Sian Crampsie

Plans for a £1 billion tidal energy lagoon in South Wales have been delayed because the firm behind the project is still in negotiations with the government over subsidies.

According to the BBC, Tidal Lagoon Power (TLP) said it had taken the decision to delay construction works on the Swansea Bay tidal scheme as talks are ongoing about how much subsidy the project will receive.

In June TLP received development consent for the Swansea project, which will harness the Severn Estuary’s tidal range and generate 320 MW of energy. It would be the world’s first man made energy-generating lagoon and TLP had targeted achieving financial close at the end of 2015. Work was due to get underway in 2016.

The project still requires a marine licence from Natural Resources Wales and a lease from the Crown Estate. Mark Shorrock, CEO of Tidal Lagoon Swansea Bay has called the scheme a "game-changer" that could pave the way for a fleet of lagoons in the UK and overseas.

After securing development consent in June, Shorrock said: "We now have some further permissions to secure and must successfully conclude CFD negotiations on our way to financial close, but the vision is now closer to reality than ever before and our delivery team is readying itself to start on site and start delivering for Swansea Bay next spring."

A TLP spokesman told the BBC that the firm’s board "has updated the target for the construction programme". The firm is reported to be seeking a CFD "strike price" in the region of £168/MWh to support the project for 35 years.

The UK government has recently announced proposed policy changes that would cut subsidies for solar and onshore wind energy.