Brexit will cost marine energy sector £400m in lost EU funding as Atlantis chief warns UK industry is at tipping point

The head of Atlantis Resources is calling on ‘people power’ to create a tidal surge of pressure from the energy industry in support of its bid to secure a Contract for Difference with the British government.

And he also warned that the current lack of UK support for tidal stream compounds the issues created by BREXIT –  with the UK marine energy sector set to lose access to over €400 million of NER300 funding due to be reallocated in early 2018 to marine power projects in Europe with delivery dates post BREXIT.

Atlantis is the developer and majority owner of the world’s largest tidal stream project, MeyGen, located in the Pentland Firth off Caithness. The first phase of this project is operating well and has generated more than 3,000 MWh. When fully complete, the project will have an installed capacity of 398 MW.

However, Atlantis is asking British Energy Minister Richard Harrington, MP, to immediately open talks with its MeyGen subsidiary for a 15-year CfD for 80 MW of capacity at £150/MWh.

This represents 29% of the unallocated budget from the recent 2017 CfD auction, which would allow Atlantis to proceed with the construction of Phase 1C of the MeyGen project without further delay.

Otherwise, the UK marine energy is a risk of ‘immediate flight’ to France and other rival locations around the world.

Tim Cornelius
Tim Cornelius

Tim Cornelius, Chief Executive of Atlantis Resources, explained: “The proposed price per MWh is half of the administrative strike price for our technology used in the recent auction rounds, and demonstrates our commitment to rapid and significant cost reductions.

“It’s not too late to secure over £200 million of immediate CAPEX investment into the world’s largest tidal power project, MeyGen, and to ensure that its economic and technological benefits are preserved for the broader UK economy up and down the length and breadth of the country.

“We estimate that such a contract would make best use of approximately a quarter of the unused budget from the recent auction round, ensuring adequate availability for other initiatives to diversify the renewables mix.

“Without this support from the UK, the industry will gravitate to those jurisdictions which do have the appetite to host this new sector. Without a 15-year bilateral CfD, the tidal stream industry will need to move immediately to France, which has recently announced commercial tender rounds for tidal power.

“Canada has provinces with well-established feed-in-tariffs and Asian countries such as South Korea, Indonesia, Japan and the Philippines are all encouraging the development of commercial scale tidal power, now that it has been proven at scale in the UK.

“The race is on to host this new industry, and the other contestants will see the UK, home to some of the best tidal resource in the world, as a huge potential export market.

“The tidal stream sector supports all 10 of the key pillars in BEIS industrial strategy but, as of last year, there is no longer any dedicated support for tidal energy in the UK. Other countries see this as an opportunity to grasp this industry, and their gain would be the UK’s loss.

“Without renewed support, the UK is likely to lose jobs and investment in the sector as developers divert focus to more favourable economies.”

The industrial opportunities for the UK economy from a thriving tidal power sector are substantial. Scottish Enterprise figures for the first 6 MW phase of the MeyGen project show that 43% of construction expenditure went to UK companies.

For the first phase of MeyGen’s wider roll out (MeyGen 1C), it is anticipated that construction expenditure will be between £200 million and £300 million, of which over 50% can be delivered through the UK supply chain.

According to a report commissioned by Highlands and Islands Enterprise, the UK marine energy industry already employs 1,700 people and this is forecast to grow to over 20,000 skilled jobs over the next decade if the UK retains its position in the vanguard of the sector.

Cornelius added: “The tidal stream industry re-purposes jobs lost in the oil and gas sector and makes use of the existing offshore wind supply chain.

 “Moreover – unlike other forms of weather driven renewable generation – tidal energy is wholly predictable for decades in advance and tidal stream generation from our waters can meet an estimated 20% of the UK’s electricity demand. “

9 Oct 2017

An Atlantis tidal turbine
An Atlantis tidal turbine

Pro-forma letter for you to send

Mr. Richard Harrington, MP

Parliamentary Under Secretary of State, Minister for Energy and Industry

Department for Business, Energy and Industrial Strategy

1 Victoria Street

London SW1H 0ET

 

richard.harrington.mp@parliament.uk

 

Dear Mr Harrington,

<insert date>

Re:  Bilateral CfD support for MeyGen tidal energy project

I write to seek your support for the UK’s largest tidal energy project, MeyGen.  The UK currently leads the world in the tidal stream energy sector, but our leadership position is under threat and we need to seize the industrial opportunities offered by this growing industry.

The results of the recent CfD auction demonstrated the success achieved by the offshore wind industry when provided with the right support.  Tidal energy can replicate this success both in terms of LCOE trajectory, industrial benefits and attracting direct foreign investment.

 I therefore urge you to support Atlantis’ request for BEIS to enter into bilateral negotiations with MeyGen for the award of a 15-year contract for difference for 80 MW of capacity at £150/MWh. 

This would allow Atlantis to proceed with the construction of Phase 1C of the MeyGen project without further delay.  Without this support from the UK the industry will gravitate to those jurisdictions which do have the appetite to nurture this growing sector.

The current lack of UK support for tidal stream compounds the issues created by BREXIT, with UK marine energy sector set to lose access to over €400 million of NER300 funding due to be reallocated in early 2018 to marine power projects in Europe with delivery dates post BREXIT. 

It’s not too late to secure over £200 million of immediate CAPEX investment into the world’s largest tidal power project, MeyGen, and to ensure that its economic and technological benefits are preserved for the broader UK economy up and down the length and breadth of the country.

Yours faithfully,

 

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