s 2015 election manifesto. Indeed, as my hon. Friend the Member for Aberavon said, it was also in the manifestos of all the other major parties. I hoped we would hear something positive about Swansea in the autumn statement, but nothing was announced. We will have to wait until the Hendry review has been examined. That review is headed by an estimable former Energy Minister, the right hon. Charles Hendry. I am confident he will have a positive look at value for money and the bigger picture I have described of the lagoon, but we do not know where that review is. We think it is on its way to Government as we speak, but we have not yet had any confirmation that it has been received, or whether there is a timetable for looking at that review or for action after it has been considered. I join my hon. Friends in calling for early publication of the review so that we can all have sight of what it is about. We also call for an early Government response to that review, even if a final decision about proceeding with the Swansea tidal lagoon has not been made.

I conclude by emphasising that timing is important. We have a worked-up, permitted, committed plan that cannot stand in suspended animation while people spend so long making up their mind. Swansea bay, in case anyone needs reminding, is not an interesting concept that we can cogitate on at our leisure, but a real project that needs to be developed within a reasonable timescale. Otherwise all the money invested in it—£50 million—will start to go stale and the project may fail, possibly never to be revived. We need to get on with it, not just for Swansea’s sake, but for the sake of a real solution that could be producing power by the very early 2020s if it is given the go-ahead now. It would be a solution for our mounting energy gap in the early part of the next decade.

[Ian Paisley (in the Chair)]

If the Minister can take about 12 minutes, that will give Mr Crabb a minute and a half to wind-up at the end.

--- Later in debate ---

[Jesse Norman]

I am very short of time. I am so sorry. I have taken an awful lot of interventions, and I want to make progress.

I note the enthusiasm of my right hon. Friend the Member for Preseli Pembrokeshire for the proposed Swansea bay project, but it is the Government’s job to consider the advantages and disadvantages and to scrutinise the evidence to ensure that decisions are taken in the longer-term interests of the UK and consumers. It is worth focusing on the significant uncertainties associated with the project—in particular, the use of a new and untried technology in a marine environment, the length of time over which the commitment would be made, and the planning issues, which have already been mentioned.

Since the debate on the economic impact of tidal lagoons in March, the Department has continued to have discussions with the developer of the Swansea bay lagoon. I cannot comment on those discussions, given their commercial nature, but the most recent proposal put forward by the developer would be a very significant deviation from current Government policy. It would not be impossible, but it would require careful consideration. We have always been clear that we will consider the findings of the independent review of tidal lagoons and all other relevant factors in deciding whether to proceed with negotiating a CfD on this project. The developer is aware of that.

The issue of value for money quite properly remains at the forefront. I mentioned the concerns about consents and leases, decommissioning and the supply chain. I note that the China Harbour Engineering Company is no longer working with the developer. There is also an issue of state aid approval. The point is that, even under ideal circumstances, it will take some time to resolve those issues, and the Government will need to take our time to consider the review and make a judgment in a proper and effective way.

As this important debate draws to a close, let me say that I expect a copy of the review’s report to be on my desk and those of colleagues very soon, and we will give it careful consideration. I assure hon. Members that the Government will strike the right balance between responding in a swift and timely way and taking the time required to consider this complex issue in the detail it deserves.

[Ian Paisley (in the Chair)]

Mr Crabb, given that the Minister has been generous in giving up a bit of time, you have the opportunity to accept a bouquet and take a bow, but not much more, before I put the Question.