An energy-generating tidal lagoon has been condemned as “appalling value for money” by Citizen’s Advice. The project is said to be aiming for a guaranteed price for the energy it generates of £168 per megawatt-hour (MGw) - far more than even the infamously expensive off-shore wind.
This price level would be guaranteed for 35 years, 20 years longer than for wind energy, a very odd decision indeed in a world of volatile energy prices. The cost of energy in the UK is predicted to decrease with effective incorporation of shale gas in a liberalised market, leaving the subsidy for this scheme looking even more inexcusable as it increases energy bills for households already heavily burdened.
This guarantee of above-market prices for non-carbon energy is nothing new. Offshore wind plants receive £140/MWh and the widely condemned contract for difference offered to Hinkley Point is £92.50/MWh – 45% less than the tidal lagoon project’s reported aim.
The lagoon may provide some benefit as a flood defence, and private investment in flood defences should be encouraged, however, it is far from clear if this is a cost effective way of achieving that. Even if it is, should flood defences really be subsidised by increasing already high energy prices?