Recommendations
Transparency and public consultation
1. Robust
and credible evidence is fundamental to building trust and reassuring
key stakeholders, particularly for an unprecedented and huge project
such as the proposed Hafren Power barrage. We support the calls
for further evidence and technical detail of the proposal in order
to arrive at an informed decision. We recommend that such evidence
is placed in the public domain as soon as possible if stakeholder
confidence is to be established and in order to promote maximum
transparency. (Paragraph 16)
2. We further recommend
that Government makes clear to Hafren Power that no further consideration
will be given to their proposal until and unless the additional
information requested has been provided.
(Paragraph 17)
3. We consider Hafren
Power's expected timetable for the passage of a Hybrid Bill completely
unrealistic. We note that the Hybrid Bill route does not offer
an open and fully accountable process for stakeholders and affected
parties. An application via the Planning Act 2008 may provide
a more suitable legislative vehicle for a barrage project. Clearer
guidelines on due process, expected timescale and the information
required by Government under different legislative routes, and
particularly under a Hybrid Bill, would be helpful for both stakeholders
and developers. (Paragraph 22)
Costs and value for money
4. We
recommend that Government ensure that levelised cost of energy
analysis reflects a fair appraisal of long-term cost and power
generation, which takes into account the full lifecycle of marine
energy projects. (Paragraph
28)
5. We believe that
the strike price for the barrage would have to be considerably
higher than the £100/MWh which Hafren Power have "in
mind". Furthermore, the company say they would require this
price to be guaranteed for 30 years, twice as long as an offshore
wind project. It is unsatisfactory that such wide-ranging figures
have been cited regarding the level of Government support required
for a barrage. As a minimum, the strike price for barrage-generated
electricity should not be higher than that for offshore wind,
which is expected to be around £100/MWh by 2020. While the
use of novel turbines and updated design may indeed provide savings
in barrage construction, it is very unlikely that the Hafren project
will be financially viable with a strike price at this level.
If a higher strike price was offered, it would risk swamping the
Levy Control Framework to the detriment of other low-carbon technologies.
Claims by Hafren Power of long-term affordability are too distant
and uncertain a prospect to overcome more immediate economic,
environmental and local concerns. (Paragraph 34)
6. We do not believe
that potential collateral benefits should be factored into any
strike price negotiations. In the case of the Hafren scheme, significant
uncertainty remains regarding whether such savings would in fact
be made, and there is a lack of consensus regarding the impact
of a barrage on flooding. The support available via Contracts
for Difference comes directly from consumers via their energy
bills. Any flood defence savings made as a result of projects
supported will not accrue to bill payers but to the Exchequer.
We recommend that the savings from any potential reductions
in Government spending are disregarded when negotiating strike
price. (Paragraph 37)
7. While we do not
share these concerns regarding foreign investment, and indeed
welcome investment in renewable projects from private sources,
all efforts should be made to ensure maximum UK content if the
project is taken forward. (Paragraph 38)
8. The Committee notes
that the current mechanisms to support large renewable projects
are limited in scope, and that support under CfDs will be limited
by the Levy Control Framework. While private finance offers a
welcome boost to infrastructure investment, particularly during
the economic downturn, projects will inevitably need to provide
an attractive return to investors and the future cost of such
finance remains uncertain. We are not convinced that Hafren will
be able to raise the funds needed for their project as easily
and cheaply as they claim. (Paragraph 41)
9. Hafren Power's
proposals will require massive support under the Contract for
Difference (CfD) mechanism and for a much longer period than alternative
low-carbon technologies. Currently it is unclear whether the company's
proposal would be eligible for such support since it has yet to
prove value for money compared with other low-carbon sources.
Until the company is able to provide stronger evidence of interest
from investors and of the basis for its claimed costings, the
economic viability of the project will be in doubt. (Paragraph
42)
Environmental impacts and mitigation
10. We
conclude that the environmental impacts of the Hafren Power barrage,
as currently presented to us, are very considerable and that there
is a high risk of unintended and possibly damaging consequences.
We also conclude that Hafren Power has not presented sufficient
credible evidence relating to estuary morphology, impacts to habitats
and upstream fluvial flood risk. Further data, research and modelling
will be required before impacts in these areas can be assessed
with any degree of certainty. (Paragraph 50)
11. We therefore conclude
that the usefulness of international comparator sites is limited
as a result of differences in estuary characteristics and scheme
designs. (Paragraph 53)
12. We note that the
Environment Agency claims that it is "not aware of any turbine
designs which would allow the safe, repeated passage of fish through
a barrage at the scale proposed." While claims that a barrage
would lead to very extensive fish mortality may be exaggerated,
existing figures of low level fish mortality tend to derive from
a single species and do not encompass the diversity of species
found in estuaries. Studies have largely focused on only direct
mortality. However initial studies on indirect mortality suggest
it may constitute a significant source of overall mortality. Field
testing a prototype in an estuary on a range of fish species and
sizes will need to be carried out before the claimed "fish-friendliness"
of Hafren Power's proposed turbine can be determined. (Paragraph
57)
13. Before giving
further consideration to the project, the Government should establish
greater clarity in the terms and application of the Habitats Directive
to major renewable infrastructure projects, in particular regarding
the derogation process and principle of 'Imperative Reasons of
Overriding Public Interest' (IROPI). (Paragraph 67)
14. Serious questions
remain about the effectiveness and feasibility of providing compensatory
habitat on the scale required for the proposed Hafren Power barrage
scheme. While optimisation of barrage design and operation offer
possibilities for mitigation, the requirements of the EU Habitats
Directive are a significant challenge. We note that smaller scale
projects may face fewer obstacles in achieving compliance with
European legislation. (Paragraph 73)
15. We appreciate
the financial outlay implied in, for example, developing a full
Environmental Impact Assessment of the proposed project. But it
is clear that such a large-scale, high risk and high cost project
cannot go ahead in a designated area without supporting evidence
and assessments in place. Without such evidence the project will
not achieve political and public acceptability. (Paragraph 74)
Socio-economic impacts
16. The
Hafren Power barrage scheme could offer significant benefits for
the UK in terms of jobs and growth, with the potential to reinvigorate
the local economy. A tidal barrage on this scale would highlight
the UK's engineering capabilities in the construction of large-scale
renewable projects. (Paragraph 79)
17. Hafren Power has
failed to reassure the ports industry that its business would
continue to be viable with a barrage in place. Serious questions
remain in regard to the barrage's impact on water levels, shipping
times, freight costs and siltation. These will need to be fully
addressed before impacts to the ports can be accurately evaluated.
(Paragraph 86)
18. We therefore
recommend that any claims about job creation and economic benefit
should be independently verified, particularly with reference
to the costs being borne by energy users, with adverse impacts
to existing industries factored in to calculations in order to
provide a robust assessment of net regional economic impact.
The employment benefit of a barrage scheme is likely to centre
around temporary jobs during construction. The number of high-quality,
permanent jobs created by the proposals will be ultimately more
significant. (Paragraph 90)
Decarbonisation and energy security benefits
19. We accept that
the a tidal barrage scheme in the Severn estuary could provide
a reliable and predictable low-carbon electricity supply, which
could bring benefits for energy security. Technological innovations
such as smart grids, interconnection and electricity storage could
help to overcome the challenges associated with tidal energy.
(Paragraph 95)
20. We note the disparities
in these carbon savings assessments and the need to take into
account a carbon payback period. Carbon reduction offered by a
barrage would nonetheless be considerable. (Paragraph 96)
21. We conclude that
the Hafren Power project in its current form has not demonstrated
sufficient value as a low-carbon energy source to override regional
and environmental concerns. We agree with the Minister that, at
present, the barrage is not vital to meeting our 2050 carbon targets,
for which alternative pathways exist. On the basis of the evidence
available, we further conclude that the same or similar policy
objectives could be delivered through less environmentally damaging
means and possibly at lower cost. (Paragraph 99)
Barrage technology and alternatives
22. Although
Hafren Power has assured the Committee that it has included time
for turbine testing and development in the project timescale,
we doubt that the two years proposed will allow sufficient time
for production of a novel turbine as well as the necessary independent
verification and trials. (Paragraph 103)
23. We conclude that
a more incremental approach using alternative technologies (such
as tidal lagoons) may have the potential to provide a lower-risk,
lower-impact option than the Hafren Power barrage scheme. Whether
these alternatives offer better value for money is far from clear
at this stage. Any alternative proposals to the Hafren Power scheme
would need to demonstrate the same robust evidence about the costs,
environmental and socio-economic impacts which we require for
the Hafren Power scheme. We recommend consideration is given
to first developing a smaller scale tidal project, in order to
build a stronger evidence base for assessing impacts, risks and
costs before proceeding with any larger scale scheme. The Government
should take this into consideration before approving the development
of projects in the Severn estuary. (Paragraph 114)
24. We conclude that
the Government should continue to examine the energy generating
potential of the Severn region in the event of Hafren Power's
proposed barrage scheme not going ahead. We therefore recommend
that the Government consider how a more proactive approach to
Severn resource management could stimulate growth in the marine
renewables industry and drive forward tidal projects in the region.
(Paragraph 116)
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