EU Offshore Wind and Marine Energy Seminaron

Friday, 2 March 2012 at the

Scottish Marine Institute (the home of SAMS),Dunstaffnage, by Oban

Welcome and Introduction

Councillor Dick Walsh Argyll and Bute Council Leader

Scottish Government Ambitions and Plans

Fergus Ewing Minister for Energy, Enterprise and Tourism

The Vision Towards EU 2020

Jean -Didier Hache Coordinator of CPMR Energy & Climate Working Group

EU Offshore Wind and Marine Energy Seminar Friday, Dunstaffnage, 2 March 2012

3 goals + 1

• Reducing the causes of Climate Change. Promoting a Low Carbon Economy

• Strengthening Europe’s security of supply in the field of energy

• Fostering the EU’s competitiveness

• …and, for the peripheral maritime Regions, promoting economic, social and territorialcohesion (Article 174 of EU Treaty).

2020 Targets

• 20 % reduction in greenhouse gas emissions compared to 1990 (30% if international conditions are right; [binding]

• 20 % share of renewable energies in EU energyconsumption, 10% share in transport [binding]

• Saving of 20 % of EU energy consumption compared to projections for 2020; [efforts of EP to make it binding]

Energy Roadmap 2050

• A secure, competitive and decarbonised energy system• Reducing greenhouse gas emissions to 80-95% below 1990

levels by 2050• Various scenarii involving a decrease in energy demand of

41% by 2050, and a strong rise in the share of renewable energy (RES) of 55% of gross final energy consumption in 2050 (10% now, 20% 2020, 30% 2030)

• The share of RES in electricity consumption even reaches 64% in a High Energy Efficiency scenario and 97% in a High Renewables Scenario that includes significant electricity storage to accommodate varying RES supply even at times of low demand.

Off-shore wind & marine energy have substantial potential…

• Offshore wind power has the potential to cover between 60% and 70% of EU electricity needs (EWEA)

• Ocean / marine energy (wave power, marine currents, osmotic or salinity gradient power, thermal power etc.) has the potential to meet approximately 1% of EU demand for electricity in 2020 and 15% in 2050 (EOEA).

• The development of this sector could create some 600,000 jobs in Europe

The Western Highlands & Islands have someof the best locations for wind, tidal and waveenergy.

(Source: Irish – Scottish Links on Energy Study – ISLE )

But… The area of N-W Scotland which have the highest offshore or marine REN potential are under-industrialised and under-populatedwith no major urbanareas, so mostequipments have to be imported, and power will have to be exported far away.

- Who will finance the grid?

- How much will be charged for its use?

INVESTMENT NEEDS TILL 2020

To upgrade existing and build new generation capacity, particularly in renewable energy: €500 BN

For distribution networks and smart grids: €400 BN

For transmission networks and Storage: 200BN

Present overall EU Budget: c. €130 BN/ per year

Can the EU finance Marine REN’s access to the grid ?

Strengthened means in the proposed2014 - 2020 budget.

Connecting Europe Facility

• One of the energy priorities is “Northern Seasoffshore grid (“NSOG”)”, i.e. : « Developing anintegrated offshore electricity grid in the NorthSea, the Irish Sea, the English Channel, theBaltic Sea and neighboring waters to transportelectricity from renewable offshore energysources to centers of consumption and storageand to increase cross-border electricityexchange”.

Memorandum of Understanding

• A Memorandum of Understanding (MoU) has been signed by 10 European countries that sees a consensus reached on the North Seas Countries Offshore Grid Initiative

The aims of the project are to:• Develop transnational grid infrastructure in the North

and North West Seas;• Facilitate delivery of large-scale offshore wind projects

to vastly increase the amount of renewable electricity generated from North Seas wind and waves;

• Further secure European energy supplies and help deliver a market for renewable energy exports.

So, in the end, who will pay?• Connecting Europe? ... €9,1BN, against € 200 BN

needed for energy infrastructures of Europeanimportance by 2020 (5%<)

• ERDF? A Region “in transition” like A&B will only have c.€77/head/year of CSF Funds to spend , and only a shareof it will be in ERDF

• The EU can only have a “leverage” effect (for examplethrough the use of financial instruments, EIB, etc.)

• The market mostly, as well as the national authoritieswill have to provide the bulk of investment

• However, auctioneering of ETS by Member States apossible source of funding (50% should be earmarked forclimate change objectives)

The Transmission charging issue

…or cost-related?

Flat rate ?

Conflicts in land and sea use• Planning in marine areas canbe even more complex than in land areas because of the number of vested interests ( fishing, tourism, shipping routes, defence, etc.)•Because peripheral areas have been under-industrialised , theirenvironment has been betterpreserved… They tend to beheavily designated, which canin turn prove an obstacle to REN development (e.g.: Lewis).

What’s in it for the Regions?• Most large REN equipments are made in

industrial regions (e.g: large wind turbines arebuilt in the industrial areas of the Netherland,Spain, Germany, etc.)

• However, peripheral Regions can play a role inR&D and experimentation (e.g.: Orkney,Cornwall), and because of their proximity, forservicing provided they have adequatefacilities and manpower, which may requiresubstantial investments.

• It is cheaper to link a marine REN installation to a high voltage supergridthan to multiply the links with the neighboring mainland (25 % capital cost saving). Off-shore & marine REN production will not necessarily land in the nearest coastal area. Enhanced Supergrid

Source: Valuing the UK Offshore Renewable Energy Resource

Marine & Offshore wind REN benefits… Where to?

• On-shore based REN installations bring subtantiallocal resources (rental, royalties, local tax …). Off-shore based ones tend to bring money only tothe State.

• Even when financial returns are achieved, it doesnot mean a local authority can spend them tofoster local development (experience of Orkneyand Shetland Reserve Funds, considered as “StateAids”)

• Proximity of an energy source does notnecessarily mean cheaper, or more accessiblepower!

http://4.bp.blogspot.com/-jo60kOIMIu8/TvTQ44uQPlI/AAAAAAAAAiQ/evbGJrdGkA0/s1600/NS+Scot.JPG�

CONCLUSIONS

For Wind and Marine Energy Development to have a positive impact on a peripheralmaritime regions, a number of politicalperequisites must be achieved:

1. Regional authorities need to be empoweredto have sufficient negotiating powers withthe industry for developments in theirneighbouring marine area (e.g: Zetland Act1974, Orkney Act…).

ARGYLL & BUTE has one of the largest Marine Planning areas in Scotland.

2. Negociations must take place with the industry toensure that wind and offshore developmentprovide a maximum of economic return in thearea. Inasmuch as possible, local authorities mustbe partner in development, by providing theindustry with required facilities and services.

3. Agreements must be made for a sufficiently longduration to justify public investment on requiredinfrastructures (e.g.: harbours facilities, etc.)

4. Negociations must take place to ensure a fairreturn from leases over marine areas.

5. A legal framework must be considered to ensurethat proceeds from such leases may be reinvestedin the local economy without falling foul of StateAids legislation.

6. The exploitation of RES must not be hamperedby excessive transmission charging costs. Theprovisions of Article 16§7 of EU Regulation2009/28/EC should be implemented, and courtaction undertaken if necessary.

7. Conflicts of use of sea and coastal areas mustbe addressed through an integrated maritimeand coastal planning strategy

8. Priorities must be cleary defined between thearea’s contribution to a low-carbon economy,and the obligations imposed by environmentaldesignation.

EU Offshore Wind and Marine Energy Seminar

Industry and Project Perspective

Argyll & Bute, 2 March 2012

Andrew Jamieson

Policy and Innovation Director

• Offshore wind- In Scotland- Argyll Array

• Marine opportunities- Overview- Islay tidal array

• Conclusions

Agenda

Resource: Offshore wind• 25 per cent Europe’s

wind resource• Potential for 169 GW

• Fixed (46 GW)• Floating (123 GW)• Ref. Offshore

Valuation Study• Challenges:

– Deeper water

Copyright © 1989 by Risø National Laboratory, Roskilde, Denmark. Source: Scottish Renewables

Scottish Territorial Waters

© The Crown Estate

• 5 sites– Islay 690 MW, SSE– Argyll Array 1500–1800

MW, SPR– Beatrice 920 MW, SSE– Neart na Gaoithe 420

MW, Mainstream RP– Inchcape 905 MW,

Repsol• All have Agreement for

Lease (2011)• Total 4.7 GW

Source: Scottish Renewables

Round 3• 9 Zones

– 25 GW total– 2 zones in Scotland

• Zone 1– Moray Firth– 1,300 MW– EDP renewables

• Zone 2– Firth of Forth– 3,465 MW– SSE Renewables

Source: Scottish Renewables

Possible future development• The Scottish

Government have outlined further areas of search – 25 medium term

options

• There is currently work ongoing looking out to 200nm.

• Test sites– Aberdeen?

– Hunterston Source: Scottish Renewables

Argyll ArrayAgreement for Lease. Signed summer 2011 for project of 1,800MW. 0m – 70m water but mostly less than 50m.

Turbines. Max 300. Turbines smaller than 6MW are not appropriate for the site.

Location. 5km from the island of Tiree, 140km from grid connection point. Fully exposed to north Atlantic wind and waves.

Agreement for connection to Dalmally.

Currently investigating route connection options

Underground cables

Grid Connection

Timeline2012

Geophys benthic surveys

etc

2013 Planning

Application

2014 Planning Decision

2017/ 2018 Start

windfarm construction

2018 Grid

available

2019 1st Power

2021 Built

Commercial opportunitiesConstruction2017 - 2021

Operations & Maintenance2018 - 2043

Activity Possible locations Activity Possible locations

Foundation supply (jackets or gravity bases)

Global, with UK manufacture (particularly if gravity base)

Spares supplyGlobal, probably Europe (turbine manufacturer)

Turbine supply Global, probably Europe Vessel supply Global

Vessel supply Global Harbour Argyll

Supply of electrical components (e.g. cables, substations)

Global Warehouse, O&M offices, helipad Argyll

Primary construction port

Clyde Estuary or Ireland

Goods & services for project and staff Argyll

Operations likely to be based out of Argyll & Bute region, and Lorn ARC could offer opportunities

Direct employment. Up to 200 FTE during operations, including: turbine technicians, logistics managers, vessel operators, helicopter pilots etc.

Skills. Electrical & mechanical engineering experience, health and safety qualifications, vessel handling, stock control, and more.

Indirect employment. Indirect employment through provision of sub-contracted supplies to project plus goods & services for operations staff

SPR Support. SPR in discussion with Tiree Community Development Trust regarding creation of an annual Tiree skills fund (~£10,000), with monies available from 2012. Fund could ramp up to multiple tens of thousands, to be available to the whole Argyll & Bute region, upon final investment decision on the project

Skills & Training for Argyll & Bute

Marine Renewables - Overview

• Scotland has the world lead in a major new energy sector:

• Excellent wave and tidal resources

• Leading technology developers based here

• Very strong political and policy support

• EMEC test facility

• Demonstration array projects at advanced stage

• Areas of best resource have been identified:

• Tidal – Pentland Firth, Argyll

• Wave – Western Isles, Argyll, Orkney, Shetland,

Argyll has a key role to play for this sector

SPR Activity in Wave and Tidal Energy• SPR has a phased plan to develop a market-leading position

• First step is prototype trials, now underway:

• Second step is array deployment – Islay 10MW Tidal Project

• Large scale commercial projects also under development:

• Duncansby (tidal, 95MW)

• Marwick Head (wave, 50MW)

Hammerfest 1MW Tidal device,Installed EMEC Dec 2011

Pelamis 750kW Wave DeviceInstallation at EMEC Imminent

Islay Tidal Project – A World First!• Developer: ScottishPower Renewables

• Technology: Hammerfest Strøm

• Local Partner: Islay Energy Trust

• Size: Ten 1MW tidal devices

• Location: Sound of Islay, Argyll, UK

• Installation: 2013/14 onwards**Dictated by funding availability & test outcome

Involvement of local businesses maximised:

• Partnership with Islay Energy Trust• Full time project officer on Islay

• Local Employment (so far)• Seabed surveys/ADCP deployments• Environmental surveys

• Indirect Benefits• Hotel accommodation• Food, supplies• Car hire and taxis

• Future Supply Chain Opportunities• Marine survey work/services• Workboat build/repair• Onshore construction• Maintenance

• Total value £0.5m in early years

Local Collaboration

Fiona MacGillivrayOrnithology

Susan CampbellArchaeology

Andy MacdonaldIslay Energy Trust

Colin Campbell, Marine SurveysIslay Energy Trust

4600

Conclusions

• Scottish Capacity for offshore wind and marine projects is very large

• Potentially world leading• Early days but solid progress being

made• Continued need to coordinate and

support supply chain and skills opportunities

Opportunities for Sustainable Economic Growth

Calum Davidson Highlands and Islands Enterprise

EU Policy and FundingEU Offshore Wind and Marine

Energy Seminar2 March 2012

Karen FraserScotland Europa

Scotland Europa- Who we are

Members(public,private,

academic)

ScottishEnterprise

ScottishDevelopmentInternational

SCOTLANDEUROPA

Our teamDedicated EU Policy & Funding resources for members and SE/SDI

Scotland Team Team of EU Funding

specialists – strategic EU funding support, project development and compliance

Close collaboration with National Contact Points

Working in partnership with Enterprise Europe Scotland for R&D funding activities

Brussels Team Experienced staff focusing

on EU policy – early warning, interpretation and analysis

Direct links with Commission and other regional and national representations in Brussels

Engagement with EU business networks and associations e.g. EURADA

Setting the scene: EU Energy Policy

Three broad “pillars” of EU Energy policy:

Climate Change & Energy package:

Towards 80-95% less emissions by 2050:

Supply security

Internal m

arket

Climate

change

20% renewables 20% less emissions 20% efficiency 2020

Low carbon economy Roadmap

Energy Efficiency

Plan

Future of Transport

White Paper

Energy Roadmap

2050

New Renewables Strategy

Strategic Energy Technology Plan

Energy infrastructure

package

€9.1 bn

7 European ‘Industrial Initiatives’, inc:

€

Priority ‘Projects of Common Interest’, inc:

New financin

g?

New targets30-45%

by 2030?

Horizon 2020

Intelligent Energy

ConnectingEurope

ProjectBonds 2020

€6 bn€230 mn

Next Multiannual Financial Framework 2014-20

Main funding for climate and energy in:

Cohesion policy – Structural Funds, INTERREG

Horizon 2020

Also dedicated funding for energy and climate in:

Connecting Europe Facility

LIFE+

And financial instruments (investment finance guarantees)

European Energy Efficiency Fund

European Project Bonds

European Investment Bank

HORIZON 2020: The new Framework Programme for Research and Development

What’s New:

Integration of research and innovation funding

Single set of rules, less red tape

More support for closer to market activities, creating business opportunities

Sustainable development an overarching aim, target 60% budget

More scope for applicants to propose innovative solutions

Strengthening participation of SMEs

HORIZON 2020: The new Framework Programme for Research and Development

3 main areas, firmly routed in Europe 2020 Strategy:

Excellent Science €25bn

Frontier research, future and emerging technologies (ERC)

Training and career development – Marie Curie

Research infrastructures

Competitive Industries €18bn

Enabling and industrial technologies

Access to risk finance

Innovation in SMEs

Better Society €32bn

Societal challenges

HORIZON 2020: 'Secure, clean and efficient energy‘

Objective: to make the transition to a reliable, sustainable and competitive energy system, in the face of increasingly scarce resources, increasing energy needs and climate change

Reducing energy consumption and carbon footprint by smart and sustainable use

Low-cost, low-carbon electricity supply

Alternative fuels and mobile energy sources

A single, smart European electricity grid

New knowledge and technologies

Robust decision making and public engagement

Market uptake of energy innovation

Energy Infrastructure Package - Connecting Europe

Modernisation and expansion of Europe’s energy infrastructure

Connecting Europe Facility €9bn of EU support 2014-20 – grants financing instruments

50 – 80% of project costs

Leverage of private investment

12 priority corridors, including Northern Seas Offshore Grid

Up to 100 projects of common interest (normally cross-border)

To be identified by Aug 2013

Facilitating Investment

European Project Bonds

Bonds – improve credit rating of projects to attract long term institutional investment e.g. pensions funds

Pilot phase 2012-3 using €230m for existing budgets + financing from EIB

European Energy Efficiency Fund

EUR 125 m EEPR + EUR 75m EIB = at least EUR 200m

“Bankable” energy saving, energy efficiency, renewables projects

Promoted by local or national public authorities

e.g. energy efficiency in buildings (public and private), CHP, micro-generation, decentralised renewables, district heating / cooling, transport, modernisation infrastructure – street lighting, smart grids

Risk capital fund – loans, guarantees, equity

Energy Funding 2014 -2020: a Strategic Approach

Meeting Europe’s energy needs a major opportunity for Scotland

Influencing the agenda

Detailed consultation, stakeholder groups on new Programmes, Work Plans

Scottish HORIZON 2020 Steering Group

Review of the SET-Plan

New industrial initiatives / PPPs / Innovation Partnerships

Strategic alliances e.g. joint member state ocean energy paper

Building partnerships and collaborations across the sectors

A strategic approach

Cross-sectoral, inter-disciplinary approach to societal challenges

Team Scotland – improved communication, joined up approach

Shane Rankin

Deputy DirectorEuropean Structural Funds

Division

Commission Thematic objectives

– Strengthening research, technological development and innovation

– Enhancing access to and use and quality of information and communication technologies

– Enhancing the competitiveness of SMEs, the agricultural sector for EAFRD and the fisheries and aquaculture sector (for EMFF)

– Supporting the shift towards a low carbon economy in all sectors

– Promoting climate change adaptation, risk prevention and management

Commission Thematic objectives

– Promoting sustainable transport and removing bottlenecks in key network infrastructures

– Promoting employment and supporting labour mobility

– Promoting social inclusion and combating poverty

– Investing in education, skills and lifelong learning

– Enhancing institutional capacity and efficient public administration.

Common Strategic Framework funds: Delivering Europe 2020

ICT

SMEs

Res

earc

h

Low

Car

bon

Clim

ate

chan

ge

Envi

ronm

ent

Sust

. tra

nspo

rt

Empl

oym

ent

Soci

al in

clus

ion

Educ

atio

n, s

kills

capa

city

bui

ldin

g

EAFRD

ESF

ERDF ERDF

EMFF

EAFRD

EMFF

Opportunities

• Opportunity to think big as we develop the next programme

• Opportunity to be integrated – skills development alongside infrastructure

• Opportunity to link small scale local developments and national infrastructure

• Working in partnership

Project Implementation on the Ground and Lessons Learned

Tim HurstScottish European Green Energy Centre

EU Offshore Wind and Marine Energy Seminar

The Role of European Policy and Funding

Project Implementation on the Ground and Lessons Learned

Tim Hurst – Marine Energy ManagerScottish European Green Energy Centre

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FP7

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NER300 Bids• Fund of up to €4.5Bn• Funds one project in:

– Wave Energy– Offshore Wind– Tidal Energy– Second Round 2013

• Funded in 2 rounds• First round being evaluated now• UK submitted:

– 3 Tidal Projects– One Wave Project– One Offshore Wind Project 70

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Ser No Project Type of Project EU Funding Scheme

Grant Date

1 ORECCA Research Roadmap CSA €1,599,032.56 03/2010

2 Marina Platform Offshore Platforms CP €8,708,660.00 01/2010

3e CORES BoP for OWC CP €3,449,588.00 04/2008

4 EQUIMAR Testing and Evaluation Protocols CP €3,990,024.00 04/2008

5 EU-OEA EU-OEA SSA €445,120.00 11/2007

6 NEREIDA Mutriku OWC Breakwater STP €831,554.99 07/2007

7 WAVE DRAGON Overtopping Demonstrator STREP €2,431,000.00 04/2006

8 WAVESSG SSG Wave Converter Pilot STREP €1,000,000.00 12/2005

9 POWWOW Coordinated Resource Assessment CA €1,049,646.00 10/2005

10 SEEWEC FO³ wave energy converter STREP €2,299,754.80 10/2005

11 CA-OE Ocean Energy Research Base CA €1,593,000.00 10/2004

12 ALDA Tunnelled Wave Power Demo STP €1,360,000.00 47 months

13 AQUABUOY Demonstrate 2MW Point Absorber STP €1,369,999.40 36 months

14 AWS-MKII Demonstrate AWS STP €1,993,840.00 36 months

15 BREAKWAVE Demonstrate OWC STP €2,440,440.00 36 months

16 CAPMIX Capacitive mixing CP €2,404,745.00 6 months

17 REAPOWER Salinity Gradient Demo CP €2,696,996.00 11 months

18 WAVESTAR 500 kW wave energy converter STP €1,710,472.00 36 months

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Mutriku Project on the north coast of Spain, the first breakwater wave energy project in Europe. Eight OWC cells will be constructed to give an active collector length of close to 100 metres.

Mutriku

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FP6 - €831,554.99

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The Beatrice Wind Farm Demonstrator Project, at a cost of €41 million, saw two 5MW wind turbines installed adjacent to the Beatrice oil field, 25 km off the east coast of Scotland

EU Funded Wind Energy Demonstration Projects

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EU Funding from FP6 of €6,000,000.00

Current Marine Energy - FP7 Calls

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Topic ENERGY.2012.2.6.1: Demonstration of first ocean energy farms

Manufacturing and the deployment of ocean energy farms for electricity generation, in real sea environments, with an installed capacity of 3MW or over.

€10-12M for 1 to 2 Projects

Current Wind Energy – FP7 Calls

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Topic ENERGY.2012.2.3.1: Innovative wind conversion systems (10-20MW) Content/Scope: The objective is to bring major innovations in the design and manufacturing of large wind energy conversion systems (aiming at 10-20MW) for offshore applications.

Topic ENERGY.2012.2.3.2: Demonstration of innovative designs to reduce fatigue loads and improve reliability of multi-MW turbines.Strategic objective of the industrial initiative of the SET Plan on wind energy is to reduce cost of energy by improving reliability and availability of wind turbines and their components.

€12-15M for 1 to 2 projects

Summary

• Significant funds for large scale demonstration projects – EU funding– FP7/Horizon 2020– NER300 Round 1 and 2

• Demonstrate innovation– Technology– Operation– Manufacture

• Reduction in LCoE• Contribution to 2020 targets and beyond

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www.segec.org.uk

QUESTIONS?

Question and Answer Discussion

Workshop Feedback Session and Discussion

Summary and Closing Remarks