Tidal power 'offers viable alternative to offshore wind'

An economic study into the cost profile of power from tidal lagoons has found that a portfolio of three UK tidal lagoons, in operation by 2021, would deliver large-scale low carbon power at a significantly cheaper price than offshore wind.

The study, conducted by energy economists at P?yry, the management consultancy, identifies a volume-weighted levelised cost of energy for the three lagoons as around £100/MWh. The Government’s assumption for a Round 3 offshore wind farm in 2021 is £131/MWh. The cheapest of the projects assessed, Lagoon 3, has a levelised cost of around £90/MWh, broadly similar to onshore wind, large-scale solar PV, nuclear and gas-fired generation.

As with all forms of low carbon generation, tidal lagoons will require Government support via a pre-defined ‘strike price’. P?yry’s central assessment of the required CfD strike price for the first three lagoons studied on a volume-weighted average basis is £111/MWh. At present, other forms of marine energy are offered a strike price of £305/MWh and offshore wind projects are offered £155/MWh.

This month, plans for the Swansea Bay Tidal Lagoon, the world’s first tidal lagoon power plant, were accepted for consideration by the Government’s Planning Inspectorate, initiating an examination process that its developer, Tidal Lagoon Power, hopes will see construction commence in spring 2015, with first power being generated in 2018.

P?yry found that the 320MW proof-of-concept project requires a strike price of £168/MWh, slightly higher than the £140/MWh offered to offshore wind projects in 2018/19. With an estimated required strike price of £130 MWh in 2020, Lagoon 2 is cost competitive with offshore wind and at £92 MWh in 2021, Lagoon 3 is significantly cheaper. Although unnamed due to commercial sensitivities, Lagoons 2 and 3 are taken from Tidal Lagoon Power’s pipeline of live development projects. Neither has yet benefitted from the same optimisation process that saw a 20 per cent increase in power output at the Swansea Bay Tidal Lagoon.

The reduction in required support from Lagoon 1 to Lagoon 3 is driven by moving to bigger sites with higher tidal range and does not rely on an assumption of technology learning. Tidal Lagoon Power’s pipeline includes projects that are larger than Lagoon 3.

Mark Shorrock, CEO of Tidal Lagoon Power, said that electricity generation from tidal lagoons will continue to get cheaper: “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.”