CARMARTHENSHIRE MP Jonathan Edwards urged the UK government to make progress with the proposed tidal lagoon in Swansea.
Speaking in the annual St David’s Day debate in Parliament, the Plaid Cymru MP promoted the “old fashioned and most cost effective way” of bringing the scheme to fruition through direct public investment.
Mr Edwards said whilst the ‘strike price’ for the lagoon seems high, it must be considered a long-term investment which will help deliver multiple lagoons across the UK, assist economic growth whilst and protect energy consumers from increased costs. With bond rates at an all-time low, Mr Edwards said, it is an investment in our long-term economic success.
The Carmarthen East and Dinefwr MP also promoted the use of investment from pension funds for the project.
Plans previously announced by Chancellor George Osborne will see pension funds pooled into regional funds for investment. Jonathan Edwards has already warned against the possibility of Welsh public sector funds being diverted for infrastructure investment in England. He questioned why the Wales Office was not ensuring Welsh assets are pooled at a Welsh level to invest in Welsh infrastructure like the lagoon.
Speaking in Parliament, Mr Edwards said: “Despite Wales being one of the most advantageous locations in Europe for renewable energy, just 10.1% of our electricity is generated from renewable sources. This compares with 32% in Scotland and 14.9% for the UK as a whole. Despite Wales being home to the second highest tidal range in the world, and 1200km of coastline, we are lagging behind on tidal technology.
“Swansea Bay is the first of many lagoons that are planned. The proposed Cardiff lagoon would generate enough electricity to power the whole of Wales. The technology is very exiting in terms of helping to develop Local Energy Production Systems instead of the wasteful State wide grid at present where a third of electricity is lost in transmission. Considering the vast majority of the Welsh population lives within twenty miles of the coast, this technology has the potential to answer our future energy needs as a country – providing security of supply vital for attracting industry.
“The level of subsidy is reflective of the fact that the Swansea Bay lagoon is the first of its kind.
“The size of the Swansea lagoon is nowhere near as big as the planned Cardiff and Colwyn Bay lagoons are and therefore the strike price on a per megawatt basis seems high, but it must be considered a long term investment which will eventually deliver multiple lagoons across the UK.
“Funding green energy through a Contract for Difference or ‘strike price’ effectively passes the cost of upfront investment onto the consumer who inevitably will see their bills go up.
“If I was in the shoes of the Secretary of State I would be making the case that the Treasury should invest directly in the project by bringing it onto the books, just as they do for transport infrastructure such as HS2 for England.
“Raising money on the bond markets is cheaper than it will ever be in future – 50 year bonds at a negative rate and ten year bonds at less than 1.5%. In addition, these are rates available to the Government and are simply not replicable for a private energy company.
“Using an old school financing method – direct public investment – as opposed to an ultimately far more costly financing scheme such as CFD – will be far cheaper in the end for the public and the UK Government should be honest with the people of Wales on this.
“The Treasury will be aware of my calls for a specific Welsh public sector pooled pension fund. Instead of letting the pension assets of Welsh public sector workers be pillaged by a super pooled asset fund based in England – why isn’t the Wales office ensuring that Welsh assets are pooled at a Welsh level to invest in Welsh infrastructure like the lagoon?
“It is an investment not just in Wales’ energy security, not just in our efforts to lessen dependence on fossil fuels, but an investment in our longterm economic success.
“The Secretary of State said back in 2014 “I want Wales to have the world’s first power generating lagoon”. I fully agree, however the next question which then comes is how we deliver it. My message today therefore is instead of messing about with financing models, let’s do it the old fashioned and most cost effective way – by using direct public investment. Especially in the light of all time low bond rates.
“To close Mr Speaker, confidence is the magic trick in any economic policy. Moving forward quickly on the proposed lagoon will be a massive confidence boost for the South and West of our country stimulating further economic investment and growth.”
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