The marine energy industry could be on the brink of making it big – but cash is needed to speed the pace of development. By Lee Hibbert
A decade ago, the wind industry was making some bold promises. There was talk of thousands of turbines to be erected in the near term, and much of that equipment was to be made on home shores, providing high-value jobs in areas that had been hit hard by the demise of traditional industries. The reality has proved to be somewhat different: there is far less generating capacity than was predicted, and the vast majority of the turbines that have been built were manufactured abroad.
Now the fledgling marine energy industry finds itself in a similar position, with some rather outlandish predictions of future electricity provision being bandied about. And, as tidal and wave developers start to test commercial-scale devices, there is once again excited talk of tens of thousands of jobs being created around the country. It is all starting to sound strangely familiar.
On the face of it, it’s not hard to see why there is so much excitement surrounding the marine energy sector. The UK is blessed with enormous tidal and wave energy potential, particularly in areas such as the Pentland Firth between the northern coast of Scotland and Orkney, the waters around Anglesey in north Wales and the South West of England, most notably the Severn estuary. Theoretically, these hotspots of marine resources promise vast amounts of energy to come.
Stephen Wyatt, marine technology acceleration manager at the Carbon Trust, predicts that as much as 50TWh/year for wave power and 18TWh/year for tidal could ultimately be achievable. “There’s no doubt that these figures are challenging, and there are engineering, market finance and environmental obstacles to overcome,” he says. “But, by working closely with industry, I believe them to be achievable.”
Wyatt believes that the UK has a good heritage of marine engineering, born not only out of the oil and gas sector but also from shipbuilding. There is also a vibrant academic sector and top-quality research and development facilities such as the European Marine Energy Centre in Orkney. “This could all come together to produce more than 30,000 jobs in parts of the country where new employment is really needed,” he says.
But what needs to be done to help the marine industry to meet this potential? Perhaps the biggest obstacle to growth is access to funding. It takes somewhere in the region of £50 million to £60 million to take a marine energy device from concept to commercialisation, and the timescales are between five and seven years. Unless a developer is fortunate enough to attract a deep-pocketed benefactor such as a major utility company at the start of the process, the most likely source of funding is venture capital. But the large amount of funding required and the long-term nature of the return on investment means that such borrowing comes at a high price, if at all.
Marine energy companies therefore face a continuing challenge to ensure adequate cash flow, which hampers the engineering and development process, and often causes key members of staff to become frustrated and eventually take their talents elsewhere.
In fairness, the Carbon Trust recognises this problem and has acted decisively to help firms through mechanisms such as its accelerator programme and the Marine Renewable Proving Fund, which is aimed at helping companies to speed up the deployment of full-scale prototypes. But the big wave and tidal energy developers think that more public funding is needed.
“If we really do have the potential for the best marine industry in the world, then government has to invest heavily in it, as it did in the early days of the oil and gas sector,” says Mike Smith, chief operating officer at Atlantis Resources, which is pioneering the development of large-scale tidal current generation turbine farms. “If the predictions for growth and jobs are to come true, then there has to be public money available. There are a lot of good words, but what we now need is action.”
Indeed, as tidal power approaches the commercial stage, companies such as Atlantis Resources are working hard to prove the reliability and operational capability of their devices at a commercial scale (+1MW) in harsh ocean environments for a period of continuous use that is meaningful to the debt and insurance providers. But Smith says that, once firms reach this crucial stage, the public money that is on offer starts to fall away.
“We won a small amount of money from the Carbon Trust’s Marine Renewable Proving Fund, and we are extremely grateful for that, but we’ve found that, the closer you get to commercialisation, the less funding is available,” he says. “Government support should be placed with companies such as ours because we are driving the success of the industry.”
Another important factor in the development of the sector is ensuring that there is adequate “demand-pull” for the electricity that wave and tidal devices might eventually produce. At present, the main method of achieving this is through the Renewables Obligation, which places a requirement on energy suppliers to source an increasing proportion of their electricity from renewable sources. This sees Renewables Obligation Certificates (ROCs) issued to accredited generators for eligible renewable electricity generated. But the number of ROCs issued for each megawatt hour for wave and tidal is not consistent across England, Scotland and Wales.
Smith says this variance isn’t helpful. What he wants to see delivered is a greater level of certainty that enables developers to put their financial models together. So, if Scotland decides to allocate five ROCs for each MWh of wave and tidal electricity generated, then it’s vital that England and Wales has parity with that. “If we want to see the creation of 100MW schemes, then there has to be a visible long-term demand put in place,” he says.
Other issues also come into play. Much of the wave and tidal resource is located off the coast of remote parts of the country where electricity networks are constrained. This is certainly true in areas such as northern and western Scotland, which have low population densities. Ensuring that the energy produced by marine devices can be transported as effectively as possible to where baseload requirements are high requires enormous investment in transmission infrastructure.
And there are already fears that not enough effort is being made in this area.
“The grid is absolutely fundamental to the development of the industry,” says Martin McAdam, chief executive of Aquamarine Power, which recently installed its Oyster wave energy device for testing in waters off the coast of Orkney. “At the moment, it is planned in a very broken way; it’s done on an individual project basis with little thought to wider implications. But what we are talking about here is the potential emergence of a new industry – so it’s crucial that all the stakeholders come together to work out how we are going to facilitate that.”
McAdam wants to see the requisite planning decisions made and enough money spent on upgrading transmission links. He admits that it will require enormous investment but argues that the national grid is a major piece of strategic infrastructure.
“We have to be able to efficiently transmit the electricity we produce,” he says. “This will require government intervention because these steps need to happen. We need to move away from basing everything on the lowest immediate cost and start thinking on a long-term basis. It’s about matching up priorities – if we want this industry to thrive then we need the infrastructure.”
Should all these factors come together, then perhaps it’s not too fanciful to imagine jobs being created as wave and tidal energy devices are manufactured in significant numbers. The marine industry actually has an advantage over the wind sector in this regard: the devices tend to be smaller, and potentially could be built in existing, non-specialised facilities. The ability to easily transport the equipment on existing roads means these manufacturing facilities could be located close to where the devices would be installed, providing much-needed employment in rural areas such as Caithness in the Scottish Highlands.
| Strangford Lough turbine working ‘brilliantly’ |
SeaGen, the prototype tidal energy turbine deployed by Marine Current Turbines (MCT) in Northern Ireland’s Strangford Lough, has exceeded 1,000 hours of operation. The 1.2MW tidal current turbine, the largest megawatt-scale grid-connected marine renewable energy system in the world, has achieved a capacity factor of 66% and so far delivered 800MWh to the national grid.
MCT says that the achieved capacity factor means that the tidal turbine delivers energy on average at the same rate as that expected from a wind turbine of twice the rated power. And the output is totally predictable, it says.
Since starting in late 2008, SeaGen’s operation has been limited by its licence conditions to daylight hours, and it is only since last autumn that it has operated automatically. It was this change that has allowed a considerable increase in operational hours. The company is now preparing SeaGen for more intensive operation and it is hoped to gain consent for continuous 24/7 operation before the summer.
MCT managing director Martin Wright says: “SeaGen is operating as it was designed to do. The fundamental concept has been shown to work brilliantly. We have incontrovertible figures proving it works reliably with high levels of availability.
Crucially, the operational experience and data that we are gaining every day is hugely valuable as we work towards deploying the UK’s first tidal farm within the next two years.”
MCT won £2.7 million from the Marine Renewable Proving Fund to support the development of SeaGen. Wright says: “The funding will be used to assess our engineering processes, construction and installation techniques, and assist us in reviewing a range of other important issues.”
A process of gradual improvement is now being planned, including an upgrade of the turbine’s control system to compensate for fluctuating sea temperatures, along with additional refinements to its frequency inverter.
MCT aims to deploy its first tidal farm in UK waters off the coast of Anglesey during 2012, partnering with RWE Npower Renewables. It will have a capacity of 10MW. |
So it’s evident that there is much to play for, especially as the first major tranche of investments is likely to be made sooner rather than later. But it was at this point in the development of the wind industry that well-meaning plans started to falter in the UK and employment opportunities were lost to countries such as Denmark and Germany.
McAdam remains upbeat, however, and believes that, this time around, the same mistakes won’t be made. “I am optimistic – I believe in what we are doing and believe it is very important for the future of our country,” he says. “We’ve just had the worst recession in years, yet our company has grown from seven to 47 people in that time, and we’ve recruited top-quality people.
“There is a real commitment to create a marine energy industry in the UK. The environment is right for this – we need to keep working with government and all the development agencies to start delivering.”
© PE Publishing, 24 February 2010
