Wave and Tidal Energy Industries Urge Government to Secure UK’s Global Lead

In a new report, the UK’s wave and tidal energy industries warn that they will only be able to grow successfully if they get the right level of support from Government – otherwise Britain risks surrendering its world lead in marine energy.

The study by RenewableUK says the biggest shake-up of the energy sector for decades, Electricity Market Reform, could act as a springboard for the growth of wave and tidal energy, or could undermine investor confidence in marine power at a crucial stage of the industry’s development. It also highlights challenges such as delays in getting grid connections for wave and tidal projects, and the high cost of transmission charges.

The report, “Conquering Challenges, Generating Growth” lays out the progress made so far: 12 full-scale single devices with a capacity of 9 megawatts deployed in UK waters generating clean electricity – more than the rest of the world combined. It notes that 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. Major engineering firms such as Siemens and Alstom are working with the UK and Scottish Governments, universities and electricity companies to develop British marine power. The Crown Estate has awarded leases for more than 1.8 gigawatts of capacity at nearly 40 sites in UK waters. The British Isles has 50% of the total European wave energy resource and 25% of tidal energy resource – these technologies could generate up to 20% of the UK’s electricity needs.

However, this growth could be stifled if the Government fails to get the details of Electricity Market Reform right. The most crucial factor is the level of financial support technologies will receive. The report states that the initial strike price for the first generation of tidal arrays should be set at £280 to £300 per megawatt hour. For wave technology, the initial strike price should be £300 to £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. Also, under EMR, contracts would only last for 15 years – the report argues that this must be extended to 20 years to give investors an adequate return – otherwise the strike price would have to be higher.

RenewableUK’s Wave and Tidal Manager, David Krohn, said:

“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. The world’s leading projects are being developed in the UK waters thanks to a comprehensive package of support granted by the UK and Scottish governments, which has ensured that the UK leads the world in wave and tidal energy.

“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 if we are to maintain pole position in this promising and strategically important sector. It is essential that Electricity Market Reform provides a level of support that will allow the most cost effective projects to be taken forward.

“Our new report doesn’t pull its punches – the prize is big as the potential of wave and tidal energy is enormous. It is vital that the government doesn’t undo its excellent work and ensures it sends the right long term signal to the market by implementing a supportive package through EMR. The UK has an opportunity to cement its position as the best place in the world to install marine energy projects and, as a result, reap the benefits of the hard-won technological advances we’ve already made here.

“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 £6.1 billion to the UK by 2035, creating nearly 20,000 jobs – up from today’s 1,000 employed in these sectors.

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Press release, February 27, 2013; Image: renewableuk