The “world first” tidal lagoon project, featuring a U-shaped sea wall with turbines, would have been able generate clean energy from the tides capable of powering about 155,000 homes.
But Business Secretary Greg Clark has poured cold water on the scheme, telling the House of Commons the project “however novel and appealing” did not demonstrate value for money.
Mr Clark said that by 2050 the lagoon would cost up to £20bn more to produce the same amount of electricity as offshore wind and nuclear sources.
The company behind the plans, Tidal Lagoon Power, wanted subsidies similar to those for Hinckley Point C in Somerset in order to build the scheme.
“The inescapable conclusion of an extensive analysis is that, however novel and appealing the proposal, even with these factors taken into account the cost that would be incurred by consumers and taxpayers would be so much higher than alternative sources of low-carbon power that it would be irresponsible to enter into a contract with the provider,” Mr Clark said.
The move was immediately criticised by Welsh politicians who described the news as “devastating” and “desperately depressing” for the region.
Plaid Cymru tabled a vote of no confidence in the Secretary of State for Wales Alun Cairns at the National Assembly for Wales following the announcement.
Friends of the Earth Cymru warned “bold action” was needed to tackle climate change, which meant investing in innovative new technologies such as tidal lagoons.
Greenpeace UK campaigner Emma Gibson said: “A government that styles itself as an international leader in tackling climate change has just rejected the opportunity to become the international leader in developing tidal lagoons that produce clean energy day and night, and whose prices would have fallen after this first demonstration project.”
Instead it was preparing to “throw billions of taxpayers’ hard-earned cash” at nuclear power which relied on handouts, saw spiralling prices and delayed delivery, she said.
The refusal to back the lagoon was welcomed by anglers who had feared the large infrastructure project would cause serious harm to marine and migrating fish populations, and other aquatic wildlife.