IPPToday #309: UK council issues RFEOI for US$2 billion tidal energy project
- Tidal Lagoon Power
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Swansea Council has announced that it is seeking a partner for the delivery of the Swansea Bay tidal lagoon development. It is inviting both corporates and consortia to submit expressions of interest (EOIs) for Lagoon 2.0 - a re-formatted version of a 320 MW project proposed by Tidal Lagoon Power. In development for several years, the project was terminated earlier this year after the UK government refused to grant it any subsidies.
The council emphasises in its Prior Information Notice (PIN) for Lagoon 2.0 that the fundamental requirement of this project is to be “stand alone”, requiring no form of subsidy. Although the Welsh Government has indicated that it is prepared to consider significant co-investment alongside a private sector institutional partner/investor, subject to appropriate private sector-led financial structure and terms being agreed and due diligence.
This highlights the strong public sector support for delivering lagoon technology in Wales, which was evident in the opposition to the UK's government decision over the original version of the project and the Welsh government's offer to partially fund it.
The PIN states that Lagoon 2.0 could be structured as a partner development arrangement or through a joint venture. If a joint venture structure is adopted, this could take the form of a contractual joint venture arrangement or involve the creation of a joint venture vehicle. Interested parties are invited to propose effective structures for the project as part of the submission of EOIs.
A selected private partner would be required to conclude the detailed planning, design and licencing, obtain all appropriate permissions and secure funding for realisation of the Lagoon Development. This includes commercial arrangements with funding partners, potential energy customers and other stakeholders, though the Local Authorities of the Swansea Bay City Region plan to establish a working group to investigate the possibility of public sector electricity supply contracts being agreed directly with the project.
The private partner would also deliver the Lagoon construction, including its infrastructure for energy generation and distribution. The estimated investment required for these works is GBP1.5 billion (US$1.92 billion), a GBP0.2 billion increase on the original project proposal.
The submission deadline for EOIs is 3 December 2018. The council estimates publishing a contract notice launching a tender for the project in September 2019, though this is subject to the response to the PIN.