UK SBS BLOJEU-CR150039BIS-Assessing the Economic Potential of Tidal Lagoons in the UK

Tender description

Tidal lagoons represent a new approach to using tidal changes to generate low-carbon electricity. They work by utilising the differential between water levels inside and outside a lagoon, created by the rise and fall of the tides, to generate electricity. This involves the construction of a bund wall, which can be connected to the shore that encloses an area of the sea. Water levels are controlled within the lagoon to create the necessary difference to sea level, whereupon gates are opened and water is allowed to flow in and out of the lagoon via turbines installed in the bund wall. Tidal Lagoon Power Ltd (TLP) plans to develop six lagoon power stations in the UK – the first of which is a 320 Megawatt (MW) power station in Swansea Bay which is currently seeking development consent under the Planning Act 2008 (http://infrastructure.planningportal.gov.uk/projects/wales/tidal-lagoon-swansea-bay/). There is significant potential for the deployment of tidal lagoons in the UK and tidal lagoon technology could theoretically contribute up to 25TWh/year across the UK (equivalent to 8% of the UK’s electricity consumption in 2013). Although tidal range barrages have been in operation since the 1960s (for example at La Rance, France), there are currently no tidal lagoons generating electricity anywhere in the world. The few existing tidal barrages are also significantly smaller than the tidal lagoon projects which could eventually be deployed in the UK. Tidal lagoons present a novel application of the tidal range technology which has so far been used solely in barrages. At Budget 2015 (https://www.gov.uk/government/news/commercial-negotiations-to-start-on-swansea-bay-tidal-lagoon), a decision was announced to enter into the first phase of negotiations on a Contract for Difference1 for Swansea Bay Tidal Lagoon (without prejudice to the planning decision on the project). The aim is to determine whether the project is affordable and value for money for consumers, and whether it will drive down costs for tidal lagoon energy in the UK. The outputs of this tender will feed into that process, subject to decisions of Ministers. The development of a UK tidal lagoon industry could have significant potential benefits to the UK economy, which we would like to explore in more detail. In particular – we need to better understand the size of the opportunity for the supply chain from the proposed Swansea Bay Tidal Lagoon project and wider lagoon programme (and as part of that the potential economic impact on employment, skills, investment and the economy in the UK). The Department for Business, Innovation and Skills (BIS) is therefore working with the Department of Energy and Climate Change (DECC) to scrutinise the potential economic impacts in more detail and have an answer to the question: “What are the economic outcomes from the proposed Swansea Bay Tidal Lagoon and a wider tidal lagoon programme in the UK?”