Tidal lagoons to deliver cheaper power than offshore wind

A study by energy economists at P?yry, a management consultancy has described how three UK tidal lagoons, to be in operation by 2021, would create low carbon power which is more cost-effective than offshore wind.

The study revealed a volume weighted levelised cost of energy for the three lagoons as being £100 MWh. The government has given a central LCOE assumption for a Round 3 offshore wind farm in 2021 as being £131 MWh. Lagoon 3 has a levelised cost of around £90 MWh which is similar to onshore wind, large scale solar PV and nuclear and gas fired generation.

The tidal lagoons will need Government support via a pre-defined “strike price”. The average for the three lagoons was a volume weighted average of £111 MWh.

The Swansea Bay Tidal Lagoon, the world’s first tidal lagoon power plant, has been accepted for consideration by the Government’s Planning Inspectorate. Its developer plans to see construction begin in the Spring of 2015. First power generation would then be expected to begin in 2018.

The study found that the 320MW project requires a strike price of £168 MWh, slightly higher than the £140 MWh by offshore wind in 2018/19. Lagoon 2 is anticipated to be most cost competitive with offshore wind, requiring a strike price of £92 MWh in 2021. Lagoon 3 is significantly cheaper.

The move to the effectiveness of Lagoon 3 from Lagoon 1 is down to bigger sites with higher tidal ranges and it does not rely on an assumption of technology learning.

Mark Shorrock, CEO of Tidal Lagoon Power, said: “This study clearly demonstrates that tidal lagoons can rapidly become one of the cheapest sources of electricity in the UK. The more water we impound, the more power we produce, the less support we require. It really is that simple. And with an operating life of over one hundred and twenty years, tidal lagoons offer future generations even lower cost electricity following their thirty-five year period of strike price support.” Gareth Davies, Director at P?yry Management Consulting, commented on the diversity the projects would offer to low carbon generation:

“Tidal lagoons have the potential to provide renewable electricity which is both affordable in the short term and secure for the long term. The Government’s budget for total low-carbon electricity support is around £7.6bn per year by 2020. We found that the Swansea Bay Tidal Lagoon will require approximately £13m more annual support than for the equivalent volume of offshore wind generation, albeit for a longer period of time. This relatively low level of additional support creates the option to develop the larger and cheaper projects in the pipeline.”