OES Annual Report 2012 - Ocean Energy Systems

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Over 2GW of offshore wind is now operational in the UK alone. There is potential for over 50GW of
offshore wind to be further developed under recent seabed leasing rounds in the UK and it is expected
to make a strong contribution to meeting UK renewable energy targets, where there are constraints to
onshore developments in densely populated areas of southern Britain. As EU energy markets integrate
and renewable targets evolve, such offshore wind opportunities offer the potential to meet the demands
of more densely populated regions across Northern Europe.
In the medium term, there are no obvious constraints to offshore wind’s expansion though there are risks
to accessing the deeper water sites identified to meet future requirements. Renewable UK [1] expects
investment costs of offshore wind to remain at circa £3m/MW (~€4m/MW) 1 up to 2022 with levelised
cost of energy (LCOE) reducing to £130/MWh (€160/MWh) during that period. Given the potential scale
of the offshore wind expansion, in order for other forms of offshore renewable energy to gain significant
penetration in the market, they will need to achieve similar or lower cost levels. Furthermore, given that
ocean energy is operating in a similar or more severe environment than offshore wind and shares similar
marine foundation and transmission costs, it is likely that ocean energy will also require economies of
scale similar to offshore wind for long term viability. Whereas offshore wind was able to benefit from
onshore wind technology to build up such economies of scale, ocean energy technologies must find a
similar bridging market to develop a supply chain, while also benefiting from the lessons of offshore wind
in terms of electrical infrastructure and marine operations.
ESB and Ocean Energy
ESB (Electricity Supply Board) is the largest utility in Ireland comprising of 6GW of generation capacity in
Ireland and Great Britain as well as the transmission and distribution system on the island of Ireland. ESB
has ambitious decarbonisation targets requiring significant investment in renewable generation such as
wind energy and ocean energy. As such, ESB’s interest in ocean energy relates to its considerable potential
to contribute to ambitious renewable generation targets.
ESB has a dedicated Ocean Energy team, which is responsible for the strategic approach to developing
wave and tidal stream energy generation assets. ESB has had an involvement in Ocean Energy for a number
of decades including technology partnership with numerous device developers such as MCT, Wavebob
and Wave Dragon. ESB is currently developing their own wave energy project called WestWave (www.
westwave.ie) and this has been developed with partners such as Pelamis Wave Power, Aquamarine Wave
Power, Ocean Energy Ltd. and Wavebob Ltd. There has been significant progress in technology verification
in recent years. However, given that technology is still being proven based on single device testing, ESB
envisages that it could still be some time before large commercial ocean energy generation projects of the
scale seen in offshore wind energy will become viable investment propositions.
ESB envisages that the bridging market for ocean energy projects will require enhanced public support
until economies of scale can be realised. ESB define three broad phases of Ocean Energy projects in this
regard. These phases are as follows:
ÌÌ
Phase 1: Pre-Commercial Arrays (5-10MW)
This would follow on from successful single prototype device verification. Phase 1 projects would be the
first step in establishing the potential reliability and operational costs of ocean energy arrays. As described
later, ESB believe that this phase will require significant grant and tariff support. ESB’s WestWave project
is an example of a Phase 1 project.
ÌÌ
Phase 2: Small Commercial Arrays (25MW+)
This Phase would involve the first projects of significant scale using technologies proven with the benefit
of Phase 1 projects and expanding manufacturing capability. It is likely that tariff support over and above
what would be sustainable in the long term for large scale electricity generation projects may be required
to develop projects at this phase.
1
An exchange rate of £1 = €1.25 is assumed
ANNUAL
REPORT 2012