The UK government today dropped plans to build a 10-mile barrage across the Severn estuary to generate "green" electricity from tides, as revealed by the Guardian yesterday.

An official study said there was no "strategic case" for investing public money in such a scheme, which could cost more than £30bn, although it said it could be reconsidered as a long-term option.

The Department of Energy and Climate Change paved the way for new nuclear power plants at eight sites: Bradwell, Essex; Hartlepool; Heysham, Lancashire; Hinkley Point, Somerset; Oldbury, South Gloucestershire; Sellafield, Cumbria; Sizewell, Suffolk and Wylfa, Anglesey.

The coalition government has already said it will give the go-ahead to companies who want to build new nuclear plants, provided there is no public subsidy involved, despite the Lib Dems' opposition to new nuclear power stations.

All the potential new sites are in the vicinity of existing nuclear power plants.

Three other proposed sites – at Dungeness in Kent, and Braystones and Kirksanton in Cumbria – were ruled out.

The sites were announced as part of a package aimed at providing certainty for the industry, including more detail on what would be required in terms of clean-up and the government's policy of no subsidies.

The energy secretary, Chris Huhne, said: "I'm fed up with the stand-off between advocates of renewables and of nuclear which means we have neither.

"We urgently need investment in new and diverse energy sources to power the UK.

"We'll need renewables, new nuclear, fossil fuels with carbon capture and storage, and the cables to hook them all up to the grid as a large slice of our current generating capacity shuts down."

The coalition's revised draft national policy statements on energy show that half the new energy capacity built in the UK by 2025 was expected to come from renewables – the majority of which is likely to be wind energy.

But the government dropped plans for large-scale tidal schemes in the Severn estuary, after considering five proposals for three barrages and two "innovative" lagoon-type energy projects to harness the power of the tides.

The most high-profile of the proposed schemes was the 10-mile wide Cardiff-Weston barrage, the costs of which were originally estimated at £15bn but which have now spiralled to more than £30bn, according to the feasibility study published today.

The barrage, which would have harnessed the massive tidal range of the estuary to produce green power, could have met 5% of the UK's electricity needs, but was controversial with some environmentalists because it could destroy thousands of hectares of habitat.

Conservation groups have been fighting the proposals which they believe could destroy the winter feeding grounds of 65,000 birds.

The barrage could also have economic impacts on the area, both positive in creating jobs for the area, and negative in damaging access to the Severn's ports and disrupting recreation such as angling.

The report published today found that the costs of a tidal power scheme would be "excessive" in comparison to other forms of low-carbon electricity generation.

It said a large-scale energy project in the Severn estuary would be costly to deliver and very difficult to finance from the private sector alone, although it did say it should not be ruled out in the longer term as a future option if market conditions changed.

The government said it believed other options, including wind energy and nuclear power, represented a better deal for taxpayers and energy consumers.

And while it acknowledged the feasibility of a Severn barrage could change over time, and there was potential for a future review of the situation, there were no plans to do so before 2015.

Huhne said: "The study clearly shows that there is no strategic case at this time for public funding of a scheme to generate energy in the Severn estuary. Other low-carbon options represent a better deal for taxpayers and consumers.

"However, with a rich natural marine energy resource, world-leading tidal energy companies and universities, and the creation of the innovative Wave Hub facility, the area can play a key role in supporting the UK's renewable energy future."