At the Ocean Energy Europe conference in Paris last week the atmosphere was quite upbeat. Of course the major challenge in the industry remains – principally funding technology development. The good news is that Europe is taking ocean energy seriously. It will not be on the same stage as funding for the nuclear industry or indeed for the tokamac nuclear fusion machine. But baby steps are important.
Everyone was intensely interested in the Meygen tidal project. This project is at a well advanced state. The funding package was a complex mix of equity, debt and grants. A total of £51.3 million has been secured from a diverse group of supporters including the Department of Energy and Climate Change, Scottish Enterprise, Highlands and Islands Enterprise and The Crown Estate. The ability to finance a project is quite different from the ability to finance technology development. Financing a project happens after the technology is proven reliable for operation.
The wave industry still lags behind tidal in having reliable machines that can run in all wave conditions. However much we hope for reliably performing wave machines, we should have learned by now that it does not happen overnight. There is hope on the horizon however. One of the themes of the conference was collaboration. We have the genesis of a real collaborative programme in the wave industry through the WavePOD project.
WavePOD now has four wave developers, two universities, two research institutes and a major OEM collaborating to deliver an industry-standard power take off system – a key piece of enabling technology.
In a recent article, Rebecca M. Henderson says; “We need to stop subsidizing fossil fuels; the world is currently spending about $500bn to subsidize oil, gas and coal. (That’s not much less than some current estimates of what it would cost us to build a carbon free economy.) And we need to subsidize research into new energy technologies so that entrepreneurs can one day bring them to market. We’re currently spending less than $2 billion a year on clean energy research – that’s less than 5% of what we’re spending on health related research, and less than 2% of what we’re spending on defense orientated work.”
Collaborations such as WavePOD are concentrating scarce resources into a much needed area of development. But the resource should not be too scarce. And the deployment of new capital and incentives to encourage investment into new technology is now needed. With the EU now looking at marine energy as a key sector – it is time to let the investment cash flow!
The big question of course, the 64,000 Euro question, is how much would it cost? On the technology development side, trade body Scottish Renewables estimates the ocean energy sector has spent over £200 million in Scotland alone – and I remain of the opinion that it will cost around £100 million per technology to bring marine power fully to market. So a thriving, multi-technology ocean energy industry with half a dozen credible businesses will require £500 million investment.
On the project side if we consider the MeyGen scheme needed more than £50 million for a three-device initial array, and Europe would like to see, say, ten arrays (wave and tidal) before the decade is out, that would be a £300 – £400 million programme.
Between technology development and financing arrays that becomes close to a £1billion. “That is a lot!” I hear you say. True, but is also around the same amount the UK consumer will pay in subsidy, every year, to the French and Chinese owners of the proposed Hinkley Point C nuclear power plant.
Energy is expensive. It always will be. But with targeted, significant investment in ocean energy, Europe has the potential to build an indigenous, low carbon industrial sector with the potential to generate green energy and technology export opportunities around the world.
That, I would say, is good value indeed.