Prudential is committing funds to a £1bn (€1.27bn) UK infrastructure development scheme.

The investor said it is financing the tidal lagoon project at Swansea Bay. The scheme will generate electricity through seapower.

The deal is part of a £25bn (€30bn) commitment made late last year by six UK insurance companies to invest in UK infrastructure over the next four years.

Prudential’s long-term insurance funds will provide the funding through its European asset management arm, M&G Investments. 

The power station project is due for completion in 2018 and will form part of a network of coastal lagoons which the firm said could generate up to 8% of UK electricity. Construction is due to start next year.

The project will generate over 495GWh of electricity every year for 120 years. Prudential said the project will also help the UK meet its carbon reduction targets by saving an annual 236,000 tonnes.

Tidjane Thiam, group chief executive of Prudential, said the investment would provide ”strong and sustainable returns, create good jobs and increase productivity and economic competitiveness”.

”Prudential is committed to invest in infrastructure projects that benefit the national economy,” he said.

Prudential, which currently manages around £25.8bn of direct infrastructure investments in the UK, was named by the government in December last year as one of six insurance companies to make a commitment to infrastructure. The firm was joined by Aviva, Friends Life, Legal & General, Scottish Widows and Standard Life. The firms’ allocations were made possible due to clarity over the implementation of Solvency II regulations.

A £375bn pipeline of potential projects was outlined in the UK government’s revised National Infrastructure Plan.