The case for the Severn tidal barrage must be improved

Former Welsh Secretary Peter Hain, MP for Neath near Swansea, has given MPs an enthusiastic account of the proposed design by Hafren Power for a tidal barrage across the Severn estuary twice recently.

The first time was in the Commons debate on the Energy Bill and the second was last Thursday in front of the Select Committee on Energy and Climate Change, which is pursuing an enquiry into the scheme.

I have to declare an interest here: I was commissioned to help write a document advocating the advantages of the scheme at an early stage.

I think it is a very exciting project. But at the same time I want to see any negative environmental effects of the scheme minimised.

It's now well known that this is a completely different proposition from the previous tidal barrage proposal that was rejected in 2010.

For example, it is claimed that the turbines are fish friendly, because they operate at a lower speed, enabling fish to swim both ways through them.

These new turbines will also work on the ebb and flow of the tide, meaning they can generate power 24/7.

Peter Hain told the Committee that the developers, Hafren Power, are prepared to settle for a strike price for the electricity generated that is the same as that received by offshore wind under contracts for difference (CfD). That, if true, is very reasonable.

The claim by the developers is that it will generate 5% of the UK's electricity needs, about the same as three new nuclear power stations and 7,000 wind turbines.

But it will last a lot longer. Like any hydroelectric scheme, it will last for up to 120 years, possibly more, and for most of its life it will therefore produce electricity 75% cheaper than coal or gas. Another considerable advantage.

No Treasury (taxpayers') money will be required to help finance it. However, it will use up a considerable amount of the Levy Control Framework. DECC has already indicated that this could be a concern for other low carbon technologies, for which little money would be left. Why put all one's eggs in one project basket?

The developers claim that the project will remove the need for millions of pounds worth of flood defences being built, because in itself it will protect much of the area from the risk of sea level rise and storm surges. They have even offered to build a Bridgwater bund to protect the Somerset Levels, which are very vulnerable.

However, this money saved cannot be offset against the Levy Control Framework, which is passed on to electricity consumers. There is no way to compensate them for the money saved from not spending on flood defences.

Nor has Hafren demonstrated that the project will protect areas upstream of the barrage from floodwaters coming down river.

It claims that it will generate 50,000 jobs, and on this basis it has won the support of Martin Mansfield, General Secretary of the Welsh TUC and Andy Richards, Wales Secretary for the Unite Union. However there is no supporting evidence explaining how so many jobs can be created.

The Angling Trust is adamant that the technology as so far presented to it is not safe for fish. Other conservation groups equally remain to be convinced.

The Habitats Directive requires that any designated ecology threatened by development must be compensated for elsewhere. In order to comply, the estuary would have to be stripped of its special status by application to the European Commission, a process which could take years due to the scientific evidence that would need to be collected and the natural inertia of the Commission.

Hain, in giving his evidence, was bending over backwards to help appease these objections. The man is staking his reputation as an MP on a private company's single project.

It would be tragic if a perfectly good opportunity to tackle climate change, energy security, promote renewable energy and stimulate the economy to the extent that this project has the potential to, were to be scuppered by the traditional, knee-jerk, objections of the traditional wing of the conservation movement.

After all, it is projected that between 10 and 20% of the habitat within the Severn estuary will be lost due to climate change and other factors anyway, in the future. The barrage proposal claims that 25% will be lost. This leaves a net loss of between 5 and 15%, which is perhaps not so significant when comparing to the environmental benefits.

The company has committed to engage with the Angling Trust, the RSPB and other conservation groups in developing the design. It has invited the Trust to test the turbine with them to see if it is a danger to fish. Together they can perhaps develop an even more fish friendly version of the turbine.

Similarly, a war has been growing between Bristol and Port Talbot ports over their mutual future viability, once the barrage is built, and employment prospects. They need to talk to each other and engage with the project to make sure that everyone benefits and no one loses out.

The project also has the potential to divide the south-west from South Wales, over competition for jobs. Developers must make sure that each side benefits here too.

This is a project with such potentially massive benefits that it cannot be dismissed easily. Its impacts will be correspondingly huge.

All big projects represent big change, and this scares people. They find it difficult to imagine what the finished product will be like and how it will affect the surrounding area.

All affected parties must therefore come together and explore it to see if together they can find a mutually acceptable solution.

It behoves Hafren to listen carefully to them all, to take their concerns on board and work with them.

All of this will take time. But it is the only environmentally and socially acceptable way to proceed.

The new Energy Bill should abandon support for nuclear newbuild

The draft Energy Bill expected this week should face the reality: it makes more sense to give 100% support to renewable electricity and energy efficiency than to continue trying to attract interest in expensive nuclear newbuild.

Last summer's Electricity Market Review White Paper assumed that the UK would soon have 16 GW of new nuclear capacity, with the first new nuclear reactor scheduled to become operational in 2018. Less than a year later, this now seems laughable.

The truth is that the ongoing fiscal crisis in the Eurozone means that the cost of capital is only going to rise. It is the high initial cost of new nuclear power stations and their long payback period that is the reason why nuclear operators are already pulling out. The coming fiscal firestorm will be the final nail in the coffin.

With the Government due to publish its new Energy Bill, now is the time for it to recognise this reality and stop trying to flog a dead horse. Otherwise, its pro-nuclear policy risks spending far more public money than it already has on feed-in tariffs for solar photovoltaics. It will make that amount of cash look like a drop in the ocean.

It's right for the Cabinet to worry, as it is doing, about whether the Green Deal will work. But it would be even more sensible to re-examine its policy on nuclear power - or it will start to look like the white elephant in the room.

EDF is the only nuclear operator with a modicum of credibility still in the running for newbuild, although Charles Hendry and the Financial Times would have you believe some Chinese operators are interested in Horizon. But with the advent of François Hollande, known to be lukewarm on nuclear power, to the French presidency, the enthusiasm of this 85%-French state-owned company for the construction of the most likely new plant at Hinckley point in Somerset is likely to cool.

EDF has already postponed the groundwork preparations for the site until next year while it waits to see what happens. The agreement which David Cameron signed on nuclear power with Nicolas Sarkozy in February is now not worth the paper on which it is written. It didn’t even represent much at the time.

Energy Minister Charles Hendry continues to talk up nuclear power, but he might as well be asking banks to invest in Spain. Two weeks ago he told the Nuclear Institute that RWE and E.ON’s decision to withdraw from Horizon's plans to build new power stations at Wylfa and Oldbury was “very disappointing", but he still hoped that the Energy Bill's proposed Contracts for Difference and other electricity market reforms would give investors the certainty they need to invest in new nuclear power.

You can understand why he wants to keep the Government’s options open. But it's a wise gambler who knows when to fold. The Government should instead put its limited resources in the service of solutions that have a much higher probability of working.

These resources include £13 million of DECC's budget currently spent on promoting nuclear power.

But, you say, what of the need to keep the lights on? There's more than one way to fit a lightbulb. Last year's White Paper's impact assessment argued that wind power, being easier to start up, would be turned off by system operators, in periods when it could generate and when demand is low, in preference to nuclear, because the latter is much more expensive to start up after shutdown.

This automatically penalises wind power and favours nuclear. Nuclear is seen as baseload, whereas wind, because of its intermittency, is not.

In the intervening time since the publication of the White Paper, more gas-powered generation has been consented. Because it can both supply baseload and is easy to start up and turn off, this gas-fired capacity negates the need for new nuclear power.

It also means that offshore wind power, tidal power (Peter Hain's new version of the Severn barrage that will be financed by private investment and produce as much as for nuclear power stations), as well as sustainable biomass, which includes anaerobic digestion, can be favoured over gas by system operators at times of low demand.

It also turns out that it is cheaper to strengthen the UK’s electricity grid connections with Europe (and this is being done anyway), widening the range of renewable sources of power, and to expand the facilities for balancing supplies with demand, than it is to build new nuclear plant. This will ensure that the lights stay on even if there is a flat calm over the UK for some time during the winter.

The Government can therefore support the provision of the maximum amount of renewable energy while maintaining a strategic reserve of gas-fired plants, together with a strategic reserve of fuels to power them.

And with the abandonment of nuclear newbuild, more capital and investment will be available for renewable energy, which will in many cases be quicker to build.

Cheaper electricity

A change in policy would also make future electricity costs lower for consumers.

This is because the Feed-In Tariff Contract for Difference policy is currently designed to benefit nuclear power the most, at a cost to consumers: the reduction in the cost of capital using this mechanism is, according to the EMR White Paper, 1.5% for nuclear, compared to 0.5%-0.8% for offshore wind; 0.5% for biomass; 0.4% for coal with CCS; and 0%-0.3% for onshore wind.

The proposed carbon price floor also benefits nuclear power far more than other technologies. The Treasury Secretary, Justine Greening MP, has admitted that the benefits to the existing nuclear sector are likely to be "an average of £50 million per annum to 2030 due to higher wholesale electricity prices".

WWF and Greenpeace together have calculated that the benefit could be much higher: up to £3.43 billion between 2013 and 2026, i.e., £264 million per year.

Therefore, if both of these policies were modified or abandoned in the new Energy Bill, electricity prices in the future would be lower.

Next week’s Bill will contain these policies, but it is only a draft. It doesn’t have to remain this way.

Osbourne axes Severn barrage

The BBC has just reported that George Osborne, the Chancellor, has told Chris Huhne, energy and climate change Secretary, to axe the Severn barrage.

This is a blow to the country's efforts to move towards a much lower carbon economy. Huhne is instead likely to sanction the building of new nuclear power stations.

The other options were intended to appease environmental campaigners worried about the loss of precious wildlife habitats in the estuary.

The technology could have generated up to 5% of Britain's electricity requirements, and created hundreds of jobs and develop technology that could have been exported around the world.

Instead eight sites have been approved for new nuclear power stations by 2025, which, if they go ahead, are likely to be financed and owned by foreign companies and produce fewer jobs. These are:

• Bradwell, Essex
• Hartlepool, Borough of Hartlepool
• Heysham, Lancashire
• Hinkley Point, Somerset
• Oldbury, South Glos.
• Sellafield, Cumbria
• Sizewell, Suffolk
• Wylfa, Isle of Anglesey.

They would add to the growing and expensive stockpile of nuclear waste, providing danger for thousands of years to come. In the Spending Review, more money was allocated to the task of safeguarding the existing stockpile.

Tidal power, on the other hand, is renewable and free, but the uranium for nuclear power stations is dangerous to mine and is likely to run out within 60 years.

A tidal scheme could last around 120 years, significantly longer than nuclear, thermal, wind, and other energy infrastructure, but in common with other hydropower generation projects.

This makes its overall levelised costs – lifetime costs – comparable to or better than other forms of generation, but the initial high capital cost is prohibitive in the current economic climate, the report says.

Supporters of the tidal project, which would link Lavernock Point near Cardiff, to Brean Down near Weston-Super-Mare, claimed it could generate 5% of Britain's electricity.

Dr Rob Kirby, an independent expert on the Severn Estuary, has worked on the project for the last 40 years, said: "The government's view is that it's too big a project to approach in financial terms.

"It's quite unambiguous - the Cardiff to Weston (barrage) can only benefit the environment and those who say otherwise are not telling the truth."

Shadow Welsh Secretary Peter Hain said scrapping the barrage would be "equally disastrous" for the economy and the environment.

"Not only is Chris Huhne turning his back on the proposed barrage scheme that would have created hundreds of good quality green jobs for Welsh people, it appears that he decided to abandon in its entirety the idea of using the Severn estuary as a generator of electricity," he said.

The feasibility study into a tidal energy project in the Severn estuary concludes that its total cost – over £30 billion – makes it unaffordable at the present time because a significant proportion of the funding would have to be borne by the taxpayer, and it would be difficult to attract sufficient private investment.

The report does not rule out a project in the estuary in the longer term if it could be shown that it did not fundamentally change the estuary's natural environment.

It also highlights the fact that even the scale and impact of smaller schemes like a tidal lagoon would be unprecedented in an environmentally sensitive area. Providing compensation for any possible damage is considered to be challenging.

The report argues that other low carbon energy sources represent a better deal in the short term for taxpayers, industry and consumers.

Dr Neil Bentley, CBI Director of Business Environment, commented: “Tidal power has the potential to play a significant role in the UK’s energy future. Given the state of the public finances, it is understandable that Government investment in the main Severn Barrage scheme has been ruled out at this time. But the Government should continue to encourage innovation in tidal power to reduce the cost of this technology.”

Welsh Environment Minister Jane Davidson added, “Two of the three schemes assessed under SETS showed a good deal of potential for extracting renewable energy from the area.

“However further work is needed to develop these technologies to the point where they may be considered as part of any future Tidal Power scheme.

“I would urge the UK Government and others to continue working with us and key business partners such as Veredeg and Rolls Royce on the development of these emerging technologies, not just for applications in the Severn but also in other locations around our resource rich coast line.

"These technologies have real potential to provide a vital source of renewable energy for the whole of the UK, which would enable us to increase our energy security and help in the global fight against climate change”