The UK government’s decision to shelve plans to build the world’s first tidal lagoon off Swansea Bay is a hard blow for Wales. That it comes in the wake of Airbus’s warning that 6,000 jobs at its Broughton factory in Flintshire are being put at risk by continuing uncertainty over Brexit, and on the same day that the Society of Motor Manufacturers and Traders sounded the alarm over the future of car building in the UK, only serves to increase the pain. Ford employs 1,700 people at its Bridgend plant, while a new Aston Martin factory is due to open in south Wales next year. The tidal lagoon project, had it gone ahead, was expected to create 2,200 jobs, plus more in the supply chain. These are the kinds of jobs that Wales, so damaged by steel and coal closures, needs. But the business secretary, Greg Clark, has decided the country can’t have them because they would be too expensive.
It’s true that tidal lagoon power is costly at the moment. The so-called strike price that the government would have to agree for Swansea’s electricity, to get the project off the ground, lay between £92.70 and £150 per megawatt hour (MWh), with the difference accounted for by a Welsh government subsidy, and the duration of the contract. While the UK government’s rejection of the scheme – on which the company says it has spent £35m – was based on the higher figure of £150 over 30 years, the company said that, given a longer contract of 60 years, it could supply electricity at £92.70, the same as Hinkley Point C nuclear power station, the government’s flagship energy project in Somerset (Hinkley Point’s strike price is fixed for 35 years). The Welsh government said that its offer of a £200m subsidy made the Swansea project – meant to be the first of six British tidal lagoons, four of them in Wales – competitive with Hinkley even on a similar time span. Welsh politicians have reacted with understandable fury to Mr Clark’s announcement, which comes almost exactly 12 months after the government abandoned plans to electrify the railway from Cardiff to Swansea, and just a day after MPs voted to press ahead with another expensive infrastructure project: a third runway at Heathrow.
There are some rational reasons to approve of this week’s decision, while regretting its consequences. No one, including the Tidal Lagoon Power company, denied that the electricity produced off the Welsh coast would have cost more than the cheapest renewables. The most recent government auctions saw offshore wind schemes win contracts at record lows of £57.50 per megawatt hour, meaning they are within a few pounds of being subsidy-free. But cost is not the only consideration. Otherwise, the government would never have gone ahead with the hugely expensive, risky and uncertain Hinkley Point C. Nor would it have cut subsidies for solar power and onshore wind, as it did in 2015. Those decisions – particularly the promise to curb onshore wind, as the Conservatives did in their 2015 manifesto, despite poll after poll showing that a majority of the public prefers wind and solar to nuclear – were ideological.
In a City speech this March, Mr Clark praised business for putting “evidence before ideology”. It is welcome that the secretary of state says this is his own approach. Too many of his Conservative colleagues remain too strongly attached to fossil fuels, including the prospect of a whole new shale gas industry. As the price of renewables continues to fall, they will surely lose the argument. With Mr Clark in charge, the hope is that onshore wind and solar subsidies may soon return – though too late for UK companies that could have developed and profited from the technology had we not given up on it long before the renewables boom.
Yet the government is planning more nuclear power stations, including one in Wales. Different rules seem to apply for different technologies. It looks like a Tory government in Westminster snubbed Welsh Labour’s pet project. Backers of the tidal project felt shut out by ministers. Wave energy lobbyists perhaps don’t have the firepower in Whitehall that others can muster. Mr Clark might have relied on the evidence to make a tough call not to back a new, green technology. But it’s hard to shake off the impression that the decision was one rooted in the partisan politics of self-interest.