A new Severn Barrage consortium is incubating. We look to see what has been hatched as a new proposal and why secure governmental price mechanisms--alongside private project financing--could lure more people to the consortium's side.
By Elisabeth Jeffries
In the tidal sector, there’s one dog that won’t sleep so to speak, and that’s the Severn Barrage. Just as the UK government in October 2010 vetoed the ten-mile barrage from Lavernock Point in Wales to Brean Down near Weston-super-Mare, a new Severn barrage consortium was hatching.
Known as Corlan Hafren (meaning Severn Group), it proposes to build a barrage of this scale with private sector funding. A private limited company; it has several associates including Halcrow, Arup, KPMG, Sancroft, Marks Barfield Architects and tidal expert Roger Falconer.
Energy Secretary Chris Huhne had stated the £30 billion scheme's costs were "excessive", although DECC’s official statement did not rule out future changes, adding that the government “wishes to keep the option open for future consideration.”
If a privately financed initiative has always been possible, why have previous plans demanded a government grant? There are two explanations. Firstly, Corlan Hafren’s scheme assumes deep cuts in cost estimates. Secondly, it comes with a few caveats which involve massaging definitions of governmental assistance.
According to Ben Hamer, Halcrow’s maritime director, the government’s estimates were much too high in the first place. “DECC’s report includes a 48% optimism bias to account for optimism in estimates. We think the cost is £21 billion, and this already has contingencies built into it.”
Optimism bias included in public sector projects, he contends, are not necessary in the private sector: “it just becomes project risk,” he states.
Corlan Hafren’s fresh proposal is also explained by a new, additional factor – the electricity reforms mooted at the moment - widely viewed as a way to let in nuclear subsidies.
If the government is really to allow more nuclear support, it is not surprising that managers of other major infrastructure projects like a tidal barrage refuse to be elbowed out. The government’s planned "contract for difference" mechanism, discussed in its consultation paper, would guarantee a price for energy generated from low-carbon sources.
It would cover all forms of low-carbon energy and would require companies buying energy to cover the difference between the wholesale price of energy and a set minimum price. It would resemble a feed-in tariff, but is also suitable for large projects.
“We want clarity on the price support mechanisms that might be in place,” asserts Ben Hamer. In a separate statement, Hamer has stated: “What we need is political support, not public money...this doesn’t require a special case; it just requires a level playing field with nuclear and offshore wind.”
According to Corlan Hafren, a £20bn price tag would make the cost of generation around £160 per MWh, putting it in the same bracket as offshore wind, and “making it hard for the government to ignore.”
Capital investment would come from undisclosed sources abroad, most likely in the Middle East or East Asia. According to a statement: “the company’s interaction with investment markets has led it to be confident in securing funding for operation and maintenance from a number of long-term investors, some of whom would be prepared to invest alongside delivery consortia in the construction phase.”
Financial considerations aside, any major Severn barrage project will come up against objections from ecologists. But the consortium says there are ways to reduce the environmental impacts.
Its scheme involves building either an ebb-only or an ebb-flood operation – either of which means impounding a large amount of water, the loss of about half the existing intertidal habitat – mudflats for birds.
This impact could be reduced by opening the sluices in the barrage once every two weeks on the spring tides to allow out more water – a solution that it says would result in only 10-15% of the mudflats being lost, at a cost of about 5% of generation capacity.
Equally, the consortium argues that the barrage would create new habitat by increasing the area of salt marsh in the Severn estuary. In addition, halving the upstream tidal range, it says, “will significantly reduce turbidity, leading to an increase in sunlight penetration and biomass production.
As a result, higher bird densities would be achieved on the estuary without the need for compensation habitat to be created.”
Peter Jones, of the RSPB in Wales, conceded that the barrage would generate 4% to 5% of electricity supply in the UK, but in his opinion “at a great cost.” The RSPB estimates the loss of habitat at 60-80% rather than 50%.
Jones also challenged Corlan Hafren’s cost estimates: “Costs tend to rise rather than hold or fall; original budgeting studies tend to be falsified,” he said, pointing out that the original figures “have been rising steadily for the last ten years from £14 billion to £20-30 billion.”
The NGO, he stated, “agrees that the Severn tidal is a major source of green energy. We’re not against tidal energy, but how it’s done and where it’s done. We’re encouraging DECC to look at a number of new innovative alternatives such as tidal reefs.”
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