A consortium that plans to go ahead with a ten-mile Severn Barrage tidal project in the UK is now in talks with private investors after the government pulled its support last month.
Ben Hamer, project direct at one of the leading partner businesses Halcrow, told NewNet discussions had taken place with the venture capitalists in the UK as well as overseas investors to further the proposal, which would see the tidal energy scheme stretch from Weston-Super-Mare in England to the Welsh capital, Cardiff.
‘We have had some preliminary discussions with people who have an interest in diversifying their portfolio into non-fossil fuel projects that are in stable socio-political environments such as ours,’ Hamer said.
‘There is interest there but some pretty major risks have to be addressed, although we would say that those risks also have to be addressed for both nuclear and wind to progress as well.’
The consortium, Corlan Hafren, was formed in 2007 to facilitate the development of the Severn Barrage project, which the government has estimated may cost up to £34bn and also includes Ove Arup & Partners and accountants KPMG, with Mott MacDonald providing financial services.
Hamer said the government’s decision not to provide financial support to the project – and to not review this decision until 2015 – came as no surprise.
‘In talking with the Department of Energy and Climate Change [DECC], we do understand the government’s decision that it does not have any money and the environmental issues surrounding the project are uniquely complex and large, which makes it difficult,’ he said.
‘Where we are working with the DECC now is to make sure that in making those points plain, we do not also go ahead and put off the private sector from engaging in financing opportunities such as this.’
Hamer said while the consortium has accepted there will be no subsidies for the project, Corlan Hafren was now calling for an adequate pricing structure to ensure it can be profitable in the long-term.
‘What we are asking for is that we have a robust pricing system in place and it is structured in way that people will get the right sort of returns, we are talking in the region of an eight to 11 per cent return on investment,’ he said.
‘When you do the sums on the sorts of capital operating costs that are required, then you can still come in on the sorts of electricity prices that are comparable to wind. We are not asking for anything special in that regard.’
The group has said the project could deliver energy by 2020 to the National Grid and stimulate substantial regeneration in the area.
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