A tidal power scheme in the Mersey Estuary which could deliver enough electricity to meet the average needs of over 200,000 homes has been shelved because of high construction costs.

The scheme’s developer Peel Energy said that the high costs mean it is unlikely to go ahead without a change in the way renewable energy and security of supply are currently valued.

An expert team commissioned by Peel Energy and The Northwest Development Agency(NWDA) has identified a preferred scheme - a barrage across the river between New Ferry (Wirral) and Dingle (Liverpool). It would be designed so that the turbines within the barrage would generate power in two ways – from ebb tides only as well as from ebb and flood tides – and from a range of water level differences (operating heads) across the barrage.

Peel Energy said that the choice of scheme allowed for flexible, managed operations that would minimise effects on the Mersey’s protected intertidal habitats.

The scheme could generate around 1 terrawatt hour (TWh) per annum (1,000,000,000 kilowatt hours or units) - the tides and consequently the electricity supply are predictable. The proposed technology is available and reliable and could supply low carbon electricity for 120 years.

£3.5bn upfront costs not competitive in current markets

However, the studies have found that the estimated £3.5 billion upfront construction costs result in a cost of electricity that is not competitive in the current energy and capital markets.

The level of Government support required during the financing period would need to be significantly higher than the 2 ROCs currently allocated to tidal power through the Renewable Obligation mechanism. As yet there has been no indication of a higher level of support through the Government’s proposed Electricity Market Reform; a White Paper is due to be published this summer.

Competing schemes such as onshore and offshore wind have an operational life of 25 years and can typically be financed over a shorter period. Infrastructure projects such as road and rail improvements provide examples of longer term government backed investments, however there is currently no basis for this form of investment in the UK electricity generation sector.

Tidal power policy still not addressed by Government

Government policy on tidal power has yet to be articulated in National Policy Statements – meaning that the policy argument and consenting route for the scheme has yet to be fully determined. However, the newly published NPS on renewable energy are confined to addressing energy from waste and biomass or onshore and offshore wind.

The NPS does not cover types of renewable energy generation that are not at present technically viable over 50MW onshore or over 100MW offshore such as schemes that generate electricity from tidal stream or wave power. Despite the fact that it is expected that tidal range schemes may be the subject of applications to the Infrastructur Planning Commission within the near future.

The Government is currently considering the need for either a revision to the new NPS or a separate NPS to provide the primary basis for decision-making under the Planning Act on such schemes. The Government said it will further consider either revisions to the NPS or separate NPSs to cover such technologies “when it appears that other renewables technologies will be economically and technically viable over 50MW.”

Anthony Hatton, Peel Energy’s Development Director, said:

“In the longer term, once the upfront capital costs have been paid off and for the rest of its 120 year life, the cost of electricity would be very competitive. But the preferred scheme is unlikely to attract the necessary investment while the emphasis in the financial sector and renewable energy incentives is on technologies that provide short to medium term returns. We need to identify an appropriate funding structure that recognises the long term low cost of electricity, security of supply and wider economic benefits that investments such as this provide for future generations.”

Peel Energy first started looking into the possibility of generating power from the Mersey Estuary in 2005. The company said it will not now be progressing the development work until it has confidence in the financial and regulatory framework for tidal power.

Mr Hatton continued, “We are grateful for all the valuable contributions made by many organisations and individuals to the Feasibility Study. We welcome feedback on the reports and look forward to progressing the project in the future.”

Mark Atherton, Head of Energy & Environment, NWDA added:

"The feasibility work has provided a valuable insight into how tidal energy schemes could be operated in the future to deliver wider economic impact, whilst minimising the potential environmental impact. Some of the lessons learnt from the work undertaken are applicable not just to the Mersey Estuary, but to other estuaries in the Northwest and UK."

RSPB welcomes shelving of “folly of a barrage”

Peel Energy’s decision to shelve plans to build a full impoundment tidal energy barrage across the Mersey has been welcomed by the RSPB, who described it as a folly.

The conservation organisation believes the construction of such a barrage would have caused irreversible damage to the estuary and had a devastating effect on the internationally important populations of birds, and other wildlife such as salmon, which have made a return to the river in recent years.

Despite the deferral of scheme, however, the RSPB is concerned that the long-term threat of significant environmental damage on the iconic river remains.

Peter Robertson, the RSPB’s Regional Director for Northern England said:

“Although Peel have made the right decision in halting their barrage plan, they have done it for purely economic reasons. They have still not discounted the possibility of pursuing a barrage option in the future and are actually calling for even more public money to enable this to happen.

“The failure of the Mersey project and the shelving of the Severn barrage scheme last year, however, prove that this technology is outdated and economically unviable.

“Renewable energy is vitally important in tackling climate change but we need the right projects in the right location.

“We would urge Peel to abandon completely the folly of a barrage once and for all and commit instead to investing in tidal technologies that minimise damage to the environment. This way, when tidal energy is considered again on the Mersey, as it undoubtedly will be, we’ll have some real viable alternatives.”

Further details of the options and the selection process are included in the Feasibility Study Reports that have been published on the project website: www.merseytidalpower.co.uk