The wave-energy sector in the UK is likely to face ‘severe disruption’ from wider political developments such as Brexit’s impact on EU RD&D funding and the Brit-Govt’s shift away from investing in marine renewables.
And the failure to deliver a commercially viable wave energy device can be attributed to weaknesses in both government and industry’s support for wave energy innovation in the UK, according to an independent new report from Strathclyde University and Imperial College London.
In order to help improve the effectiveness of future support for wave energy innovation and help accelerate the technology’s journey towards commercialisation, the authors of the report warn:
“It ‘is essential that the UK retains access to EU innovation funds following Brexit negotiations’ – especially EU Framework Programmes (i.e. Horizon 2020).
“Brexit poses a major risk to EU wave energy funding, accounting for 27% (£53 million) of all wave energy-related RD&D committed since 2000, and in 2016 EU funding (£6.3 million) was greater than that from the UK Government (£6 million).
“Brexit will also remove the UK’s primary platform for international RD&D collaboration, making it necessary to identify alternative ways to collaborate internationally to achieve the critical mass of resources and expertise necessary to commercialise wave energy.
“With the UK Government significantly reducing its support for wave energy and the threat of EU funds being withdrawn after Brexit, the Scottish Government could find itself acting alone in developing wave energy technology.
“Consequently, a long-term Scottish wave energy strategy must be put in place that presents a credible path towards delivering a commercial wave energy device in Scotland that is resilient to the potential withdrawal of UK Government and/or EU funds following Brexit.”
But the authors conclude that – despite almost £200 million of public funds being invested in UK wave energy innovation since 2000 – wave energy technology remains ‘some distance’ away from commercialisation.
Scottish Energy Minister Paul Wheelhouse commented: “I wholeheartedly share concerns outlined in the report on the very significant threat that Brexit signals for the industry, and I firmly believe that collaboration with our European partners is the best way to accelerate the delivery of a commercial wave energy industry.”
Wave energy has long been identified as a potentially significant contributor to the UK’s electricity supply mix. As a low-carbon energy source, it has the potential to help the UK meet its 2050 target of reducing its greenhouse gas emissions by 80% against its 1990 baseline.
To capture this prize, the UK invested heavily in wave energy research and development, but despite this significant investment, wave energy technology has yet to become commercially viable.
Furthermore, too-high expectations – coupled with under-delivery – sunk the first wave of Scottish wave energy developers, the report said.
Even worse, the sector is shrinking fast while at the same time as costs are going up and – unlike tidal-power – the wave-energy technology has not coalesced around one, or possibly, two ‘standard’ models.
Whilst tidal stream has witnessed a convergence around a single device design, namely horizontal axis turbines, wave energy has exhibited the opposite.
The average rated capacity of wave energy devices over the past three years (2015-2017) was 70% lower than the remainder of the period between 2000 and 2014.
In contrast tidal stream saw a 124% increase in the average rated capacity during the same period.
The UK has performed poorly in terms of market formation with the number of wave energy developers steadily falling from 30 in 2011 to 24 in 2016, with 14 developers filing for administration during this time, including market leaders Pelamis and Aquamarine Power.
Another key indicator is cumulative installed capacity: despite growing from 0.5MW in 2008 to 3.5MW in 2012, this dropped to 1.2MW in 2016 – and both indicators suggest a shrinking market.
There is also little evidence of technology maturation with the average rated capacity of devices falling by 56% in the second half of the period versus the first and wave energy’s levelised cost of electricity (LCOE) growing from 2009 and remaining very high compared to other renewables.
It adds: “Reasons for Britain going ‘too big, too soon’ included public and private sector funds being made available to progress the technology as quickly as possible following developers’ highly optimistic claims about the promise of wave energy.
“The outcome was that developers over-promised in order to receive funds but then subsequently under-delivered, in turn eroding investors’ confidence in wave energy and reducing their willingness to invest in the technology and triggering the collapse of leading firms Scottish developers such as Pelamis and Aquarmarine.
Both Pelamis and Aquamarine Power ceased trading in the mid-2010s, with Pelamis going into administration in 2014 and Aquamarine Power in 2015. They were not, however, the only cases of company liquidation.
Between 2000 and 2017, 14 of the 34 wave energy developers operating in the UK ceased trading, including WavePower, WaveBob, Wavegen, C-Wave and Orecon – a 41% failure rate.
Renewables After Brexit
Since the decision of the UK voters in the referendum in June 2016 to leave the European Union, a great deal has been written, said and speculated about Brexit.
For many businesses, lack of certainty over the outcome is having a very real effect right now on decision making, investment and jobs. Already direct inward investment into the UK has vanished since the Brexit referendum result.
The Brexit negotiations between the UK and EU matter enormously. Until they are resolved, there can be no clarity on commerce, law, or policy.
And if the Brexit negotiations are not resolved at all – the UK leaves the EU on 1 April 2019 when more than 40 years of EU law will be jettisoned overnight if the current British government does not its Brexit Bill passed by the Westminster parliament.
So the renewables sector – which now generates over half of Scotland’s electricity – urgently requires clarity on:
- People – being able to attract and retain the right staff
- Profit – being able to minimise extra cost burdens and to maximise income
- Practicalities – being able to do business with certainty and a minimum of obstacles
- Possibilities – being able to avoid missing out as the single market grows
For example, Energy UK – which represents SSE, Scottish Power and other Big Six utilities – wants to remain within the European Emissions Trading System.
Major German, Dutch and Spanish manufacturers may find it harder to sell their turbines into the UK after Brexit.
Atlantis Resources – a global developer of renewable energy projects with headquarters in Edinburgh – is also concerned about the state of the industry after Brexit.
Atlantis’s flagship tidal power project – MeyGen – is situated in the Inner Sound of Scotland’s Pentland Firth and is the world’s largest tidal stream array.
Nova Innovation, another Edinburgh-based tidal energy company has said that access to EU markets, supply chain and free movement of people, will have an impact on future success.
The European Union is an important source of financing for renewable projects, particularly tidal stream. Atlantis has been awarded both Horizon 2020 and NER300 funding from the European Commission as well as received offers of support from the European Investment Bank for future phases of their flagship MeyGen project.
They believe that should the UK remain in the EU single market they will be extremely well positioned to continue this success and benefit from future rounds of EU funding.
Ease of movement and access to markets are as critical as access to EU funding.
Atlantis has strategic partners in Belgium and France as well as suppliers across Europe, and employs a number of EU nationals who are technical experts in marine technology and whose skills and experience would be difficult to replace.
There are different views as to what is best for Scottish and and UK companies. But what must be clear to everyone is that because of Brexit, many choices have to be made, such as:
- How best to prepare my company
- Whether to cut back, invest or relocate; and, crucially,
- What the renewables industry should negotiate for, both on the transition and beyond, with the Scottish and UK governments
The aim of this crucial Renewables After Brexit conference is to look at the key issues from the point of view of businesses in tackling the ‘Brexit trilemma’ of law, policy and the environment.
- Jorge Vasconcelos, Council of Europe Energy Regulators and EU Energy Roadmap 2050 Advisory Group
- Munir Hassan, Head of Clean Energy, CMS Cameron McKenna; (“Practical steps and considerations for renewables projects and investors in preparing for Brexit”)
- John Campbell, QC
- Dave Pearson, Director, Star Renewable Energy
- Mark Sommerfeld, Policy Analyst, UK Renewable Energy Association
- Graham Provest, Managing Director, Absolute Solar and Wind Energy
- Ian Dunsmore, Scottish Water Horizons
- Alex Salmond, the former First Minister of Scotland
- Anne McCall, Director, RSPB Scotland
- Dr. Leonie Reins, Tilburg Institute for Law, Technology & Society in The Netherlands: (Brexit and the implications for (European) energy and environmental law & the EU Emissions Trading Scheme)
Being held on 1 December 2017 at the University of Dundee, the conference is a joint venture between the University’s Centre for Energy, Petroleum and Mineral Law & Policy and Scottish Energy News.
For more details, sponsorship opportunities and conference booking details: www.renewablesafterbrexit.co.uk