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Severn barrage cost hits £23bn

Final government estimates on the cost of the Severn Barrage could be £8bn more than previously thought, it has been revealed.

Independent research into the economics of building a tidal barrage between Cardiff and Weston-Super-Mare by consultant Halcrow reveals that the structure should be valued as high as £23bn under Treasury accounting rules.

The government currently values the scheme at £15bn based on a report assessing tidal power options in the Severn Estuary published by the Sustainable Development Commission (SDC) last year (NCE 5 October 2007).

But, this figure included a standard project contingency of 15%, while Treasury guidelines say all publicly-funded projects must account for "optimism bias" and apply a contingency of 60% when being planned.

The research seen exclusively by NCE shows that for the project to be attractive for investors, wholesale electricity costs would need to treble or it would need a heavy subsidy (see graphs).

Halcrow Maritime project director Ben Hamer said that the research was aimed at the need for the barrage's economics to be given as much attention as the environmental issues.

"The environmental issue is of great importance but we mustn't focus on it to the exclusion of delivery, construction, economic and finance issues," said Hamer.

In February the Department for Business, Enterprise and Regulatory Reform (BERR) launched a two year study investigating tidal power in the estuary. A 16km Cardiff-Weston barrage capable of producing 17 terrawatt hours of electricity per year is the largest scheme under consideration.

Consultant Parsons Brinckerhoff (PB) was last week appointed to lead a six month environmental assessment as part of the study, examining the strength of different options and their impact on the estuary's wildlife, protected under European Union
legislation (News last week).

"What we are hoping to see out of these six months scoping phase by PB is a route map for the rest of the study," said Hamer.

"We don't want several studies studying the environment to death," he added.

He added that the Treasury could rule out the Severn Barrage on cost grounds. But the government had to make a political decision and decide whether in truly believed in acting against climate change in the short term to avoid greater costs in the long run.

Severn Tidal Power Group (STPG), a consortium of Sir Robert McAlpine, Taylor Woodrow, Balfour Beatty and Alstom, published a report on the Cardiff-Weston barrage in 1989, and STPG spokesman Roger Hull said he agreed with Hamer.

"As part of the feasibility study you have got to determine how society will reward a barrage for not emitting carbon," he said.

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