Speaking in the House of Commons yesterday (25 June), business secretary Greg Clark said the renewable energy project did not meet the Governments value for money requirements, and it would not be appropriate to lead the company to believe that public funds can be justified.
The proposal for the Swansea tidal lagoon would cost 1.3 billion to build. If successful to its maximum ambition, it would provide around 0.15% of the electricity we use each year, said Mr Clark.
The same power generated by the lagoon, over 60 years, for 1.3 billion, would cost around 400 million for offshore wind even at todays prices, which have fallen rapidly, and we expect to be cheaper still in future.
The Swansea Bay project has been in development since 2011 and was championed by George Osborne when he was chancellor.
Negotiations over the amount the project would receive under the Contracts for Difference subsidy scheme started in 2015.
In 2017, a government-commission review into the project by Charles Hendry concluded the tidal lagoon was a no regrets option.
But last year also saw the price of electricity generated by offshore wind farms fall in the last round of Contracts for Difference, which led some, including Ecotricity founder Dale Vince to claim the Swansea Bay project would be too expensive.
The chief executive of trade body Renewable UK, Hugh McNeal said the Governments decision to reject the plans was deeply disappointing and shows a lack of vision.
Tidal lagoons have massive potential to meet our national energy needs and create jobs, as well as bringing industrial-scale economic benefits to the UK including opportunities to export worldwide, said Mr McNeal.
The review commissioned by the Government on this innovative technology found that it can deliver secure power at a price thats competitive in the long term.
The UKs future energy mix will be powered by a range of low carbon technologies. We know that with the right support, tidal energy can quickly become competitive on cost with other renewable and low carbon power like nuclear.
While Labours shadow business secretary, Rebecca Long-Bailey added: Scrapping the Tidal Lagoon on the same day as supporting a third runway at Heathrow is a kick in the teeth not only for Wales but for the renewables sector and industries outside the capital.
If Theresa May was serious about rebalancing our economy, creating jobs and protecting British communities from climate change then she would not have made this decision.
The next Labour government will back low-carbon projects like the Swansea Tidal Lagoon, supporting manufacturing, creating jobs and working to meet our climate targets.