Utility Week has reported a spokesperson for the ambitious £1bn tidal lagoon project saying the government was taking “longer than expected” to finalise a contract for difference (Cfd). This rules out marine works start spring 2016.
Website .gov.uk states: “A Contract for Difference (CFD) is a private law contract between a low carbon electricity generator and the Low Carbon Contracts Company (LCCC), a government-owned company. A generator party to a CFD is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the ‘reference price’– a measure of the average market price for electricity in the GB market. It gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices, whilst protecting consumers from paying for higher support costs when electricity prices are high.”
Read the original Utility Week article here.
A Decc spokesperson said: “Tidal Lagoon Power are seeking a significant amount of financial support from consumers for their proposed project in Swansea Bay and we need to carefully consider whether it is in the best interest of bill payers. At present there is no timeframe for how long the negotiation process for Swansea Bay tidal lagoon may take”
Swansea Bay Tidal Lagoon chief executive Mark Shorrock assured that with each lagoon built, costs would come down. “Because [the tidal lagoon] has such a long life, we can end our subsidy period, whatever duration that is, and can contract to give money to the government per MWh that we produce.”
Liberal Democrat Peter Black told Utility Week: “it is quite clear that the failure of the UK government to agree the price for the electricity it will generate within the original timetable has led to this delay. The danger now is that the project will lose momentum and that investors will take their money elsewhere.”