(Bloomberg) -U.K. plans to generate power by building a $1.65 billion tidal lagoon off the South Wales coast are in doubt after a government-backed body said the project could kill thousands of migratory fish.

Natural Resources Wales may withhold the marine license that Tidal Lagoon needs to build a 320-megawatt renewable energy project in Swansea Bay, a spokesman for the organization said Tuesday by phone.

The findings threaten to derail the planned project, one of six lagoons envisioned on the U.K.’s coast that together could generate as much as 8 percent of the country’s electricity. The Swansea project would harness the power of the world’s second-largest tidal range, using a rock wall 11.5 kilometers long (7.1 miles), enclosing an area in Swansea Bay where 16 turbines will generate power from the ebb and flow of ocean tides.

The lagoon could kill 21 percent of migrating salmon and 25 percent of sea trout every year, potentially having a “major adverse impact” on marine life, according to a letter sent by NRW to stakeholders and seen by Bloomberg News.

“We have categorically demonstrated minimal impacts on fish,” Tidal Lagoon said in an e-mailed statement. “Our planning permission was awarded on this basis and our data has only improved since then.”

Tidal Lagoon said NRW’s findings are “unrealistic and grossly misleading” in a letter sent to Welsh lawmakers. The figures ignore turbine-avoidance behavior shown by fish, the letter said. “This would significantly reduce the predicted likely impacts on fish to below our worst case of less than 2 percent population morality.”

While the project already has planning permission from the U.K. government, a marine license from NRW is also needed before any marine work can start, John Wheadon, NRW’s permitting service manager, said in an e-mailed statement.

“One issue that this considers is the potential effect on fish and we have received a vast amount of evidence on this subject from the applicant and our own experts,” he said, adding that a final decision has yet to be made.

Tidal Lagoon is still in talks with the U.K. government for a long-term contract that would guarantee prices for electricity. Officials are currently studying the findings of a review submitted last week by former Energy Minister Charles Hendry examining the economic viability of the project. The current Energy Minister Jesse Norman said a decision is likely to be made next year.

“The most recent proposals put forward by the developer would be a very significant deviation from current government policy,” Norman told lawmakers last week in London. The plan is “not impossible, but it requires careful consideration,” he said.