Oyster 800 wave energy device
The Oyster 800 wave energy device in operation at the European marine Energy Centre
Credit: Aquamarine Power

In Europe to-date, there has been much talk about harnessing the potential of the region’s wave and tidal energy resources and a number of innovative pilot projects are underway, but any sort of commercialisation appears a long way off. Tildy Bayar examines the true potential of these energy resources in the region.

Wave and tidal energy currently provide just 0.02 per cent of Europe’s energy. But the European Commission predicts an installed capacity of 0.9 GW in 2020 and 1.7 GW in 2030, and says the potential for ocean energy in the EU-27 is 10 GW (or 0.8 per cent of Europe’s electricity consumption) by 2020 and 16 GW (1.1 per cent of electricity consumption) by 2030.

Estimates from the European Ocean Energy Association (EU-OEA) are significantly higher: the trade body sees 3.6 GW in installed capacity by 2020 and up to 188 GW by 2050. By any estimate, Europe looks set to maintain its world lead in the sector, with over 10 MW installed and more than 20 MW of new projects consented, and over €600 million ($813 million) invested in the last seven years.

But any prediction about European marine energy’s true potential must include both measurable factors and unknowns. While the region’s huge wave and tidal resources could theoretically produce between 150 TWh and 240 TWh annually, it is the industry’s ability not only to develop the technology that can reliably extract energy from these resources but also to commercialise it that will determine the sector’s ultimate place in Europe’s future energy mix.

Slow and steady or race ahead?

A number of promising tidal and wave projects are in the process of testing and proving their technologies, while a few are moving ahead of the pack toward the first commercial arrays. Siemens’ Marine Current Turbines (MCT), in partnership with RWE npower renewables, plans to install a 10 MW tidal stream array off the Welsh coast in 2015, while tidal developer Meygen has received consent to develop a 9 MW demonstration array in Scotland’s Pentland Firth by 2020.

Insiders emphasise that while proving the technology as quickly as possible is crucial for industry growth, a “slow and steady” approach to technology development is also necessary in order to avoid major setbacks. Over the past few years, issues around this conundrum have led to a scaling-back of the sector’s collective ambitions.

1 MW tidal turbine
1 MW tidal turbine being towed out for installation at EMEC site
Credit: Alstom

Alstom’s vice-president of Ocean Energy, Rob Stevenson, says: “If you go back and look at the volume predictions, there should be hundreds of megawatts in potential and at least tens of megawatts already deployed. The industry is aware of this problem and we have to put it right.”

Martin McAdam, chief executive of wave energy company Aquamarine Power, agrees. “As an industry we’ve overpromised and underdelivered,” he says. “The last couple of years have seen people be more realistic. Until we put a full-scale machine in the ocean and test it throughout the full range of environmental conditions, it’s very difficult to say what can be done and how quickly.

“We need the enthusiasm of entrepreneurs to say we can do this; we also need the reality associated with the marine environment so that people will definitely appreciate technology development and reliability issues and the time it takes to address those. “

“Overpromising is a risk,’ he warns. “A lack of progress can fatigue people from an investor perspective.”

James Ingram, technical director of Low Carbon at energy consultancy Xodus, also warns about realistic expectations. “What we should be saying is that we’re recognising the risks and highlighting what we’re doing to mitigate them. It can be productive to recognise and be open about this, rather than trying to progress on the assumption that certain technologies or methods are relatively low risk when this may not have been fully proven. If we’re open about it, it helps focus people’s minds on key issues and attract the right kind of investment.”

Aki Luukkainen, chief executive of Finland’s Wello, whose Penguin wave energy converter is currently producing energy at the European Marine Energy Centre (EMEC) test site in Orkney, Scotland, is more positive.

“In 2006, expectations were high and quite a lot of money poured in, but the results were not there in the next few years for capital investors. But the energy business is a more long-term industry and we’re now starting to see the results of money burned in those days.'”

The time testing takes

Alstom’s 1 MW tidal stream device recently generated 100 MWh of power at EMEC. “This is good news” for the entire sector, says Stevenson. “The first thing the sector needs is technology that works. There hasn’t been enough of that.” Alstom’s ambitions include a next generation of 1.5 MW tidal turbines planned to be market-ready in 2016, he confirms, which will “build into a commercial product the lessons we’ve learned – and I emphasise that we’re at the early stages”.

Encountering and fixing problems with the technology is an integral part of the testing process, and many companies in the sector are at this stage. McAdam is open about the problems, believing that openness will drive the industry forward. About his company’s 800 kW Oyster machine, currently undergoing testing at EMEC, he says: “We had installed the machine back in 2011 and a lot of the equipment did not perform as expected – the cables and connectors all failed. The equipment was purchased from a company that supplied the offshore oil & gas industry, but it failed completely in our offshore environment.

“We are testing new equipment in a new environment,” he continues. “We can either regard failure as a real disaster or as a learning opportunity. If it fails twice then maybe we haven’t learned.”

Tidal Energy’s 1.2 MW DeltaStream device is planned for a year-long trial in early 2014, and will be Wales’ first commercial-scale tidal turbine. Martin Murphy, the company’s managing director, says: “Like all developers, we’re installing these devices in harsh marine environments. The high flow speeds associated with the tidal resource carry a lot of stress and loading on the overall structure, and it’s likely that despite our best efforts there will be faults with instrumentation which perhaps is not performing as we would wish. It’s likely to be the little things: sensors, electrical connectors, hydraulic hoses or connections, perhaps problems with water seals. Whilst we try to design out those problems, given the nature of the environment we’re putting devices in it’s likely that we’ll see teething problems – which hopefully we can fix fairly readily.”

Wello’s Luukkainen notes: “You have to break things to learn. In the first season that we tested our device there were a lot of challenges in installing it because it was well-designed, but not designed to be installed. There were a lot of installation compromises that caused problems.” Thus, the time testing takes is an issue for an industry in a hurry.

Policy in the UK

The UK, which possesses Europe’s largest marine energy resource, maintains a wide lead in the sector, with a programme aiming for commercial development by 2017. With its Marine Energy Parks (the WaveHub, EMEC and National Renewable Energy Centre testing sites) and financial support including subsidies under the Renewables Obligation (RO) as well as an investment of £20 million ($32 million) in MCT’s and Meygen’s projects, the UK government has sent a strong supportive message. But is the UK doing all it could, and will this support continue?

As the EU-OEA cautions, the right combination of low-carbon price signals, market incentives and policy frameworks is necessary for an industry to develop. To this end, the UK’s Department of Energy and Climate Change (DECC) has announced draft strike prices of £305/MWh for both wave and tidal power under its planned Electricity Market Reform (EMR) programme.

These figures are only slightly lower than industry proposals; however, according to Ross Fairley, an environmental lawyer at Burges Salmon, a crucial point for future industry development is that this level of support is only available for the first 30 MW of a project’s capacity; support for additional megawatts will be set at the offshore wind strike price level of £135-155/MWh.

“I know that the UK government puts a lot of effort into setting strike prices,” says Xodus’ Ingram. “They’ve got a huge balancing act to achieve the best value for money and to make the money go as far as possible since they’ve only got a finite pot. We’re certainly seeing with offshore wind great concern that the strike price will be sufficient for more challenging projects – the same has got to be the case for wave and tidal.”

The Renewable Energy Association (REA) calls EMR “perhaps the most significant unknown” for the future ocean energy industry – and it has had short-term effects as well. By 2017, the industry’s first demonstration projects must be delivered and work is to begin on the first generation of multi-device arrays; at the same time the current support mechanism, the RO, will transition to the Contracts for Difference scheme. According to the REA, this has led investors to focus beyond 2017, with a resulting drop in funding for the projects that must be completed by then.

Even in Scotland, where support for the sector has been strongest, there is uncertainty. A referendum on Scottish independence from the UK is scheduled for 2014, and an independent Scotland could have less money to spend. But according to Dr. Stephanie Merry, the REA’s head of marine, all the signals point to continuing support. Scotland “has given such a clear commitment to marine renewable energy,” she says.

France comes on strong

While marine energy sectors in most other European countries are merely a gleam in their governments’ eyes, France, which boasts Europe’s second-largest tidal resource (and the world’s first tidal barrage at La Rance, operational since 1966), could be poised to challenge the UK’s lead. In September, France launched a tender for four pilot projects totaling 80 MW off the coasts of Normandy and Brittany, with commercial production planned for 2020-25.

“France has the political will,” says Dr. Merry. “There are four developers and the government has given them each €30 million. In the UK, you’re lucky if you get a £10 million grant. That’s great, but how can you really become competitive with another company in France who’s getting more than twice as much? France has also given its developers guaranteed access to the grid, whereas here it’s too expensive to get grid access.”

Could strong French support encourage the UK’s marine energy companies to consider a move across the Channel? Alstom’s Stevenson says: “Our strategy at the minute is clear: we believe we need to play in both the UK market and the French market. We don’t see them being in competition, we see them as part of the European market.

“The limiting factor at the minute is that we need customers,’ he continues. ‘We need a customer that believes in marine energy and wants to take it forward, and those customers need a grid-connected site. France are behind the UK in developing pilot sites but could quickly catch up in volume because they’re better placed with grid connections.”

Dr. Merry also notes that grid connection has been a stumbling block for the UK sector and “threatens to be a show-stopper” for many projects. “The resource is generally in remote places and the grid isn’t strong enough to take that power back to the conurbations where you want it,” she explains.

To a significant extent, investor confidence will determine how fast the marine energy sector can grow. A survey undertaken by DECC in 2010 showed that, overall, investors see ocean energy as a unique opportunity; strong policy and early-stage government financial support for the sector were also mentioned as positive influencing factors.

But the investors also raised some serious concerns, including significant technology risk, a view of the industry as fragmented with too many devices, a huge demand for funding, high costs from startup to commercialisation and a perceived lengthy timescale, the technology being too early-stage for many investors, and simply that other renewable energy sectors offer better returns.

Dr. Merry says the UK government has given “inconsistent” messages to potential investors. Despite the support offered thus far, she believes conflicting policy statements on future support for renewable energy (such as the suggestion that the UK reject a European renewable energy target for 2030 and the government’s push for fracking) have led to a lack of investor confidence. “I believe all the device developers are finding it difficult to get investment.”

“At the moment [ocean energy] is a huge sucker-up of money – it’s not revenue-generating,” she continues. “Investors have got to be in there for the long term and accept not getting any return for several years. More long-term investors like pension funds don’t have the confidence to put the money there.”

And times are tough. “Have we had issues with getting funding? Yes,” says Aquamarine’s McAdam. “The last five years have been very difficult; the worldwide financial crisis has created a challenging environment for technology development. A lot of new ventures have suffered because there is a lack of investors available in the marketplace. There’s no question that it has slowed the growth of the marine industry.”

Risk is a larger factor for investors in a nascent industry, reminds Xodus’ Ingram. “We should not forget that cost is generally inversely proportional to risk. I’d like to hear more discussion on this topic at a generic level. While this is difficult in a competitive first-mover industry, it may help the attractiveness of the sector overall as a good long-term proposition.

“I don’t think I’m the only person who feels slightly less optimistic in the immediate term than a few years ago,” he adds, “and we need to turn this around with open discussions about the risks involved.”

Pengiun wave energy convertor
The Pengiun wave energy convertor is currently generating electricity
Credit: Wello

Confidence in the industry has been shaken recently with Scottish utility SSE’s announcement that it is undertaking a review of its marine portfolio and assessing its options for progressing the projects with which it is currently involved. Ingram labels the decision “a big wakeup call” for the industry, and he believes the move was about the cost and risk balance ultimately not fitting with SSE’s portfolio. Other large utilities also appear less than confident that the industry will achieve its potential. In July, E.ON pulled out of an EMEC test project with Pelamis Wave Power, citing delays in the development of wave energy technology and declaring that it will focus on other renewable energy technologies instead. For Dr. Merry this is exactly the wrong time for utilities to abandon the sector.

“The industry has now reached a point where we need large utilities to become potential customers,'”she says. “For companies like Siemens’ Marine Current Turbines and Pelamis, who are looking just to manufacture their devices and sell them to customers to develop projects, utilities are one of the main potential customers. So with SSE moving out, who are we going to sell these things to?”

The next few years are key

Insiders agree that the next three to five years, as the first commercial arrays are installed and the technology is proven on a large scale, will be key in determining the sector’s future. According to Alstom’s Stevenson, the most critical step for the sector in the next two to three years is to “get reliable generation in the water working. It doesn’t need to be hundreds of megawatts, but needs to be working”.

McAdam says that growing an industry “means we have multiple technologies available in the marketplace, a healthy supply chain in place, and customers who are looking for a lot of choice. With all those ingredients in place, in the next five years I hope we have the first smaller scale wave array projects in the water or being constructed, a number of different manufacturers supplying equipment and a number of customers who are happy.”

Tidal Energy’s Murphy concurs. “So far the industry in its nascent stage is testing single prototypes – and happily the success of companies like MCT, Tidal Generation, Alstom, Atlantis Resources and others are showing that we can generate electricity. The next step is, crucially, to start to connect devices in arrays so we’re getting meaningful levels of output which have commercial value. Come 2020 I do believe we’ll start to see a pretty rapid scaleup.”

The last, but not least, major conundrum facing the industry is the need to get the maximum energy returns while keeping technology expectations realistic. Some believe that the industry would do well to scale back to more manageable goals.

For example, French developers are looking at areas where “the tidal streams are vicious,” Dr. Merry says. “Deploying something straight in there, I would say, is a step too far. You need to put the machines into a more gentle, less aggressive tidal stream first to prove the technology and survivability. In fact, if they [deploy in stronger tides], which they probably will, there is potential to lose blades off turbines and maybe whole turbines. This loses investor confidence and gives the industry a bad name. What we don’t want are big high-profile failures.”

An uncertain future

So what is ocean energy’s true potential in Europe? According to Dr. Merry, the EU-OEA’s estimate that marine energy could supply 15 per cent of Europe’s power by 2050 is “probably the maximum you could expect”. Tidal energy is a limited resource, she notes: “You can’t keep taking power out of the tides – it’s not quite like the sun. When you take power out of the tidal stream, there’s less left for any further devices.” Wave energy, she believes, has more potential in the long term.

Overall, the industry’s success “is totally dependent on the political climate and political will,” she concludes. “I can see the whole lot falling apart if government doesn’t stay behind it.”

Wello’s Luukkainen says: “Looking back to wind power, it took about 30-35 years to really even show in the energy utilities’ list of areas where they get electricity. So I think it will take some decades for ocean energy to be part of the energy mix. But that doesn’t mean we can neglect it, there has to be a continuous effort to get it up and running. We’ll have to be prepared that it will take some time.”

Alstom’s Stevenson says: “If we look at the current forecast for 2020, we hope to be installing larger projects or starting to install them. In the 2020s, those volumes will build up. Between now and 2020, in my view, there will be in the low hundreds of megawatts installed.”

“There is no question that we will have a marine energy industry – the world needs it,” says Aquamarine’s McAdam. “The potential is enormous, a source of power which is relatively uncontroversial, doesn’t have long-term waste or environmental hazards associated with it, and it’s pretty much out of sight so has a high degree of public acceptability. With all those factors one would think we would have the political will to enable this industry to happen.”

“I think the industry’s 2020 targets are relatively modest and will stay that way,” adds Ingram. “I don’t see it exceeding our current plans, but that’s still a good industry to start with.

“Globally marine energy has got fantastic opportunities – it’s a tremendous resource that I’ve no doubt we’ll be tapping,”he continues. “The million dollar question is when, and that’s very difficult to predict – there are so many other factors that come in. Even though we’re currently operating in the UK in very harsh marine environments we are, technically, making it work, which means we are on a fast track for taking this industry forward. It’s just not an easy road.”

Tildy Bayar is a UK-based freelance journalist, who focuses on the energy sector.

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