OES Annual Report 2012 - Ocean Energy Systems
OES Annual Report 2012 - Ocean Energy Systems OES Annual Report 2012 - Ocean Energy Systems
121 05 / DEVELOPMENT OF THE INTERNATIONAL OCEAN ENERGY INDUSTRY: PERFORMANCE IMPROVEMENTS AND COST REDUCTIONS PHASE 3: AFFORDABLE INVESTMENT COSTS FOR GENERATION PROJECTS OPEX €m/MW/annum CAPEX €m/MW CAPACITY FACTOR 20% 25% 30% 35% 40% 45% ANNUAL OPEX AS % OF CAPEX 2.0% 4.0% 6.0% 8.0% OPEX 0.04 0.07 0.10 0.12 CAPEX 2.15 1.87 1.65 1.47 OPEX 0.05 0.09 0.12 0.15 CAPEX 2.69 2.33 2.06 1.84 OPEX 0.06 0.11 0.15 0.16 CAPEX 3.23 2.80 2.47 2.21 OPEX 0.08 0.13 0.17 0.21 CAPEX 3.77 3.27 2.88 2.58 OPEX 0.09 0.15 0.20 0.24 CAPEX 4.31 3.73 3.29 2.95 OPEX 0.10 0.17 0.22 0.27 CAPEX 4.85 4.20 3.71 3.32 to yield a 10% IRR for a 25 year project life where a tariff of €160.00/MWh is payable used in table 7 current offshore wind (approx) TABLE 3: Phase 3 Affordable capital investment for commercial projects >50MW to be competitive with offshore wind. Technology Readiness Levels (TRL) In order for a project to demonstrate that it can fall within an acceptable cost envelope, technology developers must complete a test and validation programme that demonstrates this to the satisfaction of investors. ESB has developed technology readiness level (TRL) definitions [2], adapted from those developed for aerospace technology by NASA. The ESB wave energy TRL definitions have gained some broader acceptance as a means to evaluate the maturity of ocean energy conversion technology and to communicate validation requirements for future projects. ESB’s TRL levels range from TRL1 to TRL9 with TRL9 being a fully developed ‘commercial’, certified product with significant in-service experience (similar in maturity to offshore wind converters such as the ubiquitous Siemens SWT 3.6-120 turbine). Under the ESB definition, the TRL level of a technology is evaluated based on it meeting certain criteria in both functional readiness and lifecycle readiness. ÌÌ Functional readiness describes how it has been verified that a technology performs its specified major functions including energy production performance and maintaining station. ÌÌ Lifecycle readiness describes how well it has been verified that the lifecycle of a project based on the technology is viable, considering aspects such as manufacturability, deployability, operability, reliability, maintainability and overall commercial viability. The TRL levels are summarised in Table 4 below. TRL FUNCTIONAL READINESS LIFECYCLE READINESS 1 Basic principles observed and reported Potential uses of technology identified 2 Technology concept formulated. Market and purpose of technology identified 3 4 5 6 7 8 9 Analytical and experimental critical function and/or characteristic proof-of-concept. Technology component and/or basic technology subsystem validation in a laboratory environment. (>1:25 Froude) Technology component and/or basic technology subsystem validation in a relevant environment. (>1:15 Froude) Technology system prototype demonstration in a relevant environment. (>1:4 Froude) Technology system prototype demonstration in an operational environment. (>1:2 Froude) Actual Product (first of type) completed and qualified through test and demonstration. (1:1 Froude) Operational performance and reliability demonstrated for an array of type machines. Initial capital cost and power production estimates / targets established Preliminary Lifecycle design: targets for manufacturable, deployable, operable and maintainable technology Supply-chain Mobilisation: Procurement of subsystem design, installation feasibility studies, cost estimations, etc. Customer interaction: consider customer requirements to inform type design. Inform customer of likely project site constraints. Ocean Operational Readiness: management of ocean scale risks, marine operations, etc. Actual Marine Operations completed and qualified through test and demonstration. Fully de-risked business plan for utility scale deployment of arrays TABLE 4: TRL summary definition. Full definition in [2]
122 Although the ESB TRLs also make reference to the cost and performance of a technology within the lifecycle readiness criteria, this is in an absolute sense relative to a particular project business case. Using the cost and performance envelopes outlined above, it is possible to consider economic viability in terms of target costs. These define the maturity of a technology in terms of economic competitiveness in more detail. Table 5 proposes economic competitiveness levels for offshore renewable technology. LEVEL ECONOMIC COMPETITIVENESS RELEVANT ESB COST TARGETS 1 Potential for incremental changes to meet key performance requirements to enable commercial projects Table 1(b) 2 3 4 5 Economic viability under distinctive and favourable market and operational conditions. Limited market Sufficiently competitive to be a “new entrant” renewable energy of scale in general electricity generation market (e.g. offshore wind). Tariff Supports Required. Significant market Sufficiently competitive to be best cost renewable (e.g. onshore wind). Supports may still be required. Very large market potential Competitive in general electricity market without special support mechanisms. Market constrained by resource only Table 2 Table 3 N/A N/A TABLE 5: Economic Competitive Level summary definition. Weber [3] also recently published similar Technology Performance Levels (TPLs) as well as the concept of using both TRLs and TPLs to plan and describe the progression of technology development. Such definitions of economic competitiveness permit technology developers to consider aspects such as: ÌÌ Although a technology may be very well advanced in terms of prototype testing, even to full scale, it may have poor performance and high costs. While it may be viable for pre-commercial projects under particular financial incentives, it may not be on a trajectory towards overall competitiveness in the renewable energy market. ÌÌ Experimental iterations to increase economic performance at a high readiness level may be cost prohibitive as any design changes require repetition of large scale prototype testing. However, achieving high economic performance at a low readiness level may also be difficult due to the limitations of laboratory and numerical analysis and in such cases important deficiencies in technology may not be detected until it is tested at larger scale in the ocean. By considering a combination of TRLs and economic targets, Weber [3] describes how one can capture an optimal “trajectory” in terms of developing technology towards the performance and readiness required by utility project developers. In the economic competitiveness levels described in Table 5, Level 3 is a realistic ambition for offshore renewables as it defines generation technology that is cost competitive with “best new entrant” forms of renewable energy, required to meet government targets (currently offshore wind in the GB market). However, there is inherent uncertainty on the future value of renewable electricity and this relates to the demand derived from government targets as well as the potential future availability of newer, more competitive forms of renewable energy. For now, ESB considers offshore wind to be the appropriate “new entrant” renewable energy that ocean energy must match economically in order to access a market of scale in Great Britain and Ireland electricity markets. As such, the cost and performance envelope defined in Table 3 is indicative of an ESB Phase 3 project cost requirements. Project Requirements ESB have set required TRL and economic hurdles for each of the three project phases outlined previously, as shown below in Table 6. This shows the developing combined technical maturity (TRL) and economic viability which must be demonstrated before each phase of projects can be developed. ANNUAL REPORT 2012
- Page 79 and 80: 70 RESEARCH & DEVELOPMENT Governmen
- Page 81 and 82: 72 SPAIN José Luis Villate TECNALI
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122<br />
Although the ESB TRLs also make reference to the cost and performance of a technology within the<br />
lifecycle readiness criteria, this is in an absolute sense relative to a particular project business case. Using<br />
the cost and performance envelopes outlined above, it is possible to consider economic viability in terms<br />
of target costs. These define the maturity of a technology in terms of economic competitiveness in more<br />
detail. Table 5 proposes economic competitiveness levels for offshore renewable technology.<br />
LEVEL ECONOMIC COMPETITIVENESS RELEVANT ESB COST TARGETS<br />
1<br />
Potential for incremental changes to meet key performance<br />
requirements to enable commercial projects<br />
Table 1(b)<br />
2<br />
3<br />
4<br />
5<br />
Economic viability under distinctive and favourable market<br />
and operational conditions. Limited market<br />
Sufficiently competitive to be a “new entrant”<br />
renewable energy of scale in general electricity generation<br />
market (e.g. offshore wind). Tariff Supports Required.<br />
Significant market<br />
Sufficiently competitive to be best cost renewable<br />
(e.g. onshore wind). Supports may still be required.<br />
Very large market potential<br />
Competitive in general electricity market without special<br />
support mechanisms.<br />
Market constrained by resource only<br />
Table 2<br />
Table 3<br />
N/A<br />
N/A<br />
TABLE 5: Economic Competitive Level summary definition.<br />
Weber [3] also recently published similar Technology Performance Levels (TPLs) as well as the concept<br />
of using both TRLs and TPLs to plan and describe the progression of technology development. Such<br />
definitions of economic competitiveness permit technology developers to consider aspects such as:<br />
ÌÌ<br />
Although a technology may be very well advanced in terms of prototype testing, even to full scale, it may<br />
have poor performance and high costs. While it may be viable for pre-commercial projects under particular<br />
financial incentives, it may not be on a trajectory towards overall competitiveness in the renewable energy<br />
market.<br />
ÌÌ<br />
Experimental iterations to increase economic performance at a high readiness level may be cost<br />
prohibitive as any design changes require repetition of large scale prototype testing. However, achieving<br />
high economic performance at a low readiness level may also be difficult due to the limitations of laboratory<br />
and numerical analysis and in such cases important deficiencies in technology may not be detected until it<br />
is tested at larger scale in the ocean. By considering a combination of TRLs and economic targets, Weber<br />
[3] describes how one can capture an optimal “trajectory” in terms of developing technology towards the<br />
performance and readiness required by utility project developers.<br />
In the economic competitiveness levels described in Table 5, Level 3 is a realistic ambition for offshore<br />
renewables as it defines generation technology that is cost competitive with “best new entrant” forms<br />
of renewable energy, required to meet government targets (currently offshore wind in the GB market).<br />
However, there is inherent uncertainty on the future value of renewable electricity and this relates to<br />
the demand derived from government targets as well as the potential future availability of newer, more<br />
competitive forms of renewable energy. For now, ESB considers offshore wind to be the appropriate “new<br />
entrant” renewable energy that ocean energy must match economically in order to access a market of<br />
scale in Great Britain and Ireland electricity markets. As such, the cost and performance envelope defined<br />
in Table 3 is indicative of an ESB Phase 3 project cost requirements.<br />
Project Requirements<br />
ESB have set required TRL and economic hurdles for each of the three project phases outlined previously,<br />
as shown below in Table 6. This shows the developing combined technical maturity (TRL) and economic<br />
viability which must be demonstrated before each phase of projects can be developed.<br />
ANNUAL<br />
REPORT <strong>2012</strong>