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Renewable UK Wave and Tidal 2010 conference
For up-to-date breaking news click on http://www.renewableenergyfocus.com
News/Analysis
Renewable UK Wave and Tidal 2010 conference Speaking at its annual wave and tidal conference in the UK in March, RenewableUK Chief Executive Maria McCaffery said, “over the past 7 years we have seen the beginning of a true industry.” Not only that, but “the industry is starting to get the recognition it deserves.” But there is still some way to go, says RenewableUK, which believes the UK Government must spend a further £150-£200 million over the life-time of the next parliament on top of the £60m already spent. In addition to R&D funding from the Technology Strategy Board (TSB) and the Energy Technologies Institute (ETI), RenewableUK wants the Marine Renewables Proving Fund to be allocated £10-£11m per year, and the Marine Renewables Deployment Fund to be increased to £120m - up to 2013; and this in addition to a higher-multiple band for marine renewables in the Renewables Obligation, which will hopefully be addressed in the Marine Energy Action Plan (see above). Although many see a clear need for investment, getting that money is not easy, especially in today’s market. McCaffery said there is less credit, and that credit costs more too. The market is more risk adverse – and wave and tidal is still seen as “risky business”. Aquamarine’s Oyster device being lowered into the water at the European Marine Energy Centre (EMEC) in preparation for grid connection
commercial contract for the marine sector (In February 2010 the P2 project was awarded £4.8m by the Carbon Trust under the Marine Renewable Proving Fund, a new funding scheme from the Department of Energy and Climate Change (DECC); ■ Another company that seems to be moving ahead of the prototype pack is Aquamarine Power, whose Joint Venture with SSE Renewables has the potential to see its Oyster devices deployed in small clusters spaced over a stretch of coastline off mainland Orkney in Scotland running from Costa Head in the north to Neban Point in the south-west. The proposed wave farm would have an installed capacity of 200MW (the first 315kW Oyster 1 was grid-connected at EMEC in November 2009. The next generation 2.5MW Oyster 2 is scheduled for installation at EMEC in 2011); ■ Currently there are 2.4 MW worth of wave and tidal devices in UK waters, with a further 27 MW having received planning consent and 77.5 MW in planning. Outside of the UK, however, it wouldn’t be unfair safe to say that the rest of the world is lagging behind the UK when it comes to focusing specifically on wave and tidal, though countries like the USA are watching UK developments closely, and several countries (such as Portugal, Ireland and France) have introduced feed-in tariffs for marine renewables.
In a session on finance and insurance at RenewableUK’s conference, Dr David Clarke, Chief Executive of the Energy Technologies Institute (ETI), said one of the biggest worries is affordability. He said only a quarter of the cost lies with actually getting the machine into water – the rest is sucked up in things like environmental and performance studies for example. Listing the main challenges going forward for wave and tidal, he mentioned cost reduction, robustness, maintainability and the supply chain. Deborah Walter, Deputy Managing Partner at consultancy Kreab Gavin Anderson, presented results from an investor research study whose participants were from within renewable energy. She said that a majority were positive towards marine energy in the UK, but that negative factors included the uncertainty around technology, lack of commercialisation, funding and management.
In order to attract investment therefore, more Government funding is needed; ROC support must be given; and political and regulatory stability is required
The way forward Despite the recent highlights and excitement surrounding marine technologies, no one would argue that the sector is still at an early stage of its development in comparison to wind power. But more investors are waking up to the potential, according to industry organisations like RenewableUK – which even changed its name to reflect this fact. But the nagging question outside of the group of enthusiasts within the industry remains – can the wave and tidal industry at least finally begin to close the gap on more mature technologies like onshore wind, and if not what more needs to be done?
6
renewable energy focus
March/April 2010
Banks are risk adverse and look for proven technologies, whereas venture capitalists work on a different investment time-scale than wave and tidal can deliver. In order to attract investment therefore, more Government funding is needed; ROC support must be given; and political and regulatory stability is required. Jatin Sharma, lead Renewable Energy Broker at Willis Ltd covers the insurance aspects of marine renewables. He said the insurance sector sees wave and tidal as relatively high risk. These risks include esca-
For up-to-date breaking news click on http://www.renewableenergyfocus.com
News/Analysis
lating R&D costs, vessel availability for deployment and servicing, limited weather windows for installation and inadequate operation and maintenance strategies. He also said that “insurance is a key driver for a lot of risk adverse banks.” He therefore urged the industry to get insurers involved at an early stage in project development.
Answering tough questions In a round-table discussion lead by journalist and broadcaster Stephen Sackur, also taking place at RenewableUK’s wave and tidal event, industry specialists and representatives faced some challenging questions in confirming that the wave and tidal industry is still able to validate its technologies.
Anton Milner recently resigned from the company’s management board, echoing the demise of another renewable energy visionary in 2008, Hans-Martin Rüther of Conergy Neil Kermode, Managing Director of the European Marine Energy Centre (EMEC), said it is not possible to give a time scale for wave and tidal. He pointed out that we still do not know enough about the physics, corrosion, and wear and tear of wave and tidal devices. Siân McGrath, Head of Commercial Development at Aquamarine Power, was more upbeat however. She pointed out that over the last five years there has been an exponential growth in support, political will and interest. Companies are starting to see a return on their investment and marine energy firms are beginning to scale up. But she warned that continued support is needed as wave and tidal has long time-frames for commercialisation. At previous sessions during the day, the discussion touched upon securing manufacturing in the UK. Henry Jeffery, Senior Research Fellow at the Institute for Energy Systems, University of Edinburgh said: “The UK is seen as a leader in this field – both in terms of technology and policy. The Marine Action Plan needs to cement that position to create ‘a strong home market’”. Competition will be a good thing for the industry as a whole, but Kermode said that the example of Pelamis being set up in Portugal rather than in the UK “woke up the UK industry”.
As Andrew Mill, CEO at the New and Renewable Energy Centre (Narec), pointed out regarding potential opposition to marine energy: “Environmental impact is important, but if we don’t do anything, the consequences will be far worse.”
Solar Photovoltaics: clouds on the horizon? 2010 was predicted by many to be the year that solar PV recovered some of the ground lost over the past 18 months after the industry’s welldocumented problems – the global recession combined with the collapse of the Spanish market; this resulted in oversupply, price decreases and margin pressures, something the PV industry had not been used to and, more importantly (in many cases) were not ready for. And as if to add to this pressure, oversupply gave the lower-cost Chinese, Korean and Taiwanese manufacturers a major shot in the arm for their own exports. Major organisations have been busily adapting to this new marketplace, restructuring and positioning themselves to address issues such as costs, labour, innovation and scale. Of note is SunPower’s recent acquisition of SunRay which will give it a pipeline of PV projects totalling more than 1,200 MW in Italy, France, Israel, Spain, the UK and Greece, not to mention a local presence and workforce in those markets, markets that all have positive incentive schemes in place which should – theoretically at least – give a boost to PV sales in these countries. And then there’s Q-Cells, whose well-known ceo Anton Milner recently resigned from the company’s management board, echoing the demise of another renewable energy visionary in 2008 - Hans-Martin Rüther of Conergy (who presided over a period of incredible success but then over extended the company, tying it to a series of long term contracts that proved unsustainable). Q-Cells has certainly not been shy of making punts on various technologies, but is now struggling with the industry-wide tightening of prices and emergence of cheaper alternatives, and is now engaged in a complete restructuring programme, having decided to write down three of its investments to zero – Solaria, Sunfilm and Sovello – while focusing on its core competencies of crystalline silicon, and CIGS thin film modules (through its start-up Solibro). Such high profile casualties serve to focus minds, so where do the experts think we are at present in terms of the markets that the industry hopes will absorb modules as we move forward?
Markets It would be remiss not to start with Germany, where all the talk is of the reduced tariffs that will come, well, sometime this year, probably around the beginning of July with a one off reduction in the
Click through Political support
Further information:
Sackur asked the panellists whether they feared a potential change in Government, with UK elections expected to be called this year. Aquamarine’s McGrath said a change in Government would not be a problem. “We have got support across all parties. They all recognise the potential of wave and tidal.”
8
renewable energy focus
March/April 2010
■ UK Marine Energy Action Plan launched:
http://tinyurl.com/ylzg2hg ■ 1.2 GW Scottish wave and tidal leasing round announced:
http://tinyurl.com/ykpcdg4 ■ UK Budget 2010: http://tinyurl.com/yzt6rxa
News/Analysis
Renewable UK Wave and Tidal 2010 conference Speaking at its annual wave and tidal conference in the UK in March, RenewableUK Chief Executive Maria McCaffery said, “over the past 7 years we have seen the beginning of a true industry.” Not only that, but “the industry is starting to get the recognition it deserves.” But there is still some way to go, says RenewableUK, which believes the UK Government must spend a further £150-£200 million over the life-time of the next parliament on top of the £60m already spent. In addition to R&D funding from the Technology Strategy Board (TSB) and the Energy Technologies Institute (ETI), RenewableUK wants the Marine Renewables Proving Fund to be allocated £10-£11m per year, and the Marine Renewables Deployment Fund to be increased to £120m - up to 2013; and this in addition to a higher-multiple band for marine renewables in the Renewables Obligation, which will hopefully be addressed in the Marine Energy Action Plan (see above). Although many see a clear need for investment, getting that money is not easy, especially in today’s market. McCaffery said there is less credit, and that credit costs more too. The market is more risk adverse – and wave and tidal is still seen as “risky business”. Aquamarine’s Oyster device being lowered into the water at the European Marine Energy Centre (EMEC) in preparation for grid connection
commercial contract for the marine sector (In February 2010 the P2 project was awarded £4.8m by the Carbon Trust under the Marine Renewable Proving Fund, a new funding scheme from the Department of Energy and Climate Change (DECC); ■ Another company that seems to be moving ahead of the prototype pack is Aquamarine Power, whose Joint Venture with SSE Renewables has the potential to see its Oyster devices deployed in small clusters spaced over a stretch of coastline off mainland Orkney in Scotland running from Costa Head in the north to Neban Point in the south-west. The proposed wave farm would have an installed capacity of 200MW (the first 315kW Oyster 1 was grid-connected at EMEC in November 2009. The next generation 2.5MW Oyster 2 is scheduled for installation at EMEC in 2011); ■ Currently there are 2.4 MW worth of wave and tidal devices in UK waters, with a further 27 MW having received planning consent and 77.5 MW in planning. Outside of the UK, however, it wouldn’t be unfair safe to say that the rest of the world is lagging behind the UK when it comes to focusing specifically on wave and tidal, though countries like the USA are watching UK developments closely, and several countries (such as Portugal, Ireland and France) have introduced feed-in tariffs for marine renewables.
In a session on finance and insurance at RenewableUK’s conference, Dr David Clarke, Chief Executive of the Energy Technologies Institute (ETI), said one of the biggest worries is affordability. He said only a quarter of the cost lies with actually getting the machine into water – the rest is sucked up in things like environmental and performance studies for example. Listing the main challenges going forward for wave and tidal, he mentioned cost reduction, robustness, maintainability and the supply chain. Deborah Walter, Deputy Managing Partner at consultancy Kreab Gavin Anderson, presented results from an investor research study whose participants were from within renewable energy. She said that a majority were positive towards marine energy in the UK, but that negative factors included the uncertainty around technology, lack of commercialisation, funding and management.
In order to attract investment therefore, more Government funding is needed; ROC support must be given; and political and regulatory stability is required
The way forward Despite the recent highlights and excitement surrounding marine technologies, no one would argue that the sector is still at an early stage of its development in comparison to wind power. But more investors are waking up to the potential, according to industry organisations like RenewableUK – which even changed its name to reflect this fact. But the nagging question outside of the group of enthusiasts within the industry remains – can the wave and tidal industry at least finally begin to close the gap on more mature technologies like onshore wind, and if not what more needs to be done?
6
renewable energy focus
March/April 2010
Banks are risk adverse and look for proven technologies, whereas venture capitalists work on a different investment time-scale than wave and tidal can deliver. In order to attract investment therefore, more Government funding is needed; ROC support must be given; and political and regulatory stability is required. Jatin Sharma, lead Renewable Energy Broker at Willis Ltd covers the insurance aspects of marine renewables. He said the insurance sector sees wave and tidal as relatively high risk. These risks include esca-
For up-to-date breaking news click on http://www.renewableenergyfocus.com
News/Analysis
lating R&D costs, vessel availability for deployment and servicing, limited weather windows for installation and inadequate operation and maintenance strategies. He also said that “insurance is a key driver for a lot of risk adverse banks.” He therefore urged the industry to get insurers involved at an early stage in project development.
Answering tough questions In a round-table discussion lead by journalist and broadcaster Stephen Sackur, also taking place at RenewableUK’s wave and tidal event, industry specialists and representatives faced some challenging questions in confirming that the wave and tidal industry is still able to validate its technologies.
Anton Milner recently resigned from the company’s management board, echoing the demise of another renewable energy visionary in 2008, Hans-Martin Rüther of Conergy Neil Kermode, Managing Director of the European Marine Energy Centre (EMEC), said it is not possible to give a time scale for wave and tidal. He pointed out that we still do not know enough about the physics, corrosion, and wear and tear of wave and tidal devices. Siân McGrath, Head of Commercial Development at Aquamarine Power, was more upbeat however. She pointed out that over the last five years there has been an exponential growth in support, political will and interest. Companies are starting to see a return on their investment and marine energy firms are beginning to scale up. But she warned that continued support is needed as wave and tidal has long time-frames for commercialisation. At previous sessions during the day, the discussion touched upon securing manufacturing in the UK. Henry Jeffery, Senior Research Fellow at the Institute for Energy Systems, University of Edinburgh said: “The UK is seen as a leader in this field – both in terms of technology and policy. The Marine Action Plan needs to cement that position to create ‘a strong home market’”. Competition will be a good thing for the industry as a whole, but Kermode said that the example of Pelamis being set up in Portugal rather than in the UK “woke up the UK industry”.
As Andrew Mill, CEO at the New and Renewable Energy Centre (Narec), pointed out regarding potential opposition to marine energy: “Environmental impact is important, but if we don’t do anything, the consequences will be far worse.”
Solar Photovoltaics: clouds on the horizon? 2010 was predicted by many to be the year that solar PV recovered some of the ground lost over the past 18 months after the industry’s welldocumented problems – the global recession combined with the collapse of the Spanish market; this resulted in oversupply, price decreases and margin pressures, something the PV industry had not been used to and, more importantly (in many cases) were not ready for. And as if to add to this pressure, oversupply gave the lower-cost Chinese, Korean and Taiwanese manufacturers a major shot in the arm for their own exports. Major organisations have been busily adapting to this new marketplace, restructuring and positioning themselves to address issues such as costs, labour, innovation and scale. Of note is SunPower’s recent acquisition of SunRay which will give it a pipeline of PV projects totalling more than 1,200 MW in Italy, France, Israel, Spain, the UK and Greece, not to mention a local presence and workforce in those markets, markets that all have positive incentive schemes in place which should – theoretically at least – give a boost to PV sales in these countries. And then there’s Q-Cells, whose well-known ceo Anton Milner recently resigned from the company’s management board, echoing the demise of another renewable energy visionary in 2008 - Hans-Martin Rüther of Conergy (who presided over a period of incredible success but then over extended the company, tying it to a series of long term contracts that proved unsustainable). Q-Cells has certainly not been shy of making punts on various technologies, but is now struggling with the industry-wide tightening of prices and emergence of cheaper alternatives, and is now engaged in a complete restructuring programme, having decided to write down three of its investments to zero – Solaria, Sunfilm and Sovello – while focusing on its core competencies of crystalline silicon, and CIGS thin film modules (through its start-up Solibro). Such high profile casualties serve to focus minds, so where do the experts think we are at present in terms of the markets that the industry hopes will absorb modules as we move forward?
Markets It would be remiss not to start with Germany, where all the talk is of the reduced tariffs that will come, well, sometime this year, probably around the beginning of July with a one off reduction in the
Click through Political support
Further information:
Sackur asked the panellists whether they feared a potential change in Government, with UK elections expected to be called this year. Aquamarine’s McGrath said a change in Government would not be a problem. “We have got support across all parties. They all recognise the potential of wave and tidal.”
8
renewable energy focus
March/April 2010
■ UK Marine Energy Action Plan launched:
http://tinyurl.com/ylzg2hg ■ 1.2 GW Scottish wave and tidal leasing round announced:
http://tinyurl.com/ykpcdg4 ■ UK Budget 2010: http://tinyurl.com/yzt6rxa