IT WAS the world’s first offshore wave power machine to generate electricity into the grid, and was hailed as a “significant milestone in marine energy development” at its launch in 2004. But ten years later Pelamis Wave Energy has gone under.
Last month’s decision to call in administrators KPMG was quickly followed by news that another sector trailblazer, Aquamarine Power, will be forced to make most of its staff redundant. In 2009 its flagship machine, Oyster, became the world’s first working hydro-electric wave device.
KPMG is seeking buyers for Pelamis, and Aquamarine Power will keep trading with significantly reduced staffing levels. But the effective crippling of these leading players is a massive setback for the sector, which a new report describes as being “on the brink of floundering”.
Pelamis and Aquamarine make up half of Scotland’s indigenous wave power firms, and previously accounted for the lion’s share of employment and funding.
Both are based in Edinburgh, and both used the European Marine Energy Centre in Orkney to test their equipment. But the similarities don’t end there: both also specialised in producing power from the ocean’s waves, a technology that is not as advanced as tidal energy.
A report to be published by the Offshore Renewable Energy (ORE) Catapult, the UK’s flagship technology innovation and research centre for offshore wind, wave and tidal energy, not only highlights the scale of funding requirements but also the gap between wave and tidal needs. It is estimated the tidal industry needs upwards of £100 million to get its first major projects into generation, but wave requires some £200m even before the costs of any large-scale development hitting the water.
While investors understand the distinction, there remains a tendency to use “wave” and “tidal” interchangeably. Lindsay Leask of Scottish Renewables concedes the industry itself is prone to catch-all phrases that ignore fundamental distinctions.
“There are lots of differences between the two, and we are quite guilty of lumping them together under the general term of marine,” says Leask, the group’s senior policy manager for offshore renewables.
Fixed to the sea floor, tidal generators have three blades that are pushed by the flow of the water.
Devices at the water’s surface capture the power of waves created by the wind.
Unlike tidal equipment, the wave machines developed so far by various firms are of disparate design.
“Wave is in a different boat,” Leask adds. “The technology is not quite at the same level.”
Andrew Macdonald, senior innovation manager at ORE Catapult, says tidal technology is only really suitable around countries such as the UK, France and Japan – anywhere with a coastline that juts into the water, creating strong tidal flows. The potential for wave energy around the rest of the world could be three to four times larger.
“The prize with wave is that it is a much bigger market globally if you get the technology right,” Macdonald says. “It would be a major export market.
“The issue around wave is that it has taken a long time – longer than people expected – to get the technology to commercial readiness.”
Risk-averse investors are unwilling to put money into either wave or tidal projects at the moment, though ORE Catapult is hoping to address this through a series of recommendations in its forthcoming report. On a practical level, the renewables centre focuses much of its attention on establishing common equipment and procedures in these emerging sectors.
Standardisation speeds up development while also bringing down costs: two areas where marine in particular could improve. Government “strike prices” currently put the cost of producing offshore wind power at £135 per megawatt hour (Mwh), versus £305 for tidal power.
The chief executive of the company that will start putting underwater turbines in the Pentland Firth at the start of next year admits the “costs are higher”, but adds that is always the case with new technologies.
Dan Pearson is head of MeyGen, the Caithness-based company owned by Singapore’s Atlantis Resources. It aims to install several hundred turbines in the Pentland Firth, with operation under way by the end of 2016.
If successful, this could prove a turning point for Scotland’s marine renewables sector. Macdonald says it would show both government and private investors that such projects are capable of meeting environmental targets while also generating adequate financial returns.
During its lifetime, Pelamis raised funding of more than £95m. About £70m of that was private investment, plus £12.9m from Scottish Enterprise and £2.5m from the Scottish Government’s Marine Renewables Commercialisation Fund (MRCF).
Aquamarine Power received £15.5m from Scottish Enterprise in a mix of equity, grants and loans, as well as £3.4m from the MRCF. This helped leverage an additional £66m of private sector funding.
Though substantial sums, they still fall well short of ORE Catapult’s projections on the levels of investment required. The group is therefore pushing for closer co-ordination across the marine industry “to maximise every bit of funding that comes in”.
Wave Industry Scotland – the government initiative announced in the wake of the Pelamis collapse – will also seek to forge better co-operation across the industry. Early indications are that it will focus on promoting common components, while also acquiring bits of intellectual property that would be made available to any developer in the sector.
Meanwhile, ORE Catapult and the Carbon Trust continue to collaborate on the Marine Farm Accelerator, a steering group that targets issues of common interest across the industry.
“People talk about the companies in financial trouble, but at the engineering level there is a huge amount of positive work going on,” Macdonald says.