Energy and Climate Change Committee - Minutes of EvidenceHC 194

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Oral Evidence

Taken before the Energy and Climate Change Committee

on Wednesday 30 January 2013

Members present:

Mr Tim Yeo (Chair)

Barry Gardiner

Ian Lavery

Mr Peter Lilley

Albert Owen

Christopher Pincher

John Robertson

Sir Robert Smith

Dr Alan Whitehead

________________

Examination of Witnesses

Witnesses: Gregory Shenkman, Chairman, Hafren Power Ltd, Anthony Pryor CBE, Chief Executive, Hafren Power Ltd, Ian Gardner, Director, UKMEA Board, Arup, Professor Roger A Falconer, Expert Panel, Hafren Power and CH2M HILL-Halcrow Professor of Water Management, Cardiff University and Andre Karihaloo, Head of Operations, Hafren Power, gave evidence.

Q129 Chair: Good morning. Welcome to the Committee. I am sorry we are running a few minutes late, but I am sure we can cover all the ground we want to. Thank you for coming in. I believe you have asked to make a short opening statement.

Gregory Shenkman: Yes, Chairman.

Q130 Chair: I simply make the point that the sympathy of the Committee tends to diminish rapidly if this goes on for more than three minutes.

Gregory Shenkman: Thank you, Chairman. Thank you very much for allowing us to bring such a large team. Before I give the opening statement, would it be worthwhile for me, perhaps, to introduce the people here very briefly?

Chair: Yes.

Gregory Shenkman: My name is Gregory Shenkman. I am the Chairman of Hafren Power. My background, I am a 38-year financier, investment banking mainly, Rothschild, Kleinwort Benson, other firms. My last serious job was running Asia for Rothschild, and I have a long background in fundraising, capital markets, mergers and acquisitions and so on. On my right is Tony Pryor. He is a seasoned engineer and manager. He was the Chairman of Halcrow for five years, which was sold to CH2M HILL earlier this year. Before that, he was a Chief Executive Officer of Devonport Royal Dockyard. Before that, the COO of Kellogg Brown. We have Ian Gardner. He is a director of Arup, the consulting engineers and designers. He has worked on many big engineering projects, particularly design, consent, delivery. He is an expert in handling projects. He has worked on projects like HS1, HS2, St Pancras Station and Crossrail. On my right is Professor Roger Falconer. We are very lucky and grateful to Roger for coming today. He has recently had some pretty serious neurosurgery and this is his first day’s work since he completed it. He is Professor of Water Management and Director of the Hydro-environmental Research Centre at Cardiff University. He is probably the leading expert on the Severn Estuary when it comes to anywhere, really-when it comes to tides, floods and siltation. On my left is Andre Karihaloo. He is a brilliant young man we are lucky to have with us. He runs our economic and planning area and his background is in fund management, which he left because he felt a very strong calling to work in the field of renewable energy.

Chairman, Committee Members, we believe that with the barrage we are bringing the right idea at the right time. We are facing a national energy crisis in that over the next 10 years, we are going to lose 20% to 25% of the national generating capacity. We also face 2020 renewable obligations that require us to create 15% of our energy by 2020 from renewable sources. That translates into 31% of electricity. The number today for renewables and electricity is only 9%. Therefore, it is clear that a large chunk of the new generation, which will be built in coming years, is going to be renewable. The only question is what is the mix? We believe that tidal energy, as the barrage will produce, will strengthen and enrich the current mix. The barrage will produce 5% of the UK’s electricity need and fulfil 16% of the 2020 target. The barrage electricity will be secure, clean, predictable and reliable. The life of the barrage will be at least 120 years, although in fact probably much longer.

The barrage will have three main characteristics. First of all, it will produce very cheap electricity over the lifetime of the barrage, much cheaper than any other form of generation. Second, the electricity we produce will be completely green after a two and a half year payback period. We will save 7.1 million tonnes of CO2 every year compared to burning fossil fuels, and just to put it in context, this is equal to around 5% of the total CO2 emissions of all UK households in 2011. The third characteristic is that the barrage will represent a long-term defence against tidal flooding and storm surges, which are becoming more regular. In a world of rapid climate change and rising sea levels, the Severn Estuary is particularly vulnerable and we will protect 500 square kilometres of land and 90,000 properties.

At the hearing on 10 January, which we attended, the environmental NGOs raised a number of concerns that we regard as entirely legitimate, and we share them. Indeed, from the outset, the barrage that we are proposing has been conceived and designed around the environmental concerns. We have already engaged with the NGOs and will continue to do so, and we will find optimal solutions for their concerns. However, I must say that many of the objections raised, both at the 10 January hearing and in the written submissions, were complaints about a project, which we are not. They were complaints about a scheme that will be ebb only with a small number of turbines and involving damming. We propose none of these things. Our proposal is very different. It is more efficient and much, much more environmentally friendly. Thank you.

Q131 Chair: Thank you. If you are frustrated by the fact that people have criticised schemes that are not precisely the one you are promoting, that may be partly because the details of your own scheme have remained quite obscure to a lot of outsiders so far. But part of the purpose of this inquiry is to try to shed some more light on those areas. To start with, can you confirm what we were told by Peter Hain in our earlier session that the strike price that you will be seeking for the CfD for energy from the barrage will be in line with that awarded to offshore wind?

Gregory Shenkman: Peter has expressed his view. Our expectation is that we will be seeking a strike price that is below offshore wind. As you will expect, the strike price is a matter of negotiation between Hafren Power and the Government, and we are not terribly keen to discuss that today specifically. But we are seeking a price that will make the project viable within DECC’s levy control framework. We expect that the strike price we will be able to negotiate will fall below offshore wind, and we hope close to, or perhaps at, the sort of strike price that nuclear power is currently negotiating.

I know I am talking about numbers that are not out there in the public domain. We all have our ideas-I am sure you gentlemen and ladies do as well-as to what they might be. We have had our thoughts about it, but we believe we can be in that zone. If we are in that zone, we believe that from an economic point of view, within this levy control framework, our project is viable.

Q132 Chair: We also recognise that these figures are not yet public, but the one for nuclear may become public sooner than the rest. We are assured by EDF that they are not seeking a strike price up around £140. I think the magical figure they will not want to exceed is £100. Are you saying that you would be able to proceed, financially, with a viable scheme, without any public support other than a strike price at that level?

Gregory Shenkman: I cannot say that, Chairman, no. As I say, we cannot discuss the strike price today. We must negotiate that with the Government. I think if we start giving an indication today, the whole process will be convoluted.

Q133 Chair: Let me put it the other way round. This Committee has a particular concern that the money available under the levy control framework is used in the most cost-effective way. If there are technologies that deliver the same savings in terms of carbon emissions at much lower cost, it will become very hard to justify recommending a commitment of the scale and length that you are seeking.

Gregory Shenkman: Yes, we understand that. I repeat that we are confident that we will come in below offshore wind, which is a very large component of the expected renewable generation. At the moment, there is no tidal energy out there at all. When the barrage is built, we would be able to fulfil 16% of the 2020 target. If our strike price falls in the range between nuclear and offshore wind, then we should be able to fit into that framework and bring the cost down as compared to offshore wind.

Q134 Mr Lilley: Are you talking about the strike price now or the strike price in 2020 for offshore wind?

Gregory Shenkman: I think we are talking about the strike price as it will be decided for the 2020. That is correct, isn’t it?

Andre Karihaloo: It depends on the financial close that we are looking at.

Gregory Shenkman: 2020?

Andre Karihaloo: No, the financial close on the scheme would be 2015-16. The financial close is how they determine the strike price.

Q135 Barry Gardiner: Mr Shenkman, you are talking about a net strike price, are you not?

Gregory Shenkman: We would be very happy to discuss a net strike price. We believe because we bring the benefits of flood defence-

Barry Gardiner: Let us just clarify it rather than extemporise it.

Gregory Shenkman: Sorry, yes.

Q136 Barry Gardiner: You are talking about a net strike price that would fall within that range.

Gregory Shenkman: We are talking about a gross strike price now. I am talking about a gross strike price.

Q137 Chair: We read reports that your costs could be as much as £200 or £250 per MWh.

Barry Gardiner: DECC says £312.

Gregory Shenkman: I am afraid we would not agree with that.

Q138 Barry Gardiner: Recently it was reported that the difference between your net and your gross strike price was accounted for by the fact that you had taken into account, when you were talking about net strike price, the flooding mitigation. This does not form any part of your net strike price figure?

Gregory Shenkman: No, it does not. We are talking to you today entirely about a gross strike price. For reasons you will understand, we would like the idea of a net strike price because we think we are actually bringing something to the party, as well as taking consumer support for 30 years. But we will bring flood defence and that will be savings, and from the point of view of cost to the nation, there will be a benefit as well. We are not discussing that this morning. We will be urging you-and I do urge you-that the benefits should be taken into account as well as the cost.

Q139 Chair: That is a very helpful clarification of the terms that we are discussing. Are you going to seek a CfD for 30 years?

Gregory Shenkman: If that is the way the Government would like to arrange things, yes we would. We will work with ROCs or CfDs. CfDs are what we are actually expecting. I think other renewables obtain 30-year consumer support and we would hope to do that as well.

Q140 Chair: If it turns out that alternatives for renewable technologies only receive a 15-year CfD, is that acceptable to you?

Gregory Shenkman: We would have to consider that. Thirty years is what we have based all our thinking around at this time. There is a very important consideration, which is that at the moment we believe-although we are not entirely sure-that the tendency, at DECC for example, is to look at things over 30-year cycles, perhaps because wind is imputed to have a 30-year lifetime. We say the barrage will last a minimum of 120 years. It will probably last for 200 years or 250 years, or longer. The absolute minimum is 120 years.

If you are going to look at a generating asset you should look at the cost over its lifetime, and after the 30 years of support. There are three stages to the barrage. The first stage is a stage of nine years of construction and commissioning, during which £25 billion or so will be poured into the economy. There will be a lot of jobs, a lot of activity, all coming from the private sector, all private investment. After that, we are hoping for a 30-year period of consumer support. After that there will be a minimum period of 90 years with no consumer support, when we believe we will be generating electricity at approximately £20 per MWh. For comparison today, I think that the cheapest and dirtiest method of generation, burning fossil fuels, costs about £40 per MWh. By the time we get to that period, we think we are going to be about 75% cheaper than all other forms of generation. That is for at least 90 years, perhaps for 190 years. If you look at it over just the 90-year period, and put the 90 years and the 30-year support period together, you get a concept of levelised cost, which is the way we think you should compare the cost of generating assets. The levelised cost, over its 120-year life, of electricity from the barrage, is £48 per MWh. For nuclear, assuming it has a 60-year life-if one can assume that-the cost is approximately £80; £88 I think it is. For offshore wind, assuming a 30-year life, the cost with current technology is £190, with an ambition to bring it down to £100 by 2020. On a levelised cost basis, looking at the generating asset over the life of the generating asset, we think we bring cheap electricity.

Chair: In my view, there is a lot of jam tomorrow in that. What we have to be concerned about is how we get best value for the limited resources available under the levy control framework in the next 10 to 15 years.

Q141 Sir Robert Smith: I remind the Committee of my entries in the Register of Members’ Interests to do with the oil and gas industry, and, in particular, a shareholding in Shell.

In your opening remarks, you said that you would be contributing to the 2020 target, but just now you said it would take nine years to construct and build, so how would it contribute to the 2020 target?

Gregory Shenkman: That is a reasonable question. We believe that the EU will be prepared to take into account, when looking at the target, projects that are under construction.

Q142 Sir Robert Smith: Obviously, there is a lot of energy resource within the Severn Estuary. In your assessment, have you worked out what other potential uses of the Severn Estuary to produce energy would be sterilised by your project, and the net effect that would have on its contribution?

Gregory Shenkman: Andre, would you like to answer that?

Andre Karihaloo: I think you are talking about whether we would use up a portion of the levy control framework.

Q143 Sir Robert Smith: No, more that the physical existence of the barrier means that other options would be ruled out.

Andre Karihaloo: Absolutely. The Regen SW scheme presents a very interesting holistic view of energy extraction from the Bristol Channel. They said that we could extract 14.5 GW from the channel, but part of that was a barrage, part of it was embryonic wave technology, part of it was tidal stream and part of it offshore wind. All of those things are compatible with our barrage; we should and we could do all of them. The fact is that the money exists now to do this barrage and the money will exist at some point in the future to do the others. Given that we are facing an energy crisis-by 2025 we are going to have a 60 TWh electricity gap between supply and demand in the market-we need large-scale, low-carbon projects to help offset that, because where is this electricity going to come from? We would not want to face the situation of blackouts in the United Kingdom. We should do all those things. All of those things are compatible, but the money exists for this now.

Q144 Sir Robert Smith: They can’t all be compatible once you have built the barrage.

Andre Karihaloo: For instance, wave is completely compatible. It is all about efficiency. You need to put each one of these technologies in the most efficient place. Tidal stream belongs with fast velocity currents. Barrages belong where you have high tidal ranges. Wave is great out in the Irish Sea-that is where it belongs. Yes, they are compatible. There are certain schemes, obviously, if you wanted to put a tidal array along the line of the barrage, which would only generate one-twentieth as much electricity. DECC themselves said that that would be a waste of the energy resource. I tend to agree with them on that. But if you find the right spots to put them, we could do all of them, and we should.

Q145 Barry Gardiner: Mr Shenkman, you said in your opening remarks that you felt that there would be a very positive impact from the barrage on flood defence. I am sure that you have great respect for the Environment Agency but their assessment is that, over a 100-year period, the overall impact on flood risk management cost may be neutral. How do you reconcile their assessment, as the Environment Agency, the very agency charged with looking at this and providing the nation’s flood defences, with your assessment that-what is it?-500 square kilometres might be defended from it? Is it because you have not taken into account the fact that in the upper basin, there would be an overcoming of the existing flood defences? How do you reconcile those two positions?

Gregory Shenkman: I will ask our expert, Professor Falconer, to reply.

Professor Falconer: I wonder if it would be possible for me to make a brief comment on the last point by Sir Robert Smith first. Is that okay?

Chair: Yes.

Professor Falconer: If you look at the power potential in the estuary, power is proportional to the wetted planned surface area and the square of the water level difference either side of the barrage. If you look at maximising that in the Severn Estuary, you get an overwhelming maximum power from a line drawn from Cardiff roughly to Weston. Your planned surface area, impounded upstream, is 500 square kilometres. That is one and a half times the size of Lake Garda, to put it into a physical context, and the water level difference is virtually a maximum at that point. If you work out the potential power from that planned surface area, it is by far and away the maximum you will get from any other combination from impoundments etc. in the Severn Estuary. Putting tidal stream turbines along that line is out of the question because it is not deep enough.

Having looked at the estuary over some considerable period of time, I believe that the potential power you get from a barrage is significantly bigger than you get from any other combination integrated over the estuary as a whole. Turning to the point-

Q146 Sir Robert Smith: Other people will be coming to questions on the other impacts of the barrage on environment and so on.

Professor Falconer: Yes, I know, but I do not agree with them.

Q147 Sir Robert Smith: But the point would be that society would have to look at the impact and the benefits in the whole, and therefore, obviously, the knowledge of what other schemes could not be done that would have perhaps less environmental impact. But that is going to be later.

Professor Falconer: I could refer to that in terms of papers with regard to the Bay of Fundy. I have papers on the Bay of Fundy that cite major concerns about the impacts of coastal impoundments as well, but perhaps I could now pick up the point about the flooding.

I disagree with those points. I could divide the estuary, if I may, into four components with regard to flooding: river flooding, that is beyond the tide limit; estuary flooding from the impoundment up to the rivers; estuary and barrage flooding from the barrage out to the edge of the Bristol Channel and then far-field effects. I will take those four separately.

The new barrage, the two-way generation, based on my research in my research centre at Cardiff University-funded by two major projects, both funded by the EU-shows the following. Assuming no pumping, upstream of the barrage there would be a reduction in the water level; it depends how you operate the turbines and so forth, but there would be if you operate them as we would normally expect to operate them-maximising the power.

One of the reasons there is not a lot of information on the website is that we want to work with the NGOs, and it is something I have encouraged Hafren Power to try to do. But assuming we maximise power generation, we would have a reduction in the water levels upstream of the barrage and up to the tide limit of typically two metres, so it would drop from typically zero to 14 metres, tidal range maximum, to about three to 12. That is a drop in roughly my height, or a typical average male, for example, two metres. For example, if you had a property in Newport at the moment, the water level would be two metres lower, so you would be much less likely to flood in the estuary between the barrage and the tide limit. That is the first point.

We have also looked at the far-field effect, so let me deal with the far-field effects, if I may. We have taken our model right out to the continental shelf. That has never been done before in DECC studies. When we look at the modelling to the continental shelf, first of all, with the previous DECC studies, we do in fact find-exactly as the Environment Agency say-that there will be a lot of implications in the far field. However, with the two-way generation, we find there are no significant far-field effects in the Irish Sea and Morecambe Bay and so forth. In other words, all of the far-field implications are contained within the Bristol Channel and the Severn Estuary, so we do not find any far-field effects of any significance outside the Bristol Channel and the Severn Estuary-this is work that we will be publishing shortly in the international literature. In other words, if we build a barrage, the problems are almost entirely contained within the Bristol Channel and the Severn Estuary.

Q148 Barry Gardiner: There are problems and they are contained within the Bristol Channel, not in the far-field effect.

Professor Falconer: Yes, I am coming on to that.

Barry Gardiner: I will let you continue to your third element.

Professor Falconer: Then we come to the point between the Severn Barrage and the edge of the Bristol Channel, i.e. from Hartland Point to St Govan’s Head. Again, it depends on how you operate the barrage, but we are typically finding values of an increase of the water level, a maximum of 20 centimetres. Immediately downstream of the barrage, in the region of Bridgwater, for example, we are finding a small reduction of the water level, so we are not going to increase the water levels in the Somerset Levels, for example.

Furthermore, Hafren Power is subsequently proposing to build a bund around Bridgwater Bay, and that leads to reductions in the water levels. I have the graphs and the results here. With storm surges and so forth, I am finding quite significant reductions in the water levels. Downstream, apart from the relative far field-far field within the Bristol Channel, not out in the Irish Sea-we will have some slight increase of the order of the shorter side of an A4 sheet of paper.

Then we look at the effect of the water levels upstream in the river. If we drop the water levels in the Severn Estuary, upstream of the impoundment, by two metres, then we create a huge area to absorb much more water from the river. If, as the Environment Agency is doing in many other areas, we were to remove the weirs to allow much better fish migration, then we have the potential to reduce flood risk considerably up the Severn River, in areas like Upton-upon-Severn and so forth.

In my view, the opportunities to reduce flood risk are considerable. There will be no far-field effects of any significance in the Irish Sea and Morecambe Bay. There would be a considerable reduction in the Severn Estuary, and there will be potential to reduce the flood risk in the Severn River, Wye River, the Usk and so forth, because the water levels would be lower in the Severn Estuary, assuming we do not pump.

Q149 Barry Gardiner: Professor Falconer, thanks very much. Can I just check with you? You disagree with the EA assessment, and you say you will shortly be publishing further information in a professional journal that should bring the Environment Agency onside with what you say.

Professor Falconer: Some of it has already been published.

Q150 Barry Gardiner: The notion of increased tide locking and erosion caused by a higher water table upstream, you dispute. You say it will be a lower water table upstream?

Professor Falconer: Can I just clarify why I think the Environment Agency might be making those comments? They may still be basing their assessment on the DECC studies, and those studies refer to the previous ebb-tide generation only scheme. I might split hairs with them over some of their conclusions on the previous scheme, but on the whole, I would not disagree with their assessment of the previous scheme. But this scheme is quite different.

Q151 Barry Gardiner: Let me ask you specific questions because these are the challenges that I have and, therefore, I need to put those to you.

Professor Falconer: Yes.

Q152 Barry Gardiner: The increased tide locking from the barrage would worsen the pluvial and fluvial flooding. You disagree with that?

Professor Falconer: No, because this-

Barry Gardiner: You will publish academic papers to show that.

Professor Falconer: I have the data now to make it available.

Q153 Barry Gardiner: But you said you were going to publish it.

Professor Falconer: Yes.

Q154 Barry Gardiner: You are happy to make it available to this Committee before that?

Professor Falconer: Yes, I have the draft papers now.

Q155 Barry Gardiner: Thank you very much. On erosion caused by a higher water table upstream, you have informed the Committee that in fact there will be a lower water table upstream.

Professor Falconer: No, I would not say it is lower.

Q156 Barry Gardiner: I thought it was 2 metres lower.

Professor Falconer: No, sorry, let me just clarify that point. Let me say, for the sake of simplicity, that the tidal range was from zero to 14. The old scheme chopped off the bottom of the tide, so let us say it went from seven to 14. The new scheme will chop a bit off the top and a bit off the bottom, so the mean water level now stays the same. With the old scheme, we chop off the bottom, so the mean water level would have gone from zero to 14, so it would have gone up. That is why we have the tide locking problem. Now it will stay roughly the same. So the mean water level, the groundwater level, effectively, will stay the same. High water level will lose 2 metres. I just want to clarify that point. I am not saying that the groundwater will be lowered by 2 metres. The groundwater will effectively stay roughly the same. Under extreme spring tides, the high water level will be reduced by about 2 metres. In others words, if I owned a house at Newport, I would be less likely to be flooded.

Barry Gardiner: Thank you.

Chair: Can I also draw attention to my entry in the Register of Members’ Interests?

Q157 Mr Lilley: You said that this would be the cheapest form of power, that the real costs would be in the order of £48 per MWh.

Gregory Shenkman: Yes.

Q158 Mr Lilley: Why do you need a guaranteed price from the taxpayer of up to twice that?

Gregory Shenkman: The intention is to fund the scheme privately. To fund it privately, we need to provide a return to investors and, therefore-

Q159 Mr Lilley: A 100% return?

Gregory Shenkman: No.

Q160 Mr Lilley: Well, if you could produce economically at £48 per MWh and you want something up to double that, that is 100% return I think.

Gregory Shenkman: The time is involved as well of course. The barrage will last for 120 years. Ultimately, the final investors in the scheme are likely to be very big investors who are attracted by a steady level of yield from a reliable utility-style activity, which this will be. In order to attract the investment we have to provide that return, and it is because of the need to provide that return that, like other renewable sources, we need the consumer support.

Q161 Mr Lilley: You are saying your investors do not really believe you can produce it and get a good return at £48 per MWh?

Gregory Shenkman: The £48 is the average over the life. The levelised cost is calculated very simply by taking the full capital cost, all the operating costs, adding them together and dividing it by the number of megawatt hours produced over the life of the asset. On that basis, which is a very straightforward basis, the barrage produces at £48, compared to £88 for nuclear, if they have a 60-year life, and £190 for a 30-year wind farm.

Q162 Mr Lilley: Not discounting future at all?

Gregory Shenkman: Yes, discounting.

Q163 Mr Lilley: At what rate do you discount the future?

Andre Karihaloo: Well, it depends.

Q164 Mr Lilley: What do you actually use?

Andre Karihaloo: The rate that we use is the rate that we expect sovereign wealth funds to be able to raise debt and equity for in the market.

Q165 Mr Lilley: And even so, you get £48. That is quite good, isn’t it?

Andre Karihaloo: Yes.

Mr Lilley: I might invest in this.

Barry Gardiner: Is that a declaration of interest, Peter?

Q166 Mr Lilley: It is. But it is an interest that if I did, would save the taxpayer money.

In the background material it says that it was going to produce power for only 15¼ hours a day. What does it do the other 8¾ hours?

Ian Gardner: Perhaps I can respond. You are right; it is an ebb and flow system. Unlike the previous scheme, which was ebb only, it has stretched the delivery period of the power generation. It is producing power for up to 60% of the day. The reason for that is linked to the tidal movements, obviously, which are linked to the lunar cycle-which I think we all understand-and the lunar cycle moves slightly relative to the daily cycle, as again we know.

Q167 Mr Lilley: I think we’ve got that. I was just checking. To cut a long story short, therefore, there will need to be a back-up?

Ian Gardner: Yes.

Q168 Mr Lilley: Is the cost of that back-up of power featured into your costings?

Ian Gardner: Not per se, but this is a contribution to a diverse and resilient mix of UK energy. It produces 5% of the UK power. It produces it in a way that is totally low-carbon. It is a very predictable form of energy. We know exactly when this energy is arriving, unlike, say, the equivalent in wind power. A resilient and reliable energy mix for the UK relies upon the grid operating, knowing when power is available. This will have the absolute security of availability. To give a context, this is producing 6.5 GW of energy. Looking at the latest published figures for a couple of days ago, the peak demand on the UK system was 55 GW. The minimum demand during the daily cycle was 31 GW. We are at 6.5 GW. It is accepted that during the winter period the energy demand is greater than in the summer period, but in the summer period, that daily range is perhaps slightly over 50%-50% to 60% of the winter figures. That would put the minimum power demand of the UK around15 GW to 18 GW in a daily cycle. The minimum baseload that the UK is looking for is in that 15 GW to 18 GW range. Our power source-whether during day or night generating, because of that lunar shift-is producing very reliably, very predictably 6.5 GW. There is always a capacity within the UK, in a diverse, mixed generating economy, with self-reliance for the UK and resilience and security for the UK, for this sort of power supply, particularly given that it has a zero marginal cost and it is totally predictable. It has no consumable fuel that it is reliant upon and it has no pollution legacy. All of these things give it a very strong point of applicability and relevance in a diverse UK market.

Q169 Christopher Pincher: I take your point, Mr Gardner, about the predictability of the barrage’s power supply, but you accept it is an intermittent supply. Does the predictability of its supply match the peaking demands of most of the user community? In other words, are you providing power when people need it, because if you are not, then we still have to find peak capacity load from elsewhere? Surely you should factor those costs into your overall costs.

Ian Gardner: The point I am trying to make, and perhaps I have not made it well enough, is that even with the minimum demands of our economy at the moment, it is well above-factors of three above-the power generation of the scheme. Therefore, like all power generators that provide power into the market to match different categories of demand, this is a variable baseload supply generator. The ability and the predictability of putting other sources of power into the grid will be completely determinate. I am not for a minute saying that this scheme alone will provide the whole of the UK’s power because it will only provide 5% in total, and it will provide up to about 30% of the minimum demand in the whole of the UK at any point in time.

Q170 Sir Robert Smith: Does that mean you would have to design your nuclear load not to get above, or would you have to switch off your nuclear?

Ian Gardner: That is an interesting debate for DECC and others. The UK needs a resilient, diverse energy balance. It needs the ability of supplies to be predictable. It also has other supplies that will be more variable. As I have suggested, that peak will go up to 55 GW, 60 GW. This is providing 6.5 GW. You are right, it will require that planning.

Importantly, this is a synchronised supply, unlike certain other sources such as wind that are asynchronous. When you bring in different types of supply, you have to do different things to load balance and bring them into the system. This is a synchronous supply, very predictable. It is available on a known basis, 60% of the daily cycle.

Q171 Chair: Predictability, as you have just acknowledged, is not the same as being continuous.

Ian Gardner: It is not continuous.

Chair: No.

Ian Gardner: Perhaps one further point is that the UK is moving towards dynamic response modelling. It is moving towards a more intelligent grid. It is moving towards distributed storage. There are various technologies that the UK is moving towards, and needs to move towards, to optimise its use of energy. This is a major component of that or, in our view, I would like to see DECC seeing this as a major component of that informed, smart mix that will look after the UK’s power generation in the future, particularly bearing in mind its low-carbon delivery and its zero marginal cost.

Q172 Barry Gardiner: I need to ask this question sensitively because I respect the fact that Professor Falconer has responded substantively to the questions that I put to him, and, therefore, whenever you are defeated in an argument in that way, the best way of doing things is to try to undermine the person, which is what I will try to do in my next question. I wanted to make that quite clear, so that at least it was open and respectful.

Professor Falconer, is it right that you are the CH2M HILL-Halcrow professor? Is that the sponsorship of your chair?

Professor Falconer: Yes, but my comments are not linked to that. They do not fund this particular research project.

Q173 Barry Gardiner: So there is no funding of your particular research project, only of your professorship?

Professor Falconer: No. The research I am doing, which I am referring to here, and the outcome of these results, is funded by two projects in the main. One is the Low Carbon Research Institute project, funded by the EU. The other is an international programme-international in the context of Europe-called MAREN. Both of those projects are funded through the EU.

Q174 Barry Gardiner: Thank you. Grand. Therefore, there is no information that you have, through being a member of the expert panel for Hafren, which has been fed into this research programme that others would not have access to?

Professor Falconer: No. All the research I am talking about here is completely independent. I have had no funded research from Hafren Power.

Q175 Barry Gardiner: Thank you very much. Mr Pryor, you were previously at CH2M HILL, I understand.

Anthony Pryor: Yes.

Q176 Barry Gardiner: And Halcrow, the engineering consultancy, is now part of CH2M HILL. I know these things all sort of merge into one another. A former member of the Corlan Hafren consortium, who has had a six-year involvement in the project, estimated a cost of energy between £150 and £350 per MWh. How do you reconcile that estimate, from somebody from your former company with a six-year involvement in the programme, with the figures that we have heard today?

Anthony Pryor: Just for the record, I was Chairman of Halcrow for some five, six years and my last task, as Chairman, was to persuade the board that they needed to sell themselves to CH2M HILL, a sale that was completed in 2011. I was involved, as part of my activities and duties in Halcrow, in the Corlan Hafren grouping of companies, which has now morphed into Hafren Power. I cannot comment on why the individual in question, I know who he is, put £350 in there. I have not questioned him on it because he put in his submission. I do not recognise the £350 per MWh from the meetings we used to have in Corlan Hafren, some 18 months ago.

Q177 Barry Gardiner: Therefore, you dispute his analysis. Or do you impute any malevolent intent?

Anthony Pryor: No, I would not dream of imputing any intent to individuals. He obviously felt-

Q178 Barry Gardiner: It is simply an expert view that differs from your own?

Anthony Pryor: I must say he has a very wide range there, in terms of price. You mentioned £100 and something?

Barry Gardiner: Yes, indeed. It is between £150 and £350.

Anthony Pryor: It seems to me he must have made some assumptions on both ends of that, which I do not recognise. We have spent the last five, six months here in Hafren Power refining the business model, refining the costs and, as Greg Shenkman has advised, we believe we have a pretty robust idea of where our gross strike price should be.

Q179 Barry Gardiner: Coming back to you, Mr Shenkman, why was it that in the FT article you talked about a net strike price?

Gregory Shenkman: We talked about a net strike price because we do not know-there are all sorts of numbers out there as to how much money-and there are all sorts of forecasts about what the flooding damage will be, how much the tide will rise, how much of an increase there will be in storm surge as a result of climate change. The rising sea levels are a matter of record, so you can imagine that by the time we are fully operational in 2025, things are just moving on, and without a barrage, tidal flooding is likely to become much more common and perhaps fairly catastrophic. For example, there are storm surges. There was a storm in 2010 called Storm Xynthia, which narrowly missed the Severn Estuary. It went off and hit the French coast. It killed about 68 people in Europe and did something like $4 billion worth of damage.

Andre Karihaloo: $1.3 billion.

Gregory Shenkman: It depends on who you read actually. I have read $1.3 billion. I have read $4 billion. These are newspaper reports. Anyway, it was a lot of damage. If that had gone up the Severn Estuary, it would have done terrible damage to Cardiff, Newport and Bristol.

Q180 Barry Gardiner: Yes, indeed, but come back to why it was-

Gregory Shenkman: What we are saying is we are in discussion with Defra, but only right at the beginning, because they have produced numbers on what they think the flood damages and the cost of flood defences might be. We would like to verify what those numbers are. When we have agreed those numbers with Defra, we will be able to propose what we think we are going to be saving on average-well, when the barrage is up-over 30 years, but then after that for the remainder of its life, for free, an amount of X hundred million pounds a year. We think it would be nice, when you look at the consumer support that we are getting, to take into account that although the consumer support has been given to enable the project to go forward, at the same time the nation is getting something back.

Q181 Barry Gardiner: Yes. Interestingly, you start off by saying you do not want to talk about strike price and the negotiations but now you are beginning to reveal something of the way in which you propose to negotiate, are you not, because the way in which you are presenting things to the Committee now is to say, "Look, there are these uncertainties in the future and we think that if there is increased potential for a storm surge and so on, we may be saving the nation such and such and, therefore, we will begin to negotiate on a net strike price with the Government, trying to take account of those exigencies in the future". Is that what you are trying to do? Are you trying to negotiate with the Government on those unknowns, on those very uncertainties that you started speaking of, and incorporate those into your strike price negotiations?

Gregory Shenkman: No, we are not.

Q182 Barry Gardiner: Categorically, you will not do that?

Gregory Shenkman: We will certainly discuss this issue when we are doing it.

Q183 Barry Gardiner: Why? If it is not actually going to affect the strike price, why?

Gregory Shenkman: For the reasons I have already explained. If the consumer is going to be providing support on the one hand and, on the other hand, there is going to be a benefit to the nation, it would make sense, would it not, as in any other situation of that kind, to look at the two together.

Q184 Barry Gardiner: So it is affecting your strike price negotiation.

Gregory Shenkman: However, we would like to be involved in the large amount of money that is going to be available from the levy control framework. The money has already been decided: £7.6 billion I think it is. The question is which types of generation are going to participate in that. When that decision is made, one of the questions is gross strike price, and the other question that should be beside it is: are there any other reasons why we should choose this? And we say the answer is, yes.

Q185 Barry Gardiner: So you think it is a reason for choosing the project but it will not, in your view, affect the strike price?

Gregory Shenkman: That is not a matter for us to decide.

Q186 Barry Gardiner: It is, because it is a matter of negotiation and if you do not present it as a subject of negotiation-Mr Pryor, yes?

Anthony Pryor: Can I just add something? At the last session, the Chairman said-I forget who was giving evidence at the time-"I hope you understand that Government Departments cannot put one pot of money against another particular project".

Gregory Shenkman: Yes, exactly.

Anthony Pryor: That led us to say, "Ah, all our debates about, ‘Well, isn’t it interesting our net strike price’-" because we wanted to net off the flood savings, a figure still to be decided, because I met with Defra last week to start that process of trying to agree a number-"is probably not the right way". We accepted the Chairman’s guidance that you could not do that. So we had to go back to that to say, "We are now going to talk about gross strike price. Justify the project on gross strike price, which we believe we can. Justify it on gross strike price, and then invite the decision-makers to accept that there is an additional benefit somewhere, maybe in Treasury, maybe somewhere else."

Q187 Barry Gardiner: That is absolutely clear. You have changed your position.

Anthony Pryor: Exactly.

Barry Gardiner: Thank you.

Q188 Chair: The reason I made that point is because, of course, the support available from the levy control framework does not come directly from the taxpayer. It is not a question of offsetting a bit of Defra spending against a bit of DECC spending. It is saying to electricity consumers, "You are going to pay more for your electricity but there is some hidden benefit, at an unknown time of an unquantified amount, to Defra’s flood budget". There is simply no way to offset these things and talk about a net strike price.

Anthony Pryor: Understood. We understood that very, very clearly from your comments.

Gregory Shenkman: I am sorry, I was not clear. Although I think we probably would like to make it clear, we still think, on a gross strike price basis, we are going to be very competitive with offshore wind. That is without thinking about these benefits.

Q189 Albert Owen: Good morning. I remind the Committee of my membership of the all-party group on the Severn Barrage. In your opening remarks earlier on you talked about the legitimate concerns of NGOs and others, and they have certainly raised them in evidence sessions that we have already had. One of the criticisms is that there is very little detail in the proposals, thus far. We heard for the first time today about your studies, which you have not published and will publish. When do you propose to publish your full proposals?

Gregory Shenkman: Perhaps I can pass over to you, Tony.

Anthony Pryor: One of the huge benefits of this Committee’s inquiry has been to raise the profile and to encourage us to concentrate-

Q190 Albert Owen: We are brilliant at doing that, but we are talking about your proposals.

Anthony Pryor: - to concentrate all our minds. What it has also done is create an insatiable demand for detail that is not normally present at this stage of a project. We have not started the environmental impact assessment and the economic impact assessments. We have done a lot of work so far, but we have to build all that into a comprehensive piece of work to produce an environmental impact statement, which will then hopefully underpin a hybrid Bill approach, and I am sure there will be a question on that shortly. We do not have all the data, and we do not have a detailed proposal to present. Defra’s new guidance, which I have right here, on the Habitats Directives for birds and floods, habitats, water framework-they are all here-defines a process aligned to the EU process, the three-stage of alternatives, IROPI and the mitigation measures. They define their process, and they will put in place the lead competent authority to lead on all those events. We have opened the debate with Defra. We asked them last week, "Who is the lead competent authority?" We are waiting to hear back from them who it is and then we will engage with them in a rolling process-it is a rolling process-to produce the detailed proposal, which we then have to submit for their acceptance.

Q191 Albert Owen: I understand that. But the line of questioning that I was putting to you is that there has been a vacuum, and that vacuum has been filled by NGOs and others asking questions and making statements, which you raised in your opening comments. One of the criticisms is that you are waiting for in-principle backing by the Government before you produce these details. How would you respond to that?

Anthony Pryor: When you say "backing", we are not looking for financial backing.

Albert Owen: No.

Anthony Pryor: Ideally, we would like a positive response from this Committee, obviously, and following that, ideally we would like-as in the process with HS2-the Minister to say that, in principle, they will support a hybrid Bill sometime in the future when all the detailed work has been done. That is how HS2 has been done.

Q192 Albert Owen: I will come to the hybrid Bill in a second, but again I put it to you that because of this vacuum and because of what we consider to be, as a Committee, slowness in the detail coming forward, we are having to extract this at this session, whereas others are coming in with slightly more organised standpoints, if I may say that. Do you feel this has eroded a bit of public trust, that you are having now to play catch-up to engage with the public?

Anthony Pryor: Can I classify "the public" as being the relevant people who put submissions into this Committee?

Albert Owen: Public opinion is a broad spectrum, I understand that, but what we have heard from members of the public, yes.

Anthony Pryor: Clearly, we would not want the RSPB to stand up and put in a newspaper article-

Q193 Albert Owen: No, not NGOs to one side. I am talking about the public in general.

Anthony Pryor: The public in general?

Albert Owen: Yes.

Anthony Pryor: Well, our plan is to undertake a full consultation process. We have already appointed the two companies who will do it, one in South Wales and one in Bristol. The one in Bristol happened to have done the consultation process for Hinkley Point, so they have understood all the local players. That consultation process starts with consulting on consulting. You go round to all the stakeholders and you ask them what they want to be consulted on, what are their key issues, their key problems, and then we have a 12-month period of time. That will be our approach to the public.

Q194 Albert Owen: When do you envisage starting that, Mr Pryor?

Anthony Pryor: As soon as we kick off this project, we are going.

Q195 Albert Owen: You mentioned the hybrid Bill. You will know that that will take some time to go through Parliament, if the Government agree-up to three or four years. So you are saying that you will have a pre-Bill consultation with the public and with stakeholders?

Anthony Pryor: Yes, absolutely.

Albert Owen: Fine.

Anthony Pryor: If I may just mention the parallel example of HS2. The Minister for Transport stood up at least 12 months ago and said, "We will have a hybrid Bill approach to this project". They put a project team in place. I do not think they had even settled the line of the railway track when she said that. So there was not much data out at that time. It is exactly the same process for major projects of this nature.

Q196 Albert Owen: But HS2 is already up and going, by the Government.

Anthony Pryor: Yes.

Q197 Dr Whitehead: We have mentioned the question of capital for construction, which we understand you are saying will all come from private investors, sovereign wealth funds and so on. Is that a supposition on your part, or do you have evidence that that funding is potentially available?

Gregory Shenkman: To answer your question directly, yes, we plan to finance this project entirely from private sources. Indeed, it has taken about five or six years to get here, so far, and something like £18 million has been spent to get to this point. There is money out there and it has been invested, so yes, there is evidence.

Money has been spent to get to this point, and I must say that we are very grateful to your Committee for deciding to hold this hearing, because it has provided the perfect platform for us to explain what we are trying to do and what is involved. We are now fully ready and we are now approaching the second stage. The second stage involves the things that Tony has just referred to: the creation of the environmental impact assessment; the public consultation; and the preparation for the hybrid Bill, which we would have to pay for ourselves. We are currently in the early stages of second-stage funding, to fund us through the next period of about two and a half years, which will carry us to the moment when, if you like, political risk is gone and when the hybrid legislation is pretty much definitely going to happen.

At that point, there will be a third funding that will be very much larger, and the third funding will be a commitment, effectively, by a range of very large investors to invest over the nine-year period to pay for the construction and commissioning of the barrage.

Q198 Dr Whitehead: But you have only just formed as a company, Hafren Power, and you are the successor of Corlan Hafren that dissolved. As a newly formed company with yet unknown investors, how do you think you are going to be able to gain the public trust and confidence to carry out something on this scale?

Gregory Shenkman: I have had about 38 years of financial experience and I have seen many companies and projects come and go, fail, and do well and do badly. I must say that this is really the project of my life. This project really should be delivered. I have become a real, true believer in this project. It is a huge national asset. We have the second highest tidal range in the world and we are not exploiting it. The only way to exploit it, as Professor Broyd said at the 10 January hearing, the only way of commercially viably exploiting it is a barrage along the Cardiff-Weston line as we are proposing.

We have gathered together a group of about 30 pretty hardened professionals who are, across the piece, able to deliver this project. We have also teamed up with a number of companies-and Arup is obviously one of them-which will fill any gaps that might be there. We have a wide range of skills. They cover engineering, project management, engagement with the environmental stakeholders, local communities, financing, operations and maintenance. Basically it is soup to nuts. We have agreed with two very large global-scale consulting/engineering operations. They are very interested in what we are doing and they have already given very clear indications that they want to work with us on this project. We have no doubts at all about our ability to deliver this project.

Anthony Pryor: Let me just add to that, Mr Whitehead. I have been working very hard on what I call the supply chain side, the alliance team that is going to deliver this project. As you rightly said, we are a small start-up company. We have chosen Arup. Arups are our lead engineer designer. We have chosen an architect firm, Marks Barfield-who were responsible for the London Eye-to add some architectural features to this barrage. We have chosen Swansea University to undertake fish studies. We have chosen our consultation group. Greg has mentioned that we have had discussions with two very large engineering firms. We have talked to the construction companies. We are in quite detailed discussions with one of them. We have talked to five turbine manufacturers. We are about to talk to National Grid. We have not been able to do that because of the Christmas break. In the total supply chain to deliver this project-with my own experience of major projects, and Arup’s-we are confident that we have the right team to deliver it.

Q199 Dr Whitehead: I hope you will forgive me, but it would be possible to make those claims as to whom one has talked to, without having any substance behind the claims. Who are the companies that constitute Hafren Power and are associated with them? Secondly, why did Corlan Hafren dissolve?

Anthony Pryor: I will explain Corlan Hafren because I was Corlan Hafren and Greg was not there. From memory, Corlan Hafren had five or six shareholders. They were quite disparate shareholders. One was Sancroft, which was headed up by John Gummer or Lord Deben, as he now is. One was Halcrow. One was an entrepreneurial start-up investment company called Zercin. One was Temporis. I think that was it. We were disparate and, in my opinion, we were not the right form. At that time, I had just sold Halcrow to CH2M HILL. They looked at their portfolio of risk and decided that staying in the project for them at the time-which is why Halcrow is not involved today in this project, Mr Gardiner-Arup were involved at the time. They stayed and Halcrow did not.

Anyway, for various reasons, we decided to dissolve ourselves. Two or three of those shareholders felt it was worthwhile continuing. They raised some more money to keep going and they encouraged Greg to join. They have encouraged me to join and we feel-on the basis of this 1,000-turbine barrage spreading across the estuary, with its better operating characteristics and better flood characteristics-that this is now the project to go. Also in that time, the Government has moved, through the Energy Bill, to an acceptance of having to pay a contract for difference. I think 18 months ago it was almost, "Well, produce the electricity at the price we need to match the current price". But there has been a shift in understanding of how we, the nation, are going to pay for electricity.

My personal belief is that it has been driven by the nuclear industry. The nuclear industry could not match gas. Someone has to pay for the nuclear industry and we need nuclear power in this country. The whole debate about building a new nuclear fleet was that the country had to have it to meet renewables and to reduce carbon, but it costs more. So the whole contract for difference debate has come up and we are now in that same position. This is the right project at the right time.

Your second question was when will we tell you who is behind Hafren Power. Not the shareholders of Hafren Power, which are still a couple of entrepreneurial investment firms in Wales. In the future, Hafren Power will be sold to a sovereign wealth fund. Then they will have to deliver it with the delivery team that I am currently putting together. If you are asking which companies I have got to put together, I do not have their permission to give their names out today, but I probably would be comfortable to give you it in confidence, Mr Chairman, if you wish to know who the companies are behind being able to build this project.

Chair: If you indicate things you do not wish us to refer to in our evidence, we are happy to take those into account certainly.

Q200 Dr Whitehead: You stated that you think the barrage will be partially operable in nine years and you think it will be fully operational in 11 years. I think some people have raised eyebrows at that particular timescale. What is factored in the timescale for partial and complete operation? For example, you mentioned nuclear in terms of the factoring in of new nuclear. You have the generic testing and the planning process and so on, all of which has to be factored in prior to the build. Have you factored in, for example, marine licenses for dredging, planning consent, compensatory habitat, and so on? Is that all factored into that nine-year period?

Anthony Pryor: Yes, absolutely. I can produce my detailed chart, if you would like. But yes, we have factored all those factors in.

Q201 Dr Whitehead: Are you suggesting that those things should be done in parallel or in sequence?

Anthony Pryor: In many projects, things are done in parallel. One of the issues I suspect you might have a question on is the turbines. It is our intention, having discussed it with the turbine manufacturers, to certainly build a scale model of the turbine we wish to use, and probably a full-scale model, and test it either in situ, or in some suitable dock, because we want to prove its performance characteristics.

Q202 Dr Whitehead: And of course time for the hybrid Bill, with planning consent presumably obtained prior to the Bill being introduced.

Gregory Shenkman: We are not wedded in particular to a hybrid Bill, although a hybrid Bill seems to be the normal track down which a national scale project like this would go. It has been the way with HS1, HS2, and Crossrail and so on. Also, because this is a project between two countries-Wales and England-we think a hybrid Bill may be necessary. It also involves the Crown Estate and its ownership of the seashore and the seabed. Probably the best way of bringing together the interests of the communities on both sides of the Severn, and the Crown Estate and Hafren Power, is through a hybrid Bill. That should handle the consents question, but if the Government would prefer to go down a different route we will simply do whatever is required.

Anthony Pryor: The local Hinkley Point is going through the planning process.

Q203 Chair: Mr Pryor, you were quoted a couple of weeks ago in one of my favourite bedside readings, which is New Civil Engineer, and you said once the project has a hybrid Bill and an environmental impact assessment-I do not know why my colleagues think it is so funny that I spend my evenings making preparations for these meetings.

John Robertson: It is obviously a cure for insomnia.

Chair: We can then look to sell it on to a sovereign wealth fund to take the project forward. What implications, do you think ownership of the Severn Barrage by a sovereign wealth fund, even before it has been constructed, would have in terms of commitments to UK manufacturing and jobs in the construction process?

Anthony Pryor: May I say first, Chairman, the circulation manager will be very impressed and pleased that you have a copy of the New Civil Engineer magazine.

My belief is-more than a belief-that the only way that a sovereign wealth fund would feel comfortable to invest in this company and take it-

Gregory Shenkman: Sorry, can I just break in for one second. We are not talking about one sovereign wealth fund. The final takers in this will be sovereign wealth funds plural: global infrastructure funds and pension funds-a class of investors that have an appetite for a reliable, long yielding, assets, so not just one, sorry.

Anthony Pryor: You are asking about their commitment to jobs. In my view, they are unlikely to say, "Thank you very much, we will buy this company for whatever it is and then we will start afresh and decide our own way". They are much more likely to say, "What are the construction risks?" which is the big risk they have to face in terms of a project of this nature. They will want to know what is the in-place supply chain for building it, from turbines to design, to project management to construction, to connection to the grid. All that is going to have to be discussed and put into place in skeleton form in the next two and a half years. That will be the-I want to use the word guarantee. That will be the commitment, in that they will be buying a supply chain. For example, I am sure they will not turn around and say, "We are not going to build the caissons in Port Talbot. We will go and build them in country X somewhere else and turn round." It will be part of the package they will be buying.

Q204 John Robertson: I would be interested in the companies that are associated with Hafren, and I am quite happy for you to write to us to tell us. But I would also, Mr Chairman, like to be able to ask some questions once we get that list of companies. I had some questions I was going to ask about a company, which I will not do at this moment in time and will wait until you send me the list.

Anthony Pryor: Yes.

John Robertson: I would obviously like to ask some questions at that point once you give it to us.

Anthony Pryor: I’ll give you the list and if you would like to have a separate meeting to discuss it, any time.

Q205 John Robertson: Thank you. Can I go back to the timescale bit? I need to get my head around it because we have talked about several things on time. There was a two-year spell and then there were three to four years on top of that, and then nine years. Is that 13 years from today to operation? Is that what you are talking about?

Gregory Shenkman: Not quite that long, we do not think. Clearly it is very difficult for us. You are legislators, we are not and we are assuming that we move ahead when we get the environmental impact assessment underway. What we are hoping will happen is, exactly as Tony has described, the Government will say, "Subject to completing these necessary things: that we get a satisfactory environmental impact assessment, that there is an appropriate public consultation and that you conform to the Habitats Directive. Providing that, we are going to provide Government time to allow hybrid legislation to go through". At that point this whole process can get underway.

We are hoping-and you are experts, not us-that there can be an element of "in parallel," and that we will start off with these things but it does not have to be consecutive, so we are hoping the hybrid legislation will be able to pass through in the life of this Parliament, which we understand is fixed. Hopefully, that process could be completed by, let us say, the first quarter of 2015 at the latest. Therefore, we would hope to be digging out of the ground in 2015, and after that will be a period of seven years of construction, two years of full commissioning. You would look at a first full year of operation of about 2025, perhaps 2026, and you might be generating little bits of electricity in 2021, 2022 and then rising in scale.

Q206 John Robertson: There is good news and bad news in some of the things you have said. Government never give you what you want, by the way, so that is the bad news. The good news is that it will not really matter which party is in power. We are very similar on the hymn sheet we sing from when it comes to energy. My fear is that, if it is the 2026 time before we get anything from you, you will be completely swamped by gas, nuclear and renewables and that, in effect, the money on the Severn Barrage would be a waste, rather than being put into other areas of energy. Would you agree with that?

Gregory Shenkman: The Government currently anticipates a pretty large electricity gap. You are more of an expert on this than me, Andre.

Andre Karihaloo: Yes, I mentioned it before. There is a 60 TWh gap by the middle of the 2020s. I do not agree with that, because if we do go into offshore wind, it has a life expectancy of about 30 years, tidal stream about 20 years, nuclear 60 years. We would be around for 120 years. The price support only lasts for 25% of the barrage’s life.

Q207 John Robertson: I know what you are saying, but if you think about where we were 60 years ago and where we will be in 60 years’ time, I think things will have moved on just a tad from where we are today. My point is that the energy that will be coming along will be coming along in the 2020 area, between 2018 and probably 2022. By the time we have invested as much money in gas as I think this Government, and probably the next Government, will have to do, it makes it, shall we say, not financially viable to go forward with such a large project as yours.

Gregory Shenkman: Can I make two points? I will give two examples. First of all, La Rance. It is small, but it is a barrage and it was built in 1966.

Q208 John Robertson: No, I know, but it is different. Give us two experts and you will get two different answers. I know that. "Our expert says something different from what your expert says."

Gregory Shenkman: The only part I was going to focus on-none of the controversial stuff-was simply the reality of what it costs. It is generating electricity at €20 per MWh, despite the changes that have taken place in the last 45 years. In Norway, 98% of consumer electricity is derived from hydropower. They did this huge investment programme 20 or 30 years ago, and now their consumer price is 65% lower than it is in this country for electricity.

John Robertson: Yes, but they are not starting in 2026. Unfortunately, we are where we are and we have to deal with the problems we have today and the problems that we are going to have, which I would suggest will be before your project will be even close to being complete.

Q209 Barry Gardiner: Mr Shenkman, you said that you were a true believer in this project. Your investors must be as well, must they not, because of the process that you have just taken us through-I was very interested that you said, "We are assuming that these things can be done in parallel." But if these things are done in parallel there is a huge sword of Damocles hanging over it, isn’t there-the Habitats Directive and the EU. The danger of course, from the Government’s point of view, of saying, "Oh, well, we can just let it trot along in parallel", is that they get, or you get, far enough down the road and then when the response comes back, "No, we can’t do that", everybody says, "But we’ve got so far now we can’t row back".

I wonder what discussions you have had with the EU Commission about the possibility of derogation from Natura 2000 and compensatory measures and so on. I heard what you said about having gone to the Government here, but you must know how long things take to get through the EU Commission to get approvals that are going to satisfy Natura 2000. Because this is not site-specific, this is a network of sites that has to be holistically maintained.

Gregory Shenkman: I am going to hand over to Tony to answer the bulk of this, but can I just say that when I said "handle these things in parallel", I do not mean the whole process. I am hoping that once you have traction and the whole thing is going in the right direction, you don’t have to do them on a consecutive basis, so to some extent in parallel. Tony, this is your field.

Anthony Pryor: I am going to talk about the directives in the generic sense. The particular one is the birds’ habitat, and Ian will talk about the compensation measures we have been talking and thinking about.

This new guidance, which was published on 12 December-it is a draft for public consultation-looks to me like a guidance document and a menu list of how to work through the European sites directives. It talks about derogation, but derogation is the compensation measures of level 3, and we were talking about it on 10 January. This is a process that has in it that the competent authority, whoever the competent authority and the decision-maker is, should assist applicants like us for projects, and you decide whether the project has a negative impact. If it has, you go down a very well worked out flow path through IROPI, if it applies or not, and through into compensatory habitats.

In following this for the UK, I think we are going to be in pretty close concert with what is required for the European one because it is a mirror image of the European directive. We are going to engage with the Commission. We did some time ago. The Corlan Hafren company and DECC went to see the Commission two or three years ago, but of course people change and then you have to start to regenerate personal relationships on these things. We intend to meet the Commissioner for the Habitats Directive some time in the next month, I think was the plan, so we can start the process with him. But I do think this document is a good starter to get the thing running, to get the final approval from the European Habitats Directives.

Q210 Barry Gardiner: One of the key problems, and I know you-

Anthony Pryor: If we look at birds, in particular. That is the one that we are going to have to find compensation measures for.

Barry Gardiner: It is not just birds, but let me go through the final conclusions of the original DECC study. I know it was on a different scheme, but in a sense it was not scheme specific because it referred more widely to the possibility of compensatory measures. It said, "Compensation for declines in migratory bird populations might not be possible within commission guidance because of the limited potential for habitat creation within the Severn in some circumstances." That is specifically dealing with the Commission’s view that there has to be co-location of the compensatory measures. It said, "Like for like compensation for changes to the hyper-tidal character of the estuary feature is not feasible". It was far more definite on that point. Of course, one of the reasons that this is such a good site for energy is precisely because of the range. It is a unique feature-or only one greater in the world-and therefore they said the recreation of that hyper-tidal character is not feasible.

They concluded, "This would mean that changes in the conservation objectives that depend upon the physical, chemical and ecological conditions generated by the extreme tidal range and shape of the Severn Estuary could not be addressed on a like for like basis". There are a number of different areas, which-you are quite right-there is a process for addressing. But until they have been addressed, what does that do to your cost of capital? Because your potential investors, knowing that that sword of Damocles is hanging over you, are going to say, "There is a very substantial risk here".

If I can say simply two more words to you. Rather like Robert Frost in Mending Wall, "I could say ‘elves’ to him," I could say "migratory birds", because to get the assessment of this is a matter of years. Compensatory habitat that can be shown to be effective for migratory birds can only be so over a time period that I would suspect is longer than your investors’ patience.

Anthony Pryor: I would like to pass to Ian on the particular, because he has been studying and doing the work on the birds and compensatory habitat. But in general terms, we already have a bird survey done. Hargrove did one 18 months ago. We know it takes time. You have to measure birds over a period of time, the same with fish. We are going to have to do a fish survey, which is going to take certainly a breeding cycle. We know it takes time. If we start now, we have about 18 months to do it all.

DECC have said in their submission-they are coming to see you next week, aren’t they-and in our meeting with them last week, that there is more detail and more data they would like. I have taken note of their comments that you rightly quoted from, but we do believe that we can work through, with DECC and with the NGOs in particular, to satisfy their concerns for compensatory habitat. Ian, do you want to talk about that?

Q211 Barry Gardiner: Sorry, but including hyper-tidal character of the estuary, which they say is a feature that it is not feasible to compensate for. That sounds pretty damn conclusive to me.

Anthony Pryor: Roger, do you want to take the hyper-tidal?

Professor Falconer: I would say that the loss of inter-tidal habitats with the new scheme is significantly less, so I think there is far less concern with the new scheme, in terms of the loss of inter-tidal habitats, than the old scheme based on computer simulations that we have undertaken with our research at Cardiff University, and secondly-

Q212 Barry Gardiner: It is not the inter-tidal habitats. It is the hyper-tidal nature of the scheme. You are saying you are going to reduce a very unique feature that the directive is saying needs to be recreated and compensated for in the locality, and it cannot be.

Professor Falconer: The concern that DECC referred to-

Andre Karihaloo: Sorry, Roger, I just wanted to say that with the turbines, unlike bulb turbines, they enable an element of control that did not exist with bulb turbines. We would be able to flood the basin periodically and, therefore, replicate the hyper-tidal nature of the estuary, occasionally.

Q213 Barry Gardiner: Occasionally.

Andre Karihaloo: Well, when it would be required, yes.

Q214 Barry Gardiner: At the moment it happens how many times a day?

Andre Karihaloo: No, but in particular at spring tides and-

Q215 Barry Gardiner: In terms of an ecosystem, the difference between an occasional hyper-flooding and twice a day is pretty big.

Andre Karihaloo: Mr Gardiner, what I am trying to impart is that there is-

Professor Falconer: Could I just make one important point? The previous scheme was going to change the upstream tidal characteristics completely. The current tide upstream of the barrage or the theoretical line where the barrage would go is basically sinusoidal in form. The shape of the tidal curve upstream of the barrage was going to be completely different from a sinusoidal tide, so the whole characteristics of the estuary would have been completely different in the previous scheme.

Barry Gardiner: That is the point.

Professor Falconer: Yes, but the new scheme will still be sinusoidal in form upstream. The tidal range will be different and it will be reduced in amplitude, and how much that amplitude varies by, in my view, will be dependent on our discussions between Hafren Power, which is what I am proposing, and the NGOs, and that is one of the reasons why we do not have much information in the public domain.

Q216 Barry Gardiner: Professor Falconer, nobody on your panel is suggesting that in order to make appropriate compensatory measures, what you are going to do is hyper-flood to the level that it was before-twice a day-because that would completely defeat the objective of the scheme. This is precisely the point of the conclusion of the previous DECC study, is it not, that this is a feature that is irreparable-no.

Chair: Irrevocable?

Barry Gardiner: No. Unreplicatable.

Anthony Pryor: Can I just go back to the operation of the barrage? You are right, you would not say every six months or so you would flood it up or not. The barrage is a complete control mechanism. The thousand-odd turbines can obviously be used in ebb and flood. They can be turned to-I say-freewheel, but feather the blades because the pitch can be changed. So they can let the water flow through, which could actually replicate the whole tide, but when would you do it? We would like to have a discussion with the ecologists and the NGOs to ask how often would they like the tide to be filled up to the top, bearing in mind that if we do nothing we are going to lose inter-tidal habitat anyway. If we do nothing we are going to lose 20%.

Q217 Barry Gardiner: There are projections that show that it could be up to that, yes indeed.

Anthony Pryor: Sea level rise is going to do it.

Barry Gardiner: Schemes like this are trying to stop that.

Anthony Pryor: I have seen figures ranging from 35 centimetres to over a metre.

Barry Gardiner: You may have also seen the Delft study, which says that because of the gravitational field-

Q218 Mr Lilley: The IPCC-we spent a lot of money on it.

Anthony Pryor: Well, even 35 centimetres is quite a bit.

Mr Lilley: Thirty to 60.

Anthony Pryor: Yes. So sea level rise is a significant effect and the EA is going to have to spend money to prevent flooding from the sea level rise. This barrage will get rid of sea level rise problems completely.

Q219 Mr Lilley: Upstream?

Anthony Pryor: Upstream. Oh, yes, upstream. Downstream is a different-

Q220 Mr Lilley: About the width of a paper, about 20 centimetres.

Anthony Pryor: That is not sea level rise. That is the general operation of the tide. But can I just go back to Mr Gardiner’s point. We want to have a discussion to say, one, you can raise the tide, and if you operate the turbines in a pumping mode you can do it as well because you can raise the tidal height. You are talking about the loss of the two metres at the top of the inter-tidal habitat at that area. That is what you are talking about with hyper-tidal.

I have seen somewhere that if you did it once a fortnight you can regenerate the mudflats. I have seen that as a paper somewhere. Once a fortnight, if that is acceptable to everybody, then we regenerate the flood plains and then we have to factor that into our business model in terms of how much power is generated. You just say that for that window of tide you do not generate any power.

Q221 Barry Gardiner: Once a fortnight may regenerate the mudflats. What it may not do is attract the bird species that need to eat not once a fortnight but all day, every day. Habitats are part of an ecosystem and it seems to me that a response like the one you have just given precisely ignores that.

Anthony Pryor: Let us ask Ian to talk about the habitats precisely.

Ian Gardner: If I can contribute, I think major infrastructure projects such as this one clearly have an impact. The sequence that is needed is that the first stage would be a decision in principle on whether or not the barrage is an attractive contribution to the mix of the UK’s energy. If that is established as principle, as a team we fully understand that there is then due process but there is then a mechanism and a shape to that due process. We fully accept that part of taking that process forward, to test the viability of the process, is that we would have to convince and work through the necessary mitigation, environmental impact and associated mitigation measures. We would expect that process to go in parallel with the formulation and the powers needed in the hybrid legislation, or whatever other legislation, because some of those powers being sought might be the very powers to enable the necessary mitigation, so we would bring those two together.

We have done this sort of thing before. We did it on High Speed 1. Crossrail is doing it. As an example, Crossrail, as part of its obligations and powers, is creating wildlife habitats in Wallasea Island. It is creating new wetlands for birds, so it is possible you can translocate ancient woodlands, you can do things. Clearly you have to find ways of doing them that satisfy the environmental balance, the economy-

Q222 Barry Gardiner: Mr Gardner, we have a fundamental point of disagreement. What you are saying is decide to do, justify later. If you look at the Natural Environment White Paper, which came out last year, precisely the way in which the Government is moving-and I applaud them for moving in that direction-is to say, "Start looking at natural capital as a whole and look at these in a holistic way. Look at the whole value to the wider economy", exactly the point you make about energy, but also look at the value, so that nature, the natural environment and the various ecosystem benefits and services that accrue from it are taken into account. If you begin to do things in that way, then I am all with you, but to do it on a basis that says, "Start by taking the decision that we have to go ahead with this and then find reasons to justify it," is exactly the old-fashioned way that gets us into so much trouble time after time after time.

Ian Gardner: I am not saying that you take a decision that is an absolute. You take a decision to take the thing forward. I am not saying you take a decision that you immediately are guaranteed a result. We fully accept that, but it is putting it into the agenda in a way that there is a willingness and a commitment to work these issues. If the issues are not solvable-and I fully agree with you-then you do not have a solution.

For instance, we are talking here of 60,000 birds. We are talking of six species of birds. We know what the characteristics of those six species of birds are. We know what their feeding grounds are. We know what areas of equivalent habitat might exist for them or not exist for them. For instance, we know that the shelduck, if we put some measures in around Bridgwater Bay we could provide compensatory habitat within the estuary, further protect that species in the estuary.

What I am saying is we would work through these issues with the right people involved and seek to find the right solutions. But we put our hands up-if we cannot satisfy those right solutions, we do not have a solution. But if we can in an acceptable way then we can take the whole thing forward. That is what we would be seeking to do. That is the sort of process that has been happening on these other major projects. It is enabling things that are benefits to come out of these projects-sometimes that have not been foreseen; that, as the process works its way through, the right opportunities with the right minds are hopefully identified. If they cannot be, then a decision has to be made. We fully accept that and we accept that risk, but we want the ability to take the agenda forward.

As an example in this complex debate, climate change, sea level rising would take out areas of the estuary at the moment that are deemed to be-absolutely the point you are making-the status quo that at the moment is crucial. There are things happening in the natural systems with sea level rising that will move that status quo. In some respects, the barrier will compensate for that because areas that would be lost, with actual sea level rising, would not be lost. Other areas would. So there is a balance here, we fully accept, and we fully take responsibility for seeking with the right contributions to achieve a result.

Q223 Barry Gardiner: Last time, my colleague Peter Hain outlined that there was a budget of, I think, £1 billion for compensatory measures. Have you put in place yet a process for acquiring the land that will be necessary for the replacement habitat that you are talking about?

Ian Gardner: That is exactly what the process of working towards the hybrid Bill would be. It would be doing the work on the environmental impact. It would be doing the work on the need or opportunity for mitigation measures. It would need to assemble the register of land impact. All of that comes together in whatever legislation is needed, be it the hybrid Bill or whatever, but that is the process. It is a known process that we would absolutely comply with, so the answer is yes.

Q224 Albert Owen: Can I just move from the important issues of wildlife and environment to equally important issues of socio-economic impact? If you could briefly-I know we have time restraints-outline how you see the benefit in terms of jobs, industry and growth.

Andre Karihaloo: In terms of jobs - the sheer scale of this barrage. It is going to be 18 kilometres long. We need to build about 250 massive concrete Lego blocks, effectively, that are 75 metres by 50 metres by 30 metres, and we need to build 1,000 turbines that weigh 400 tonnes each. Now, because of the size, they need to be built in the area-you do not want to ship them in. So we are going to need to assemble the turbines in turbine halls in the Bristol area, and in Port Talbot or perhaps in Cardiff. We are going to need to build the caissons nearby. We have identified a spot in Port Talbot. Geographically it makes sense to do it there. It is going to take about 20,000 workers to build this thing. We are going to need construction workers, engineers, surveyors, crane drivers, truck drivers, barge operators.

Q225 Albert Owen: In your evidence you said 20,700 full-time jobs and potentially a further 30,000 indirect jobs.

Andre Karihaloo: Yes, that is right.

Q226 Albert Owen: Do you stick by those figures?

Andre Karihaloo: That is using Office of National Statistics multipliers. You have 20,000 direct jobs, give or take, and then you have a supply chain effect. The supply chain will be improved so there is another 20,000 there. Then you have an induced effect, which is effectively an income effect, whereby those 40,000 people have new jobs, they spend their new-found money and increase employment.

Q227 Mr Lilley: You are assuming that they were entirely unemployed beforehand. They are not resources available in the economy to do more productive things, but they are otherwise unemployed resources.

Andre Karihaloo: Not necessarily, that is just the normal calculation.

Q228 Mr Lilley: You are if you start going into this sort of thing if they had no incomes before. If they had incomes before then there is no multiplier.

Andre Karihaloo: There will be an element of that obviously. But there are currently 40,000 people on jobseeker benefits out of a population of 700,000 in the area.

Q229 Albert Owen: I think upskilling people is a good thing for the under-employed at the moment, and giving them other opportunities in the future on energy projects is a positive thing but I do want to pin you down on certain figures. Mr Pryor, you said about South Wales having the opportunity to build the turbines, which would be advantageous because of close proximity. But we have heard evidence-and it is only fair to raise it-from Bristol and Avonmouth, and associated British ports, that say there would be some displacement of jobs. Have you factored this into your figures?

Anthony Pryor: I will answer that one because you mentioned Bristol, and-

Albert Owen: They are the ones that gave evidence so we are using them as an example.

Anthony Pryor: Yes. I have read their evidence and seen their evidence, and clearly they have some differences of opinion in their two written submissions to you. I met with the Bristol Port senior management last week, and you can imagine we had a somewhat robust debate about all these issues.

If I may just make one clarification, Chairman, of our written evidence for the record. I think we used the wrong tense. We used the first person rather than the third person and we said, "We will consider building a ULC port at Port Talbot." That is not the case. We should have used the third person and said, "It could be considered by somebody". We intend to build the caissons in casting basins, which we will create at the Port Talbot brownfield site and then they are there. We will either fill them in at the end of it or someone can use them, but we have no plans to build a new port at Port Talbot.

Yes, we had a debate with Bristol Port. The first issue was the effect on their operations of the barrage, which ranged from locks we would put in the barrage and the transit time, the siltation that will or will not occur, and the effect on the sill heights of their entrance locks to their existing docks. The fourth point was their plans-they have not built it yet-for a new deep draught container port in the river rather than the docks. We debated all those issues. I think we have opportunities to show benefits from the barrage to them. We can actually improve their access to their existing docks by raising the height of the tide at particular times to suit them. We have a meeting-

Albert Owen: Can we get on to the jobs?

Anthony Pryor: I will come back to jobs, because the second point was jobs.

Albert Owen: This is a question on jobs.

Anthony Pryor: The second point was jobs. We have an agreement between us to meet again for us to present more details with my experts to go through the issues.

Now, on jobs, we have a difference of opinion, which we have not resolved yet and we did not resolve last time. They believe that once the barrage is in operation that there will be a significant job loss. If, as I believe, we can find all the right measures to make sure their port is in full operation-including their new deep sea port that they have not built yet-then I do not see why they could claim some figure of 60% job losses. I do not believe that will happen. In the intervening time, there is 10 years of construction with £20 billion worth of stuff 10 miles from your port. We are going to need a port.

Q230 Albert Owen: In an area of low GVA that is very important. Again, on your figures in evidence, can I ask you how confident you are that you could ensure that 80% of this £25 billion investment remains in the UK and in the local economy? What kind of studies have you done specifically on that?

Anthony Pryor: We did some lengthy studies about 18 months ago in Corlan Hafren on this. At that time we were relying on a solely UK turbine supplier, who unfortunately in the intervening time has decided to withdraw from the market. However, these turbines are of such a size-9 metres in diameter, the size of this room-and there are 41,000 of them, that the turbine manufacturers we have talked to realise that they will certainly have to assemble them and probably manufacture large parts of them. Bearing in mind the construction is all going to be done in the UK and the electrical supply equipment done in the UK, I am pretty confident we will be around about the 80% figure.

Q231 Albert Owen: That is a good figure to use and obviously it will have a huge impact. Can I ask the other side, where would the specialist 20% come from and is that available now?

Anthony Pryor: When you buy a Rolls Royce jet engine, what proportion do you think is not made in England?

Albert Owen: You can get some cars made 100% in-

Anthony Pryor: Fifty per cent of a Rolls Royce jet engine delivered to you from Derby is made outside of the UK. I would expect-

Q232 Albert Owen: This is not a guesstimate, you have some figures?

Anthony Pryor: We have done some sums. It is not a guesstimate, no.

Gregory Shenkman: Andre, do you want to come in?

Andre Karihaloo: We did a breakdown; our engineering consultants identified the supply chain and roughly where the components would come from. It was 38% Severn Estuary, 43% the rest of the UK and the remainder outside.

Q233 Albert Owen: One final question. Have you been liaising with the TUC and the CBI in Wales? Are the skills going to be there in the timetable you envisage?

Andre Karihaloo: We have started having conversations with district councils and some of the bodies you mention. We want to leave a legacy of improved skills, and where the skills do not exist then we would like to work with colleges and training providers to upskill local workers.

Q234 Albert Owen: Don’t forget North Wales-plenty of skills there.

Andre Karihaloo: No, obviously.

Anthony Pryor: More than the legacy, I think we are going to require to support, sponsor, whatever it takes with local colleges-as an ex-mechanical trade apprentice-a proper apprentice training school for all the skills necessary for this, not only just for building it but for running it.

Q235 Albert Owen: But many of these are transferable skills from nuclear industry and from other energy sectors.

Anthony Pryor: Bridgend has a very good technical training school. It draws in people from all over the UK.

Albert Owen: Thank you.

Q236 Ian Lavery: Employment is very important in the area surrounding the barrage, and the Bristol docks behind that are mainly areas of social deprivation, areas of lower employment. Unite the union claim simply that if this barrage is constructed it will be the end-the death-of Bristol docks. Why would they say that?

Anthony Pryor: As I said, I disagree with Bristol Port’s evidence that they would lose 60% of their jobs once the barrage is built. They based that on the fact that they would not get access to ships. We have started a debate with them. We will continue that debate with Bristol Ports, because I believe some of the things we are going to do will provide benefits to them; for example, the operation of the locks. We are going to provide the locks in the barrage free of charge, plus tugs.

Q237 Sir Robert Smith: Why is it a benefit to put an extra process in shipping locks?

Anthony Pryor: Two things occur. There is a transit time of an additional 45 minutes but many ships anchor up off Swansea at present waiting for the tide. They wait already.

Q238 Mr Lilley: There will be less of a tide to wait for.

Anthony Pryor: They will not have to anchor up, they can spend the 45 minutes in the lock, and the flow of water upstream will be less, which makes it easier for navigation. There are some benefits. As I said, I am committed to discuss this through, and the managing director of Bristol Ports has agreed to meet again in the near future-I will not say immediate future-when we will bring my experts and discuss with his experts how we can make sure that his port can operate properly. I do not accept the local union Unite saying that it is the death of Bristol Ports. The Unite union in South Wales of course has a different view.

Chair: Robert?

Sir Robert Smith: I think we have covered the ports.

Q239 Mr Lilley: Can we go a little further? I just remembered doing a study for the Port of London Authority, about 40 years ago, on the need to dredge the entrance to the Thames, because it turned out that very large carriers came in on the tide and if they met a fog halfway they could not turn back, they could not stop, they had to keep going on the high tide. I do not know whether it is the same in Bristol-that they need the high tide to get there. If they do, then the worries of the port authority would strike me as very serious.

Gregory Shenkman: Roger, would you like to address that? Siltation.

Professor Falconer: I do not think the siltation problem is going to be anywhere near as serious as has been implied. Another big advantage of this-

Q240 Mr Lilley: Certainly the draught of ships that can get in will be reduced by 2 to 4 metres, 2 metres you said.

Professor Falconer: The very highest tide.

Mr Lilley: Those that come up.

Professor Falconer: We can increase that. I was talking about the situation with no pumping.

Q241 Mr Lilley: You cannot turn 5% of the nation’s electricity off every time a ship arrives.

Barry Gardiner: Every time a ULCC comes up the river.

Gregory Shenkman: That would not be the outcome. You would not lose 5% of the country’s electricity. Clearly it would be a brief period.

Mr Lilley: They are having ships all the time.

Anthony Pryor: Well, this is the debate that I would like to have with Bristol Port-to discuss their actual shipping in 10 years’ time. Today they are having something like, I believe, seven ship movements a day and not all of them are deep draught ships. The current draught is 14.5 metres and the number of 14.5 metre ships is extremely rare, from my studies and surveys. I want to discuss with them when those times are, what we could do to assist to achieve that. Interestingly, their new port, which they have planning permission for, says they will take 16 metre draught container ships, and they claim the low water tide is 16 metres above the bottom. We are going to make it 18 metres, so we will make it easier for the deep draught ships to get in.

Professor Falconer: I was specifically addressing-sorry.

Anthony Pryor: We are raising the low tide.

Gregory Shenkman: Drop the high tide, raise the low tide.

Anthony Pryor: They say they can get in up the navigable channel at low tide. We are going to make it easier for them because it will be 18 metres rather than 16 metres.

Q242 Sir Robert Smith: Can I just clarify about the locks? Who would be designing the locks in terms of the kind of ships they would be able to operate?

Anthony Pryor: My colleague from Arup will be designing the locks.

Ian Gardner: We will be designing them based on the discussions and the criteria that we establish.

Q243 Sir Robert Smith: How will they be managed in terms of which ship gets to go through when?

Anthony Pryor: All to be debated and decided. That is what I would like to have a meeting with Bristol to talk about, because AB Ports also have ports there. Bristol have said they would like two locks so we will certainly consider building two locks. We will have to have some management mechanism between the four major ports on the river and the shipping movements and the barrage operator.

Q244 Sir Robert Smith: How would they be funded?

Anthony Pryor: The lock? The locks will be funded through the revenues from the barrage electricity stream.

Gregory Shenkman: It is part of the operating costs factored in.

Q245 Mr Lilley: What about silting? If the effect of having a barrage is to lead to greater deposition of silt, presumably that will reduce the draught of ships that can go in unless it is all dredged away. Who will be responsible for dredging away if there is any serious silting?

Gregory Shenkman: Roger.

Professor Falconer: Let me just clarify the point on flooding first, because it is related to this point. I have a plan in front of me here, which seems to be arbitrary but I can leave it with you. The water level for the tidal cycle varies over the spring neap cycle and the 2 metres I was referring to was a maximum water level reduction; the blue here is without the barrage and the red is with the barrage. This is over 100 hours. Over the spring neap cycle, which is 14 days, the highest water level difference is at peak spring tide and the lowest water level is at neap tide. The peak variation in the spring neap cycle will be 2 metres, and that is when the house is most likely to flood or the embankment is most likely to be overtopped. If you build a barrage the water level remains fairly constant over the spring neap cycle, so the peak that we were referring to before is the maximum water level difference of the spring neap cycle. As far as the ship coming in is concerned, that peak water level is varying continuously from the spring value to the neap value during the 14-day cycle.

That is the first point I wanted to make. In terms of siltation, the big attraction of this barrage over the previous barrage, in my view, irrespective of what turbines you use, is that the turbines are located over the whole of the length of the wall. In the previous scheme, the turbines were only located over the middle third and you had sluice gates over the first third and the last third, so power was only produced over the middle third. Therefore, you had very high velocities on the ebb tide generating a lot of power, but also making it particularly damaging to fish. This scheme, having all that water going out over the turbines over the whole of the wall makes the scheme less damaging to fish because the velocities are a third of what they would be with the previous scheme.

Then we come on to siltation. If you have all the flow going out through just the middle third, you generate very high velocities, very high circulation, and the siltation is proportional to the third power velocity, so you have very high proportions of sediment being picked up in the region close to the barrage and that has to settle out somewhere. So it is quite understandable that on the basis of the previous scheme, Bristol Port would quite naturally assume that we would get very high levels of sediment being picked up and then deposited elsewhere. That is far, far less likely to occur with the current scheme, and on the basis of those-

Q246 Barry Gardiner: But the reference point is not the scheme, the reference point is the status quo.

Professor Falconer: No, but they are basing their assumptions on the previous scheme.

Mr Lilley: I do not know what they are basing their assumptions on. I was basing my assumptions on common sense.

Chair: Sorry to interrupt this exchange, but we are going to have to draw this session to a close. We have been going for nearly two hours and we have another panel of witnesses who we have to conclude before we get to Prime Minister’s Questions. If you want-

Q247 Mr Lilley: Siltation is a major issue and you have not come back to my point.

Professor Falconer: Okay, I will come back to your point.

Chair: Perhaps that answer could be given in writing.

Anthony Pryor: We will submit a written answer on siltation.

Chair: I am very grateful to you for all coming in. We have had a very good tour d’horizon of the issues, and we look forward to reaching some further conclusions in due course.

<?oasys [pg6,cwe1] ?>Examination of Witnesses

Witnesses: Andrew Shirley, Chief Surveyor, the Country Land and Business Association, Johnny Gowdy, Programme Director, Regen SW, Rupert Armstrong Evans, Proprietor, Evans Engineering and Power Company Ltd, and Vincent de Laleu, Offshore and Marine Engineering, EDF Energy, gave evidence.

Q248 Chair: Good morning. I am sorry you have been waiting a while for this session to start. We have to conclude before 12 o’clock so we have an absolute maximum of about 40 minutes. I will come directly to the point rather than go through introductions. We do know who you are.

First of all, can I ask the CLA about your view that compulsory purchase orders should only be used as the last resort? Can you explain what the shortcomings of a CPO are and what alternatives you are proposing?

Andrew Shirley: Thank you, Chairman. I suppose the starting point is to look at the hybrid Bill process. Compulsory purchase orders work from the point of view of the acquirer. They have little reference to the landowner who is afflicted by the procedure. If you look at the hybrid Bill, the full scheme will not be available until the hybrid Bill is about to go into Parliament; you can see this particularly with HS2. You can only see where the compensatory habitat is going to be provided when the environmental impact assessments and environmental surveys are all complete, which is at the time it comes into Parliament. The problem with all these things is that the compulsory purchase system is driven by the acquiring authority. The acquiring authority will be the company, the commercial company, that will stand to make a substantial amount of money over a substantial period of time for the scheme.

The landowner will not be able to choose when he has his land acquired, or what land he has acquired. What is for certain under the present system and even the systems proposed under HS2, is that the landowner will get the minimum amount that can possibly be given to him as a result of the scheme. The uplift is minimal and, no, I have not met one person over my-whatever it is-25 years of professional experience, who feels that he has been anywhere near compensated for any compulsory purchase across his land. That is where we stand.

The proposal is that compulsory purchase should not be the forerunner, it should just be the very last resort, and whatever can be done should be done through negotiation. If you look at the provision of compensatory habitat, I would argue it seems sensible to have a system where you can encourage people to offer the best environmental land to put that habitat on, and for it to be managed the best way. That is not by taking it off the landowner necessarily, and at some point giving it to someone else to deliver who is perceived to have a better knowledge of that land than the landowner himself.

Q249 Chair: Given the scale of the land that is needed for compensatory habitat, will a voluntary scheme be able to deliver it?

Andrew Shirley: I think it will. If you look at large areas of land, the problem we have is that we know from the Hafren evidence that you are looking at 49 square kilometres-call it 5,000 hectares-of habitats being lost. If you were to say that would be compensated for to the rate of 1:4, you would be looking at 20,000 hectares. So you have a substantial area of land that needs to be compulsorily purchased, or purchased. It does offer real potential to look at a system that will work in much the same way as an auction, but it would allow profitable management of the conservation habitat. That is a really big step forward and it is something that a scheme of this size could look towards achieving.

Q250 Chair: How do you think the barrage scheme is going to impact on local fisheries and the wider rural economy?

Andrew Shirley: What you need to do when you are looking at this scheme is not look at the 18 kilometres of barrage that creates all the excitement. What I was going to say-prior to my evidence, when I was preparing myself for today-was that you should look from Weston-super-Mare to Cardiff all the way up into the Welsh hills, because that is what we are talking about with the River Usk and the River Wye. From the evidence that Hafren gave earlier, I think perhaps you might be looking all the way from Land’s End right up because that is going to be the impact, both the tidal impact but also the fishery impact.

Having spoken to the Wye and Usk Foundation, the evidence they put forward was that a huge proportion of the salmonid population depends on the River Severn. What the salmon do, I understand, is not just swim straight up the Severn and into the Wye but they tend to-for want of a better expression-hang around a bit, and the concern was that, if you put a barrage across there, it would not just be the salmon swimming through the barrage, they would swim through it and then swim back and then swim through it again. So there are considerable risks, but I think there is also an argument that the Severn, the Wye and the Usk perhaps are not offering the best conservation habitat for the salmon at the moment and numbers are under threat. It is all about having the proportions of fish in a favourable conservation condition. The thinking is that they are not at the moment. One argument might be perhaps, before embarking on a scheme like this, you should try to get them into a good conservation condition, otherwise numbers are going to continue to go down. If you look at the capital value, the last assessment, which admittedly is over a decade ago, undertaken by the Environment Agency, put a value on an individual salmon of something like £9,000.

Q251 Chair: Your evidence suggested that the provision of compensatory habitat would be detrimental to UK agriculture. Can you explain that?

Andrew Shirley: It is necessary to take account of the amount of compensatory habitat and the financial implications. Just simply, if you take a figure that has been bandied around quite a lot, which is 16,000 hectares of compensatory habitat, if you were to work that out, it is somewhere around £25 million worth of lost production. That is grain production. It is slightly less if you are looking at livestock production. But that is the sort of order you are considering. It depends where you provide the compensatory habitat, whether it is provided on good quality land, which these figures are probably based on, or whether you are looking to have it based further away where you might look at less productive land. The argument for a voluntary scheme is that you can choose the land that is going to produce the best environmental potential.

Q252 Ian Lavery: Mr Gowdy, Regen Southwest’s paper suggested that there would be 40 GW of electricity harnessed from the barrage, using a balanced multi-technology approach. I wonder if you could briefly describe, first of all, what this approach would be, and second, outline the new technologies.

Johnny Gowdy: The paper we wrote came out of work that Regen Southwest has been doing, mainly with the industry but with other stakeholders as well through the Bristol Tidal Energy Forum and the Southwest Marine Energy Park, which we have been party to setting up. The basis of our approach-and it went back to early 2011, so it is just after the Severn Estuary feasibility study was published-was our assumption that the barrage would not be built, because at that point it seemed very clear that the barrage had been kicked into touch. The question we set ourselves was: what alternatives could we look at that would generate a significant amount of energy within the Bristol Channel area from a variety of technologies? How could those technologies be deployed in a way in which we could manage the environmental impact, the economic impacts, and look to develop technologies as they became mature and as they became more cost-effective? The other thing that we were focused on was: how can we support new technologies that are UK-based that could be exported?

That was the exam question we set ourselves, as opposed to writing a paper that was anti-barrage. The energy estimate is up to 14 GW, not from just tidal energy, I have to say; it is a mixture of technologies. Some technologies are relatively mature, for example, a tidal lagoon, which could be built with existing technology, tidal stream, or tidal fences, which are the new way of looking at how you can combine both tidal stream energy with a degree of head without necessarily creating a hard barrier across the Bristol Channel. Then of course we also looked at wind energy, floating wind energy and wave energy. The basis of the approach was to look holistically at all the potential energy sources in the Bristol Channel area, and indeed out to the western approaches, and think carefully about how they can be used in combination and also how they can be deployed over a time continuum, because I am very much of the opinion that we need to do something quickly. Our feeling was that by starting perhaps with smaller projects, which would nevertheless be significant-a 600 MW tidal lagoon would be the biggest tidal project in the world today-we could develop the technologies, export them and build on it.

The 14 GW figure is our upper estimate. It is 5 GW to 14 GW. There are other estimates around the place. The Crown Estate recently did a study where they estimated 16 GW of tidal and 8 GW of wave energy, so there are a lot of numbers around the place. We looked both top down at the resources but also bottom up at what would be feasible in terms of projects.

Q253 Ian Lavery: Thanks for that. Could you elaborate ever so slightly on what your paper says about inter-technology impacts? I wonder if you could explain how a single barrage might impact on the development or deployment of other marine resources.

Johnny Gowdy: You mean a single large-scale barrage, and would that stop you developing other resources?

Ian Lavery: Yes.

Johnny Gowdy: The question was asked earlier on about the opportunity cost of a large-scale barrage, and it is quite right you could still develop wave energy. You could develop some of the tidal range projects, tidal lagoons for example. You could develop the wind energy project. Our starting point was not to think about an either/or, our starting point was to think about what is an optimum approach. There are other opportunity costs. We mentioned the CFD Levy Control Framework, the cap on the amount of subsidy that would be available, so there is an opportunity cost there. There is an opportunity cost in terms of the grid capacity to handle more projects, in addition to the barrage in the Bristol Channel and South Wales area. There is a fundamental opportunity cost about the environmental impacts because we will then be getting into the cumulative impacts of doing multiple projects. In the short-term there is an opportunity cost in terms of resources. For example, the DECC officials, who are focused on preparing for this committee and looking at the barrage, are the same DECC officials who would otherwise be supporting the wave and tidal sector.

Q254 Ian Lavery: Are you anti-barrage?

Johnny Gowdy: I am not anti-barrage, because I believe we need large-scale projects. If we are going to tackle climate change and other issues-ocean acidification, our own energy security-we need to have large-scale projects. Tidal lagoons are very similar to tidal barrages. It is the same sort of concept, in terms of an impoundment of water and then running that through either a single direction or a multi-directional turbine. We think that a lagoon-type concept, which would enable us to develop these new concept turbines more quickly, would get us to the point of being able to generate more energy.

We can look at what is happening around the world, Korea for example. I was with a group of Koreans yesterday down in Cornwall talking about marine energy. They have started smaller. They have five projects at the moment. We would define them as lagoons rather than barrages. They are not actually blocking a channel or an estuary. The one they have built to date at Shiwa is 250 MW. Of the other four, three are less than 500 MW; only one is over 1 GW. That seems to us to be a sensible approach when you are trying to develop a new technology, particularly using a new turbine concept that has not yet been deployed.

Q255 Dr Whitehead: In your paper, you mentioned that the various technology solutions you are looking at are still under development. Do you consider, in terms of the alternative sources you are thinking of using, that the timescale involved would be right for the sort of imperatives we have heard about in terms of the power sources being needed?

Johnny Gowdy: We have heard a lot about timescales today. I have some thoughts about the timescales that we heard about this morning, but in terms of the new technologies, there is a range within that. We are talking about offshore wind, for example, where the timescale is relatively quick with the technology that could be deployed. There is a sort of continuum, as I said. Tidal lagoons would face some of the same issues as a tidal barrage, but much smaller in terms of habitats, for instance, impact on ports, which would enable you to develop, in a shorter period of time, a technology that could be exported. Wave energy is something that we are looking at from 2025 onwards, basically, in terms of large scale deployment. Nevertheless, today, there is a huge amount of activity in terms of technology development and research. One of the pieces of work that we have been looking at is on jobs in the south-west already engaged in the offshore wave and tidal sector. It is not just the south-west, it is also south Wales, Pembrokeshire, Southampton, Scotland, for example. There is a huge amount of activity going on today. It would be good if the Committee could consider how much work is being done in the UK, and the companies that are already engaged in this sector, as well as the opportunity for a single project.

Q256 Dr Whitehead: The view that this might be a series of projects that could be perhaps exemplars and, as you say, guidance points through further development, would presumably include, among other things, very substantial upfront costs and high strike prices, perhaps £190 per MWh, for those early projects. How would that compete with other, cheaper, renewable options, or would it simply be a high cost development exemplar?

Johnny Gowdy: Yes. Let us take wave and tidal stream, because they are probably the least developed of the technologies that we are talking about. At the moment, they receive five ROCs, which is a subsidy equivalent to around about £200 per MWh. That is limited, in the sense that it is time-limited to 2017, and it is size-limited to 30 MW. It is intended to jumpstart the industry, to get some of the early commercial projects in the water, so that we can then drive down costs and reduce those costs over time. The discussion about levelised cost of energy and strike price kind of focuses on mature technologies, because it is a slightly static way of looking at it. When you are looking at embryonic technologies, you have to look at how those costs can be reduced over a period of time. I think, from a UK Government point of view, we should not just be looking at market incentives like the strike price to support new technologies. We need to have a combined approach with a market incentive, grant subsidies and co-investment. That is a much better way of doing it. It does worry me that if wave and tidal stream is put in the mix with the mature technologies, we will lose the support from, particularly, people in Treasury, for example, who will say, "These are too expensive". We will lose the opportunity to develop the jobs and the capability that we can then export around the world. That does worry me.

Q257 Dr Whitehead: Perhaps I am caricaturing things a little bit, but the Severn Barrage proposals, both the previous ones and the present ones, I think would say that this is all fairly feasible technology now, to the extent that you put a large concrete bund across the Severn, and you put turbines that already work in it, and you are away. Whereas you are talking here about a number of different technologies that are far less mature, are you not?

Johnny Gowdy: Which would spread over a longer period of time, but which we could potentially start sooner, I would say. Characterising the barrage as a done deal in terms of technology ignores the fact that we are talking about a new-concept, bi-directional turbine, one that has not been built yet. During the previous study, Rolls Royce and Atkins did a concept design for such a turbine. We have heard today that Hafren Power is talking to a number of different turbine manufacturers.

In terms of timetable, I find it hard to believe that a turbine manufacturer is going to develop a new turbine and test it. The comment (from Hafren Power) was that you could build a scale model and perhaps test it in a dock. I understand this industry, and I know exactly what the investors and the utilities will ask for. They will ask the turbine manufacturer for a performance guarantee and a warranty. A performance guarantee means that the turbine manufacturer will guarantee what the output of that turbine is. Those take years to develop. I have a question about the assertion that because they might weigh 400 tonnes, they would have to be built in Port Talbot, for example. The wind turbines weigh 300 tonnes and they are quite happily brought over from Bremerhaven. If it was the argument that they could only be built in Port Talbot, then that would lead to the conclusion that they would not be able to be exported from Port Talbot, because it would be a one-off project basically. So I do find that quite hard to understand. In particular, the timetable required to develop those things is going to take a lot longer, as it will do with wave and tidal energy. I am not saying that all the technologies are available today at all.

Q258 Dr Whitehead: Mr Evans, your company has outlined a radically different proposal for a tidal reef. In terms of reef equivalents, we have heard from Hafren that that would produce 1/20th of the power that a barrage would. But I think your proposal would dispute that, and would dispute it on particular grounds. Could you outline a little further what your reef proposal-

Rupert Armstrong Evans: Yes. I have come to rescue the reef concept, because Hafren-and they will have to admit it-have actually adopted the reef operating concept. It is all very well documented, because I filed the original patents and offered them for public use, so I cannot complain that they have taken on some of the clothing of the reef. But in my opinion they have made major mistakes in terms of how they want to implement it. Even now, they are distancing themselves from the original Severn tidal barrage project. I designed and built the world’s first tidal stream turbine, which has now gone on to the project in Strangford Lough, which is the biggest one around. Although my main area is small-scale hydro, I was brought into this by Dr Linley at Plymouth Marine Laboratory, who was working on snails in the Severn Estuary, and they were terrified about the prospects of building the Severn Barrage. She said, "Would it be possible to come up with an environmentally friendly version to try and harness the amazing potential?" What came out of this is that projects of this kind of scale, I think, are approached in totally the wrong way.

The Hafren project is finance-driven, project-driven. You start with the machinery and then you look at the environmental impact afterwards as mitigation in various environmental things. My fundamental starting point was that you have to address all the fundamental issues of birds, fish and ships, and how the project is owned. It is not going too far to say that, first of all, morally, you cannot take a piece of Wales and England and sell it off to a foreign multinational company. They have admitted themselves just now that they want to develop the project and sell it on. You cannot sell a piece of the UK. I think there is enough interest and good will out there in the British public to be able to float a green bond so everybody can take part in this project; good side or bad side, but it is part of our heritage, something that we are going to do for a long time. But if you do not have the project right to start with, then it is dead in the water.

Q259 Dr Whitehead: Your proposal, so I understand, starts and finishes in an entirely different place, and encloses a larger amount of water, and happens to land in the middle of a national park.

Rupert Armstrong Evans: Yes. Applying the reef technology to the Severn Estuary, we were looking at a route that was much further to the west, between Minehead and Aberthaw or that part of the estuary, because it encloses just about double the area of water. The thing with any big engineering proposal is flexibility. Building a conventional barrage is, in my opinion, an elephant, because you cannot change the civil engineering on a conventional barrage. Whereas the idea behind the reef was that it was not only a modular construction, from the point of view of installing it, owning it, maintaining it, but also, if things go wrong or if you want to future-proof it, if you want to update the technology at a later date, it is built in there. You can change the way it operates. If you have adverse flow effects in the estuary, you can change your operating system and learn and build on it. You are not tying yourself down to a major piece of civil engineering that is totally inflexible. This goes right through to things like the shipping interests. Further out in the estuary you have plenty of room to manoeuvre big ships. We are not talking about conventional lock gates that stop the ships for an hour. There are openings in this structure where the ships can just go through.

Q260 Dr Whitehead: I think you contend that you would gain a greater amount of power from that sited reef than you would from the proposed site of the barrage, even though you would be using the same sort of turbines, essentially. Or rather, they would be using the same sort of turbines that you originally proposed. Is that right?

Rupert Armstrong Evans: No. I do not think they have gone nearly far enough. They have simply taken conventional technology and are trying to move down to what I was suggesting. I have moved more from the tidal stream turbine, which is the original, and moved up.

Q261 Dr Whitehead: These would be bi-directional?

Rupert Armstrong Evans: Yes. There are two things that are working against each other are the higher the head difference, the more environmental problems and the more shipping problems, the more flooding problems. It is better to encompass a bigger area of estuary, where you have more potential, because there is more room in the design to be able to bring in these other factors, which are vital.

Q262 Dr Whitehead: DECC rejected your reef proposal in 2009 and said it was unworkable, didn’t they?

Rupert Armstrong Evans: I can be fairly blunt. As far as I am concerned, it was-how does one put it?-a stitch-up. I think people would agree that it was a total disgrace and what happened with the various other parties is all on the internet. I do not object to people taking the ideas, but it is a hard pill to swallow when people take the ideas, do not give credit for it, and then go and change it and use it to dress up their own project, to make their own project look environmentally friendly.

Q263 Dr Whitehead: My point is that whether it is a stitch-up or not, they rejected your design as unworkable in 2009. Have you changed your thoughts since then to deal with a number of those issues.

Rupert Armstrong Evans: With all due respect, they did not even investigate the way it was built. It has evolved. The detail has come in, and with my somewhat limited resources, we have worked on it, put flesh on the bones, even in terms of developing fish-friendly turbines, because fish-friendly turbines are certainly not pie in the sky. For conventional river work, you end up with machines where-this is a small version of it-you could literally take a car through the spaces between the blades on the turbine, which is about the size of this room. So it is not particularly helpful when certain environmental groups say all turbines will act as mincing machines. Yes, certainly, conventional machines, if they are run on this, would be absolutely devastating to fish. I am saying you start at the other end and you have to design machines that will not do any damage. It is perfectly feasible.

Q264 Dr Whitehead: In summary, you are working from the other end?

Rupert Armstrong Evans: I am working from the other end, so that there cannot be an objection from environmental groups because one is working from the basis of consensus, and identifying those things that are the crown jewels, the really important habitat factors, and those things which are on the wish list. Because if people are not going to compromise-and there will be compromises on a scheme of this magnitude-then it simply will not get built, and it will end up in the European Court for the next 50 years.

Chair: We may need to move on, because we are running out of time.

Q265 Barry Gardiner: Specifically, the report said that they had found fundamental engineering flaws in the design. Have you addressed those specific criticisms?

Rupert Armstrong Evans: The specific things that they said were misunderstandings that they admitted-

Q266 Barry Gardiner: Have you published a response to those misunderstandings? Could we have it?

Rupert Armstrong Evans: Yes.

Q267 Barry Gardiner: That would be very helpful. Thank you. Turning to Vincent de Laleu, EDF has said that La Rance has been a technical success. That rather implies to me that it may not have been a financial success, or it may not have been a success in some other way. Why that word "technical" in front of the word "success"?

Vincent de Laleu: Thanks to La Rance, EDF has acquired unique experience in tidal barrage. We have been involved in worldwide feasibility studies on tidal projects. If we go back to La Rance, it was a very challenging project. Remember, it was designed in the 1950s and built in the beginning of the 1960s. There are many lessons learned from La Rance, despite the fact that La Rance is a very small scheme compared with the Severn Barrage. But we can still learn, because the first point is that innovation is the key to deliver a successful project. There were a lot of technical innovations. The turbines were the first bulb turbines used for the tidal barrage; the corrosion protection. From the way they built La Rance, we know that the construction has had a massive impact on the ecosystem, so now we should build in a very different way.

From the technological point of view, it is very successful, because regarding the maintenance of the turbines we have less maintenance on these turbines than the run-off-river plants using the same bulb turbines. So it is quite successful.

Q268 Mr Lilley: More than what?

Vincent de Laleu: If we compare La Rance with a dam using the same bulb turbine in a river, a conventional run-off-river plant, at La Rance we have less maintenance work thanks to corrosion protection, which is very effective. There are many successful technology developments. Regarding the environmental impact, we know that it took approximately 10 years, according to the experts, to have a new ecosystem in the estuary. Now we have a new ecosystem, but we have to bear in mind that the ecosystem is very fragile and it depends heavily on the way we operate La Rance. This is why EDF is part of a local committee with different stakeholders-

Q269 Barry Gardiner: Is it a qualitatively different ecosystem from the one that you had before?

Vincent de Laleu: Yes. Experts say that the estuary has been turned into a sea, a small sea. We have new fish, new species, so it is a different estuary from before. We have new fishing activities. It is a significant change; now we have a new biological environment.

Q270 Barry Gardiner: What is the price of electricity that La Rance is delivering at the moment? What were the financial arrangements? How was the barrage financed?

Vincent de Laleu: Regarding the price of electricity, I am afraid I do not have a real figure, but I could provide you with the information. It is confidential within EDF. This project was funded by EDF. EDF was created in 1946 and the study started just before that. It was a huge programme in France after the war, to rebuild the energy system, and La Rance was part of a massive programme of hydro-development in France. It was funded by EDF, so by the state at that time.

Q271 Barry Gardiner: Environmental groups in the UK have said that La Rance is perhaps not an appropriate comparator to the Severn Estuary. Do you think that is a fair comment?

Vincent de Laleu: It is difficult to compare, because the site conditions are not the same. We have less turbidity in the La Rance river. But there are some interesting comparisons, also, due to the magnitude of the project.

Q272 Barry Gardiner: Have EDF developed any other tidal power facilities after La Rance?

Vincent de Laleu: EDF carried out various feasibility studies in France until the beginning of the 1980s. Unfortunately, in France we do not have suitable large estuaries. La Rance is quite a unique site. But there were some very innovative projects in Mont St Michel Bay, close to the Channel Islands, based on multi-basins, on land-connected lagoons. It was a strategy decision at the end of the 1970s to launch the nuclear programme, so most of these projects were ruled out. But EDF have also been involved in international projects. We have supported, for example, the Shiwa project in South Korea. We helped them to commission the powerplant.

Q273 Barry Gardiner: Do you have knowledge of very low head turbine technology and design?

Vincent de Laleu: Yes. We have a good knowledge, and we are in touch with turbine manufacturers, because there are a lot of innovations. In Russia, they are developing a very innovative concept based on vertical axis turbines, which have been tested in existing tidal barrages near the Barents Sea, so we are in touch with these kinds of people. We are in touch with the developers. We believe that a conventional barrage using turbines nowadays is unlikely to be the most cost-effective solution. We need to increase the energy yield of barrage schemes, and the idea of having a 100% reversible turbine is a good one, but it will take many years to develop such a turbine. It is quite a technical challenge.

Q274 Barry Gardiner: The design that Hafren Power have proposed to use, you would say would take many years to develop?

Vincent de Laleu: Yes. It will take several years, because we have to make sure it works. We need to test it. This is an opportunity to say that La Rance could be a suitable test, because there is room to test such a turbine. We need to test these turbines in real conditions, not only in a dock. We believe that is not enough. Therefore, it requires several years to develop it to make sure it will be cost-effective, efficient, and it will work properly.

Q275 Mr Lilley: Within the French context originally, I believe, La Rance was intended to be the precursor of a bigger project from Granville or wherever, but it was decided that such bigger projects would not be attractive vis-à-vis nuclear-less attractive than nuclear?

Vincent de Laleu: From EDF’s point of view, we are committed to developing low-carbon emission solutions, including nuclear and renewables-hydro, tidal and wind. We need a mix of different solutions, and the tidal range could be part of this energy mix, provided it is a cost-effective solution and all the different issues are well addressed. It requires time; everybody here is aware of the different environmental and economic issues. It will take time to be sure that such a large scheme is feasible, but it could be part of the energy mix, because the key advantage of tidal range is predictability, and for a manager of energy it is very interesting.

Q276 Mr Lilley: Has La Rance been economically successful?

Vincent de Laleu: Now, yes. We consider-

Mr Lilley: Now?

Vincent de Laleu: Yes. Of course, at the beginning, like every innovative technology, we had to cope with some failures in terms of the design, because the design of the alternator was not very suitable for the many stops and goes, due to the cycle, because we pump as well. La Rance is an ebb and flow generation plant, so we needed to refurbish and to modify the alternators. Now, 44 years after we commissioned La Rance, we are starting a maintenance programme on the turbine, mainly on the alternator. So it is quite a success in terms of technology, yes.

Q277 Mr Lilley: Is there a silting problem at all?

Vincent de Laleu: There are some sediment deposit issues, but in the upstream part of the estuary where the fresh water meets salty water. But it is a very local issue, and we are working with the various stakeholders to find the best way to trap the sediment. We carry out a dredging operation every 10 years. But it is a very local issue.

Q278 Mr Lilley: Why do you think areas with more advantageous tides, like the Severn and, the biggest of all, the Fundy basin or wherever it is, in Canada, have not been inspired by La Rance to introduce tidal barrages?

Vincent de Laleu: In Canada, in New Brunswick and Nova Scotia, some representatives visited La Rance in 1967, and they started to launch a massive programme to harness the tidal range in the Bay of Fundy, but most of the projects were ruled out due to the environmental impact. There were some issues, so they decided to rule out most of the projects, but now they are involved in the development of tidal stream energy. But some developers have resumed the feasibility study of lagoons-not a barrage across an estuary. A lagoon would be more suitable in the Bay of Fundy.

Chair: I am afraid the witching hour is now upon us. If you have any further points you would like to make, I would ask you to submit them in writing if you would not mind. Thank you very much for your time this morning.