By K.Steiner-Dicks on Mar 3, 2015

The first indicators include the appointment of General Electric and Andritz Hydro as preferred bidders to the £1bn Swansea Bay Tidal Lagoon infrastructure project.

The project will have an installed capacity, dependent on final design, of between 1,800MW and 2,800MW, giving a reliable annual output of 4 TWh to 6 TWh, enough low carbon electricity to power every home in Wales throughout its 120 year life, according to Tidal Lagoon Power, the project’s developer.

The Severn Estuary has the second highest tidal range in the world, which places the proposed project in almost ideal tidal power conditions.

The plant will have an installed capacity of 16 units with over 20MW each.

The two companies, bidding together for the £300m (EUR400m) contract to supply sixteen bidirectional turbines to the world's first tidal lagoon power plant, have committed to a majority of British large turbine components.

Supply chain opportunities to garner local support

Welsh Secretary Stephen Crabb said the project, if planning consent is granted, has the potential to transform the South Wales economy by creating hundreds of jobs and countless supply chain opportunities for local businesses across the region.

The Andritz Hydro share amounts to approximately EUR250m.

The main order for supply of the electromechanical equipment is scheduled to for 2015 upon fulfilment of all requirements and procedures. Start of commercial operation is scheduled for 2019.

British generators and the operation of a dockside Turbine Assembly Plant in Wales will also create jobs for an initial 100 skilled workers.

Mark Shorrock, Chief Executive, Tidal Lagoon Power Ltd, said, “The Swansea Bay Tidal Lagoon provides a scalable blueprint for a UK-led global industry that delivers true value to the nation. Tidal lagoons will employ British industry to harness a British natural resource and return profits to British institutions.”

Made in Britain

According to Tidal Lagoon Power, the majority of large turbine components to be made in Britain

• All generators to be made in Britain
• All turbines to be assembled at a new Welsh facilites
• British industrial operations to scale by six times by 2018, as the UK moves from proof-of-concept to the first full-scale tidal lagoon.

Steve Hollingsworth, Tidal Lagoon Power's Pre-Construction Director, has told Tidal Today, "We are absolutely committed to using local designers, contractors and suppliers wherever possible; aiming to secure a minimum of 50% spend within Wales and 65% within the UK."

Robert Lloyd Griffiths, Director of the Institute of Directors in Wales, said of the tidal lagoon opportunity: “IOD Wales has taken a keen interest in the development of Swansea Bay Tidal Lagoon. In particular, we have been impressed with the potential business opportunities that it presents for the supply chain in Wales.

“We believe that this has the capacity to contribute significantly to the local and regional economy and were delighted to learn that the preferred turbine bidders GE and Andritz are already working with local companies.”

The project’s sixteen generators - the highest value component in the 700 tonne turbines - will be produced at GE's Rugby facility.

GE is also working on plans to potentially re-shore its medium voltage switchboard operations for the UK tidal lagoon industry at its Kidsgrove facility.

InfraRed Capital Partners has agreed to invest in the £1bn project alongside equal commitments to be made by Prudential.

The tidal power station is scheduled to reach financial close in the summer with construction scheduled to begin immediately after.

The pace of the project’s progress and secured investment commitment is a feather in the cap for tidal energy in the UK.

Tidal lagoons at competitive strike price

Tidal Lagoon Power has also reported in March 2015 that it has plans to submit a full planning application for Tidal Lagoon Cardiff in 2017, with a decision expected in 2018.

The lagoon will take up to five years to build. The company estimates a CFD strike price requirement of £90-£95/MWh for the project.

With a Cardiff Tidal Lagoon, the weighted average CFD strike price across the UK’s first two tidal lagoon power plant at Swansea Bay and Cardiff could be between £95/MWh and £105/MWh.

Under the coalition’s electricity market reforms, large renewable energy projects will no longer receive direct subsidies funded by the electricity bill-payer, but through auctions for contracts for difference.

The tidal lagoon strike prices currently exceed those of onshore wind and other renewable sources, such as solar, but are lower than offshore wind, which averages close to,

£117per megawatt hour of electricity generated.

The recent UK CfD auction awarded contracts competitively under a sealed bid system, with one group reserved for less established technologies, such as offshore wind, and the other for established technologies, such as onshore wind and solar.

The established technology group was reserved for energy from waste (EfW), onshore wind and solar. These projects received an average of £82 per megawatt hour, according to reports.

These less established technology projects were awarded much higher strike prices at an average of £117, which included two offshore wind projects.

Chart Source: Department for Energy and Climate Change; Carbon Brief