The government has dropped plans to generate power from a Severn Barrage after deciding that low carbon energy could be more easily generated from new nuclear and offshore wind.
“No case” for barrier
Energy secretary Chris Huhne said there was no “strategic case” for a project that would be costly to deliver and “very challenging” to fund.
He was speaking as he revealed the findings of a two year feasibility study that shows costs have escalated so much the scheme now fails to stack up economically.
Prior to the study, estimates put the cost of the Cardiff to Weston-super-Mare barrage at £15bn. However, one year into the study this had risen to £22.2bn.
The final report now puts the real cost at £34bn – over double the cost of two years before.
Huhne said there would now be no public funding for the scheme until at least 2015. “The study clearly shows that there is no strategic case at this time for public funding of a scheme to generate energy in the Severn estuary. Other low carbon options represent a better deal for taxpayers and consumers,” said Huhne.
High cost, high risk
Parsons Brinckerhoff led the two year study, along with specialists such as Black & Veatch, which looked into five different tidal power schemes across the Severn. The Cardiff-Weston scheme emerged as the most expensive, but highest energy generating option (NCE 29 January 2009). This could have generated 8.64GW of energy but would have cost £34bn.
The study concludes that the scheme would be “high cost” and “high risk” in comparison with other low carbon energy sources. It adds that the scale and impact of the scheme would be unprecedented in an environmentally sensitive area, and regulatory uncertainty would add to the cost and risk of construction.
Despite the government ruling it out for now, engineers remained hopeful that a scheme can still be built.
Corlan Hafran – a private company with representatives from engineering and finance firms including Halcrow, Arup and KPMG – has been set up to push the scheme forward.
“We have identified two or three investors who are interested in the scheme without initial public funding,” said Halcrow director Ben Hamer. “To fund it we will break the project down into more sensible milestones.”
“We have identified two or three investors who are interested in the scheme […] to fund it we will break the project down into more sensible milestones”
The ICE said while it “understood” the government’s decison it still “strongly” believed that the Severn scheme has “potential that the UK cannot afford to let lie”.
The Department for Energy and Climate Change (DECC) will now throw its weight behind other renewable sources such as offshore wind to ensure that more than half of new energy capacity built between now and 2025 comes from renewables.
Huhne said a significant proportion of the remainder will come from low carbon sources such as nuclear and fossil fuels with carbon capture and storage (CCS), but he did not specify how much or how realistic it was to rely on unproven CCS technology.
“We’ll have to wait and see what happens,” Huhne said. “CCS is a key part of the energy jigsaw.”
Nuclear and renewables “stand-off”
The barrage decision was part of a series of announcements by DECC designed to drive low carbon energy investment. These included narrowing down the new nuclear build list (see p6) and re-consulting on the energy National Policy Statements (NPS).
“I’m fed up with the stand-off between advocates of renewables and of nuclear which means we have neither. We’re 25th out 27 in the EU for installed renewables and we’re determined to change this,” said Huhne.
Huhne declared the NPS, which sets out national policy on a number of key energy policy areas, out for public consultation until 24 January 2011 with Parliament able to consider it until 31 January 2011. The coalition government decided to reconsult on the NPS following a consultation by the previous government.
The policy areas are split into fossil fuels, renewable, gas supply and gas and oil networks, electricity networks and nuclear. Each of these sits below an overarching energy NPS.