The decision follows a consultation study on Severn Tidal Power.

This found that there was no strategic case for major public sector investment in a large-scale energy project in the Severn estuary "at this time", even though the project could have generated 5% of the UK's electricity needs.  According to the report, "it would be very costly to deliver and very challenging to attract the necessary investment from the private sector alone".

The Severn Tidal Power feasibility study showed that a tidal power scheme in the Estuary could cost in excess of £30bn, making it high cost and high risk in comparison to other ways of generating electricity. The report did recommend that a Severn tidal project should not be ruled out as a longer term option if market conditions change, but noted significant uncertainty over complying with regulation and that a scheme would fundamentally change the natural environment of the estuary.

Commenting on the Severn study, Chris Huhne said:

"The study clearly shows that there is no strategic case at this time for public funding of a scheme to generate energy in the Severn estuary. Other low carbon options represent a better deal for taxpayers and consumers."