The allure of marine and hydrokinetic (MHK) energy is clear: water is 800 times more energy dense than wind, MHK technologies have two to three times the capacity factor of solar, and the growth in offshore wind has demonstrated that despite the unforgiving marine environment, energy can be harvested offshore. But, as we point out in Pike Research’s recently released report, Marine and Hydrokinetic Energy, it’s time for the industry to deliver. A brief look at the markets on both sides of the Atlantic highlights the opportunities and challenges facing the nascent MHK industry.
The United Kingdom recently approved leases for 1.6 gigawatts (GW) of wave and tidal projects toward its target of 2 GW of installed marine and hydrokinetic capacity by 2020. The U.K. currently offers 5 Renewable Obligation Certificates (similar to U.S. Renewable Energy Credits) per megawatt-hour (MWh) of MHK electricity generation and has a four-tiered MHK feed-in tariff scheme that extends out to 2021. The U.K. is home to multiple grid-connected marine energy testing centers that host a dozen prototypes. In February, Siemens announced it was acquiring Marine Current Turbines, a leading technology company in which Siemens has been investing in for several years, and is now heading toward large scale deployment. Over the next six years, the a series of “phase 1” commercial scale deployments ranging between 50 MW and 200 MW will determine the feasibility for scaling projects up to as much as 1 GW. The questions are: Will these “phase 1” deployments perform as well at scale as they have over the past several years at testing centers? And can these massive arrays survive for 20+ years underwater without maintenance costs sinking ROI?
Meanwhile, in the latest version of the proposed 2013 budget, the United States reduced its funding commitment for marine energy by 66%. Over the next six years, only a few projects at limited capacity will move forward, despite years of testing. Three “National Marine Renewable Energy Centers” have been designated, but have very limited financial resources. The most experienced U.S. MHK company, Verdant Power, recently received FERC’s first-ever issuance of a commercial license for tidal power – for a whopping 1 MW tidal project. This came six years after Verdant became the first company in the world to install a grid-connected tidal array. Lockheed Martin is the only major corporate entity that has seriously delved into marine energy – but with ocean thermal energy conversion technologies that are not likely to see broad commercial viability before 2020, if ever. U.S. river hydrokinetic companies may fair better in the next six years as Pike Research forecasts up to 300 MW installed by 2017. The questions are: Can the US government create an adequate enabling environment to green light quality MHK projects? And if so, how many US companies will remain by the time they get through the extremely long (and costly) permitting process?
Both countries have insisted, correctly, that given the immense technical and environmental challenges presented by MHK, it is critical to “get things right”. But the bottom line is that in the U.K., the industry is getting a clear shot at proving its muster, while the nascent U.S. MHK industry is falling into a familiar pattern that has prevented other clean-tech industries from reaching their full potential: lack of investment certainty, lack of policy direction, inconsistent federal funding, and severe regulatory restrictions.
Tags: Marine & Hydrokinetic Energy, Policy & Regulation, Renewable Energy, Smart Energy Practice
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