There is widespread understanding that the UK's wave and tidal energy is a strategic priority for our emerging green economy. We enjoy substantial natural resources, strength in depth in our technical capability, and an eye on the prize in terms of the scope of a future UK and global market in wave and tidal stream technology.
The potential benefits of wave and tidal energy development to the UK are well understood – the marine energy industry has been forecast to be worth £6.1bn to the UK economy by 2035, creating nearly 20,000 jobs. With a burgeoning export market, the rewards could be greater still. The potential for predictable and consistent marine energy to moderate requirements for balancing plant can have a substantial impact on the cost of increasing the uptake of other variable renewables generation.
The wave and tidal energy industries are making rapid progress in delivering this goal as they move from single device demonstration to installing multi-device arrays in UK waters. Industry know-how, backed by a long term commitment from Government means that we now have world-leading technologies being built and demonstrated in the UK, by UK and international companies, utilising a UK supply chain delivering sustainable employment.
The last year has seen an immense amount of activity. We have seen 12 full scale prototypes deployed or operating in the last year around the UK – more than the rest of the world combined. Seabed leases have been awarded for over 1.8GW of power production, including the first Northern Ireland leasing round.
Major engineering firms such as Siemens, Andritz, Voith, Alstom and ABB are working hand in glove with major utilities such as SSE, E.ON, RWE Innogy, Vattenfall, EDF and ScottishPower Renewables to take our industry forwards, while the UK is cementing its academic, testing and industrial pre-eminence.
The UK and Scottish Governments have provided a consistent strong signal of commitment. Programmes such as the Marine Energy Array Demonstrator and Marine Renewables Commercialisation Fund, backed up by support from the Renewables Obligation have been introduced, and the plans for the first small arrays are being progressed.
This progress has led to the wave and tidal sectors gaining significant momentum, and confidence in its ability to deploy technology and reduce cost over time. However, a critical junction looms. Between now and 2017 industry must deliver a first round of demonstration projects, and begin work on a first generation of multidevice arrays.
However, between 2014 and 2017 industry will move from the Renewables Obligation (RO) into the new Contract for Difference (CfD) regime, which underpins Electricity Market Reform (EMR). At the same time, delays in building out new infrastructure, and concerns over costs of transmission charging are adding risk, and frustrating the ability of developers to press ahead.
Perhaps the most significant unknown for the UK's burgeoning wave and tidal sector is the EMR process. Investment in wave and tidal energy projects is now focusing beyond 2017 and the end of the Renewables Obligation regime.
Correctly set up, EMR can be a springboard for successful delivery of wave and tidal across the second part of this decade into the next, when a second generation of commercial arrays will be in operation, delivering the job benefits and cost reductions sought. However, should the EMR regime not inspire confidence in the future of the UK wave and tidal sector, progress made to date will be threatened.
The transition from the RO to the CfD falls in the middle of the delivery period for the first arrays. As such, this policy shift holds the potential to halt or catalyse the development of the industry. Our primary requests relate to an adequate level of support that reflects the costs associated with developing wave and tidal projects, a contract length that matches the life span of a project and a clear route to market.
The industry has developed its own set of detailed cost reduction plans, and the leading developers are pursuing an aggressive cost reduction programme to ensure that cost can fall to a level that will encourage investment and catalyse development. The best plans combine both high-level aspirations for cost reduction with detailed proposals for specific engineering work to reduce costs.
The primary focus of the leading manufacturers is to prepare for array-scale deployment by improving deployment and recovery methods, reliability and O&M practices. These are becoming key differentiators between device manufacturers.
Many of the leading manufacturers are now designing or deploying more production-ready, full-scale devices. The accessibility requirements of these devices have now changed as there is less need to access devices regularly for testing purposes and more need to make the deployment, O&M and retrieval operations as efficient and safe as possible. As a result, diverse O&M strategies are emerging.
Manufacturers of different devices use a variety of deployment and recovery techniques. Devices are typically separated into permanent and detachable sections. Some concepts just have foundations on the seabed with the full device detachable; others use a substantial fixed structure with just a detachable power take-off module.
A considerable amount of investment has been allocated to technologies that reduce the challenges in this area, such as research into wet-mate connectors funded by the Energy Technologies Institute. Substantial work is also being undertaken by the sector to improve reliability of devices and understanding of their through-life operation. This is being achieved partly through implementing learning from real-life operations at test centres such as EMEC, and component testing under controlled conditions such as at NaREC.
Historically, vessels used for wave and tidal applications have been adapted from other sectors. In the case of the tidal sector, the vessels have not been designed for high tidal flow and as such are often utilised at the limit of their capabilities.
The sector is now seeing significant investment from third-party installation providers who are designing generic solutions, rather than device manufacturers and project developers who have previously created project specific solutions. Public funding has been allocated towards the development of solutions such as improved dynamic positioning systems, and these activities will increase the operating windows of vessels, hence lowering costs and reducing risk.
Getting real about risk
As the industry matures, there is a real need to engage maturely with the risk facing the industry. In RenewableUK's latest report, Conquering Challenge, Generating Growth, we have analysed the primary risks facing the industry and suggested mitigations for them. We've found that risks impact across four areas:
- Technology development;
- Grid; and
Financing the first arrays remains a challenge for the industry. As capital-intensive technologies, when wave and tidal energy converters scale up from prototypes to small arrays, their financing needs will scale up too. Total public funding, as delivered by various acronymic funding pots – MEAD, MESAT and NER300 amongst others – remains small compared with, say, the £1bn Commercialisation Programme for carbon capture and storage.
Yet a strong revenue incentive in the form of 5 ROCs/MWh has helped compensate for constrained public sector capital support. The result has been to attract the interest – and equity – of Original Equipment Manufacturers (OEMs) and utilities. The latter have invested in both wave and tidal energy converters, in recognition that the potential exists for both.
The technology development of wave and tidal devices will be shaped by both engineering and cost pressures. Perhaps the most significant risk in technology development is (non-)survivability: any significant failures could be make or break for leading device developers, through detrimental impacts on investor confidence. This is a challenge that applies to all ocean energy projects, although the loads resulting from harsh environments are perhaps more obvious for wave devices than their tidal counterparts.
Grid access and transmission charges remain high risk for the industry and are stymieing the development of the UK industry. The proposed sites for wave and tidal arrays to 2017 are notable for their location on the fringes of the existing electricity system, and distance from major centres of electricity demand.
There is therefore a substantial risk that grid costs will be particularly high, both for the upfront costs of connection and reinforcement and for on-going costs for use of the distribution and transmission systems. This is especially the case on the Western Isles, Orkney and Shetland
The consenting regime remains a challenge, with onerous baseline surveying and post deployment monitoring requirements. To date, wave and tidal projects have largely been concentrated in specific test centres, most notably EMEC in Orkney and Wave Hub in the South West, which has minimised consenting challenges. This will change with the transition to small arrays, although devolution will lead to differentiated impacts across the UK.
A key risk is a general lack of preparedness amongst statutory consultees – such as Scottish Natural Heritage, the Joint Nature Conservation Committee and Natural England – in addition to the Marine Management Organisation and Marine Scotland. Wave and tidal energy devices are an evolving and diverse set of technologies, with the implication that their assessment will require substantial specialist expertise.
By understanding the risks impacting wave and tidal projects, the industry can work with other stakeholders to develop viable strategies for overcoming them. Only by engaging with the challenges together can they be conquered. In short, it is time to get real about risk.
Our analysis has identified the primary risks facing the industry and suggested possible mitigations for them. This will help to educate the range of stakeholders on the activities they should engage in to move the industry forward. The greater understanding of our current position and the potential risks is a sign of the growing maturity of the industry as we grapple with how best to progress.
The growing sense of realism in our deployment and cost projections and greater engagement with the issues ensures that we are firmly on the pathway to commercialisation. With this shared vision, the industry can achieve the potential it promises and deliver meaningful amounts of electricity and the full range of economic and environmental benefits.
About the author: David Krohn is Wave and Tidal Development Manager at RenewableUK