Get the biggest stories sent straight to your inbox Sign up for regular updates and breaking news from WalesOnline Thank you for subscribing We have more newsletters Show me See our privacy notice Invalid Email

The company behind the planned Swansea Bay Tidal Lagoon needs less subsidy money than previously, according to an MP — a move which supporters hope can finally pave the way for the £1.3 billion project to be built.

Tidal Lagoon Power has reportedly put forward an offer which would match the structure of the subsidy deal agreed by the UK Government for the new nuclear power station at Hinkley Point, Somerset.

This would not change the cost of building the privately-funded lagoon, but it would significantly reduce the length of time that a subsidy is required from 90 years to 35 after it starts generating electricity.

This in turn would benefit consumers, who finance subsidies for low carbon energy schemes through their bills.

The subsidy proposal follows an offer by the Welsh Government to lend Tidal Lagoon Power capital to help cover construction costs.

MP Richard Graham, who is chairman of the All Party Parliamentary Group for Marine Energy and Tidal Lagoons, claimed the Welsh Government would eventually become the 100% equity holder of the project.

The lagoon, which the developer says would produce the equivalent electricity used by 155,000 households and create more than 2,000 construction jobs, has planning permission but cannot proceed without a subsidy agreement.

The company also still needs a marine licence from Natural Resources Wales before work on the four-year project can start.

An independent review of tidal lagoon energy said last year that the project would be a “no regrets” policy, but there has been no formal response yet from the UK Government.

Referring to the new subsidy proposal and Welsh Government offer, Mr Graham said in a blog: “We still await a formal response (to the review), but there have been two developments which make me believe that the Government can now take a positive decision that will above all benefit consumers.”

The MP for Gloucester — the city where Tidal Lagoon Power is based — also reckoned the plummeting costs of offshore wind power could be replicated by a series of larger lagoons which the developer wants to build, including off Cardiff and Newport.

Mr Graham said: “We can continue to increase our percentage of energy generated from domestic low carbon by replicating the future savings of offshore wind through tidal lagoons.

“The Swansea pilot project proposal is now affordable, has the support of the Welsh Government, and will transfer equity and dividends to Wales while establishing a UK supply chain for this new industry.”

It is understood that Tidal Lagoon Power’s proposed subsidy would not replicate the Hinkley Point deal line for line, and that this would therefore make it cheaper for consumers than the nuclear one.

Swansea East MP Carolyn Harris, who has consistently backed the lagoon proposal, said: “My initial reaction is that this shows the confidence the company has in the product they are offering.

“I don’t think anyone can go further in making concessions to allow the Government to make the right decision.”

Asked about the 100% equity claim, a Welsh Government spokesman would only said it was supportive of the economic benefits of lagoons and added: “We have offered funding to get the lagoon project started.”

Business Secretary Greg Clark wrote to First Minister Carwyn Jones last month, saying he acknowledged the Welsh Government’s “substantial equity and/or loan investment” offer, and that he was asking his officials to find out more about it.

The letter added: “The issues considered by the (independent) Hendry review remain complex as they relate to an untried technology with high capital costs and significant uncertainties.”

One of Mr Clark’s departmental colleagues, MP Claire Perry, said at a committee meeting this week that talks with Welsh Government officials were under way.

“So there are a series of extremely important conversations happening,” she said.

Asked about the 35-year Hinkley Point-style subsidy, a Tidal Lagoon spokesman said: "That is one of the possible outcomes of current talks between the UK and Welsh Governments."