The UK could capture 15% of the global marine renewable energy sector by 2050, worth up to £4bn to the economy, according to a new report.
And successfully harnessing this energy has the potential to deliver over 10% of the UK’s forecast electricity needs in 2050 whilst helping to meet the greenhouse gas emissions and renewable energy targets and reducing reliance on gas imports.
The UK has a large natural resource of marine energy – energy from waves and from tidal streams - says a Technology Innovation Needs Assessment (TINA) report issued by the Low Carbon Innovation Co-ordination Group (LCICG), which is the coordination vehicle for the UK’s major public sector backed funding and delivery bodies in the area of low carbon innovation.
The report assesses that the eventual role of marine energy in the UK energy system is currently uncertain. Marine energy systems are still at the relatively early stages of technology development and demonstration, with significant uncertainty about their ultimate costs and risks. Deployment scenarios range from almost no marine energy to over 20GW in the UK by 2050.
If costs are reduced the analysis suggests that the UK is uniquely well positioned to capture market share, in particular due to its favourable resources - this could be up to 50% of available European wave resource and c.25% of European tidal resource.
But most deployment would occur post-2020, and levels of deployment this decade will not be sufficient to have a major impact on 2020 renewable energy or carbon emissions targets.
The TINA experts predict the cost of marine energy will need to reduce by 50-75% by around 2025 if it is to compete with offshore wind power and other technologies. Whilst whole arrays have not yet been developed, they estimate that the current costs of marine energy are of the order of £350-400/MWh for wave and £200-300/MWh for tidal. These compare to current offshore wind costs of £140-180/MWh with cost reduction pathways to £100/MWh by 2020 established and validated with key industry players.
“This level of cost reduction of marine energy is ambitious but conceivable with significant economies of scale and innovation . . . combined with supply chain optimisation and appropriate financing”, the Report says.
“This assessment is based on a broad range of expert sources, in turn informed by what has been learnt from historical demonstrations and modelling of future arrays. It would require a large scale (at least 200MW) array installation to be deployed by 2025 and a significantly optimised marine energy system that incorporates multiple innovations, combining to deliver the maximum level of cost and risk reduction deemed possible.
“If marine energy reaches parity on costs and risks with offshore wind by 2025, cost of energy generated (of both technologies) could potentially fall further to c.£60/MWh by 2050, which could make them cost competitive with nuclear, and fossil fuels with CCS.”
Successfully implementing this innovation in marine energy could reduce deployment costs in the UK by between £3 - 8bn.
There is similar uncertainty in the global market, with deployment scenarios ranging from almost no marine energy to over 180GW by 2050. But the UK is uniquely well positioned to capture market share, potentially c.15% of the global market, driven in particular by favourable resources and the current dominance of UK device developers. If marine deploys globally and if the UK successfully competes in this global market to achieve the market share above, then marine energy could contribute up to 4.3bn to UK GDP up to 2050.
The Report adds that to unlock this opportunity there is a strong case for targeted public sector intervention to catalyse private sector investment – there are significant market failures to innovation and the UK cannot rely on other countries to develop the technologies within the required timescales because there are on-going market failures, including demand uncertainty, infrastructure conditions, insufficient payback on early stage R&D and insufficient collaboration and knowledge sharing.
It also says the UK cannot rely on other countries to develop these technologies on its behalf – marine energy will not achieve the required cost reduction within the window of opportunity outlined above without UK public sector intervention; it would take too long for other countries to catch up the UK. In addition, the UK requires specific technology solutions, in particular for foundations and installation systems, to address its specific resource conditions.
Innovation support across various stages of technology development is needed to play a role in reducing cost of energy and risk, with the later stages having the highest innovation costs.
This would include the initial deployment of first arrays to prove a viable cost reduction pathway, support to move technologies beyond single device demonstration and into first arrays (c.5MW). And in the longer term, first array development of second generation technologies may be required in order to prove solutions for more difficult conditions (e.g. deeper water).
R&D also needs to address the challenges identified in first arrays such as cabling, multi-array deployment, device interactions, and the cost and risk reduction required to make first arrays viable. These areas are likely to provide opportunities for collaborative R&D.
For tidal energy, R&D is required on system integration and evolution of component level capabilities. For wave energy, as well as system level R&D, it is possible that new and better concepts will be required at the component and device level. This R&D is likely to be at relatively low cost compared to demonstration and deployment and will drive the step-change cost reductions required to meet the full cost reduction potential.
The Report says that public intervention should focus on increasing collaboration and integration of RD&D to address these market failures. It should also join up innovation programmes with supply chain and infrastructure development.
The LCICG members have provided significant support to marine energy in the UK. They expect to invest up to an estimated £60m-£80m of public sector funding over the next 3-4 years, to leverage 1 to 3 times that from the private sector.
Achieving the full benefit from innovation over the following 4-10 years will require significant ongoing UK and European Union public sector funding, scaling up support for a prioritised set of technology innovations as they move from design to demonstration.
The Report adds: “Our analysis would suggest that the UK is uniquely well positioned to capture market share, in particular due to its favourable resources (c.50% of available European wave resource, and c.25% of European tidal resource) and the strength of its supply base thanks to past support measures relative to other geographies.
“UK competitive advantage is estimated to be high or very high in nearly all areas with the exception of power take-off systems (a technology area dominated by larger electric engineering companies e.g. ABB), thanks to a strong research and development base, a strong share of leading device developers, and the experience from its offshore oil & gas and offshore wind industries.
“The marine market is likely to be global for smaller subcomponents, vessels and design elements and regional for the larger components, with particularly strong regions in Europe, parts of SE Asia and the East Coast of North America.
“With successful technology development, and the required build of infrastructure and industrial capacity, the UK could be a strong player, especially in regional markets. This would equate to a sizeable share of the global market, an estimated c.15%. The UK‟s global share in structures & prime movers could be c.25% reflecting today’s dominance and with a c.25% of O&M reflecting its large local resource."
The Report concludes with a warning that the UK cannot rely on other countries to drive innovation with the required focus and pace
It says: “Our analysis broadly concludes that the UK cannot rely on innovation by other countries, notably for the reason that the UK’s leadership of the industry puts it noticeably ahead of its nearest competitors (Canada, US, Ireland) with twice as many devices and the most credible players.
“In addition, in the medium and high/very high deployment scenarios, the UK will require the technology well ahead of the rest of the world. In addition, the UK has specific requirements for foundations & moorings and, potentially, installation technologies, related to its geographical conditions (e.g. water depth in tidal, sea-bed conditions in wave).”