Chinese get £300m Swansea lagoon package in exchange for opening doors

Renewable energy firm Tidal Lagoon Power has handed a Chinese state-owned construction company the £300m marine works contract on its Swansea Bay scheme in exchange for introducing the British company to Chinese opportunities.

Swansea Bay Tidal Lagoon has named China Harbour Engineering Company (CHEC) its preferred bidder for the £300m contract to provide marine works for the £1bn project, which is set to be the world’s first tidal lagoon power plant. The Chinese contractor will build six miles of lagoon wall in Swansea Bay.

Approximately 50% of contract value should stay in Britain, being spent on British workforce, partners and supply chain, said Tidal Lagoon Power. CHEC’s offer to invest Chinese government money into the project was turned down.

In return for the contract, CHEC and Tidal Lagoon Power have struck a deal to work together on the development of tidal lagoon power projects in Asia, particularly at sites along China’s 18,000km coastline.

Under the terms of the contract, CHEC will be responsible for the construction of the bund wall and coffer dam, sourcing and transporting rock armour and materials to Swansea Bay, and managing all landside and marine crews associated with this element of the build.  At peak construction, it will manage 500 workers on site at Swansea Bay.

As well as committing to approximately 50% UK content for the delivery of the contract, CHEC has set up a UK subsidiary company and has set out its vision to pursue a UK infrastructure investment programme over the next decade.  CHEC’s investment strategy will include a focus on further tidal lagoon infrastructure projects in the UK.

CHEC president & CEO Lin Yi Chong said: “CHEC has taken the strategic decision to enter the UK infrastructure investment and construction market, and we see the Swansea Bay Tidal Lagoon, a pioneering scheme that could bring the world a new energy option, as the cornerstone project in our business development strategy in the UK and wider Europe. We have not invested directly into the Swansea Bay project but we made a proposal to do so and will seek opportunities to invest in similar projects in the UK and 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.”

CHEC, a subsidiary of China Communication Construction Company Ltd, has more than 10,000 employees, currently working on contracts with a total value of more than £6bn.  In recent years it has become a major global player, with more than 70 overseas offices around the world.

Mr Lin added: “CHEC’s track record demonstrates that we have delivered safely, on time and on budget, on some of the most complex and challenging marine engineering projects globally.  We are proud to have been selected for the tidal lagoon job and look forward to establishing new partnerships in Wales and across the UK.

“As a state owned enterprise, we are working closely on the ‘Green China’ initiative with the central government and local authorities in China.  We have invited TLP to work with us on the development of tidal lagoons in China and across Asia, and a memorandum of understanding will be signed shortly.”

CHEC has selected Newport environmental consultancy JBA and Surrey engineering consultancy Cullen Grummitt & Roe to provide support through the advanced works and value engineering phase for the Swansea Bay Tidal Lagoon project.  CHEC has also appointed HR Wallingford to undertake 2D and 3D hydraulic models and is expected to select more UK consultants and local resources to provide technical supports to the design and construction phases in due course.

Tidal Lagoon Power chief executive Mark Shorrock said: “I have worked in China, speak Chinese and have huge esteem for China’s delivery capability and ability to deliver projects to time and budget.  Having encouraged CHEC to bid this job and invest in Western European infrastructure projects by creating a British base, I was delighted, following an intensive competition, when my engineering colleagues recommended CHEC for our seminal Swansea Bay project.

“Further, I think China is taking a leadership position in tackling the threat of climate change and so a state-owned enterprise makes a good partner when you wish to deploy multiple tidal lagoons quickly and cost effectively.  Beginning in Swansea Bay, we aim to foster a new economic opportunity for collaboration in civil engineering between our two companies and nations. Given the lead by our respective governments, we are aiming to take on the greening of our energy economy in European and Asian locations that have eight or more metres of tidal range and are interested in low impact, secure and local sources of energy.”

Doug Oakervee, the Institution of Civil Engineers’ special representative for China, said: “The selection of CHEC as preferred bidder for the seawall and dredging works required for Swansea Bay Tidal Lagoon Power Scheme is a major step in the collaboration between UK and Chinese companies.”

He said: “The Institution of Civil Engineers is about to establish a working group involving senior members of the construction industry to see how best they can facilitate working with Chinese companies.”

Following advanced works, a fixed price contract with a risk and value engineering scheme for the main marine work at Swansea Bay will be signed later this year.