The Independent Charles Hendry Review of tidal lagoons issued last week was significantly supportive of the first tidal lagoon project in Swansea. The Review looked at the potential of tidal lagoon technologies across the UK. Whilst this has yet to be accepted and implemented by the UK Government, which is non-committal at this stage, the project participants and the marine industry as a whole could not have hoped for a more positive endorsement.

There are some get out clauses principally around the full value analysis being completed, but the suggestion that this project should commence as soon as possible is probably as positive as it gets.

If this project does proceed, it opens the door for marine renewables to gain some real traction in the UK market. Importantly, the Report suggests that the other projects planned at Newport and Cardiff should be delayed to enable the full impact of this form of renewable energy to be properly and fully assessed. Some bodies are suggesting that the gap between the Swansea project, if it proceeds, and the others should be as long as 8 years to allow for this.

Because the costing is not currently competitive with other forms of renewable energy technology, it will require the Government to take a long term view on energy policy, something which many have been advocating more generally. As we move into an energy market transition, not just in the UK but across global markets, it would seem that this would be the sensible approach.

Using arguments which have also been raised by the wider marine renewables industry, the Hendry Report reached several conclusions on the evidence presented and made several recommendations including the following:

• tidal lagoons could help to deliver security of energy supply to the UK principally because this is a base load technology

• in view of their longevity, tidal lagoons utilise a technology which is cost effective with other technologies that will be developed in the mid-2020’s. The Report also noted that the costs to the public were attractive and drew comparisons with the cost of nuclear projects

• a “pathfinder” project should be developed first as a “no regrets” policy and the Report recommended that the Department of Business, Energy and Industrial Strategy (“BEIS”) explore terms that would enable such a project (in the form of the Swansea Bay project) to proceed

• the Report stressed that “a fledgling industry” would benefit from the clarity and stability of an explicit statement of Government support

• it was also recommended that the Government should establish a Tidal Lagoon Authority to maximise the potential benefits of the industry to the wider economy (stressing the potential benefits to the wider UK supply chain in particular) and to implement the competitive framework that is recommended to be adopted for future developments

• a recommendation that the consenting process should be assisted by a National Policy Statement, similar to that undertaken for nuclear new build, to identify the finite number of sites deemed as suitable for development. However, the recommendation was that the Swansea Bay pathfinder project should proceed independently and outside of such an approach

• a recommendation that the current CfD model of tariff support is retained but that projects should receive this for no more than 60 years. The Report introduces the concept of partial indexation of the CfD

• a recommendation to move much of the decommissioning burden by accepting that sea walls should be deemed to be permanent structures

Charles Hendry stated that marine technologies offer an energy opportunity where the UK can reasonably aspire to be the global leader. He recommended that, barring the CfD regime, other Government financial support should be targeted at the supply chain. While he believes that the export potential is unlikely to be significant, he does see a significant opportunity for the indigenous suply chain. Overall, Charles Hendry sees the nascent tidal lagoon industry as a real opportunity for the UK to create a cost effective, long- term and secure source of low carbon energy.