Environmental groups have welcomed the UK government's caution over the possibility of a Severn barrage.
A review of tidal energy in the Severn estuary is proposed
The energy review, revealed on Tuesday, recommended further study of the £14bn project, but said it would raise "strong environmental concerns".
Friends of the Earth Cymru said that amounted to a rejection of assembly government support for the barrier.
But Welsh Enterprise Minister Andrew Davies said he was delighted there would be a study of Severn tidal power.
HOW TIDE POWER WORKS
As tide comes in, sea water passes through barrage to landward side
At high tide, sluice gates shut, trapping water in estuary or basin
When tide recedes on sea-side of barrage, sluice gates open
Water flows through barrage, driving turbines and generating power
Power can be generated in both directions, but this can affect efficiency and economics of project
The 10-mile (16km) barrier would run from Lavernock Point, near Cardiff, to Brean Down, near Weston-super-Mare.
It is estimated it could provide about 5% of the UK's energy needs by 2020.
Gordon James of Friends of the Earth Cymru said it was "particularly pleased that the environmentally destructive and costly Severn barrage proposal has not won favour".
He added: "We were always surprised that the Welsh Assembly Government supported such a scheme when more cost-effective and environmentally acceptable options, such as tidal lagoons, look more promising."
The RSPB also welcomed the UK government's recognition of the River Severn's environmental value.
The charity said the estuary was "prized" for its importance to wild birds, particularly in winter and during migration, and was of "international importance".
The energy review stated that while the barrier was "attractive in terms of energy generation," it would "raise strong environmental concerns".
The report went on to recommend further study of "tidal technologies" and their "public acceptability" to use in the estuary.
But Welsh Secretary Peter Hain said no other renewable energy project came close to the proposed tidal barrier.
"A barrage across the Severn estuary could generate massive amounts of clean, green energy - up to 5% of the UK's energy needs," he said.
"The review starkly illustrates the huge challenge we face if we want to achieve energy security over the coming years - and the need for us to make tough choices."
Mr Davies said he was pleased the UK government wanted further research.
"The assembly government fully intends to play a full part in taking this work forward to its next stages. We recognise there is more work to be done," he added.