Money Talks in Marine Power Generation

Wednesday 31 October 2012, Amsterdam

Governments are embracing marine power as they attempt to combat climate change and an increasing dependence on fossil fuel, states the new report.

The new report states that development in the ocean energy sector could significantly reduce greenhouse gas emissions and pollution, create direct and indirect employment, and lead to the economic development of coastal areas. However, the industry will have to find ways to cut costs in order to win the world over.

Ocean energy refers to power generated by tides, waves, marine current, salinity gradient or thermal gradient. While the ocean energy industry is still young, it holds the potential to fight the current reliance on fossil fuel generation.

Ocean energy is the costliest of all renewable power technologies, with wave energy technology holding a capital cost between $9,000/ kilowatts (kW) and $12,500/kW, and tidal energy technology having a capital cost ranging between $8,000/kW and $9,500/kW. The Levelized Cost of Energy (LCOE), defined as the cost incurred in generating a unit of power by a power generating technology, averages at $0.49/kWh and $0.39/kWh for wave energy and tidal energy technology respectively. Offshore wind energy technology has an LCOE of around $0.263/kWh, and marine energy must strive to reach a similar pricing before it becomes a competitive energy source. However, future technological developments are expected to drastically decrease cost of wave energy projects.

The marine power industry is currently held back by the lack of standards in place for ocean power equipment, a lack of regulatory framework to standardize financial support to producers, and the absence of proper guidelines and authorization processes for gaining approvals.

Many countries offer credit schemes in order to promote the young marine energy industry. The US government’s Production Tax Credit (PTC) for electricity generated from qualified renewable sources currently pays $0.011/ per kilowatt hour (kWh), and the Renewable Electricity Plan in Nova Scotia, Canada, similarly offers a Community-based Feed-In Tariff (ComFIT) of CAD$0.625/kWh ($0.632/kWh) for tidal projects connected to the grid for distribution. Grants are also often available, with the Marine Energy Array Demonstrator (MEAD) scheme in the UK promising funding of up to £20m ($32.08m) in 2011 to support two marine technologies which are now ready for demonstration. The Marine Renewable Commercialization Fund (MRCF) in Scotland, administered by the Carbon Trust, has also provided £15m ($24.07m) to be distributed before 2015.

The real potential of ocean energy is yet to be realized and will take time to develop, but installations will doubtlessly increase in the next decade against the backdrop of technological developments in the present decade.