An accurate assessment of the hydro-environmental impacts of tidal range energy schemes, where the performance of the scheme has an impact on the marine environment and ecology, is crucial in optimising the design and development of such schemes. A proposal for a new coastally-attached impoundment, namely West Somerset Lagoon, has been investigated in this research and the numerical model TELEMAC-2D has been refined to model the impacts of this scheme on the Bristol Channel and Severn Estuary. Domain decomposition was applied and full momentum conservation between the subdomains was included in the model by implementing momentum source terms at the turbine locations. The results have confirmed the importance of including full momentum conservation in modelling the effects of turbo-machinery in tidal lagoons. It was found that the operation of the scheme decreased the high water level slightly in the Bristol Channel and Severn Estuary, while there was a decrease in the low intertidal areas. The maximum velocity and bed shear stress were predicted to increase in the inner Bristol Channel, while they decreased noticeably across most of the interior of the lagoon, away from the turbine wakes. Furthermore, the operation of the lagoon significantly improved the water renewal in the region.