Chinese group to build world’s first tidal energy plant in Swansea Bay, £1 billion
http://www.ft.com/intl/cms/s/0/1da6dcba-094b-11e5-b643-00144feabdc0.html#axzz3c1ZedQBx
Gill Plimmer and Jim Pickard
June 3, 2015 8:34 am
A Chinese construction company has been chosen to build the world’s first tidal lagoon project for generating clean electricity in Britain.
The state-owned China Harbour Engineering Company (CHEC) has won the deal to undertake marine works on the £1bn Swansea Bay Tidal Project, which will deliver power to the National Grid, potentially enough for 120,000 homes.
It is the UK’s first infrastructure development to be part delivered by Chinese expertise, according to Swansea Bay Tidal Lagoon Power, the developer behind the project.
Lin Yi Chong, president and chief executive of CHEC, said the deal marked a “strategic decision to enter the UK infrastructure and construction market”.
He added: “We see [it] as the cornerstone project in our business development strategy in the UK and wider Europe. We will seek to grow our UK presence through significant investment into a subsidiary business and through a programme of UK infrastructure investment and construction.”
Swansea Bay Tidal Lagoon Power has raised £200m of institutional funding but is still waiting for the government to agree to generous subsidies for its electricity.
As part of the deal, CHEC has established a UK subsidiary to look at investment opportunities in infrastructure over the next decade. The company is a subsidiary of China Communications Construction Company, the listed state-owned enterprise.
CHEC has also agreed a memorandum of understanding with Swansea Bay Tidal Lagoon Power to look at more projects in Asia, particularly along China’s 18,000km of coastline.
Although the site management team and marine engineering specialists will come from China, CHEC has agreed to source half of the plant, equipment, materials — such as the rock to build the lagoons — and half the staff in the UK.
George Osborne, the chancellor, has sought Chinese investment in the UK, visiting Beijing in 2012 to hold talks with investors. He has welcomed investments in Britain such as China Investment Corporation’s stake in Heathrow airport.
[IMG]
Chinese developers are involved in a number of housing and office projects including a £650m business district near Manchester airport. But although they are in talks to invest in a new nuclear power at Hinkley Point in Somerset, the final deal has still not been signed off with EDF, the French energy company that owns the site.
Andrew McNaughton, the former Balfour Beatty chief executive who is director of engineering and construction at Tidal Lagoon Power, said the project needed to draw on international experience. There was no British company with the right marine experience and capability to build the marine works for the tidal plant, he said.
The project had the potential to create a “new domestic industry” that could be exported worldwide, he added, citing interest from Canada, France and India. The Swansea scheme, which will involve turbines working 14 hours a day, expects to win planning permission this month, with work due to start next spring.
Although Tidal Lagoon Power is pressing ahead at Swansea Bay, it believes it could build five cheaper lagoons along the Severn estuary, in north Wales and in the northwest. This could generate low-carbon electricity equivalent to 8 per cent of the UK’s installed capacity.
The company is seeking a generous “strike price” from the Department of Energy and Climate Change for the energy it produces — far in excess of the support for onshore wind turbines.
But ministers are sympathetic to the group’s case on the basis that subsequent projects would require a lower subsidy. Backers of the scheme, which involves a six-mile horseshoe-shaped sea wall designed to power turbines through tidal movements, have previously suggested the government guarantees £168 per megawatt hour for 35 years — the highest level of subsidy secured by a large-scale commercial green energy project.
Electricity is currently sold into the grid by commercial operators at about £50 per MWh — less than a third of the price sought by the Swansea Lagoon scheme.
Douglas Oakervee, special representative for China at the Institution of Civil Engineers, said the deal was a “major step in the collaboration between UK and Chinese companies”. He added: “This is in total alignment with the agreement and aspirations of Prime Minister David Cameron and President Xi Jing Ping.”
About 5m tonnes of rock will be used in the building of the lagoon. Although CHEC will take responsibility for sourcing and transporting the rock, there has been no decision as yet as to where it will come from.
The two other tier-one contracts — the turbine housing and ancillary civils — have been awarded to Laing O’Rourke and Alun Griffiths, both UK companies. There will be further tenders for the construction of a turbine assembly plant in Wales during the summer.
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http://www.ft.com/intl/cms/s/0/1da6dcba-094b-11e5-b643-00144feabdc0.html#axzz3c1ZedQBx
Gill Plimmer and Jim Pickard
June 3, 2015 8:34 am
A Chinese construction company has been chosen to build the world’s first tidal lagoon project for generating clean electricity in Britain.
The state-owned China Harbour Engineering Company (CHEC) has won the deal to undertake marine works on the £1bn Swansea Bay Tidal Project, which will deliver power to the National Grid, potentially enough for 120,000 homes.
It is the UK’s first infrastructure development to be part delivered by Chinese expertise, according to Swansea Bay Tidal Lagoon Power, the developer behind the project.
Lin Yi Chong, president and chief executive of CHEC, said the deal marked a “strategic decision to enter the UK infrastructure and construction market”.
He added: “We see [it] as the cornerstone project in our business development strategy in the UK and wider Europe. We will seek to grow our UK presence through significant investment into a subsidiary business and through a programme of UK infrastructure investment and construction.”
Swansea Bay Tidal Lagoon Power has raised £200m of institutional funding but is still waiting for the government to agree to generous subsidies for its electricity.
As part of the deal, CHEC has established a UK subsidiary to look at investment opportunities in infrastructure over the next decade. The company is a subsidiary of China Communications Construction Company, the listed state-owned enterprise.
CHEC has also agreed a memorandum of understanding with Swansea Bay Tidal Lagoon Power to look at more projects in Asia, particularly along China’s 18,000km of coastline.
Although the site management team and marine engineering specialists will come from China, CHEC has agreed to source half of the plant, equipment, materials — such as the rock to build the lagoons — and half the staff in the UK.
George Osborne, the chancellor, has sought Chinese investment in the UK, visiting Beijing in 2012 to hold talks with investors. He has welcomed investments in Britain such as China Investment Corporation’s stake in Heathrow airport.
[IMG]
Chinese developers are involved in a number of housing and office projects including a £650m business district near Manchester airport. But although they are in talks to invest in a new nuclear power at Hinkley Point in Somerset, the final deal has still not been signed off with EDF, the French energy company that owns the site.
Andrew McNaughton, the former Balfour Beatty chief executive who is director of engineering and construction at Tidal Lagoon Power, said the project needed to draw on international experience. There was no British company with the right marine experience and capability to build the marine works for the tidal plant, he said.
The project had the potential to create a “new domestic industry” that could be exported worldwide, he added, citing interest from Canada, France and India. The Swansea scheme, which will involve turbines working 14 hours a day, expects to win planning permission this month, with work due to start next spring.
Although Tidal Lagoon Power is pressing ahead at Swansea Bay, it believes it could build five cheaper lagoons along the Severn estuary, in north Wales and in the northwest. This could generate low-carbon electricity equivalent to 8 per cent of the UK’s installed capacity.
The company is seeking a generous “strike price” from the Department of Energy and Climate Change for the energy it produces — far in excess of the support for onshore wind turbines.
But ministers are sympathetic to the group’s case on the basis that subsequent projects would require a lower subsidy. Backers of the scheme, which involves a six-mile horseshoe-shaped sea wall designed to power turbines through tidal movements, have previously suggested the government guarantees £168 per megawatt hour for 35 years — the highest level of subsidy secured by a large-scale commercial green energy project.
Electricity is currently sold into the grid by commercial operators at about £50 per MWh — less than a third of the price sought by the Swansea Lagoon scheme.
Douglas Oakervee, special representative for China at the Institution of Civil Engineers, said the deal was a “major step in the collaboration between UK and Chinese companies”. He added: “This is in total alignment with the agreement and aspirations of Prime Minister David Cameron and President Xi Jing Ping.”
About 5m tonnes of rock will be used in the building of the lagoon. Although CHEC will take responsibility for sourcing and transporting the rock, there has been no decision as yet as to where it will come from.
The two other tier-one contracts — the turbine housing and ancillary civils — have been awarded to Laing O’Rourke and Alun Griffiths, both UK companies. There will be further tenders for the construction of a turbine assembly plant in Wales during the summer.