News & PressThe City Surveys Group - The UK's Measurement Specialists
Skills plea for tidal lagoon
Published: 30th January 2017
This Article was Written by: Richard Furlong - City Surveys Group
There have been calls for politicians and the energy industry to team up to ensure Wales has the right skills in place, should Swansea’s tidal lagoon go ahead.
The Royal Institute of Chartered Surveyors (RICS) has encouraged key players to ‘step up’ so that Wales’ ‘golden opportunity’ does not fall by the wayside. Energy and engineering firms are preparing to bid for work on the £1.3 billion Swansea project, which could create up to 2,000 jobs.
The £1.3bn UK scheme proposes six tidal lagoons: 4 in Wales and one each in Somerset and Cumbria. If the bid is successful, these enormous lagoons will trap the incoming and outgoing tides behind giant sea walls, using the immense weight of the water to power turbines, generating electricity.
The scheme in Swansea is expected to generate sufficient energy to power over 150,000 homes and it has been estimated that the combined power of all six could satisfy demand for up to 8% of British power.
As the first of its kind in the world, the cost of generating power from the Swansea lagoon is expected to be initially very expensive, but developers have guaranteed subsequent lagoons would be much more economical.
A world first in green energy is a really exciting prospect for Wales, but how will it be funded?
As well as Swansea, plans for lagoons in the following locations are still being discussed: Cardiff, Newport, Colwyn Bay, Bridgwater in Somerset and West Cumbria. Purpose-built to contain the lagoon, the Swansea site would be over five miles long and extend more than two miles out to sea.
However, without a green subsidy from the UK Government (a ‘strike price’) the project is a non-starter but the scheme received a welcome boost earlier this month with the publication of the Hendry Review. The review was commissioned by the government to assess the economic potential – not just of Swansea Bay – but of all six lagoons.
It recommended the project should receive the go-ahead and, as a result, it is hoped that the upcoming Budget in March will award the crucial 60-year subsidy to the tidal lagoon project.
With £235 million in the funding pot there is still a deficit of more than £1 billion. The pot comprises £35 million raised in working capital, including funds from a community share offer, and investment from 370 individual shareholders, including Prudential, car insurance Admiral, and CEO of Tidal Lagoon Swansea Bay, Mark Shorrock.
It is hoped the remainder can be raised through long-term repayable debt finance. Subject to an agreed strike price, Macquarie Capital has been mandated to raise the funds, but the time frame for repaying and the interest charged on the debt cannot be determined until a strike price has been agreed.
With plans to finalise the details of the funding by the close of 2017, original investors will then be able be sell their shares (anticipated to generate a projected three times return on their original investment). In the meantime, Mark Shorrock at Tidal Lagoon Power will continue to raise further working capital for the project.
Chair of RICS in Wales, Helen Kane, said everyone was working flat out to ensure Wales could meet the potential. She highlighted the need for support to be consistent and funding established to attract people into seventeen trades from surveying to construction.
“It is very feasible we can provide the skills in Wales to boost the economy but we need to work together and start now,” she told BBC Wales.
The final decision now rests with the UK Government.