Instead, a controversial Severn Barrage from Weston-super-Mare to Cardiff heads the shortlist, on which the Government will now consult during the next three months.
Also included on the preferred list was a Bridgwater Bay Lagoon scheme next to Hinkley Point nuclear power station.
Lagoons are radical new proposals which would impound a section of the estuary without damming it.
The scheme has been proposed off the shoreline between a location east of Hinkley Point and Weston-super-Mare.
It would cost an estimated £3.8 billion to construct and could generate 1.36 gigawatts of electricity per year, or nearly one per cent of the UK's total demand, while saving 1.1MT of CO² emissions.
The Government said it would be the best-perfoming of the Bristol Channel lagoon proposals in terms of cost of energy.
The shortlist was announced today by Energy Secretary Ed Miliband following a 12-month Government consultation on a longlist of 10 options for producing electricity from the tidal range of the Severn.
The longlist included a 12-mile tidal reef idea put forward by Cornish engineers Joseph Evans and Sons Ltd which would run from Minehead to Aberthaw.
Evans and Co owner Rupert Evans said the tidal reef would cost less than a barrage, have less environmental and economic impact, and generate more power more reliably.
It was an alternative favoured by campaign group Stop the Barrage NOW, which has expressed fears a barrage would devastate the estuary’s environment and wildlife.
However, the Government said tidal reef technology was not yet ready, although it could be revisited before any final decision was taken.
The Cardiff-Weston Barrage option would dam the estuary from Brean Down, near Weston-super-Mare to Lavernock Point, near Cardiff.
It would cost an estimated £20.9 billion but would have a capacity of more than 8.6 gigawatts, meeting nearly five per cent of the UK’s electricity demand.
The three other shortlisted schemes were:
Shoots Barrage at a narrower point further upstream, spanning the estuary near English Stones, which would produce 1.05 gigawatts – about equal to a large fossil fuel plant.
Beachley Barrage - the smallest barrage on the shortlist - just above the Wye River, generating 625 megawatts.
Fleming Lagoon, an impoundment off the Welsh shoreline between Newport and the Severn road crossings which could also generate 1.36 gigawatts.
Mr Miliband said: “The five schemes shortlisted today are what we believe can be feasible, but this does not mean we have lost sight of others.”
He said public consultation would continue on all 10 long and shortlisted schemes until April 23.
Mr Miliband said: “Fighting climate change is the biggest long-term challenge we face and we must look to use the UK’s own natural resources to generate clean, green electricity.
“The Severn estuary has massive potential to help achieve our climate change and renewable energy targets.
“We want to see how that potential compares against the other options for meeting our goals.
“The largest proposal to harness the power of the tides on the shortlist could save as much carbon dioxide as all the residential emissions from Wales.”
- Our images show (TOP) a map of the 10 longlist schemes and (BELOW) the sluice and turbine caissons of a lagoon. Images submitted.