Prudential to finance £1 billion Swansea Bay tidal energy plant
Friday 24th October
Prudential PLC has been announced as the cornerstone investor in the project to construct the Swansea Bay tidal energy plant, expected to become the world’s largest tidal energy power station when it opens in 2018.
Prudential is the cornerstone investor for the project, the first construction funder to be officially announced. Term sheets from other potential equity investors are also now being considered. Tidal Lagoon Power isn’t releasing specific figures at present but up to £100 million is being quoted as the potential investment figure.
Development funding has now been closed to new investors, but development funders to date have included Prudential and Good Energy, alongside a number of high net worth individuals and members of the local community. In addition, Macquarie Capital has been appointed as financial adviser and debt arranger for the project.
The Severn Estuary possesses the second highest tidal range in the world and Swansea Bay benefits from an average tidal range of 8.5 metres during spring tides. Tidal Lagoon Power intends to construct a 320MW tidal lagoon to harness this energy which would help the UK transition to a low carbon future with greater energy security and reduced electricity costs.
The project will generate over 495 gigawatt hours (GWh) of electricity per year for the next 120 years, enough to provide nearly all the domestic electricity for the Swansea Bay region. It will also prevent more than 236,000 tonnes of carbon dioxide per year from entering the atmosphere.
When it opens in 2018, the plant will be a world-leading infrastructure project and the world’s largest tidal energy provider. It is the first step in a tidal energy network which is expected to generate up to 8 percent of UK total electricity demand.
Prudential’s investment in the project is part of the company’s commitment to invest, alongside five other major UK insurance companies, a total of £25 billion in UK infrastructure over the next four years. The company’s long-term insurance funds will provide the funding through Prudential’s European asset management arm, M&G Investments.
“The financing of this power station is emblematic of the role that Prudential plays in transforming the hard-earned savings of millions of our customers into long-term, productive investment in the UK economy” said Tidjane Thiam, Group Chief Executive, Prudential plc.
“Such investments provide our customers with strong and sustainable returns, create good jobs and increase productivity and economic competitiveness. Prudential is committed to invest in infrastructure projects that benefit the national economy. We are also proud to play our part in the development of this world-leading renewable energy technology.”
Construction of the power station is scheduled to begin in 2015 and will create almost 2,000 jobs during the construction phase, providing economic benefits to the local community.
“Securing the backing of a world-renowned investment institution marks another major milestone for the Swansea Bay project and is a clear endorsement of our vision to introduce tidal lagoon infrastructure into the UK’s low carbon energy mix” added Mark Shorrock, Chief Executive, Tidal Lagoon Power.
Further information available from:
Prudential PLC – http://www.prudential.co.uk
Tidal Lagoon Power – http://www.tidallagoonswanseabay.com