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WAVE ENERGY TECHNOLOGIES:
CRITERIA FOR SUCCESS
ISLAND ENERGY TRANSITIONS:PATHWAYS FOR ACCELERATED UPTAKE OF
RENEWABLESMartinique, June 22-24, 2015
Max Carcas, Managing Director, Caelulum Ltd
Caelulum Independent company providing management
and consultancy services in offshore renewables Strategy advice to government in renewables
adoption Experienced in bringing new products to market
and market enablement >£70m funding raised in investment, sales,
grants in marine renewables Sales and joint ventures established with leading
utilities and energy companies
Wave Energy• Waves formed by
interaction of the wind with the sea
• Swell waves travel for thousands of miles without losing energy
• Very concentrated form of renewable energy
Þ Wave energy – stored, concentrated, wind energy
• Benefits from consistent trade winds
• Immunity to local climatic effects
• Small hourly & diurnal variation
• Numerous calibrated WIND-WAVE models
• Existing offshore forecasting services
Predictability
How much power can we get from ocean waves?
P = L . W. E
Length of coastline in m (eg 0 –
2000km)
Wave Power generation in
kW
Efficiency of wave energy capture (0-
100%)
W = ρ g² H² T 32π x
1000
ρ - sea water density = 1024kg/m³g – gravitational acceleration = 9.8 m/s²
T
Time period between
wave crests (seconds)
H – peak to trough wave
height (metres)
Wave Power kW per metre of wave front
How much is there?
60km x 15kW/m (est)= 900MW average; = 7.8TWh/year
….€2.7bn/year (!) @ 35c/kWh [Martinique demand =1.1 TWh/year, ie average of 125MW]
What about the technology?Key requirements:
Installability Survivability Reliability Maintainability Operability Cost effectivenessÞ Vital to have a fully
engineered solution to the all the requirements above to deliver commercial farm operation
Pelamis Wave Power
Aquamarine Power
The offshore/marine sector’s contribution:
“No major technical barriers to the development of wave energy prototypes have been identified. All issues raised under design, construction, deployment and operation can be addressed by transfer of technology from other industries, especially the offshore industry”
DTI Report - Wave Energy: Technology Transfer & R&D RecommendationsOve Arup, October 2000
Building on offshore technology
3. Sustainable business model- Virtuous circle of cost
reduction- profitable projects- profitable technology
suppliers
4. The vision- Significant economic, environmental and energy system benefits
2. First investible power projects- Key performance
indicators validated- Risks reduced that
could impact projected returns
1. Full scale prototypes- Generating electricity- Technology validation &
iteration
£305/MWh + capital grant
£150-200/MWh with 1GW deployed
£305/MWh; projects <30MW
Wave technology path to success
Commercial criteria Energy yield (eg 25-35% capacity factor)
Validated power curve over tidal cycle Availability (eg 80-95%)
Validated reliability and maintainability, ideally over period of 2-3 years Capital costs (eg £3-7m/MW)
Correlation between prototype and production Ratio of fixed costs in project to variable costs
Operating costs (eg 4-6% Capex/annum) Grid costs Correlation between prototype and production Ratio of fixed costs to variable costs
Lifetime (eg 15-20 years) Design & validation
Other risks eliminated/reduced Wake effects, electrical interconnection, environmental
PROJECTBUILD
PROJECTDEVELOPMENT
What to finance?
Ele
ctr
icit
y
consu
merProject Developer
Development (1-3 yrs)
Wave Energy Converter Technical feasibility studies
Environmental & Technical consultants, Stakeholders, Government, etc
Project OwnerBuild (9-24 months)
Wave Energy Converter assembly & installation
Component suppliers, subcontractors, fabricators, vessel operators
Balance of plant supply, substation, submarine cable, network upgrades
Project Owner Operation (>20 years)
Wave Energy Converter operation & maintenance
Component suppliers, vessel operators
Balance of plant maintenance, Insurers, site owner/lessor
PROJECTOPERATION
Who to finance?
Utilities Energy companies Independent power producers Pure project developers Pure financiers Industrials Suppliers/ Contractors Public sector
Decision factors for a project financier
Does return
on equity
balance risk?
RISKS:Machine:- Survivability- Reliability- Availability- Maintainability- OperabilityPolitical:- Tariff variationContractual:- Warranties
Financial Model
COSTS OF:- Machine- Installation- O&M- Insurance- Grid connection- Permitting & EIA- Seabed lease
Approach to financing
Likely projectreturn defined
Likely returnon equitydefined
INCOME:- Grants- Tariff- Energy Forecast
FINANCE/DEBT:- On balance sheetor limited recourse?- Contracts/Terms- Coverage ratios- Warranties
Resource datafor site
MachinePower curve
Data
from
Test
centre
pro
toty
pe
Data
from
Te
st centre
pro
toty
pe
Data
fro
m T
est
ce
ntr
e
pro
toty
pe
Allconditionsprecedent
met?
Execute contracts,
release finance
OrderMachines
CONTRACTPREPARATION:- PPA- EPC- I, O & M- Grid connection- Grant Assistance- Insurance
CONSENTS &PERMITS:- Environmental- Seabed lease- Fishing/Navigation- Onshore equip.GRANTS- secured
YES YES
OTHER BENEFITS Eg: PR, FirstMover, Exclusivity, Tech rights
Need for scale - CapexCapex cost versus scale of project
£0.00
£1.00
£2.00
£3.00
£4.00
£5.00
£6.00
£7.00
£8.00
0 5 10 15 20 25 30 35 40 45 50
Mill
ion
s
Project size (MW)
Ca
pex
co
st
(£m
/MW
)
£0
£20
£40
£60
£80
£100
£120
£140
£160
Mill
ion
s
Capex £/MW Capex cost (absolute)
Variable (per machine costs)
Fixed costs (Project development costs, Grid connection)
Need for scale – O&MO&M cost versus scale of project
0
2
4
6
8
10
12
14
16
18
0 5 10 15 20 25 30 35 40 45 50
Project size (MW)
Ele
ctr
icit
y c
os
t a
ttri
bu
tib
le t
o O
&M
(p
/kW
h)
£0.0
£0.2
£0.4
£0.6
£0.8
£1.0
£1.2
£1.4
£1.6
£1.8
Mill
ion
s
O&M cost (p/kWh)O&M cost (absolute)
Variable (per machine costs)
Fixed costs (O&M team, O&M base, vessel)
Back to the future?Wind 1980: ~10MW installed? Typical turbine 75kW Capacity Factor 12%
(1985, California) Annual average: 9kWWind 2012: >100GW Europe alone Typical turbine 3MW Capacity factor 30%
(2012, California) Annual average:
900kW
Back to the Future?
Opportunities for Martinique and other islands Use only indigenous energy resources Develop marine energy solutions
appropriate to local conditions Create conditions for inward
investment Create business and jobs – not just in
technologies but also support services, tourism relating to innovative projects
Protect the environment But first – understand what you have
and where you want to get to!