According to Douglas-Westwood’s report, The World Wave & Tidal Market Report 2011-2015, installations in 2011 are more than double those in 2010 and a total of 150MW of wave and tidal current stream capacity is forecast to be installed between 2011-2015. The three largest markets are U.K., Canada and the U.S. The U.K. leads with 110MW of installations forecast.
Shown in the accompanying photo is an attentuator wave energy device from Scotland’s Pelamis Wave Power.
Lead report analyst, Ian Jones, says “Capex here will total almost $900 million over the next five years, with annual expenditure approaching $500 million in 2015”. An excellent wave and tidal resource, together with encouraging levels of government funding, market mechanisms and site licensing make the country the strongest market for both wave and tidal. Driven by a strong tidal resource, excellent R&D and support, Canada is the second largest market. The US is also making progress, again with much R&D funding attracting developers.
“Small commercial projects are starting to be realized with a dramatic increase towards the end of the forecast period, led in large part by the UK’s first licensing round which has encouraged large projects to come forward from utility companies,” explains Frank Wright, Renewable Energy Manager at Douglas-Westwood. “The next two years will be vital in creating an investment environment that allows the financial community to fund these projects and to invest in the necessary supply chain.”
Still, the report points out, the challenges facing the growing industry are considerable.
With few commercial-level devices installed to date and fewer still in multiple-unit installations, the full cost of wave and tidal farms remains uncertain. Costs are high at present but there is significant reduction potential as the supply chain develops and dedicated manufacturing begins. As a result, there is recognition that wave and tidal projects will require higher levels of support from appropriate market mechanisms, such as feed-in tariffs or green certificate schemes.
The financing of wave and tidal projects and devices is dependent upon long-term industry confidence and visibility. To ensure sufficient investment appetite is created, individual countries must create the correct environment. “Commitment to long-term market mechanisms and targets must be given so that investors gain confidence; initial commercial projects must have strong support from government, given the high costs involved,” Wright commented. “The financial sector will not respond otherwise,” he warns.
Grid connection represents a major constraint for marine renewables deployment in several countries. The variability of the output together with the remoteness of many sites makes grid connection a challenge to commercial development. With projects often located away from areas of demand, grid upgrades are required. In some countries such as Portugal, this is not a significant issue, but countries such as the UK (in particular Scotland) have much to overcome. While grid upgrades are planned, these have not yet been considered with marine renewables in mind.