To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to his Answer of 9 June 2020 to Question 51817 on Tidal Power: Swansea Bay, what range of hurdle rates, comparable to those more established renewable energy technologies, such as solar PV, onshore wind and large hydropower, were used for the Swansea Bay tidal lagoon value for money assessment.
Answered on
23 June 2020
This answer is a correction from the original answer.
The hurdle rates applied across the portfolio of tidal lagoons in the Department’s value for money assessment[1] are shown in Table 1. The hurdle rates for other low carbon technologies estimated at the time of the value for money assessment are shown in Table 2.
Table 1: Range of hurdle rates applied to proposed programme of tidal lagoons[2]
Hurdle Rate Scenario | Hurdle rate (real terms, pre-tax) |
Low | 6.2% |
Central | 8.0% |
High | 9.0% |
Table 2: Selected hurdle rates for other low carbon technologies (up to date at time the assessment was undertaken)[3]
Technology | Hurdle rate (real terms, pre-tax) |
Onshore wind | 6.7% |
Offshore wind | 8.9% |
Solar PV (>5MW) | 6.5% |
Nuclear | 8.9% |
Gas with CCUS (first of a kind) | 11.3% |
Hydro (>5MW) | 6.9% |
[1] Available at: www.gov.uk/government/publications/swansea-bay-tidal-lagoon-value-for-money-assessment
[2] Source: BEIS commercial advisory
[3] Source: BEIS Electricity Generation Costs Report (2016), available at: www.gov.uk/government/publications/beis-electricity-generation-costs-november-2016
Original answer
The hurdle rates applied across the portfolio of tidal lagoons in the Department’s value for money assessment[1] are shown in Table 1. The hurdle rates for other low carbon technologies estimated at the time of the value for money assessment are shown in Table 2.
Table 1: Range of hurdle rates applied to proposed programme of tidal lagoons[2]
Hurdle Rate Scenario | Hurdle rate (real terms, pre-tax) |
Low | 6.2% |
Central | 8.0% |
High | 9.2% |
Table 2: Selected hurdle rates for other low carbon technologies (up to date at time the assessment was undertaken)[3]
Technology | Hurdle rate (real terms, pre-tax) |
Onshore wind | 6.7% |
Offshore wind | 8.9% |
Solar PV (>5MW) | 6.5% |
Nuclear | 8.9% |
Gas with CCUS (first of a kind) | 11.3% |
Hydro (>5MW) | 6.9% |
[1] Available at: www.gov.uk/government/publications/swansea-bay-tidal-lagoon-value-for-money-assessment
[2] Source: BEIS commercial advisory
[3] Source: BEIS Electricity Generation Costs Report (2016), available at: www.gov.uk/government/publications/beis-electricity-generation-costs-november-2016