By Jonathan Davies

The proposed tidal lagoon in Swansea moved a step closer yesterday (Wednesday) after the Chancellor George Osborne confirmed that the government will enter negotiations.

The £1 billion project would see the world's first man-made, energy generating lagoon. It is believed it could power 120,000 homes for 120 years.

The Chancellor announced in the Budget that the government would enter negotiations over subsidies.

It is understood that the talks will focus on the amount of subsidies will receive in return for the guaranteed price of energy generated.

After the confirmation from George Osborne, Energy Secretary Ed Davey said: "Tidal lagoons could provide 8% of our electricity needs, replacing foreign fossil fuels with clean, reliable home-grown electricity and creating fantastic economic opportunities."

The project is still subject to a planning decision and the cost of producing energy in Swansea Bay are thought to be very high, but the company behind the plans hope to build five more lagoons in Cardiff, Newport, and Colwyn Bay in Wales, Bridgwater in Somerset, and West Cumbria, which would allow it to generate energy much more cheaply.