Swansea Tidal Lagoon

Simon Hart Excerpts

Tuesday 8th March 2016 Westminster Hall

[Mr Graham Brady (in the Chair)]

Many colleagues have indicated that they would like to speak in this debate, so it might help if I point out that we anticipate Divisions in the Chamber at 3.50 pm. It is entirely up to hon. Members whether they wish to continue the debate after 3.50 pm. If so, we will have to come back after a suspension.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

I beg to move,

That this House has considered the potential economic benefits of the Swansea Tidal Lagoon.

The 2015 Welsh Conservative manifesto said:

“We know how important Wales is to the UK’s energy security…We’re entering into the first phase of negotiations on a Contract for Difference for Swansea Tidal Lagoon to recognise Wales’ potential to become a major hub for tidal and wave power. This project will create thousands of jobs and attract millions of pounds worth of investment into Wales. We will continue to support strategic energy projects in Wales to boost the Welsh economy and help secure Wales’ energy future.”

So far so good. It is unusual in this day and age for a manifesto commitment to have the widespread support of quite so many interested groups. They include the UK Government, all parties in this House, the Welsh Government, all parties in that Assembly and local government in areas where the lagoon might be constructed and other areas in Wales that will reap the benefits of it. Environmentalists by and large see it as a clean form of renewable energy; economists across the UK and further afield recognise the long-term value of the project; and, almost without exception, the local communities affected directly or indirectly support the proposal. I can remember few, if any, commitments from any party’s manifesto that have such widespread and cross-party support.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

The hon. Gentleman did not mention the Scottish National party—perhaps for understandable reasons—so may I say, as an SNP Member, that I am very supportive of it as well?

[Simon Hart]

The hon. Gentleman makes a good point. The only reason I did not mention the SNP is that I forgot. I hope he does not take that to heart.

The Swansea bay tidal lagoon project ticks a lot of boxes—to use that rather awful expression. If I make only one point this afternoon, it is this: it must not be seen as a one-off project or a stand-alone proposal. It is part of a four-part proposal for the Severn estuary. It will lead to other projects around the UK coast, and after that—who knows?—perhaps across the rest of the globe. We have a chance to be a global leader in this technology; to start it down with us in the Swansea bay. It is equally important that the Government look at it not as a stand-alone project, but in the context of the proposals for Cardiff and Newport. This is not about just Swansea, Wales or the UK; nor is it about just renewable energy, which has been debated so often here.

I have four issues that I will deal with as quickly as I can, given your steer, Mr Brady: the current situation; employment opportunities; the questions about costs, which have been reported in the press; and other benefits, which sadly do not seem to have been reported at all. On the current situation, this is about a long-term plan for the UK and beyond. Over the next 10 years, the UK will lose 11 of its coal-fired power stations, followed by our ageing nuclear capability. In technical terms, that is the same as a 25 GW reduction out of a total capacity of 85 GW across the UK. As yet, nobody has made it entirely clear how we will fill that void. Hinkley Point is 10 years off, and today further questions were raised about the speed and certainty of that project. No new gas-fired power stations are under construction in the UK.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate my constituency neighbour on securing this debate and on his opening remarks, many of which I agree with. The big issue with Hinkley C is the strike price. The problem with the tidal lagoon is that the financing model that is envisaged for it is the contract for difference. Does he agree that we should perhaps look at other models, such as direct public investment? If we go for a CfD, the cost ends up with the consumer. If we go for direct investment, it ends up with the public, but it is far cheaper than a CfD.

[Simon Hart]

The hon. Gentleman makes a very good point. I will come to that issue later in my speech. That is an important message to the Government. I entirely agree that using a model for this form of energy infrastructure simply because it is used for other forms, such as offshore or onshore wind, is potentially a mistake. There is an opportunity, especially with the Government review, to look at other models to see whether we can make it work over a longer period using different technology.

[Richard Graham (Gloucester) (Con)]

My hon. Friend is being very kind in giving way. He is making a series of very good points. Does he agree that time is of the essence not just for the company and its employees, but for investors, for the communities that he mentioned and for our ability to show technological leadership, which could lead to a great export business?

[Simon Hart]

My hon. Friend is spot on. Many people are watching the Government’s approach to this—not only investors, but people who question whether we have the technical capability and the political will to proceed with this type of project. He is absolutely right that, as long as the Government do not prevaricate about the outcome of the review, they have the chance to put right the concerns that he raises.

[Craig Williams (Cardiff North) (Con)]

I apologise for turning up late because of the vote in the Chamber. I commend my hon. Friend for securing this debate. Is not the issue that we are at the proof of concept stage? The review is very welcome. I know that we need time on our side, but proof of concept is a difficult stage for any project. Although we wholly support it, we need to review it and look at the financing.

[Simon Hart]

I think I understand my hon. Friend’s comment. I should have said earlier that we are not unique in using tidal power. This technology has, in various forms, been tried and tested in other parts of the world, so there are not significant doubts about its workability. We should look elsewhere to ensure that the lessons learned from projects in other parts of the world are applied here.

[Huw Irranca-Davies (Ogmore) (Lab)]

Will the hon. Gentleman give way?

[Simon Hart]

I will. The chances of us finishing at 3.50 pm are getting slimmer by the moment, but we will do our best.

[Huw Irranca-Davies]

I congratulate the hon. Gentleman on securing this debate and on his opening remarks. This project is as significant as the previous investment in the offshore wind industry in the east of England, which included £60 million of pump-priming for port infrastructure and so on. This project is as significant, not only because it will have an immense impact on the region, but because it will make us a global leader. The hon. Gentleman is right that there are those looking to take it elsewhere if we do not get on with it.

[Simon Hart]

I will devote a section of my speech to concerns about the cost, which are raised in the media. I want to address those points, because at the moment we are looking at added value or some of the other elements that move this project from being simply a good idea to being an irresistible one. However, I will hopefully deal with the hon. Gentleman’s point properly in a moment.

Before I took those interventions, I was talking about the uncertainty about Hinkley Point. Until literally the last few days it was seen as the saving grace of UK energy production, but suddenly we discover that we are back in the land of the unknown. An important message for the Government is that an energy void needs to be filled, about which we know very little. I do not want to sound too melodramatic, but there will be a lights-off moment in about a decade’s time unless the Government—I would say this to any Government—take it seriously. They must act with haste, as my hon. Friend the Member for Gloucester (Richard Graham) said, to ensure that no uncertainty creeps into the proposals.

It is also reasonable to say that everyone who supports the proposal understands that it is not a silver bullet. Our energy demands will be met by a range of different options, of which this happens to be one, but it is an important one. Tidal lagoons can provide—there is no doubt about the statistical back-up for this—8% to 10% of the UK’s total requirements. That is an extraordinarily tempting prospect. To quote, or possibly misquote, the Secretary of State for Energy and Climate Change, it is home-grown, reliable, affordable, sustainable and clean, and I am not aware of any other current proposed energy projects that can boast such descriptions.

The second thing that I want to cover is the added value, which has not been discussed in great detail in this House or in the wider media. It is important to point out that the Swansea bay tidal lagoon will employ nearly 2,000 people at its peak construction period. The programme over the whole of Wales—including Cardiff, Newport and Colwyn Bay—if it goes ahead, will consist of a £20 billion investment, which will need an average of 12,000 jobs for 12 years and result in more than 2,000 full-time positions. That does not even begin to touch on some of the supply chain, tourism and leisure benefits associated with the proposal.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

The statistics for the steel required for the project include 8,000 tonnes in the mechanicals package, 60,000 tonnes of rebar and 3,000 tonnes of structural steel. Furthermore, Sheffield Forgemasters and DavyMarkham, another world-class manufacturer in Sheffield, are both well placed to work on several of the core turbine and generator components, remembering that the project includes 16 turbines. On that basis, it would be good just to get on with this—UK steel would be helped enormously to get over its difficult period if the project were given the go-ahead as soon as possible.

[Simon Hart]

The hon. Lady makes a good point, although of course I want all the construction work, including the steel, to be in Wales and, preferably, with bits of it in Pembrokeshire. However, I recognise with a heavy heart and rather grudgingly that we may have to extend our reach to Sheffield—

[Angela Smith]

This is a UK debate, but nevertheless DavyMarkham has said that it will invest in Wales as a result of the project, so I think we are all friends on this.

[Simon Hart]

I accept the hon. Lady’s polite reprimand in the spirit in which it is intended. According to my figures—I will come on to steel in a moment—we are talking about 370,000 tonnes of steel for the Swansea project alone, and double that as we scale up to include Newport and Cardiff. As that figure goes up, it brings a whole range of other possibilities for UK steel, which, given the state of the industry at the moment, can only be welcome. I take her point.

[Jason McCartney (Colne Valley) (Con)]

To keep the Yorkshire theme going, one of the chief advisers for the Swansea tidal lagoon project is my constituent Bernard Ainsworth, who has also managed construction of the Shard and the millennium dome. Does my hon. Friend agree that this project, as the hon. Member for Penistone and Stocksbridge (Angela Smith) just said, is not only about boosting the economy and confidence of Wales, but about benefiting all of us across the whole of the United Kingdom?

[Simon Hart]

My hon. Friend is of course absolutely right. At least 50% of the £20 billion investment to which I referred is to be in Wales, so by definition the other half is not. My very next comment was to be that more than 1,000 companies have already expressed interest in this project, or these projects. I have seen a rough outline map, and the whole of the UK is covered. The line-up is impressive, and includes companies such as General Electric, Andritz Hydro, components suppliers, construction companies and a whole range of small and medium-sized enterprises from sandwich makers to pretty much every area of SME activity in Wales and beyond. Everyone in the Chamber will have a bite of the cherry, in terms of constituency interest, as might plenty of those who are not present and do not yet realise it. Our job is to remind them of that.

My third point is about cost, which has been cited regularly as a major obstacle to progress on the project, despite its being a manifesto commitment and Government having trawled the numbers for a long time. It cannot come as a particular surprise that the costs are what they are. However, over 90 years—this is key—the Swansea bay tidal lagoon needs a contract for difference, or CfD, of £118 per MWh, which is the same as for offshore wind projects that already have consent. So Government have already taken a favourable view of projects at that cost, admittedly possibly over a different timescale. None the less, the revised figures show a more attractive number as far as value for money for the British taxpayer is concerned and, once we add in Newport and Cardiff, the cost actually falls to £68.3 per MWh, which really gets it into the realms of acceptability in anyone’s language—even that of the Treasury during these difficult times.

That means that if the Swansea project alone were to be built at the current cost, arguably 10p per annum would be added to energy bills throughout the UK. If we add Newport and Cardiff into the scheme, let alone all the other places that we are talking about, annual bills would be reduced by between £8 and £12. So Swansea alone will add 10p per household bill per year, but Swansea with Cardiff and Newport will start to make significant reductions to householders’ energy bills.

That leads me to my fourth and final point, which is the other benefits. We have not learned much about them so far. Starting with leisure and tourism, the comparable Rance project in France attracts between 70,000 and 100,000 people a year, and there is no reason to believe that the same level of attraction cannot be generated for Swansea and the other tidal lagoons. There is already interest in individual sporting events around the lagoon constructions, which could attract up to 8,000 people a year. Plans are afoot for an offshore visitor centre, sailing and boating centres, and a hatchery. Local and national sporting groups have put in for a sailing triathlon, and there are rowing, canoeing, open-water swimming and sea angling ideas and concepts. There is no shortage of significant extra activity around the lagoon constructions, which can only be good for the tourism offer and employment in Wales.

The great unknown is the export of technology. The lagoon products will be at the cutting edge of global technology, so we have the possibility of creating and growing our own experts in the field, with our own concepts, ideas and plans, which could be exported to 30 or 40 countries, all of which have potential capacity for tidal lagoon generation.

That leads me to steel. I have had various conversations with interested parties, and the fairly modest figure for the steel requirement on the Swansea bay project alone is 370,000 tonnes. Anyone who has been following the plight of the steel industry in Wales and beyond will prick their ears up at that potential for rescue and sustainability. In passing, one potential investor in the project is Liberty Steel, which has already stated that it would move its operation to Wales in the event of the go-ahead from the UK Government, because it sees the opportunity for a UK recycled steel project. At the moment, recyclable steel is exported, recycled and then reimported for use in the UK, which is a crazy situation in anyone’s language. Now we have investors thinking that the scale of the tidal lagoon projects is sufficient to enable them to set up shop properly in the UK, thereby forgoing the need to export 5 million tonnes of recyclable steel. We could do it all here, with significant benefits for the country that are not only to do with tidal lagoons.

[Guto Bebb (Aberconwy) (Con)]

My hon. Friend is making a strong case for looking at the development in the round. Is it not also the case that a tidal lagoon in north Wales would not only be an energy and tourism-generating opportunity, but play a significant part in flood defences? That is another issue that should be brought into the equation.

[Simon Hart]

My hon. Friend makes a good point. Many people have raised issues with me in support of tidal lagoon technology but I had not heard that one. It is useful to use occasions such as this in Westminster Hall to bring to the Minister’s attention the added benefits that somehow never seem to get into the Treasury calculations as prominently as they might.

[Dr James Davies (Vale of Clwyd) (Con)]

I thank my hon. Friend for calling for the debate and for his reference to north Wales. It is important to protect national infrastructure such as the A55 and the north Wales branch of the west coast main line. In fact, tidal lagoons on the north Wales coast offer an opportunity for that as well as for development in areas currently categorised as flood risk zones.

[Simon Hart]

My hon. Friend reinforces the earlier intervention. It would be helpful to hear from the Minister on that.

We have a Minister representing the Department of Energy and Climate Change here, which is welcome, but I hope that she will share her thoughts with the Treasury, because it is as much a decision maker in the process as her Department. I know that she takes our manifesto commitment seriously and recognises that the project comes with almost unique widespread support, and I hope that she recognises the huge economic, social and practical benefits that this and other projects will bring, should they be rolled out. Her Department is aware of the safe and clean nature of the proposal and the longevity it offers the country in an uncertain time.

Back-Bench Members welcome the Government’s review, but we have all been down the review road before on various issues and so often we have come away disappointed that instead of “review” we could have said “delay”. I have no doubt that the review is genuine, but that needs to be demonstrated—the Minister has an opportunity to do that—because as colleagues have mentioned, investors and interested parties do not want prevarication, delay and doubt; they want us to honour our commitment, stick to our word and see the project through under the new, revised terms. DECC has already been involved in negotiations on this project and others for five years, so it has got a lot of the information it needs and it has already granted the development consent order, so it is not as if the project is coming out of the sun without having been seen before. A lot is known about it, so there is no reason to delay matters beyond the lifespan of the review.

I hope that the Minister will address the issues that colleagues have raised and that above all she will recognise and confirm that Swansea on its own is not the entire picture. We are looking at a range of projects of which that is just one, but it is important because it is the first one. I hope that she recognises that, for Wales and the wider UK, there is nothing but upsides from the project and that, as a result, the Government will give it the go-ahead at the earliest opportunity.

[Several hon. Members rose—]

--- 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.

--- Later in debate ---

[Simon Hart]

Thank you very much, Mr Hollobone, for calling me again.

I thank the Minister, the shadow Minister, the Scottish National party representative, the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), and many colleagues for their contributions today.

This has been an interesting debate, summed up by three words beginning with u: unity, which is good and somewhat unusual—to give a fourth word beginning with u; uncertainty, which is bad, and I hope that has been taken on board; and unique, because this proposal has a unique nature. There have been some erroneous comparisons with other projects. This project is not the same as other projects and therein lies its strength. I hope that the Minister will agree.

I hope that the Minister will not mind my saying this, but as far as manifesto commitments are concerned, nothing annoys me—and I suspect voters—more than something that gives a very clear impression in the written word in a manifesto that is followed up a few weeks or months later with, “Oh, we didn’t mean it quite like that.” The manifesto was really pretty clear about this project; there was no indication anywhere that this project might run into the long grass at a later stage.

Also, when the Minister talks about “not at any price”—I accept that, because nobody is going to do anything at unlimited price—I hope that she will stipulate at some stage in the future what the acceptable price is. It is all very easy going round and saying, “Not at any price”, but we need a slightly clearer indication of what we are talking about.

On behalf of many colleagues, I will say that this has been a healthy kick-around of this subject, and I hope that the decision makers in this process realise that there is some momentum behind this proposal and that, as far as we are concerned, it would have nothing but positive benefits for the Welsh economy and the wider UK economy.

Question put and agreed to.

Resolved,

That this House has considered the potential economic benefits of the Swansea Tidal Lagoon.