UK Minister for Energy and Clean Growth Claire Perry says: “We want to continue to invest in technologies that have the potential both to decarbonise and drive global exports, and (wave and tidal) is certainly an area that could contribute….”
The news last week of £7.7million new funding for two Scottish wave energy firms, alongside £7 million investment in Orbital Tidal, is a welcome boost to the country’s marine energy sector.
However, aside from proving technology, one of the greatest challenges for the sector is finding a suitable route to market – via a long-term, reliable revenue stream.
Other renewable technologies – solar, onshore and offshore wind – have all benefitted from a variety of revenue mechanisms, from Renewable Obligation Certificates (ROCs) to Feed-In Tariffs (FITs) and now Contracts for Difference (CfDs).
These have enabled early projects to be built and for costs to come down over time. Well-sited onshore wind is now the cheapest form of large-scale generation in the UK.
Yet despite the obvious long-term potential of marine energy, and the UK’s global lead in these technologies, current government policy is that wave and tidal power plants must compete for support with offshore wind, which is already established as a large-scale industry with low cost of energy. As a result, no CfDs have been awarded to wave or tidal projects in recent rounds.
It’s my view that small-scale experimental wave and tidal schemes (typically of a few megawatts or even less) cannot reasonably be expected to compete on price with the gigawatt-scale off-shore wind turbines schemes.
Sadly, this means that, although Scotland is great at inventing such new technologies, has world-leading testing (EMEC) and technology development (Wave Energy Scotland) schemes, there is a difficult path towards commercialisation for the businesses that result.
Various solutions are now being proposed. For example an ‘Innovation Power Purchase Agreement’ (IPPA) could allow large firms to contract directly with early tidal or wave schemes at a premium price to give these new technologies the leg-up they need.
Or, more simply, the UK Government could ring-fence a small amount of the total CfD pool for wave and tidal technology, then the start-up businesses in those sectors could have realistic prospects of scaling up and lowering the cost of energy in the process – such that they can, in time, compete on cost with more established industries.
And for those who say ‘this can’t be done’, well it can – DECC (as was) introduced a 30MW minima for wave and tidal in the first CfD auction round, and there is no reason it could not be done again today.
Of course, there are concerns about the impact on the consumer – but these very small amounts are a drop in the ocean when socialised across the electricity market and could be transformational for tidal and wave developers.
There is continued political support for wave and tidal, and I was especially pleased when our local MP for Midlothian, Danielle Rowley, raised the issue with Minister for Energy and Clean Growth, Claire Perry in the House of Commons last week.
The Minister responded as follows:
“The hon. Lady raises an important point. We want to continue to invest in technologies that have the potential both to decarbonise and drive global exports, and that is certainly an area that could contribute, although not at any price: we will not rerun the debate over Swansea, which would have been the most expensive power station the country had ever built and created just 30 jobs. There are potentially better, more valuable projects and I am always happy to look at innovative proposals coming forward to see how we might support this technology.”
The minister’s response was light on detail – but certainly leaves the door open to future support.
With the continued support of politicians across the political spectrum we should remain positive that a workable solution can be found.