Lost at sea? Charting wave energy’s difficult journey towards commercialisation since a resurgence in UK

government support

What is the global and UK wave energy resource?

Abstract

BUT major innovation challenges remain…

Why has progress been slow?

Brief history of UK’s innovation support to capture this resource

Dr. Matthew Hannon Centre For Environmental Policy, 13 Prince’s Gardens, South Kensington, London, SW7 1NA

Email: m.hannon@imperial.ac.uk Website: www.imperial.ac.uk/rcukenergystrategyfellowship Twitter: @hannon_matthew and @ES_Fellowship

The UK has witnessed a renaissance in wave energy innovation support almost 20 years after discontinuing its initial wave energy programme. Since 2000 the UK government has committed $100m to ocean energy RD&D, which the private sector has leveraged by a ratio of 7:1, thus positioning the UK as a world-leader of wave energy innovation support. However, despite this commitment the UK has yet to deploy wave energy technology on a commercial scale due to numerous outstanding technical challenges. Following a literature review and stakeholder interviews this research identifies aspects of the UK’s wave energy innovation system responsible for this slow progress. Recommendations to accelerate wave energy technology innovation, beyond simply increasing funds, include promoting: knowledge sharing and collaboration between device developers; cross-sector fertilisation; and central coordination of UK wave energy innovation support. The UK could also help to develop ‘step change’ wave energy technologies by both shifting budgetary funds from market pull to supply push policies and increasing the flexibility and capacity of its wave energy test centres.

• Theoretical global wave energy (WE) resource approx. 32 PWh/yr, roughly twice the global electricity supply in 2008 (Mørk et al., 2010). Majority of this located between 40o and 60o latitude, with UK well located.

• UK could practically and economically extract 32-42 TWh/yr of WE, assuming a cost of energy 2-3 times greater than the cheapest sites, plus planning and environmental constraints (e.g. fishing impacts, shipping lanes) (Fig. 1).

• On this basis WE could account for approx. 11% of UK electricity supply (2013 data) and make a major contribution to the UK’s 2050 target of reducing its greenhouse gas emissions by 80% on 1990 levels.

• Despite the recent resurgence in innovation support the levelised cost of energy (LCOE)

of wave energy still too high (Figs 3) with only <4MW capacity installed (mostly demo)

in UK (OES 2014)

• Challenges focused on improving: affordability, reliability, predictability, survivability,

(remote) operability, installability and manufacturability (Jeffrey & Winskel 2009)

• Cost reductions expected from both learning by doing and learning by using, primarily

from device structure and prime mover but also power take off innovation (Fig 4)

• UK has seen 2 key phases of WE support (Fig. 2):

1) 1976 – 1982: Initiated following oil crisis. Closed due to slow progress in cost reduction, public sector cutbacks of Thatcher government and shift in support towards nuclear and wind energy

2) 1982 – 2000: Fallow period with only national and European piecemeal funding.

3) 2000 – present: Renaissance following concerns about climate change, energy security and affordability.

• UK the 2nd highest total public ocean energy RD&D budget ($264m) and average public ocean energy RD&D budget per million GDP ($3.7/million $ GDP (2012 PPP)) between 1974-2011.

• Renewable UK survey identified that industry has on average spent £7 for every £1 of public funds committed to wave energy innovation, with 77% of this spent in the UK.

Figure 2: Historical support for ocean energy RD&D (source: IEA)

Figure 1: Practical UK wave energy resource (source: AMEC & Carbon Trust 2012)

Key recommendations to accelerate wave energy innovation References • AMEC & Carbon Trust, 2012. UK wave energy resource • Carlsson, J., 2014. ETRI 2014: Energy Technology

Reference Indicator projections for 2010-2050, Petten • Energy and Climate Change Committee, 2012. The Future

of Marine Renewables in the UK. HoC • Jeffrey, H. & Winskel, M., 2009. The Opportunity and

Challenge for Ocean Energy as Part of Energy System Decarbonisation: the UK Scenario. In International Energy Agency Implementing Agreement on Ocean Energy Systems: Annual Report 2009. Paris: IEA

• Jeffrey, H., Jay, B., Winskel, M., 2013. Accelerating the development of marine energy: Exploring the prospects, benefits and challenges. Technol. Forecast. Soc. Change 80, 1306–1316.

• Lawrence, J., Sedgwick, J., Jeffrey, H., Bryden, I., 2013. An overview of the U.K. Marine energy sector. Proc. IEEE 101, 876–890.

• LCICG, 2012. Technology Innovation Needs Assessment Marine Energy.

• MacGillivray, A. et al., 2013. Innovation and cost

reduction for marine renewable energy: A learning investment sensitivity analysis. Technological Forecasting and Social Change, 87, pp.108–124

• Magagna, D., 2015. 2014 JRC Ocean Energy Status Report: Technology, market and economic aspects of ocean energy in Europe, Petten.

• MEPB, 2015. Wave and Tidal Energy in the UK : Capitalising on Capability

• Mørk, G.,et al. 2010. Assessing the global wave energy potential. In: Proceedings of OMAE2010 (ASME), 29th International Conference on Ocean, Offshore Mechanics and Arctic Engineering, Shanghai, China, 6-11 June 2010.

• OES, 2014. Annual Report: Implementing agreement on ocean energy systems.

• Vantoch-Wood, A.R., 2012. Quantifying Methods for an Innovation Systems Analysis of the UK Wave Energy Sector. University of Exeter.

• Winskel, M., 2007. Policymaking for the niche: successes and failures in recent UK marine energy policy, in: International Summer Academy of Technology Studies - Transforming the Energy System.

Table 1: Weaknesses of UK wave energy innovation system (identified via 9 interviews and a literature review)

Figure 5: UK energy technology funding landscape (source: DECC)

Figure 3: LCOE for alternative and conventional energy technologies (source: Magagna 2015; ETRI 2014)

Figure 4: Cost reduction by sub-area, 2010-2050 (medium deployment scenario) (source: LCICG 2012)

Area Weaknesses Source

General Poorly coordinated funding regime - multiple, overlapping funding bodies with different objectives (Fig 5) Interviews; Vantoch-Wood (2012); ECCC (2012)

Public innovation support relatively low versus other technologies and desire for a world-leading market Interviews; Vantoch-Wood (2012); ECCC (2012)

Intermittent innovation support has undermined innovation momentum and investor confidence Vantoch-Wood (2012)

Poor economies of scale - Developers competing for same funds to cover same overheads (e.g. premises) Interviews; Winskel (2007)

Limited cross-sector knowledge transfer to seed innovation (e.g. oil/gas, offshore wind, materials etc.) Interviews; LCICG (2012)

Lack of product sales means developers place value on their intellectual portfolio (IP) portfolio, which limits collaboration and knowledge sharing

Interviews; Winskel (2007); LCICG (2012)

Bundling of wave with tidal energy within policy despite differences (e.g. intermittency, cost, location) Vantoch-Wood (2012)

Mismatched incentives between universities and device developers (e.g. knowledge sharing) Winskel (2007)

Investment decisions based on LCOE but benchmarks are inaccurate until devices rolled-out commercially Interviews; MacGillivray et al. (2014)

Supply push Locking-in mature technologies and locking-out immature ones by funding incremental improvements LCICG (2012); Vantoch-Wood (2012)

Match funding requirement leads developers to overpromise about their technology’s potential to secure private sector funds. Under-delivery can damage investor confidence (e.g. Pelamis in Portugal - Fig.6).

Winskel (2007); Jeffrey et al. (2013)

Demand pull Political/financial capital invested in market-based policies technology not being market ready Interviews; Jeffrey et al. (2013); ECCC (2012)

WE competing against more mature renewable energies for subsidies (e.g. post-2019 wave competes against wind for subsidies within the UK’s Electricity Market Reform – Contracts for Difference)

Interviews

Test centres Essential but cannot cater for all devices and device capacity limited (i.e. number of berths) Interviews

Figure 6: Pelamis devices at Aguçadoura, Portugal (source: Wikipedia)

• Encourage device developer collaboration (e.g. Joint Industry Projects in oil and gas sector)

• Avoid ‘reinventing the wheel’ through cross-sector fertilisation (e.g. offshore oil/gas, materials, offshore wind)

• Improve coordination between WE innovation funders by opening dialogue via system intermediaries

• Centralised coordination of energy innovation could improve economies of scale and knowledge sharing

• Provide opportunities for new, ‘step-change’ wave energy technologies to emerge vs. improving existing ones

• Increase flexibility and capacity of test centres to maximize scope for wave energy technology innovation