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The sectors are characterized by high numbers of prototype technologies. Over 200 are known of and tracked by Douglas-Westwood. Of these technologies, only a handful is now approaching full-scale commercial deployment. The majority fail to progress to full-scale prototyping, often due to difficulties raising the required finance in this now highly competitive market.
With the first multiple-unit commercial-scale installations now occurring, such as the Agucadoura wave farm, off Portugal, interest in the marine renewables industry is at a high. Investors are seeking the most promising technologies and individual countries are bringing in market mechanisms to help establish projects.
Figure 1: Wave & Tidal Current Stream -- Installed Capacity 2004-2013
Source: Douglas-Westwood
The United Kingdom is so dominant due to three major factors. First, the excellent wave and tidal resources that exist around the coastline -- many other countries do not benefit from both together. Second, the market mechanisms and funding in place, which are comparatively strong and give more confidence than in other countries. Third, the UK is home to a large number of wave and tidal device developers, including some of the 'market leaders' such as Pelamis Wave Power and Marine Current Turbines.
The United States is expected to be the second largest market, with 11 MW (12 percent) of overall capacity. Portugal with 9 MW (10 percent) and Canada with 6 MW (7 percent) are the other most significant countries. Portugal is especially strong in the wave sector whereas Canada has more potential from tidal.
A total of 135 units are forecast with over half of all devices being commercial scale. Seventy-four commercial units will be installed, 55 percent of the total. Of the 86 MW forecast, 44 MW is from wave energy devices and 42 MW from tidal current stream.
It is our view that the 2009-2013 period will see several devices in each sector pull away and build significant market share. Over the next five years devices that are deployed successfully on a commercial basis, and can prove reliability and low maintenance requirements, will provide the knowledge for a second generation of devices, where we may see some standardization of device design emerging.
There will be new technologies emerging, but only the most promising will progress in an increasingly competitive marketplace. Support must be forthcoming through government funding to help companies get devices into the water for thorough testing and ongoing product development.
There are, however, many challenges facing the industry:
Survivability and reliability -- There are justified concerns over the reliability of devices. With relatively little real-world operation of projects, developers must prove reliability, survivability and maintenance is adequate. There have been multiple cases of device failures but this is to be expected in the prototype stages. The growth of offshore wind has been characterized by some major reliability problems, and this sector is using decades-old technology. The marine environment is extremely challenging and for devices to operate successfully in it will require significant investment.
Supply chain development -- While there are some elements of the supply chain already in place, the emerging industry will need a fuller range of companies to enter the sector. The high number of different technologies means that 'off-the-shelf' components do not exist. This adversely impacts costs and, potentially, production timelines.
Manufacturing -- Manufacturing will prove to be a key challenge for the commercialisation of the industry.
Few of the many devices being developed have yet gone through any commercial level manufacturing processes. While costs are acknowledged to be high on prototype/demonstration units, what matters ultimately to project developers and investors is costs at a commercial scale for farm-style projects (where appropriate). Without 'off the shelf' components, developers must engage fully with the supply chain to accurately estimate and future-forecast costs. Location of manufacture is a key issue.
Dedicated manufacturing facilities are currently a rarity. One company that has its own plant is OpenHydro which opened its European assembly facility in 2007. The 2,500 m2 (27,000 sq ft) Irish technical center is adjacent to Greenore Port, County Louth providing convenient access to sea transport. The first turbine to be built at this new facility was completed in October 2007.
Pelamis Wave Power also has an assembly facility at Fife Energy Park, Methil, Scotland. In July 2007, the company secured a 260,000GBP ($378,000) Regional Selective Assistance grant to upgrade its production facility.
The funding made the company a permanent tenant at the Energy Park which features deep quayside access, long quaysides and large-scale covered manufacturing facilities. The production facility features upgraded production flow lines, material handling, a machine shop, test facilities and office accommodation.
Investment -- Developers are usually reliant on private investment to progress their devices to a pre-commercial stage. The leading technologies have each achieved private investment of around 10 and 50 million GBP.
Market mechanisms -- The importance of national market mechanisms for marine renewables is paramount. The UK is emerging as the dominant player in the industry, in large part due to the mechanisms in place. Long-term confidence in a market is essential for investors; this has been shown through both the onshore and offshore wind industry previously. While countries such as the US have some strong domestic technologies, a current lack of support for projects means developers must look abroad for sites.
Cost -- Thorough understandings of performance, reliability, survivability, maintenance, etc., are required to provide true costs and to ascertain the operable lifetime of a device. With full-scale prototype/demonstration plants only having been operated for relatively short periods at present it is arguable that true costs remain to be seen, certainly at the commercial level.
Operational expenditure (Opex) is a variable cost and will be higher in the early years of a project's life with extended periods of commissioning, testing and refining.
The major cost variables are as follows:
- Distance to shore -- This creates an immediate increase in cabling costs and will also affect the cost of both installation and O&M due to the distance vessels and personnel will have to travel. With greater distances to the site, weather windows are shorter due to travelling times. This can impact upon uptime and overall production.
- Installation -- Major factors here are fabrication, transportation, foundations or moorings, time required for installation and network integration. Minimising the amount of time and work required to install and commission is a major cost (and risk) benefit.
- O&M access -- Some devices have functionality to raise the unit out of the water entirely and hold it fixed in place. This greatly eases O&M activity and could reduce O&M time and therefore downtime. Other devices are operable in location but others will have to be relocated onshore for major work. This is costly but provides a safer working environment. It also may enable a fuller inspection of the device while out of the water than would be possible during routine offshore maintenance.
- Modularization -- Devices with easily 'swappable' components can offer quicker and safer O&M, lowering costs offshore, potentially with overall cost savings.
- Redundancy -- Providing redundancy in the device may be costly but can prevent expensive intervention and the associated loss of production. However, this may not be possible/desirable and performing remedial work on site or onshore may be preferable. While this is usually considered on a device level, looking at it on a project level, it is possible to see some projects deploying 'extra' devices to bring online in case of the failure of one of the array's devices. This is more likely with smaller units.
- O&M strategy -- the scheduling of O&M activities is of key importance. Unscheduled downtime must be avoided by ensuring the upkeep of the device, but this must be balanced against the cost and risk of offshore O&M activity. Remote monitoring is particularly significant here.