OES Annual Report 2012 - Ocean Energy Systems

113
05 / DEVELOPMENT OF THE INTERNATIONAL
OCEAN ENERGY INDUSTRY: PERFORMANCE
IMPROVEMENTS AND COST REDUCTIONS
Improve reliability -- The system reliability drives O&M costs because it dictates intervention cycles and
also replacement part cost. It is expected that with deployment experience, these system will become more
reliable and robust over time.
If the above improvements are applied to the baseline CoE profile of 27 cents/kWh at commercial scale, it
would allow a cost reduction on the order of almost 50 percent over present cost to a CoE of about 15.5
cents/kWh, as illustrated in Figure 5. Given the uncertainties in the prediction of the baseline cost of +/- 30
percent, the range of CoE values that could be achieved is on the order of 10 – 20 cents/kWh.
30
28
26
24
COE (CENTS/KWH)
22
20
18
16
14
12
10
POWER CAPTURE ALTERNATE MATERIALS RELIABILITY MARINE OPERATION
FIGURE 5: Contribution to cost reduction of different cost centers.
Cost Reductions in the US Context
Two scenarios were developed to illustrate how the cost reduction could be established in the US
marketplace. The first scenario (the blue lines in Figure 6) shows how the cost would decline from today’s
levels to the commercial opening cost level predicted by this study if the technologies stayed the same. Cost
reductions in this case are largely based on economies of scale (going from 5 MW plants to 50 MW plants)
and improvements in device reliability (eliminating the high failure rates typical in pilot and demonstration
projects). From the projected opening cost, an 85 percent learning curve indicates predicted cost reductions
as the cumulative installed capacity base grows beyond 100 MW. Figure 6 shows that the breakeven target for
the lower 48 states, at which no subsidies would be required, occurs at about 50,000 MW cumulative global
installed capacity. This point is very similar to the deployed capacity levels at which land-based wind started
to become very competitive.
The second scenario (the red line in Figure 6) shows what would happen if an accelerated research, development,
and deployment (RD&D) strategy were pursued. Such an accelerated program could potentially reduce the
CoE to a level of about 15 ¢/kWh within the first 100 MW of cumulative installed capacity. Cost projections
extending out from the 100 MW point were assumed to follow a more traditional learning curve with an 85
percent progress ratio. Figure 6 shows that the CoE would become competitive in Hawaii at a cumulative
deployed capacity of less than 200 MW. The learning in this early adopter market would allow costs to be
further reduced without any required subsidies, and therefore would minimize the public investment into the
technology space. At a cumulative installed capacity of about 3,000 MW, wave power would then reach grid
parity with the US mainland (lower 48 states and Alaska).