A Gloucester-based company has secured the grid connection for a 3,240MW capacity tidal lagoon expected to generate among the cheapest electricity of all new power stations built in the UK.

The project by Tidal Lagoon Power is located between Cardiff and Newport and has been selected as the first to employ at full-scale the blueprint being established by the pathfinder Swansea Bay Tidal Lagoon.

The Swansea project, a world-first, is awaiting final sign off by the UK Government in the coming weeks.

Tidal Lagoon Power's chief executive, Mark Shorrock, said: "Our offer to the UK Government is to contract Swansea Bay Tidal Lagoon for a lower subsidy per megawatt hour than Hinkley Point C.

"While we await the Government's response to this offer and to the independent Hendry Review of tidal lagoons, we have continued our development work on the subsequent programme.

"Today we have secured the grid connection for a tidal power station equal in installed capacity to Hinkley Point C. Looking at the pounds per megawatt hour unit cost of new build power stations, nuclear is currently priced in the nineties, the latest offshore wind projects are expected to drop into the seventies and our models show Cardiff Tidal Lagoon beating them all in the sixties.

"What's more, by leveraging the commanding position taken by UK industry preparing for Swansea Bay Tidal Lagoon, the supply chain contracts awarded for Cardiff Tidal Lagoon will be worth more than £6 billion to UK companies".

In January this year, the Hendry Review, an independent report to Government by former Conservative energy minister Charles Hendry, concluded that Cardiff Tidal Lagoon could generate power that is "less expensive than offshore wind and significantly less expensive than nuclear."

Investec Bank's Jeremy Ellis said: "In our experience and given their sustainable long-term return characteristics, there is likely to be investor demand for both project and development equity of tidal lagoons once there is clarity regarding government support for the pathfinder then a portfolio of full scale tidal lagoons. This grid offer enhances Cardiff's reputation as a standout full scale tidal lagoon project."

Phil Sheppard, National Grid's director of UK System Operator, said: "Tidal power presents a reliable and predictable source of renewable generation that has the potential for highly flexible operation in the future. We have worked alongside tidal lagoon developers to gain an understanding of the operational characteristics of the proposed lagoons. This infrastructure project will have a significant impact as we move towards an increasingly low carbon electricity network."