A study by RenewableUK says the biggest shake-up of the energy sector for decades, Electricity Market Reform (EMR), could act as a springboard for the growth of wave and tidal energy. Alternatively, it could undermine investor confidence in marine power at a crucial stage of the industry’s development. The report, “Conquering Challenges, Generating Growth”, also highlights challenges such as delays in getting grid connections for wave and tidal projects, and the high cost of transmission charges.
Commercialisation of the tidal sector is just around the corner, with the deployment of the first arrays (multiple devices) beginning in 2014, and an expected increase to 100-200MW of wave and tidal installed by 2020, a point highlighted in an article by RenewableUK’s Wave and Tidal Manager, David Krohn, in the upcoming March/April 2013 issue of Renewable Energy Focus (subscribe here to get your copy). However, this growth could be stifled if the Government fails to get the details of EMR right, the most crucial factor being the level of financial support technologies will receive.
The initial strike price for the first generation of tidal arrays should be set at £280-300/MWh, RenewableUK says. For wave technology, the initial strike price should be £300-320/MWh. “This will catalyse the marine energy industry, leading to economies of scale and learning through experience, which will lower the strike price for the second generation of arrays in 2018.” Meantime, under EMR, contracts would only last for 15 years – the report says this should be extended to 20 years to give investors an adequate return - otherwise the strike price would have to be higher.
“The wave and tidal energy industry has reached an exciting period as it moves from single device demonstrator projects to the first small proving arrays,” says Krohn. “However, there are significant hurdles that need to be overcome to ensure the sustained growth of the industry. It’s time to get real about the potential risks so that we can work with Government and others to find the solutions as early as possible.”
Wave technology in particular will need tailored capital support in the coming years, he says. "One new step we would like to see is a fresh approach from the Green Investment Bank, which so far has failed to identify wave and tidal energy as a priority sector.”
Based on independent research, RenewableUK estimates that wave and tidal energy could be worth £6.1bn to the UK by 2035, creating nearly 20,000 jobs – up from today’s 1000 employed in these sectors.