BLOG: Potential of Marine Energy Projects in Great Britain
In August, the UK Government put out a call for evidence on the potential of marine energy projects in Great Britain. In the letter below, submitted as part of the consultation, Aquatera Managing Director Gareth Davies advocates for a path toward commercialisation for tidal and wave energy in the UK.
From: Gareth Davies, Aquatera Ltd
Potential of Marine Energy Projects in Great Britain: A Call for Evidence
I am writing in my capacity as Managing Director of Aquatera in response to the call for evidence on Marine Energy Projects in Great Britain, which closes on 7th October 2020. Aquatera welcomes the opportunity to respond to this consultation exercise following on from the Contracts for Difference (CfD): proposed amendments to the scheme, which closed on 29 May 2020.
I have been involved with marine energy since 1987 and Aquatera has been at the forefront of the growing sector since 2000. We are based in the Orkney Islands at the heart of the global activity in wave and tidal energy. We have undertaken over 40 studies and projects relating to marine energy, supporting over 50 technology developers, 10 testing sites, governments, agencies and working with 20 or so communities. This work has taken us to over 40 countries around the world and we now have offices in 5 of those countries. Our team of 25 staff and another 20 associates work tirelessly to investigate the needs for energy transition, considering where, when and how best for marine energy to make a contribution and then helping to deliver suitable marine energy solutions at the technology proving and energy system integration level. Underpinning all this activity is our ever-deepening understanding of marine science, engineering, ecological, social and economic issues within a broad sustainability framework
As a company we have generated around £25 million of turnover over the last 20 years and have invested some £5 million back into sector understanding, technology support and project development. We are currently launching two new investment funds aimed at, amongst other things, supporting the optimal development and deployment of marine energy generation and enabling technologies and deployment projects.
Aquatera’s work and contribution sits alongside that of a cluster of organisations located in and using Orkney as a base for their activities. This cluster has led marine energy activity for over 20 years. It includes over 20 individual companies and organisations, some 350 people involved locally, has accumulated over 6 million hours of effort directed at marine energy matters and has collectively invested around £100 million in marine energy endeavour. This investment has come from the local authority, from local businesses from local people and from local agencies.
More has happened in Orkney related to marine energy than has happened in the rest of the world put together. Orkney is revered across the globe as a centre of excellence, a place where: things happen and get done; where experts understand the sea, working on and in the sea and sea life; where metal gets wet; where the community is engaged; where visitors and collaborators are welcomed and where new ideas, concepts and designs are imagined and crafted. Orkney and it’s adjacent waters in Caithness and Shetland have been home to the first, the biggest, the longest, the most, the best, the most cost effective and the most energetic in so many aspects covering environmental conditions, technology deployment, project development, support vessel development, oceanographic advances, insights into ecology, demonstrating economics and living with social consequences.
This understanding, experience and insight has then been shared and exported across the UK and around the whole world. There are particularly strong links between Orkney and its neighbours in Shetland, the Outer Hebrides and Highland Region. There is good collaboration with the metropolitan centres of Aberdeen, Edinburgh and Glasgow. There are especially strong links with North and South Wales. There are well established working relations with the Isles of Man, Cumbria, South West, Isle of Wight, Humberside, the North East as well as with numerous academic institutions and industrial companies. Alongside this collaborative endeavour Orkney has worked diligently and consistently with governments of all hues and at all levels to help understand and deliver the undoubted benefits that can arise from marine energy.
These national, regional and local benefits include:
- Advances in scientific knowledge and understanding
- New data sets, surveys and timeseries
- New tools for measuring and monitoring the environment
- New engineering designs and standards
- New generation technologies
- New vessel technologies
- New cabling technologies
- Advances in energy conversion
- Better understanding of fluid dynamics
- Better understanding of waves and tides
- New, more and better jobs in remote and island communities
- Wider employment opportunities in the established economy
- Sources of energy which have a competitive advantage in serving the blue economy
- Energy which can help balance other forms of renewable generation
- Creation of local, regional and national innovation ecosystems which can help deliver on a range of key societal challenges
- The spin-off benefits of new and expanded, expertise, experience and capacity that has been applied to offshore founded wind, offshore floating wind, onshore wind, hydrogen, floating solar, integrated energy systems, EVs, charging infrastructure, decarbonised ships, decarbonised aircraft, oceanographic sensors, ROVs, AUVs, foundation and anchoring systems, cable laying and securing, aquaculture, electrical transmission and distribution cables, offshore oil and gas, ecotourism, tourism, education, community development and so many other areas of sustainable and industrial development.
If all of the aspects of marine energy and renewables are rolled up together in and around Orkney. Connected with the islands there has been over £1 billion invested over the last 20 years, giving rise to a major explosion of innovation, industrial and community development capacity and delivery.
Looking forwards over the next 10 year there are plans being explored and delivered for a further £20 billion of investment.
The world is full of options and choices. The options associated with tidal and wave energy and with powering the blue and onshore economies of the UK and the wider world are many and complex. But it is very hard to conceive of any future where tidal and wave energy will not play a significant and competitive role in certain energy markets where these sources of energy have a competitive edge. There are markets where tidal and wave energy are likely to offer the most cost effective and best solutions. The optimal marine energy markets do not embrace all markets, but no energy source is suitable for all energy markets. They do include major and, as yet, difficult to serve energy markets particularly associated with transportation in general, water production and the breadth of the blue economy. These are areas where marine energy is likely to have, or has already got, a competitive advantage.
The simple question in the end is whether the UK wants to have a role in and a part to play in such markets.
The groundwork has been laid, the UK leads the world in many areas of marine energy sector development and delivery. Generation technology is a part of that story and a part of that opportunity but there are also many other areas of technology provision, service delivery, investigation and innovation, project management and finance where the UK has a major role to play, if its wants to. All these areas are strongly aligned with UK policy such as the UKs industrial strategy, building green, building back better, levelling up, combatting climate change and being ambitious and innovative.
How many times has it been said that as a country we should never repeat the mistake we made with wind energy, for example, where we invested in it, led it and then gave up and walked away just when it was getting interesting.
The country faces a similar choice again, the opportunity is there for the UK to fully embrace marine energy, to lead the exploitation of the blue economy, to POWER THE BLUE ECONOMY and to accrue immeasurable benefits across so many of the policy priorities that exist. Such a prospect is no pipe dream or distant prospect - it is a reality that has been demonstrated, nurtured and exploited very successfully over the last 20 years. The last 8 years have been especially difficult but the sector has not gone away or given up, it has shaken itself down, broadened the base of what it is offering, looked carefully at where and how it can best it can contribute to local, national and international priorities.
The benefits of this have already been recognised and exploited by UK government through its international development activities where marine energy has been used as a diplomatic and industrial development tool in Chile, Peru, Columbia, Mexico, Brazil, Indonesia, Philippines, China, Japan, USA, Canada and across Europe.
All of these countries are looking to whether the UK will continue to lead in this area or will the UK sit back and allow others to inherit the marine energy crown jewels that the we have created in the UK. The USA in particular is surging to catch up and overtake, recognising the huge strategic importance of maritime security, influence, enterprise and community benefit. The more distant maritime and more recent marine energy heritage that we have created in the UK still provides a platform and an opportunity for the UK to shine and excel on a global stage if we step-up our interest in and commitment to marine energy.
Tidal stream and wave technologies have progressed at different rates leading to them being viewed as two distinct sectors but with a strong crossover between many elements of the supply chain.Tidal stream energy is now ready to deploy a scale, the technology has produced over 30GWh and 124MW of shovel ready projects are poised for development in the UK. Many more technology and related energy systems developments are underway and the need for energy transition within the Blue Economy are forever increasing.
This is an excellent time to be supporting the marine energy sector and along with our partners in the sector we commend the following measures.
The Opportunity to Deliver a £1.4bn Net Cumulative Benefit to the UK by 2030
Aquatera sees tidal stream and wave energy as an exciting growth market, that we want to be at the forefront of, along with other UK companies to create a robust UK supply chain. We have invested around £5M in working in the sector so that we can secure the future opportunities. This will help us understand how we can accelerate the understanding, project development and technology along a commercialisation pathway and ultimately ensure that we, as a UK supplier, can be competitive on a global level.
By taking positive action now, the UK can secure a realistic majority share of a global market and assist in the green recovery and ambitions for the UK Government to reach Net Zero by 2050. The tidal stream industry could generate a net cumulative benefit to the UK by 2030 of £1.4 bn, including considerable exports. Importantly this future business can build upon the excellent commercial and academic foundation already established nationally and internationally by the existing sector clusters such as those in Orkney, Shetland, Scotland, Wales, South West, South and North East. This cluster-based type of industrial development adds further value to this sector be facilitating development in specific locations and regions as part of the levelling up initiative.
Future prospects for the sector have been predicted to encompass billion pounds turnover and 10,000s of jobs (ORE Catapult Report, 2018).
Due to the UK’s marine and maritime nature and heritage, it is uniquely positioned to support the powering of the blue economy and the supply of additional energy to the onshore energy markets as well. This activity can help to grow, develop existing and create new UK companies as part of world class national and global marine energy supply chain.
A Path Towards Commercialisation
Crucially, in the current climate, strategic support for this sector would help deliver three key Government objectives – a boost to UK manufacturing and jobs; practical application of the ‘Green Transition’ as a route to post-pandemic recovery; a major exporting opportunity in technologies where the UK currently leads the world.
That lead will only be maintained if there are appropriate measures in the domestic market to support commercialisation of the technologies, which have advanced greatly with Government support in recent years. We believe this is now a critical moment in ensuring that support mechanisms are geared to the specific needs of the marine renewables sector.
There are 124MW of tidal stream sites that are in an advanced stage of development in Scotland, Wales and England, preparing to bid into AR4 and each subsequent auction rounds thereafter. To secure the global lead and £25bn export market, encourage competition, drive down cost of energy to below £90/MWh and distribute economic benefits across the country, the tidal energy sector requires a minima of 100MW to be established within AR4. To support the build out of this 100MW of tidal energy within AR4, an Administrative Strike Price of £250/MWh is required.
Combined with a signal of similar support structures in AR5 and AR6 and beyond, at the sites already under development alone, hundreds of MWs could be ready to bid in the next few CfD rounds, with GWs in the 2030s as further sites are developed. Entering into the 2030’s, this roll out trajectory would see tidal energy well on the way to deploying at sub £90/MWh and have secured the UK a £25bn global export opportunity.
Furthermore, implementing a complementary proposal that would support technology developers; the Innovation Power Purchase Agreement (IPPA). The IPPA is designed to keep costs off consumer bills whilst putting the risk on the private sector for delivery. Under the IPPA scheme, a project would sell electricity to an electricity supplier at a strike price agreed with BEIS. The supplier would be entitled to offset the annual difference to market prices against tax. Payments are only made on delivery of power and, unlike grants, if the technology does not deliver payments are not made. By embracing this concept, HMT could enable the creation of 15,000 jobs and secure the net GVA of £25bn by 2050, just for tidal stream energy, to benefit the wider UK economy; far beyond the £50m per annum cost of the proposed IPPA over the next twenty years.
Aquatera believes that the IPPA is a particularly important and critically required tool for supporting the next 5 years of sector development in the UK.
We welcome the opportunity to respond to this call for evidence and hope that our contribution has demonstrated that revenue support for the marine sector will:
- Help us as a company to enable a green recovery from Covid-19
- Unleash the deployment of tidal stream technologies which are already demonstrating at high technology readiness levels and with the correct early support in place will enable a realistic target of 4GW being deployed within the UK by the 2030s and support efforts to meet the UK Net Zero by 2050 target;
- Achieve cost reductions through technology innovation, economies of scale, and commercial factors and risk profiles which face investors;
- Embed UK supply chains through delivery of early projects to assist in the ‘levelling-up’ agenda and the creation of technologies for export.
Thank you for the opportunity to consult on this important area of energy policy in the UK.
Aquatera Group – incorporating Aquatera Ltd; Aquatera Sustainability Ireland, Aquatera Chile, Aquatera Asia, Aquatera Atlantico and Oceantera Pte