Renewable Energy and Environmental Impact

Chapter One

1.0 Introduction

As concerns regarding the degradation of the environment due to air pollutants such as sulphur dioxide and carbon monoxide and the calamity that may follow, the world`s nations have been observed to turn towards renewable energy sources. These new sources are low in carbon and can be replenished- on human timescales- to meet their electricity and energy needs (Adib et al., 2015). Regions around the world have been taking measures to deal with the looming environmental challenges. An example is the 2009 Renewables Directive in Europe which set binding targets for all the members of the European Union so that by 2020, 20% of energy in the EU would be drawn from sources that are renewable. The government of the UK has a commitment to targets that are legally binding to cut on the emission of carbon by 34 % come 2020 and 80 % by 2050. These targets are set out in the 2008 Climate Change Act (Hammond & Griffin, 2019). To achieve such targets, it would be necessary to generate up to 30% of the electricity in the UK from sources that are renewable by 2020. By 2050, the sector would be required to be almost entirely free of carbon (Elliott et al. 2018). Using the challenges presented in the above paragraph as a basis, this dissertation focuses on providing an in-depth assessment of the potential of a tidal lagoon energy generating company in the energy sector of the UK. The past UK`s energy situation and the measures that have been taken to deal with the different problems that face the kingdom, and would affect an investment in a tidal lagoon project are explored.

Chapter Two

2.0 Method and approach

This study will use data collected from secondary sources. According to Nash (2016), the collection of secondary research involves summarisation, collation, and synthesis of data that already exists. It is relatively easy to go about collecting data in secondary research as the data is obtained from previously carried out studies. Secondary research is also time-efficient because the researcher does not need to the scheduled time to collect the primary data because this job has already been done by the researcher who collected that data from the primary sources. However, there is the risk that the data collected could be out of date or lack accuracy. Hence, the use of data which has already been collected may lead the researcher to overlook samples that are specifically being examined in the new research. It is worth mentioning that the tidal lagoon industry is still in its infancy and research specifically focused on tidal lagoons is limited. While the collection of data through direct industry engagement would have been more appropriate, this was not possible in this study as a result of the limited time. The focus of this study is three different effective ways that are used for the assessment and analysis of the use of energy in the UK. This section introduces the two analytic models of Porter`s PESTEL and SWOT. The PESTEL tool is used for the analysis of the energy sector because of its suitability to the scope of drivers that are important and have an influence on any new energy strategies or which inform them. The paper uses Porter`s Five Forces to assess the macro-environment that this project is confronted with. The final part of the analysis is the SWOT, where the strengths, weaknesses, opportunities, and threats of an investment in the energy sector are explored.

2.1 Porter`s Five Force Analysis

Porter`s five forces is a model for business analysis that helps with explanations of the ways through which different industries manage to sustain different profitability levels. It is a simple framework that is used in the analysis of the position and also competitive strength of a business organisation. The use of Porter’s Five Forces Model was informed by the need to carry out a high-level market business analysis on an investment in the construction of a tidal lagoon. It was also brought in to carry out an overall assessment of the desirability of the tidal lagoons in the generation of electricity. Porter`s Five Forces is one simple tool that is quite powerful that aids in understanding a business environments competitiveness and for the further identification of the potential profitability of the adopted strategy. What makes this quite useful is that, with a proper understanding of the forces in existence in an environment that have the potential of affecting operations, and with that, accordingly adjusting strategies. For instance, it would be possible to take advantage of strong positions while also improving on the weak ones. Using the analysis, five main points are considered: powers held by the competitors; the powers wielded by the suppliers; the buyers’ powers; the threats of new entrants into the energy industry; the power of substitutes. The tool will help the decision-makers to establish if the market itself is worthy of investing in. Additionally, it will enable an assessment of those areas that provide threats and opportunities to potential players. From a strategic position, the conclusions drawn from the analysis can then be built into any strategic plans. Having a proper understanding of the forces within the environment and industry in which an organisation operates, it becomes possible to adjust strategies based on that understanding (Carraher, 2018). Porter`s Five Forces model was used to do an analysis of different competitive forces that could shape the renewable energy industry. Tidal lagoons are renewable sources of energy, and that informs the focus on the renewable energy industry. The use of tidal lagoons in the UK for the generation of power is still minimal, and that is why this section focused on the entire renewable energy sector. Through the analysis, it was possible to identify the strengths of the industry and its weaknesses.

2.1.1 Threat of new entrants in the energy sector

The abilities of new companies to penetrate the market in which a company operates affects its position. This is determined by the level of regulation of different markets and the ease with which one can get a foothold in a certain market or industry. The most significant barriers to market entry in the energy market are the economies of scale. Economies of scale deter new entrances by forcing any such potential entrants to accept cost disadvantages. The companies that would benefit from economies of scale are those that serve extensive markets and those that hold high market shares. Such companies are more capable of minimising their costs per unit of energy, both distributed and produced. That would go a long way in improving the flexibility of market-leading companies in fighting off any such new market entrants.

2.1.2 Threat of substitutes

The threat of substitution refers to customer’s likelihood of customers coming up with new ways of the activities they carry out. For instances, in those situations where unique software products that automate processes that are important are supplied, this may be substituted by doing things manually or through outsourcing. Substitutes that are cheaper and easier to get have the potential of weakening the positions of companies and further threatening their profitability’s.

2.1.3 Bargaining power of suppliers

The power of suppliers is determined with the ease with which suppliers are capable of increasing their prices. How many potential suppliers are available? What expenses would be attached in switching between different suppliers? And what is the uniqueness of the services and products provided by the suppliers.

2.1.4 Power of buyers

Analysis of the power of buyers involves an analysis of the ease with which buyers are able to drive down prices. What is the number of the buyers and how big are their orders? Additionally, an analysis is done on how much it would cost the buyers to switch to rival services and products.

2.1.5 Competitive rivalry

The competitive rivalry part explores the number of one`s competitors and their strengths. Who are the rivals and how does the quality of their products and services compare to the quality of your services and products. In those circumstances when there is strong competition, it becomes possible to attract more customers with price cuts that are aggressive and marketing campaigns that have high impacts. Additionally, in those markets that have numerous rivals, buyers and suppliers are always able to go to other providers whenever they feel like they do not get the best (Serrat, 2017). To develop a convincing strategy for potential investors, the study will consider the underlying economics that impact the use of tidal lagoons for generation of power and further demonstrate how the UK’s substantial tidal resources could be harnessed by the tidal lagoon industry for generation of electricity for boosting economic growth, creation of job opportunities, and the reduction of the dependence on fossil fuels, which are often imported.

2.2 PESTEL analysis

PESTEL stands for political, economic, social, technological, environmental, and legal. This framework is used for monitoring and conducting an analysis of the different macro-environmental factors that would affect the operations of an organisation. The results derived from this analysis are normally used in the identification of weaknesses and threats in the SWOT analysis. Political factors are related to the degree of government influence within an economy. These include policies on foreign trade, government and tax policies, labour and environmental laws, and trade restrictions, among other political factors (Pan et al., 2018). The operations of different organisations are profoundly affected by political factors. Any business is better placed if it is capable of responding to anticipated and current legislation and accordingly adjusting marketing policies.

2.2.1 Economic factors

The business operations of any organisation are affected by economic factors and their profitability. Different economic factors include economic growth and interest rates, inflation, rates of exchange, and business and consumer disposable income, among others. Economic factors can further be broken down into micro and macro-economic factors. The focus of macro-economic factors is on-demand management in different economies. Government expenditures, taxation policies, and interest control rates are used by governments to manage demand within economies. Microeconomic factors deal with the ways through which citizens manage and use their incomes. All these factors have a particular impact on B2C organisations (Balasopoulou et al., 2016).

2.2.2 Social factors

These are elements that involve the public’s attitudes and shared beliefs. Examples of those factors are population growth, health consciousness, age distribution, and career attitudes, among others. What makes these factors particularly interesting is that they have direct effects on the understanding held by marketers of customers and the different factors that drive the customers.

2.2.3 Technology

An important factor that also has to be considered is the technological landscape which quite dynamic and has many effects on the ways products are marketed. There are three major ways through which marketing and management are affected by factors that are technological: these include; new ways of production of services and goods; novel ways of through which services and goods are distributed; and new ways of communicating with target markets.

2.2.4 Environmental factors

The prominence of environmental factors has grown in recent years; particularly with the escalation of raw materials scarcity, targets of pollution, ethical business models, and sustainability.

2.2.5 Legal factors

Legal factors are related to standards of advertising, consumer rights, labelling of products, products safety, operations licensing, and equality of opportunities. To trade successfully, companies would need to know what is not legal and what is legal (Pan et al., 2018).

2.2.6 How PESTEL analysis would be useful

Generally, there are four main reasons why PESTEL analysis is useful. It;

Helps in spotting personal and business opportunities and would provide advanced warnings of threats that are significant

Reveals a business environments change of direction. That would be helpful in shaping what is being done so that later on the developers of tidal lagoons would be able to work with change and not against it.

Helps to prevent kick-starting projects that have a high failure likelihood

Is helpful for breaking free of assumptions that are unconscious because it helps build a view that is objective of any environment.

In this study, conducting a PESTEL analysis helped the researcher to build a clearer picture of the forces of change that anyone establishing a tidal lagoon would be exposed to. From the results of the analysis, the presented opportunities can then be fully exploited.

An example of the PETSEL analysis in use is when the UK government commissioned an independent review in 2016 aimed at assessing the case for tidal lagoons and the role they could play in the country’s energy mix (Waters & Aggidis, 2016). The results from the review were published in 2016, and one of the major conclusions was that there was a very strong case for a small scale pathfinder project producing 500 MW and below. This would be established as soon as reasonably practicable. The same document indicated that the Swansea Bay Tidal Lagoon was the most likely pathfinder because of its advanced state of development and its small size (320 MW) (Guo, 2018). The review further recommended the consideration of other large projects only after the commissioning of the pathfinder and its operation for a reasonable period. The analysis, however, indicated that there exist major concerns related to tidal lagoon projects, with one major concern being related to the environmental impacts of such lagoons on fish movements, habitats, silt deposits and birdlife. These concerns are addressed under the UK Conservation of Habitats and Species Regulations which place an obligation on the developers of lagoons to implement measures that would reduce disruption during the course of construction to continuously monitor the impacts on the environment and to further provide compensatory habitats that would replace designated features.

2.3 SWOT analysis

The SWOT analysis is a planning technology tool used for strategic analysis which identifies weaknesses, strengths, threats, and opportunities associated with a project or businesses’ context (Phadermrod et al., 2019). The main goals of a SWOT analysis include the identification of external and internal factors that are either detrimental or conducive to the achievement of the objectives (Gregory, 2008). It is worth noting that while strengths and weaknesses are internal, threats and opportunities are external. Carrying out all these different analyses will provide a broad scope of the potential of tidal lagoons in the UK and their potential for energy production.

Chapter Three

3.0 The UK’s Energy Mix

The UK government`s energy strategy focuses on two key areas: reduction of the threats and shortcomings, and provision of more benefits and opportunities. Climate change is one of the greatest threats both to the UK and also to the security of the entire globe (Neil, Hashemi & Lewis 2016). Generally, it is accepted that climate change is mainly brought about by the ever-increasing content of carbon in the atmosphere; as a result, human beings activity. Different consequences of climate change include melting of polar glaciers, the greenhouse effect, increased storms, air pollution, and flood risks. Currently, the levels of atmospheric carbon dioxide are the highest in history. The bulk of greenhouse gas emissions come from the production of energy. This has led to the government of the UK putting forward proposals that are aimed at the reduction of carbon emissions such as efficient energy use and a shift towards low-carbon fuels. Additionally, the UK government has signed three international agreements aimed at reduction of carbon emissions: the United Nations Framework Convention on Climate Change; the Kyoto Protocol; and the Paris Agreement. The United Nations Framework Convention on Climate Change (UNFCC) was established 1992, and its main goals are the mitigation of greenhouse gas emissions, adaptation to climate change, finance action on climate change, and to produce frequent reports on the national levels of emissions in member countries (Weiss, 2016). In 1997, the UK acceded to the initial Kyoto protocol and made a pledge to minimise the emission of greenhouse gases by 12.5% between 2008 and 2012 (Grubb, Vrolijk & Brack, 2018). And in 2015, the UK acceded to the Paris Agreement, and that was facilitated by the negotiations that were going on at the UNFCCC. The Paris Agreement`s main objectives are to limit the rise of the current global average temperatures at the pre-industrial level to 1.5oC (United Nations Framework Convention on Climate Change, 2016).

As the population of the UK continues to grow, together with the increased affluence and levels of urbanisation in the country, the standards of living have also been rising. This has led to increasing demand for energy. This increasing demand for energy brings about three challenges: security of energy supply; sustainability of energy (emissions); and affordability of energy with regards to costs. Currently, all these three challenges are faced by the UK. The country’s main problem is how to mitigate these problems. Based on these challenges, there is a possibility that the UK may not be capable of meeting the required levels of energy for the sustenance of national growth and development and of further preventing possible blackouts. This could lead to prices of energy shooting up together with an escalation of other means of producing energy that could add more carbon into the atmosphere. This will make it a challenge to manage a sustainable development of energy that is currently required by the UK for setting up of new low-carbon energy supply. It is quite clear that these three challenges have resulted in adaptation being incorporated into the energy strategy of the UK. At all times, the government of the UK needs to pursue such an energy mix that is reflective of its relative priorities for affordability, low carbon, and security of supply. That would imply making a decision whether it would be fair and right for consumers of energy to pay for tidal lagoon projects within long timeframes or short time frames. Such a decision would be the most conducive for the achievement of value for money for the consumers (Lin, 2015). This project will seek to develop a deeper understanding of tidal lagoons potential for generation of power in the UK while also seeking to develop a strategy that would encourage potential investors to put their monies on the project. One distinct advantage that the UK has is that its tidal range resources are among the largest across the globe. Tidal lagoon power stations have the potential of adding into the available range of options for the generation of clean electricity, and that would go a long way in helping to achieve a power sector that is decarbonised. This would also put the UK in a position to capture additional value that is significant from the wider industrial benefits that would be delivered by the sector. The UK, in response to the sustainable development goals, has plans of halting the generation of power using coal through the implementation of a new policy that will also see the phasing out of nuclear reactors. In line with this, on August 1, RWE Generation made an announcement of the proposed closure of the coal-powered Aberthaw B Power Station. This necessitates the need for construction of new power plants to ensure that once the nuclear reactors and coal power plants are phased out, there will be no energy gap. With the ever-rising population of the UK and living standards that have been improving over time, increased amounts of electricity will be required for both heating and transportation. In the event that the UK is not able to cater for the energy needs of its citizens, it will be forced to import electricity from its neighbours, and that will expose its supply to different markets, a situation likely to further make the supply electricity there more expensive and unreliable. To prevent such a scenario from happening, it would be necessary for the UK government to have a proper understanding of the country’s energy use patterns. An analysis of the current energy situation in the UK shows that those in charge are clear about the consequences of such a situation. In response, there has been a shift in the supply of electricity in the UK towards clean energy. For instance, in 2018, nuclear and carbon power accounted for up to 53% of the sources of power in the UK.

Chapter Four

Porters five force analysis

4.1.1 Threat of new entrants

The barriers that are present go a long way in determining the seriousness of the threat of entry together with the reaction from already established competitors that new entrants would face. With no doubt, the most significant barriers to market entry in the energy market are the economies of scale. Economies of scale deter new entrances through forcing any such potential entrants to accept cost disadvantages or come in on per a rather large scale. The companies that would benefit from economies of scale are those that serve extensive markets and those that hold high market shares. Such companies are more capable of minimising their costs per unit of energy both distributed and produced. That would go a long way in improving the flexibility of market lending companies in fighting off any such new market entrants. The UK offers different incentives in terms of subsidies and tax credit which would definitely woo potential investors into investing in their renewable energy sector (Cowell et al., 2017). In 2017, an all-time high of new entrants into the UK retail energy market as recorded with a record 12 new entrants in the year that ended June 2017. There was a wide range of businesses that ventured into the market which included grass-roots organisations, international oil companies, and European utilities. With no doubt, such kind of diversity will continue to drive the conception of differentiated and new business models. Direct Energy Business for Industrial and Commercial customers and Direct Energy for residential customers are good examples of retail energy providers. In electricity markets that are competitive, these vie to supply power to businesses and homes. There are four distinct areas in which renewable energy would replace conventional fuel: generation of electricity; motor fuels; rural energy services (off-grid); and space/water heating services. The global renewable energy market has in recent years, been experiencing a mixture of declining rates and growth rates. Generally, growth is being driven by climate change concerns, increasing costs of fossil fuels, and the national economic policies that aim at creating jobs. The UK offers different kinds of incentives through subsidies and tax, meant to encourage investors to contribute to the energy department’s efforts to create renewable sources of energy (Cowell et al., 2017). In 2017, an all-time high of new entrants into the UK retail energy market was recorded. There was a wide range of businesses that ventured into the market, which included grassroots organisations, international oil companies, and European utilities. Such kinds of diversity are likely to continue to drive the conception of differentiated and new business models. Direct Energy Business for Industrial and Commercial customers and Direct Energy for residential customers are good examples of retail energy providers. In electricity markets which are competitive, these vie to supply power to businesses and homes. The threat of new entrants is quite moderate because of a number of factors. For instance, low switching costs can be shown in the way that the end-user switching costs are quite low, which goes a long way in increasing the opportunities for any potential new entrants. With regards to differentiation, it is worth noting that electricity is not differentiable, and users generally have selected suppliers based on cost and efficiency. This goes a long way in increasing the opportunities for new efficient entrants.

Generally, the high capital requirements in the establishment of energy companies also go a long way in barring potential entrants. These include the costs of putting in place fixed facilities and also in research and development. Technological and plant equipment constitute expenditures which are not recoverable, and that is something that increases the risks associated with venturing into the renewable energy market. These costs tend to vary contingent on the specific energy segment from less costly, as in the case of solar panel plant, and too much costly as in the case of large hydropower and geothermal plants. Another factor that minimises the threat of new entrants is the requirement that newcomers have to secure distribution. In the majority of cases, producers of energy already own most of the channels of distribution or use them after making special agreements with the distributors. That could, therefore, turn out to be a huge barrier as potential new entrants have to create their own channels of distribution, something that very few may afford. From this analysis, it is quite clear that while there are significant barriers that would face new entrants, there are also factors that would facilitate their entry. The barriers have more weight than the incentives offered by governments and this, would in the long run, discourage any potential new entrants. We thus conclude that there is a low threat of new entrants.

4.1.2 Threats of substitutes

This threats are relatively high as a result of the many different alternate sources of energy which include wind, solar, biomass and hydro. Electricity generated in nuclear power stations or fossil-fuels is the most direct substitute for renewable energy. Electricity generated from nuclear power and fossil fuels has actually been more economical traditionally. Far from that, the decline in the cost of important technologies has been one of the most exciting developments in the renewable energy sector to the extent that renewable energy has begun to challenge fossil-fuel alternatives even without factoring in health and climate benefits of renewable energy. Any tidal lagoon project within the UK would need to respond to the energy policy of the UK in reference to the reduction of carbon emissions and sustainable development of energy. With no doubt, there is urgent need in the UK for new sustainable energy entrants into the energy industry of the UK and that is especially with the different environmental goals that the UK has and also with the suspension on supply of energy that is not sustainable. It is expected that in the coming 10 years, the UK would experience a crisis in its energy sector, energy gap (Harvey, 2016). It is as such necessary to put up power supply facilities that have high power generation capabilities and that are friendly to the environment in terms of carbon emission in a bid to cope with the oncoming crisis. Early in 2012, the prices of solar panels went down by up to 50%, and the fall was attributed to the increased competitiveness, mostly driven from China. This was also witnessed in the wind turbine manufacturing industry whereby, during the first half of 2009, a 29% reduction was observed in the prices of turbines. However, a ceiling on the chargeable prices is placed by the common alternatives of fossil fuels, and that limits the renewable energy`s potential. The threat of substitutes is, as such, significant because up to date, fossil fuel energy has better price-performance trade-offs in comparison to renewable energy. The threat posed by substitutes is relatively high. This results from the many different alternative sources of energy which include wind, solar, biomass and hydro. Electricity generated in nuclear power stations or fossil-fuels is the most direct substitute for renewable energy as it has been more economical traditionally. The threat of substitutes is as such quite significant because up to date, fossil fuel energy represents in different cases, better price-performance trade-offs in comparison to renewable energy.

4.1.3 Bargaining power of suppliers

The bargaining power of suppliers is higher when the concentration of the supplier`s industry is higher. The energetic segment is a major determinant of the concentration of suppliers. It is observed that to a large extent, most producers of renewable energy invest in equipment that are highly specialised and the after sale services that are related to those products and that is especially in the case of wind and geothermal power plants. That makes them face switching costs that are rather high in switching between suppliers. The products that suppliers offer to producers of renewable have rather specialised technologies and as such, there is no such obligation on suppliers to contend with other products for sale to the industries. It is only in the biomass sector where it is easy to change suppliers because of the varied nature of bio-supplies. The supply chains can be described as gaining energies from the energy suppliers, the social resources from the government and the transportation systems and then it offers the products to the consumers. Relationship with suppliers can be quite close and it depends on the professional products development and transportation of the suppliers. The differences of the products may not be quite large for the company. For the investors, it is easy to transfer to the other platforms or companies with the similar nature products offered with less costs. The suppliers would, therefore, be interested in the protection of their sustainability through the application of rational pricing and through offering assistance in other fields like research and development. That reduces their bargaining power. Also, the fortunes of suppliers are largely dependent on the fortunes of the renewable energy sector and as such, the sector presents a critical customer for them. The suppliers would therefore be interested in protection of their sustainability through application of pricing that is reasonable and through offering assistance in other fields like research and development.

4.1.4 Competitive rivalry

There is an intense rivalry in the UK energy sector as a result of the many multinational energy companies. Notable companies include BP Plc., EDF Plc., Centrica Plc., and Royal Dutch Shell Plc. With many others. All these are companies that have extensive strengths financially, have experienced talent, and employ the latest technologies (Hall & Buckley, 2016). New entrants often introduce lower pricing strategies which reduce costs and provide new value prepositions to customers. It would be necessary to manage all these challenges and further build effective barriers for purposes of safeguarding the competitive edge of tidal energy. The supply of energy in Britain is controlled by six big companies that are collectively referred to as the “big six” between which they supply electricity and gas to up to 50 million businesses and homes in the United Kingdom. The Big six include British Gas, Edfenergy, E.ON Energy, SCOTTISH Power, SSE Gas and nPower. These companies are also the longest-running private suppliers of energy in the UK. They were formed during the 1990s after the 1989 Electricity Act was passed. It is, however, worth noting that over the years, other smaller independent suppliers have been establishing with the aim of providing competition and even create markets that bring advantages to the consumers. It is observed that the biggest sources of renewable energy so far are onshore and offshore wind. Onshore and offshore wind beats the other sources of renewable energy by 13.8% of the total electricity generated in the UK. It also beats the combined amounts of energy generated from other sources of energy like oil and gas National Statistics, 2019). The targets by both the UK and EU to cut on the emission of carbon have facilitated an increased interest in renewable energy sources. The amount of electricity generated from renewable sources of energy has been on the rise since 2009 where the electricity generated was 25,244GWh. Fast forward to 2016, a total of 83,255GWh was generated which is a 230% growth. In 2017, 27.9% of the total electricity in the UK was generated by renewable sources of energy (Alternative Energy, 2018). Renewable energy also generated 4.6% of the total transport energy and 7.7% of the total heat energy. It is observed that the biggest sources of renewable energy so far are onshore and offshore wind. Onshore and offshore wind beats the other sources of renewable energy by 13.8% of the total electricity generated in the UK and also beats the combined amounts of energy generated from other sources of energy like oil and gas National Statistics, 2019).

It can then be concluded that there exists intense competitive rivalry in the UK`S energy industry. Being the largest suppliers of energy does not automatically qualify these companies as the providers of the best services or as the fairest. The ever-increasing number of smaller suppliers of energy means that, more than ever, there are even better choices for potential customers. These large established companies, however, provide some major competition for any new suppliers of energy who have the intention of penetrating the UK market. The targets by both the UK and EU to cut on the emission of carbon have facilitated an increased interest in renewable energy sources. The amount of electricity generated from renewable sources of energy has been on the rise since 2009, where the electricity generated was 25,244GWh. Fast forward to 2016, a total of 83,255GWh was generated, which is a 230% growth. In 2017, 27.9% of the total electricity in the UK was generated by renewable sources of energy (Alternative Energy, 2018). Renewable energy also generated 4.6% of the total transport energy and 7.7% of the total heat energy.

4.1.5 Bargaining power of buyers

In the same way that suppliers are able to squeeze an industry`s profitability, customers also have the capabilities of forcing down prices, demanding more services and higher qualities and playing competitors off against one another. The primary buyers in the energy market are individual consumers even though there exists some substantial demand for renewable energy from the transport and industrial sectors. The power of buyers is considerably weakened by the large number of buyers in the market coupled with their characteristically small size. Then, as a result of energy not being differentiated, it is always possible for buyers to get other suppliers on the basis of price discrimination. Besides that, energy has no effect on the quality of the services and products of buyers which increases the sensitivity of buyers to price. Generally, there are not enormous expenses that face buyers when they seek to change their energy supplier and that goes a long way in increasing their bargaining power. Also, there exists no considerable threats of backward integration because buyers are mostly of very small sizes in comparison to big producers of energy. From this it is quite clear that the bargaining power of buyers in the renewable energy market is high. Electricity is the final product in this case. With no doubt, the concern of buyers would be on benefits both long-term and short-term benefits and that implies that the products need to have benefits that are practical for themselves. While venturing into the project it is important to be cautious that while there are residents who will be supportive of the project, there are also others who will disrupt the project. To ensure cooperation with local communities, the company in charge of the construction of the tidal lagoon project would need to cooperate with the communities to facilitate that the community benefits both socially and economically. That means that the project should provide electricity that is cheaper for the locals. Local enterprises are also potential buyers of electricity who actually stand to benefit a lot from a tidal lagoon project. Enterprises which are characteristically large scale have the potential of better achieving the conservation of energy and reduction of emissions and as such, responding to the energy strategy. The government is also potential buyer of the power generated from the tidal lagoons in addition to meeting the demand for electricity from the residents. The government could also use the industry to make an emphasis of the advantages of energy that is sustainable in addition to popularising energy strategies even more.

Conclusion

To summarize, the five forces of Porter’s model has made it clear that the energy industry in the UK has a high degree of competition. We also noted that while there are incentives offered by the government of the UK which would make it easy for new entrants to venture into the UK market, they are outweighed by barriers like economies of scale. It can also be noted that the development of processes that produce energy from tidal lagoons will be met with huge problems challenges. Thus, it is quite important for any interested invested in tidal lagoons to find a way through which they will deal with these issues. There is a lot of potential for energy generation in tidal energy resources. It is estimated that the UK’s tidal energy resources could be more than 10 gigawatts (GW); representation of up to 50% of the tidal energy that can be produced in the European countries. The tidal energy technically harvestable across the globe is estimated to be around 1 Terawatt (TW) (Neil et al., 2018).

Chapter Five

5.0 PESTEL Analysis

In this research, the following steps were followed in the analysis of the tidal lagoon business environment and the opportunities and threats it presents;

Use of PESTEL analysis to brainstorm the changes happening around the UK environment

Brainstorming of the different opportunities that arise from the different changes

Brainstorming issues and threats that could be brought about by changes in the UK environment

Dealing with the opportunities and threats brought about by changes in the environment

5.1 Political factors

A close analysis of the current situation with the government in the UK shows that support for the energy industry is becoming much more emphasized. The government’s energy policy stipulates that the companies that exceed the number of renewable energy volumes get higher levels of tax reduction for their further development. Meanwhile, the targets that the companies may be confronted with can lead the UK to among the highest energy consumption countries all over the world. There is a political fit with the STL as the government has the rights and resources to support industrial development.

In brainstorming the political factors, the researcher put into consideration the following elements;

Is there any likelihood that certain political factors would change?

Could an investment in a tidal lagoon project be affected by any pending legislation or taxation change?

Does the government support an initiative of this kind?

What approach does the government follow for environmental issues, corporate social responsibility and corporate policy?

The level of development of the rule of law in the UK and the spread of organised crime and corruption across the United Kingdom.

The other significant players in the political area are the civic organisations. For instance, the anti-corruption activists and organised networks for open governments have been pushing even more reforms in the energy sector. This is encouraging for any potential investor because the existence of corruption reduces the credibility of businesses. Whenever a business's resources are tampered with, the efficiency of the business to turn the resources into profits would definitely be reduced. Corruption effects on investment would be such that the business now had fewer resources which would not be adequately sufficient for the effective running of the business and for the business to maintain its operation levels. Being a constitutional monarchy, the UK operates under parliamentary institutions. The political imperative towards the introduction of incentives, both regulatory and fiscal, are likely to create opportunities for different investors. For instance, to achieve the goals of reduction of greenhouse gas emissions by 2050 by 80%, there should be political will for the government to increase its renewable energy investment portfolio. That would ensure that renewable energy demand is met by 15% by 2020 (Kolios & Read, 2013). Additionally, the government has also been harbouring the ambitions of reducing electricity generation costs through innovation. A tidal lagoon project provides an opportunity for meeting these goals. Also, such a project also has the capabilities of stimulating local development of economies and protecting the energy future of the UK in an affordable manner while also making a positive contribution to the protection of the environment. Apart from its own initiatives, the UK government is also under political pressure from many quarters. For instance, even though the Welsh government yields no powers of setting transaction prices, it has been lobbying the government to speed up the making of decisions. Generation of tidal power is viewed by the Welsh government as a project that would go a long way in boosting local economies in addition to revitalising traditional industries like construction and the manufacturing of steel. It can also be speculated that the development of a tidal lagoon project would provide opportunities for increasing the revenue accrued from tourism and hotels, and through successful redevelopment, boost the cash flow of businesses. The government of the United Kingdom has also put in place different measures that are seen to support the renewable energy field. Suppliers of electricity are required to purchase specified amounts of the electricity they supply from renewable sources of energy. Additionally, there is a climate change levy which grants exempts for entities that use a certain degree of renewable technologies. Additionally, there are also capital grants available for research and further development of a wider range of renewable energy projects. It can be argued that all the above initiatives go a long way in the stimulation of investments in renewable energy. Investors, however, always need assurance that such subsidies and incentives would be available over a larger part of the life cycle of a product and not just trap-in-incentives. That would put those companies involved in the generation of renewable energy in a better position to build strategies that are more viable and stable. This is likely to see them more willing to take advantage of the available incentives. Another political element that threatens British energy supply is the withdrawal of the country from the European Union. After taking over as Prime Minister of Britain in July 2019, Boris Johnson made a promise to facilitate the withdrawal of Britain from the European Union. For a long time, the goal of the energy legislation of Europe has been to complement national legislation; to make investments and trade in the energy sector easier across the borders between the countries that are members of the EU easier. It also promotes sources of energy that are low in carbon in addition to the generation of solidarity between the countries in the EU in the event that one of them is confronted by energy supply threats. The logic behind the emphasis by the EU on activities across borders is that the solution to issues related to energy would be easier if the country exists within a bigger network. It also covers areas that have more varied supply sources, different patterns of demand and climatic conditions. An interconnected and integrated EU-wide national energy systems network has the potential for the different member countries to save on investment in the capacities of generation and to further cut on costs related to generation and improve and strengthen the security of supply of energy. It is likely that such a strategy would be helpful for member states in dealing with the challenges of management of energy systems that are low in carbon and increasingly rely on renewable energy intermittent supplies. Decentralised generation of energy, enhanced storage capabilities, and even more flexible energy use goes a long way in helping different member states to cope with intermittency challenges.

It is worth noting that in any Brexit scenario, increasing interconnectivity with continental Europe would require cooperation between the internal energy markets with the EU. Even though Brexit is a threat, it is not likely to change the climate change goals of the UK in any way. The Climate Change Act 2008 established the climate change goals of the UK. Nevertheless, there will be important issues which will need to be settled. For instance, it would be necessary to entangle the commitment of the UK on the reduction of emissions at an international level from the targets of the EU which are set out in the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC). It would become necessary for the UK to submit the New Nationally Determined Contribution afresh with regards to its intended climatic actions under the processes of the UNFCCC. It would be important to gain an understanding of whether after Brexit, the UK will still be able to take part in the Emissions Trading Scheme of the EU. Different countries in Europe like Iceland, Lichtenstein, and Norway take part in the EU cap and trade scheme even though they are not members of the European Union. In the event which the UK never participated in the EU ETS, it would be necessary to have linking and transitional arrangements. Such arrangements would be important, particularly for those companies that hold allowance surpluses. A recommendation has been given by the House of Commons Business Energy and Industrial Strategy Committee that even after Brexit, the UK remains in the EU ETS at least until phase III ends in 2020. The UK would be released from its targets of renewable energy after Brexit unless it remains part of the EEA. The deployment of capital projects capital intensive, which are innovative would be affected by the availability of funding from different EU institutions. It is, however, a fact that national and international decarbonisation obligations would still bind the UK and there are anticipations that the development of low carbon and renewable energy would continue to form parts of the policies of the climate change policies of the Government. The withdrawal Bill of the Government would transpose the derived legislation of the EU into law of the UK after withdrawing from the EU. In those instances where the law of the EU provides for the mutual recognition by the member states of the EU of those rights that are derived under the laws of the EU, it would be necessary for the UK to secure agreements from the EU for maintenance of the status quo. For instance, in relation to renewable energy guarantees of origin (REGOS), an agreement would be necessary. The REGOs are used as proof of the fuel mix of the suppliers of energy. After the withdrawal of the UK from the EU, the UK would not be recognised by REGO.

5.2 Economic factors

In brainstorming the economic factors, the following factors were put into consideration;

Stability of the current economy: Is the economy declining, stagnating or growing?

Are the disposable incomes of the consumers of energy falling or rising? In the future, what is the likelihood that this would change?

What are the rates of unemployment? Would it be easy to build a workforce that is properly skilled?

The Renewables Obligation (RO) Scheme has been established in the UK for support of emerging renewable industries.

The RO scheme was introduced some years ago but became closed to any new developments from 2017. It is therefore not relevant to tidal lagoons. It was replaced by the CFD system.

5.2.1 UK Economy

With regards to the UK economy, there was an annual increase in the GDP from 2018 into the first quarter of 2019 (the United Kingdom, 2019). This has ensured that the demand for renewable energy is stable. It is further expected that the demand for renewable energy would continue to increase over the years as there are numerous incentives that have been put in place by the UK government. These incentives are aimed at ensuring that the goals of the UK renewable energy sector are met. These incentives would ensure that there would be enough renewable energy in future to supply the equivalent of up to 26 million homes across the UK with their electricity demands. They are up to 4 million homes with their heating needs. Sustenance of technological and infrastructural development over a period of time would eventually bring about economies of scale in terms of reduced energy costs. That would definitely improve renewable energy`s competitive strength.

5.2.2 Price of energy

The Centre for Economic and Business Research (2014) carried out a study that established that tidal lagoon projects have the potential of playing two important economic roles. First, the tidal lagoon would boost the construction and manufacturing industries of the UK in the event their extensive use is made from domestic supply chains. The fact that it is possible to source most of the components from the UK is desirable because an investment in tidal lagoons would have one of the best returns in relation to the Gross Domestic Product impact per pound that is invested in comparison to other investments in energy. Additionally, in the development and delivery of a tidal lagoon project, the UK supply chain would hold a distinct advantage across the global energy market. According to the estimations of the same study, around the globe, there are up to 80 GW of lagoon sites that have a proper development commercial potential worth an estimated £38 billion based on current energy prices. The price of energy can be quite high for consumers. This can result from the processes involved in ensuring that projects are sustainable. An example of such processes is the Contract for Difference (CfD) mechanism for renewable energy prices which can be explained as the general transaction mode of differential contract. It is based on the understanding that customers pay a certain amount of margin to banks or brokers according to the agreement, so as to ensure that the transaction has the ability to withstand risks, and trade and settle accounts according to the agreed transaction price and settlement price. When dealing, brokers or banks freeze a certain percentage of margin deposits in the customer's margin account according to the volume of transactions, generally 1-5%, while the remaining part is financed or traded in securities by brokers or banks with credit support. Interest gains and losses will occur in the duration of the contract (the period when the transaction contract is held). If interest gains and losses occur, the first consideration is to deduct (or add to the unfrozen margin) from the frozen margin. When the frozen margin is not enough to pay interest, it will never be deducted from the frozen margin. In addition, some brokers' agency contracts also stipulate that once all the frozen margin losses are caused by interest gains and losses, the brokers' chamber will re-freeze a certain percentage of the margin, of course, less than the original one.

5.2.3 Supply Chain

The supply chain of UK tidal lagoons has the potential of being a dominant player in the tidal lagoon services and components in the same way as Germany and Denmark, the first countries to develop commercial wind industries which developed into wind turbine global leaders. That would go a long way in closing the balance of trade deficit in addition to boosting exports. It is estimated that the tidal lagoon industry has the capabilities of providing up to 8% of the electricity needs of the UK in addition to reducing imports of fossil fuels by up to half a billion pounds by 2027 (The Economic Case for a Tidal Lagoon Industry in the UK, 2014). Additionally, the UK would be put in a better position by new interconnector capacities to export additional electricity during durations of oversupply. It is also estimated that over 4,300 GWh would be produced annually by the tidal lagoon project, which would go a long way in improving the balance of trade.

5.2.4 Employment rates

The unemployment rate in the UK came in at 3.8% in the three months to April 2019; a relatively low rate of unemployment. What this implies is that most of the people have a job. Any company that seeks to invest in the construction of a tidal lagoon for the generation of electricity would have to consider sourcing a good number of employees from foreign countries to fill different skilled engineering roles. The increased demand for different forms of renewable energy has generated a need for people with the right skills. The renewable energy sector in the UK is a world-class industry, and that requires a skill base that is properly established for purposes of supporting its expansion. There is likely to be an increasing focus on the sustainability credentials of renewable energy as it continues to become an increasingly large part of the energy equation. For companies involved in renewable energy, the implication of this is that they would have to undertake thorough social and environmental assessments that would see sustainability embedded into their overall corporate strategies and supply chain so that the reputation of their industry can be sustained. It could be conferred that increased social and sustainability responsibilities would bring about an increment in the costs of renewable energy. The electric utility week did a survey in 2010, which established that high costs of various energy forms were the single biggest energy problem facing consumers.

5.3 Social factors

This part explored;

The population of the United Kingdom

The social attitudes that could impact investment in tidal lagoons

Renewable energy is widely considered as a solution to the world’s wider environmental concerns. Renewable energy`s success as an alternative source of environmentally friendly energy is from time to time questioned based on its sustainability and scope as such, there has been more pressure on companies that produce renewable energy to deliver effective sustainability agendas. The difficulties associated with obtaining planning permission is one social factor that mitigates the development of renewable energy projects. That has been borne out of the fear of change, and the absence of appreciation of the benefits communities could reap from renewable energy (Mirzania et al., 2019).

5.3.1 Community benefits

The UK has a large population which has been observed to grow over the years; a favourable scenario for the future and current prospects of the tidal energy supply. A region’s population and its composition, distribution, and growth trends is a socio-economic factor that plays a vital role in the designing of effective corporate strategies over a relatively long period of time. Recruitment policies are promoted by an understanding of the population dynamics in which corporate organisations operate in and that provides an enhanced understanding of the demand for the products and proper market segmentation. With favourable population growth, companies will be able to expand their market share, and that will have a positive impact on the bottom line of any organisation. It is, however, worth noting that a growing population could also present a challenge for the industry that aims to reduce carbon emissions to continue providing proper services.

5.3.2 Redevelopment of deprived areas

The Industrial Revolution that took place in Britain is generally inseparable from the development of the British coal mining industry. The cheap and abundant natural resources obtained from the world as a source of raw materials were also one of the important reasons for the early European countries and the later Western countries such as the United States and Canada to move towards the world economy developed countries. Enough resources in the energy sector can be closely related to different departments. The vast territory and abundant natural resources endowment are also important factors for China's economy to maintain long-term and high-speed growth since the reform and opening up. The positive impact mechanism of abundant natural resources on economic development is called "resource gospel". Because the price of primary products fluctuates greatly in the international market and the market price tends to decline, it is difficult for resource-intensive sectors to become a promising sector in a country. The development of resource-intensive sectors will also have crowding-out effects, which will make it difficult for technology-intensive modern industrial sectors to develop in the country. This is through the phenomenon of what has come to be called the "resource curse." The development of the resource-intensive sector means that the labour force will also be concentrated in this sector. For individual workers, employment in this sector will generate higher income, which leads to the lack of motivation for individual workers to take the initiative to further education and hinders the further improvement of the quality of workers. Meanwhile, the endowment of the resources can help to make the corporate managers be less relative in investment decision making. Therefore, the managers may also find the "unexpected wealth" of the resources. This makes it hard for the relative parties to make further efforts in this way. The power of periodic growth plunges into the predicament of "resource curse".

5.3.3 Tourism

A tidal lagoon would also become a major site for tourist attraction with thousands of visitors annually in addition to being a foundation venue for different local, national and international sports. Such sports include walking, running, cycling around the lagoon wall in addition to swimming in open water, sea angling, rowing, canoeing, sailing and rowing around the lagoon. This type of project would provide experiences that are positive for both visitors and also the locals. Its design would be in such a way that access to the seawall is free, and people can stroll to enjoy the spectacular views.

5.4 Environmental factors

The environmental factors are important considerations as they play a crucial role in shaping the industrial development. The Wildlife Trust of South & West Wales has raised a number of concerns on the feasibility of a tidal lagoon project. The Wildlife Trust of South & West Wales argues that tidal lagoons could bring about loss of intertidal habitats, specifically, having adverse impacts on hydroid rockpools, sabellaria reefs, intertidal sand flats, and mudflats. The Wildlife Trust of South & West Wales also posits that tidal lagoons are likely to have adverse effects on migratory fish as a result of the fish getting injured when they pass through the turbines. NRW estimates that up to 25% of sea trout and 21% of salmon would be killed every year as they go about migrating around the local rivers; Afan, Neath and Tawe. Additionally, it is predicted that there would also be impacts, even though smaller on the migration of other fish species like the lamprey, shad, and eel. The Intergovernmental Panel on Climate Change listed carbon emissions for different electricity sources but never listed tidal generation. The panel made an estimate that equivalent sources like hydroelectric dams whose construction emits carbon have carbon emissions that are up to 20 times lower in comparison to gas and up to 34 times lower when compared to coal.

Some of the environmental risks associated with tidal lagoons include;

Deposition of sediments or coastal erosion,

Increased risks of flooding,

Extensive biodiversity and habitat loss,

Injury and displacement of marine animals,

Harm on fish populations,

Displacement and damage of bird populations,

Impact on underwater marine heritage and

Changes to the quality of local water, including potential harm on the water table.

For so long, the government of the United Kingdom has been committed to the achievement of the set climate change goals, marine energy equipment, with proper management have the potential of producing energy through reduction of damages brought about by acid rain, greenhouse emissions, and air pollution (Mueller & Wallace, 2008). A tidal lagoon would also have a negative effect on the sub tidal ecology and other related species. There are concerns related to the loss of sub tidal gravels and sands. There have been concerns in different environmental organisations on the potential damages the construction of a tidal lagoon would bear for the environment and wildlife because dams have a great potential of damaging the populations of wildlife. The construction of a tidal lagoon is expected to have some temporary impact in shellfish and fish as a result of the increased sediments and noise in the course of construction. Additionally, there is also the possibility that coastal birds could be impacted during the construction of projects that would have an impact on their foraging and habitats. The project’s impact on turtles and marine mammals is still not clear, and that is because the movements of those animals in construction areas are rare. Potential impacts would, however, include, the risk of collision, vibration interference, noise, visual obstruction, toxic pollution, and changes in the quality of water. Further, as a result of the increment in sediments and noise, the construction of a tidal lagoon would have a temporary negative impact on shellfish and ordinary fish. Even though emphasis may be on the undesirable effects of tidal lagoons, some desirable effects have been noted. For instance, tidal lagoons also have the potential of creating the perfect spaces for biodiversity and conservation schemes. A study done by Tidal Lagoon Power established that a tidal lagoon could restore the native population of oysters in Swansea (Jenkins, 2013). Also, the creation of a seawall would provide opportunities for the creation of new habitats that could possibly be colonised by large varieties of marine species. The biggest environmental benefit of a tidal lagoon project is that it would positively contribute to the generation of clean energy. In comparison to biomass energy and fossil fuels, tidal lagoons provide lower-carbon energy and nuclear energy; tidal lagoons are not threatened by radioactive leakages.

5.5 Technological factors

In contemporary times, technology has been changing at a rapid pace which requires the parties to react to the changes and social needs in a manner that is equally fast. Also, it makes it quite crucial for the industry to react to such changes. This section explored whether there were new technologies on the horizon that had the capability of radically affecting the operations of tidal lagoons. The main challenges in the development of technologies that have the capabilities of harnessing ocean energy include; the extremely high upfront costs, the high maintenance costs required, the concerns that are related to the impacts of tidal lagoons on marine environments and the availability of more affordable energy sources. From this analysis, it is quite clear that renewable energy is a sector of the energy industry which is observed to grow continuously with numerous potentials for development into a key energy sector. It is worth noting that the technologies behind tidal energy are still in their teething stage, and there are still possible risks in their development. It is worth noting that in contrast to the power generation mode of lagoons which use tidal turbines, wind turbines have a maximum of three blades that are usually mounted either on concrete or steel. During the evaluation of tidal turbines, the lessons and experience of the reliability of wind turbines should at all times always be taken to account. The main reasoning behind this being that tidal energy`s power density is higher in comparison to that of wind. What the higher power density implies is that equal swept areas have the potential of generating higher levels of energy and would also bring about significant increments in load with the periodic loads brought about by waves. Additionally, as a result of the high costs attached to the development of devices used in the generation of tidal energy, it becomes a necessity to pay close attention to their life cycle from the carbon footprint and payback periods perspective. As such, it is always possible to make a reference to the collected historical data for improvement of technologies.

5.6 Legislation

The government of the UK hugely supports the renewable energy sector as a result of the continued efforts to solve the issue of global warming. The Government of the United Kingdom takes a noticeable role in the mitigation of the effects of climate change through the reduction of the emission of carbon gas. By 2020, the government of the UK aims to reduce carbon emissions through the expansion of the sources of renewable energy (Masden et al., 2015). There are several government initiatives and legislation that have been put in place to ensure the reduced carbon emissions: The Climate Change Act of 2008 which is a commitment to cut on the greenhouse gas emissions of the UK by up to 80% below the levels that were witnessed in the 1990s by 2050; the 2008 Energy Act and the Renewable Obligation (Committee on Climate Change, 2019). Suppliers of electricity are required by the renewable obligation to supply a specified amount of electricity from renewable sources. Such incentives are with no doubt vital for long term strategic plans and have succeeded in creating a favourable atmosphere that is favourable together with opportunities for investment in the sector. A tidal lagoon would be considered as a Nationally Significant Infrastructure Project (NSIP) in line with the 2008 Planning Act. The system used for consenting NSIPs is quite different from that used by local authorities and are managed by the Planning Inspectorate of the UK and require to be consented by the Secretary of State that is relevant. The Welsh government further requires that if any such project is to be carried out in its waters, a Marine License is obtained for purposes of construction and dredging in line with the Marine & Coastal Access Act 2009. TLP has planning consent lasting nine and expected to expire in 2020. It has a marine Licence as it wants to take full advantage of the marine resources. The United Nations Convention on the Law of the Sea is a comprehensive law and order regime which applies to all seas and oceans that contain rules that govern their use. The convention provides different rights to sovereign states and gives them control over the waters that are up to 200 nautical miles off their coasts. There are some directives that may apply to tidal energy at the European level, and these include the 2001 Renewable Energy Directive. It applies to all those countries that agree to participate and renewable targets are legally binding. In the event, any participating countries do not achieve any of the goals; they risk paying fines imposed in the EU currency.

Chapter Six

6.0 SWOT Analysis

6.1 Strengths

Renewable energy is an option that is both viable and feasible for the reduction of carbon emissions. Global warming is one of the largest challenges facing the world, and it is brought about by the emission of carbon gas from conventional fossil fuels. Tidal lagoons are friendlier to the environment on the premise of electricity generation when compared with other traditional fossil fuels. This is in line with the strategy for the protection of the environment and saving of energy of the United Kingdom (UK Emissions, 2019). The resources of this area can be relatively rich, which can be an important part of corporate development. This can be part of the industrial development in the country. Tidal energy is a renewable source of energy. This source of energy is a result of the sun and moons gravitational fields which are combined with the rotation of the earth around its axis, bringing about, low and high tides. The difference in potential energy is usually the source of generation of power from tidal energy. Tidal power is also friendly to the environment. In addition to delivering renewable energy, it does not take up a lot of space, and neither does it emit any climate gases. There are, however, rather few examples from actual tidal power plants and the effects they have on the environment, and it would thus be important to do an assessment of such factors. Tidal currents are also highly predictable, and that is because the development of high and low tides happens in cycles that are well known. That makes it relatively easy to construct systems with appropriate dimensions since the kind of power the equipment would be exposed to is already known. Also, the density of water is up to 1000 times higher than the density of air. This makes it possible to generate electricity at rather low speeds. Finally, there are currently no reasons to doubt the longevity of tidal power plants. Their long life spans would definitely cut on the costs that the power plants incur in production of their electricity which would go a long way in increasing the cost-effectiveness of tidal energy. It is also worth noting that rather, simple engineering components are required for the construction of the project. Among some of the structures that require to be put up are permanent underwater turbines and gate facilities which would be followed by the installation of gates and further construction of seawall bidirectional turbines.

6.2 Weaknesses

Substantial amounts of capital are required in the development of large scale renewable energy plants. It also has been established that in the short run, when compared to conventional sources of energy, renewable energy is more expensive. What that implies from a business perspective is that in the short run, the profitability of an investment in renewable energy would be affected. There is low product differentiation in the energy sector which makes consumers go for the cheapest sources of energy. And while there has been some considerable theoretical evaluation of the tidal lagoon project through the PESTEL and PORTER`S Five force analysis, there are other hidden problems which would only become apparent at later stages only after the completion of the project. The production of renewable energy imposes a large number of costs for the parties and companies in this industry.

6.3 Opportunities

The political structure of the UK is quite stable and is characterised by high infrastructural and technological development. As such, the economy has the capabilities of developing expertise that is extensive in a wide range of renewable technologies which include installation, manufacture, and research. The UK has numerous universities with world-class manpower and facilities which could be channelled towards the development of first-class technologies of renewable energy that would go a long way in the promotion of the efficiency of the industry generally. It is expected that many jobs would be created in the course of the construction of a tidal lagoon project. That would go a long way in solving many unemployment issues.

6.4 Threats

The biggest threats facing tidal lagoons is the potential of other renewable sources of energy to produce energy at better prices and more conveniently. To gain a better understanding of the threats posed by other renewable energy sources, it would be worth doing a comparison of how Tidal energy would compare to wind and solar power.

Comparison to the wind and solar power

To provide an idea of the differences between wind and solar power, Figure 2 shows the typical power generation pattern of a solar panel in the UK on a cloudless day. In January, the generated peak power is approximately 60% of April and July`s peak power. Power generation during winter takes place on a daily basis for 8 hours, and during summer, the generation of power happens in up to 16 hours daily. The similarities in the power generation curves between April to July could be explained by the high levels of efficiency of solar panels under low temperatures in April. This is regardless of the fact that in July, irradiance is higher. Figure 3 below shows the generation of power in the UK for three different days in April 2017. What is indicated by these graphs is that it is quite difficult to forecast generation of wind in comparison to generation of solar power and that is mainly as a result of the high variability of the speed of wind in consecutive days. From the above illustration, it can be identified that the volumes of these two kinds of resources vary in quite different approaches. This makes it necessary for the energy companies to take on further gains in this approach.

Information on wind energy generated monthly across the United Kingdom between January 2013, and April 2017 is adapted from the Renewable Energy Foundation. What can be seen is that the generation of energy from renewable sources usually depends highly on natural elements availability. In addition to the availability of the natural resource, this energy generation is also dependent on the used technology and the location of the project. Lower demand is also a possible reason for the curtailing of wind generation. According to the developers of tidal lagoons, different tidal lagoon projects in different areas of the UK would provide a constant base load as a result of the different times the tides come about in the different locations. Lyer et al. (2013), did an analysis which proved that given the proximity of the tidal lagoon projects and the insufficiency of spatial diversity, it is not easy to achieve base load generation. This conclusion is further reinforced by the analysis carried out by Houde (2012), which concludes that the provision of base load by tidal lagoons is not realistic. In addition to geographical diversity, the most profitable characteristic of tidal lagoons is their high predictability. Because it is possible to make an accurate prediction of the levels of a generation of tides well in advance, it is possible to integrate this source of energy in the forecast accurately; and as such, rather than being used as a base load, it could be integrated more in the form of spinning reserve. The UK`s transmission system operator maintains several power stations that are mainly powered by gas that never rarely run in their full capacities and as such, providing up to 1GW of spinning reserve. Such capacity has the potential of responding to generation shortfalls automatically in only a few seconds. Currently, in the UK, base generation is provided by nuclear energy while the generation of gas is variable and appears to compensate for wind generations variability. The utilisation of gas generation for the provision of energy is relatively expensive and contributes to a lot of pollution, and that is mainly because the intermittent operation of gas turbines is a process that is not very efficient. It also produces a lot of carbon dioxide. Because tidal lagoons are going to be connected to the systems of transmission and it is relatively easy to predict their output power, it can be argued that they could be used for the provision of the spinning reserve. Only means of accurate integration studies can verify this possibility and could provide justification for improvement of the patterns of generation of tidal plants and further contribute to reduced fluctuations in generation of power. Tidal power plants also have the potential of lasting longer in comparison to solar and wind farms. The longevity of tidal power plants is estimated to be up to four times that of solar and wind plants. All these are advantages that will favour the operation of a tidal lagoon over time. To successfully invest in the construction of a tidal lagoon, however, any company that wishes to do so should first research extensively on the effects their construction will have on both marine life and the life of other wild animals. This will help them to come up with clearly set out measures for mitigation of the negative effects to prevent disruption of marine life and the lives of other animals. The company would also need to ensure that it has adequate capital as a result of the high costs required for the construction of a tidal lagoon. About $560 Million was used up in the construction of the Sihwa Lake Power station. The high initial costs of construction should not discourage investors because the long-term costs of generation of tidal power are better in comparison to other renewable energy systems. In the coming decade, the role played by tidal lagoons is expected to grow in prominence. An objective has been set out by the government of the UK to phase out the different coal plants as a result of the increased concerns about the environment, targets of emission, CO2, and the ever-increasing costs of running coal power station in comparison to other different technologies. Several coal plants have already been closed in the past few years, and it is expected that the trend will actually continue. At the end of 2016, the installed power generation of coal plants stood at 18 GW, and it is estimated that this will reduce to 0 GW by 2025. A projection is further made that there will be a growth in renewable generation to 56 GW from 31 GW.

Chapter Seven

7.0 Conclusion

A review of the tidal lagoon technologies was done in this study which further discussed the integration of this renewable source within the energy mix of the UK. The paper provided a summary of the existing tidal projects in addition to describing the principles of operation of tidal lagoons. At the end of the paper, a discussion is offered of the potential for the integration of tidal lagoons into the energy mix of the UK. Over time, the energy deficit of the UK is expected to grow, and that is especially with the current plans to halt the UK`s coal plants. Tidal energy could possibly be utilised to fill the gap. The capital costs of tidal lagoons are, however, still a major problem as high capital costs are required. To make such a project viable financially, substantial incentives from the government would be necessary. Such infrastructures environmental impacts are also of major concern. Implementation of measures for mitigation of the variability would make tidal lagoons more valuable and would also bring about higher initial capital costs. To gain a better understanding of the interactions of tidal lagoons with the local systems of power, more studies are required. With the good marine environment of the UK, it is evident that there are opportunities for the generation of tidal lagoon technologies; especially with the predicted energy deficiency in the UK`s by 2025.

Chapter Eight

8.0 Recommendations

8.1 Define the medium and long term development goals of marine energy

With reference to the experience of British marine energy development, a clear and stable national medium and long-term development goal can effectively stabilize the development expectation of marine energy industry, pool core R & D team, and guide the direction of technological innovation. China should speed up the formulation of medium and long-term development plans at the national level, and make clear the medium and long-term development goals and roadmap of national marine energy. First of all, further clarify the detailed distribution of marine energy resources. According to the investigation and evaluation of offshore marine energy resources carried out in China, tidal energy, temperature difference energy and wave energy have better development and utilization value. However, in the aspects of offshore marine energy array optimization and micro site selection, detailed investigation of offshore marine energy resources around the island and far-reaching sea, the existing data cannot meet the development goal of national marine energy Needs. Secondly, according to the characteristics of marine energy resources in China, identify the target market of marine energy development, and clarify the key technological innovation direction and main tasks of each stage. Finally, study and formulate one-stop approval and other policies for marine energy projects, and coordinate land use preferential policies such as island development and construction of marine energy demonstration base.

8.2 Formulate stage marine energy incentive policies

According to the different stages of basic research, key technology research and development, sea trial, demonstration and commercialization of marine energy, we will study and formulate the incentive policy system of marine energy, gradually carry out the research on incentive policies such as risk investment, discount loan, tax preference, electricity price subsidy and fixed electricity price of marine energy projects, reduce the wind direction for enterprises to invest in marine energy research and development and demonstration, cultivate and accelerate the development of marine energy industry in China. In view of the fact that China's marine energy technology is still in the critical period of technological breakthrough, we should adhere to the principle of financial investment in the near future, continue to implement and give full play to the leading role of the national marine energy special fund in promoting technological innovation, improving public service capacity, strengthening demonstration application, etc., and guide social diversified investment in the medium and long term. In order to accelerate the scale of marine energy development and utilization in China, and to implement the national 13th five year plan for the deployment of "actively developing coastal tidal energy resources", it is necessary to speed up the research and formulation of the differentiated on grid tariff system for marine energy (especially tidal energy), and to build a 10000 kilowatt tidal power station as soon as possible.

8.3 Improve the capacity of marine energy infrastructure

The construction and operation of marine energy offshore test site can effectively share R & D experience, reduce the risk of sea trial, and promote the rapid improvement of marine energy technology maturity. The layout of marine energy test field in China is earlier and the promotion is relatively slow, mainly due to the problems of conflict and coordination in the site selection and landing of the test field. In order to support China's offshore energy engineering design, equipment manufacturing, offshore construction, operation and maintenance as soon as possible, it is necessary to start the construction of offshore energy test site and demonstration platform as soon as possible according to the overall planning of offshore energy test site, so as to provide support for the continuous improvement of China's offshore energy technology.

(1) The government has upgraded the marine renewable energy industry to a strategic level, formulated a more detailed development plan, and given vigorous support in terms of policies, regulations and funds; Since the implementation of low-carbon transformation, the UK's energy supply has shown a low-carbon, diversified trend, and the proportion of renewable energy has been rising, with the most obvious increase in bio-energy and wind energy. Bioenergy, as a renewable energy which has been neglected for a long time, has great application prospects in the field of transportation. As a new energy market, offshore wind energy has developed rapidly in Europe in recent years, and is also the future direction of British energy development. As the birthplace of the Industrial Revolution, Britain not only leads mankind in the industrialization of coal and steam engines, but also leads the world in energy development.

(2) Established a fully open market mechanism and a reasonable industrial structure to support the development of the marine renewable energy industry; Although great achievements have been made, Britain still faces challenges such as energy shortage, sustained growth of fossil energy dependence, high energy prices and increasing economic burden of the people. There are four factors that complement each other at different stages of British energy transformation: the large-scale development and utilization of alternative energy sources such as North Sea oil and gas, the transformation of industrial structure from industry to service industry, the unswerving "de-nationalization" process of Thatcher's doctrine, the continuous improvement of consciousness of British social energy transformation and planning guidance. Among them, air pollution is an important catalyst, but it is not enough to stimulate energy transformation.

(3) Focused on international development. To cooperate and establish a full mechanism of public participation. The key is to find cleaner and cheaper alternative energy sources, especially natural gas. In the fields of railways, gas manufacturing and household heating, Britain has been phasing out coal in 20-30 years, but it has taken more than 60 years to phase out coal in the whole economy. Compared with small-scale combustion of coal in households and factories, the centralized use of coal in power plants is usually cleaner, and it is more economical and feasible to install specialized equipment for capturing emissions such as dust, sulfur and mercury. For countries with coal as the main energy source, it is more realistic to adopt a phased approach to energy transformation. In the first stage, small-scale coal consumption will be concentrated in coal-fired power plants, followed by the gradual use of clean energy alternatives in the power industry.

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