Swansea Bay: on the right path?

Political enthusiasm for the Swansea Bay Tidal Lagoon - the first project designed to take advantage of the UK's big tidal range to generate power - has ebbed away as the UK government tries to reduce payments to renewable energy sources.

Giving evidence at a parliamentary committee in February, UK prime minister David Cameron said, "The problem with tidal power, simply put, is that at the moment we have not seen any ideas come forward that can hit a strike price in terms of pounds per megawatt-hour that is very attractive....

“They are very long-term schemes with big investments up front, and they can last for many, many years, but right now my enthusiasm is reduced slightly by the fact that the cost would be quite high."

Government and developer, Tidal Lagoon Power, have been negotiating over the level of financial support required by the project. It would be funded under the government's "Contract for Difference" scheme whereby the developers receive a guaranteed price for the electricity produced. Initially negotiations began at a so-called 'strike price' at an eye-watering £168/MWh for 35 years - four times current power prices and much higher than the strike price for power from Hinkley Point C, which at £92.50 has become something of a benchmark fir the UK. Recent reports have suggested the strike price for Swansea could come down - but only if the guarantee period was extended past 60 years, or if it was tied to building a second, larger project.

In February the government decided it needed to step back, and announced an independent review of tidal lagoons. The review will delay any decisions on the Swansea project - it will not start until the 'spring', which in UK political terms could be any time up to the summer recess. And it will throw the net wider, considering:

• the potential scale of opportunity in the UK and internationally, including supply chain opportunities;
• a range of possible structures for financing tidal lagoons;
• different sizes of projects as the first of a kind;
• introduction of a competitive framework for the delivery of tidal lagoon projects.

A competitive framework may seem a far-off goal for such large, site-specific projects, but in fact Swansea Bay's developers do face at least one competitor. Ecotricity, one of the UK's smaller power companies and a long- standing, if relatively small scale, wind and solar developer, in February announced it had its own plans for a Swansea tidal lagoon facility. Ecotricity's founder Dale Vince said his project would produce power much more cheaply than the Swansea Bay Tidal Lagoon, which he said was 'the wrong size and in the wrong place'.

Is it the right project?

Is the current Swansea Tidal Lagoon the right project?

It is possible one element in delaying agreement on a strike price is the nature of the project itself, which offers predictable power supply, but not the characteristics lauded by the prime minister at his evidence session. He said "Instinctively I can see the strength of the argument for tidal power because one of the problems with renewables is whether they can provide baseload power.

“Nuclear can. Wind cannot because it is intermittent. But tidal, because the tide is always going in or out, can provide baseload power." Others have suggested the project can offer storage, which is an aim of network operators.

But in fact the project offers neither of these options. Instead it exports - and imports - power during highly predictable but short periods.

Usually, a characteristic of hydro power is its responsiveness and flexibility in operation. Hydro plants with dams can stop generating and store water when power is abundant; pumped storage plants with two reservoirs go further, using excess power to pump water back up the chain to be used to generate later. Although so-called run of river plants cannot store water, and may have limited generating capacity according to river conditions, they can reduce generation on demand.

All these options help balance the grid - and although it sounds unlikely, there are times when local or national conditions mean there is oversupply and it is necessary for generation plant to turn down.

Swansea Bay has little of this type of flexibility. Although it can pump, that ability is used to maximise generation around high or low tide. In theory it could store water between one tide and another - but that would affect the next cycle of generation and, importantly, the tidal habitat enclosed by the sea wall, which has to empty regularly to mimic natural tides.

There are some services the plant could offer to help balance and stabilise the grid, if not continuously over 24 hours. The plant has some flexibility to store short-term, generating half an hour before or after the optimumtime,andofcourseitcouldopenthe turbine vanes and allow water to flow without generating. It could also alter the amount of pumping or change the time slightly.

At present, however, that is not on the project's radar. The aim is to generate as much as possible whenever possible.

Tidal Lagoon Power says a fleet of lagoons around Great Britain could mean the lagoons will generate 24 hours a day somewhere in the country. But it says that in addition, National Grid is interested in taking advantage of the projects because during pumping periods a lagoon would be a big- demand customer - albeit at more or less fixed times. "We can't use the lagoons like a pumped storage unit. But more lagoons means more flexibility. At the moment we have fairly simple optimisation - [any other options] are outweighed by the income from CfDs. Once the CfD comes to an end, that may change."

Is the technology ready?

In another puzzle for government, Tidal Lagoon's Swansea Bay project is at once "innovative" and "tried and tested", depending on whether it is looking for subsidy or investment.

The tidal lagoon planned for Swansea Bay is a project that combines many very familiar elements. What's new is the combination, the type of site, and some developments in turbine technology. Tidal Lagoon Power says: "Each component part is proven. The configuration and pulling them together has never been done before." That degree of familiarity makes it an attractive investment: "In terms of technology risks it's in a different ball game. For institutional investors it's entirely different from other renewable energy."

The tidal barrage is a familiar technology - one has been in operation for 50 years t La Rance in France. Swansea Bay uses the same principle. But instead of filling a natural space, it has to create its own: six miles of sea wall will enclose a horseshoe- shaped area that will be filled and emptied by the tides twice a day.

The sea wall is one area where the technology is familiar. Two options went into planning and the preferred one was very similar to a typical sea wall, with sediment and different grades of rock infill. Seabed areas have already been identified for dredging for the sediment infill.

The turbines too are based on familiar technology, but with a new application. They are "variable speed" turbines, which means the generator can generate at any frequency which is then corrected through power electronics to synchronise with the grid frequency of 50 Hz. It means the project has a wide operating load and can "chase hydraulic efficiency". The company says variable-speed technology has not been used at large scale in this type of hydro plant before.

With 16 bidirectional turbines housed in the powerhouse, the project will have four 3.5-hour generating periods every 24 hours, predictable decades in advance. The turbines will each be of 20 MW capacity, totalling 320 MW.

The facility will use the pumping ability of its turbines to control the water level difference. That will maximise the power produced on each tide, and ensure the lagoon is emptied at low tide for environmental reasons, to mimic the natural flow.

Tidal Lagoon Power explains that when there is high tide outside the lagoon and the level inside is almost the same, it will pump into the lagoon. "We pump for half an hour and then close the [turbine's] wicket gates. Then we wait for the tide to turn. It means [the water level inside the lagoon is slightly higher so] we generate at slightly higher head."

That is not unique - the plant at La Rance can also pump, but its efficiency is very low. Designing this in from the start, Swansea Bay expects to make annual energy gains of 10%.

In all there are four generation cycles, either side of the two high tides, and up to four pump periods (importing power). The company says fine tuning when to pump will be part of the lessons learned from the project: "The devil's in the detail on deciding when to pump. We don't necessarily have to pump on every tide." The company says it may want to avoid importing power during triad periods, for example, so there will be some tides when it will not pump.

Can costs come down?

Power from Swansea Bay, seen as a "pathfinder" designed to establish a "scalable blueprint for subsequent full scale projects", will be expensive. The company has a buyer for 10% of the power - Good Energy, which is an early-stage investor - but the remainder has still to be placed.

Follow-on projects are intended to be much cheaper in terms of per-MWh costs, that's partly because of technology, and experience from Swansea that will reduce the construction risk. But mainly it is because the follow-on projects would be much bigger (with capital costs up to around seven times the projected £1 billion investment in Swansea Bay).

Tidal Lagoon Power is looking at five potential full-scale projects. Three are in Wales - Cardiff, Newport and Colwyn Bay - and the others are in west Cumbria (north of Workington) and Bridgwater (Somerset). Cardiff, described as the "UK's first full-scale energy-generating lagoon", is likely to be the next project.

At that site, the sea wall would be twice as long as the one at Swansea and it would enclose six times the area of water - 12 times the volume. That means 12 times the volume of water going through the turbines - and low-head hydro is all about the volume through the turbine. But Cardiff also has a better tidal range, so the project would have more head (adding more power). The larger lagoon would have more turbines - 90, compared with 16 at Swansea. That puts minimum capacity potentially at 1800 MW and maximum at 2800 MW.

Economies of scale provide an immediate cost reduction. There will also be "a degree of learning" in the technology, Tidal Lagoon
Power says. But it also requires investment from the supply chain.

“When you are looking at the supply chain and industrial opportunity, most industry turbine makers can cope with an order for 16 turbines, they don't have to expand. But for 90 they do. The pilot project builds a readiness to step up in the supply chain," the company says. "A year ago we guessed the strike price at Swansea at £168/MWh - at Cardiff we would have a strike price of £95/MWh and a lot more power produced." In addition, the company says that in the first project, the risk is in the construction, not the technology, and that is borne by the private sector.

What's next?

The first major construction activity at the Swansea Bay site, in year one, would be building a cofferdam so the company can work through the winter constructing the turbine hall.

The company has announced that it wants to maximise the UK supply chain, and it says there are UK suppliers for nine of 11 major turbine components. The turbine suppliers "have had to rewrite their supply chain to do that".

Tier 1 contracts have been awarded. Theproject'smajordeliverypartnerships announced to date are: China Harbour Engineering Company Limited (CHEC) for marine works; Andritz Hydro and GE Power Conversion for turbine supply; Laing O'Rourke for turbine housings; and Alun Griffiths for public realm ancillary works.

But these suppliers are now waiting for the outcome of the new government review as a first step. If it comes out in favour of the project, the problem of negotiating a CfD remains - and any CfD agreed would have to pass EU "State Aid" tests, a process that takes from six to 18 months, depending. That means the project is unlikely to move forward this year.