OPINION: Post-Brexit, the UK must support new technologies that have potential global value

Andrew Scott, chief executive of Orbital Marine Power (previously Scotrenewables) says revenue support for the UK’s tidal energy sector would be a cost-effective way of growing a global business

 

As the dust settles on the Swansea Bay Tidal Lagoon rejection by the UK government, three tidal stream projects commissioned in the Pentland Firth, Orkney and the Shetland Islands are achieving record electricity production.

Over the past year, these schemes have delivered performance approaching that of widely deployed mature renewable technologies, validating the capability of the existing supply chain to deliver a scalable generation solution that can harness an as-yet untapped renewable energy resource.

On its own the Scotrenewables 2MW floating tidal turbine – grid connected at the European Marine Energy Centre, Orkney – has supplied about 7% of Orkney’s electricity needs over the past 12 months. Through doing so it has, in parallel, demonstrated an innovative, low-cost, low-risk solution for the full lifecycle of projects by having systems and components contained in easily accessible floating structure and thereby minimising operational costs and outages.

The private sector investments required to deliver these world-leading projects, and the technology development programmes behind them, were largely enabled by revenue support through the Renewables Obligation (RO). This mechanism was adjusted by the UK government specifically to encourage private sector investment in marine renewable technologies and UK projects – and is a mechanism that only rewards successful electricity generation. The private sector has responded by investing about £500 million to date and established the UK as a focal point for a new industry supported by more than 850 supply chain companies.

UK waters have over half of Europe’s tidal energy resource, and provide the basis for a significant indigenous industry and for supply chains to be established and consolidated here – all with tremendous export opportunities. A recent report from ORE Catapult estimates the UK tidal energy sector could deliver value of about £1.4 billion and support 4,000 jobs by 2030.

With its marine engineering heritage entrenched in world-leading supply chain companies, the UK is perfectly positioned to make the best of this really sustainable industrial prize – providing we can grow expertise around domestic projects. We are working closely with other tidal companies, the Marine Energy Council and industry trade bodies to press the UK government to provide modest, targeted revenue support for first commercial projects so this country can finally realise the industrial and environmental benefits of tidal power.

However, RO support for marine energy projects has not been carried through to the Contracts for Difference (CfD) mechanism. Support was withdrawn in 2016, despite consistently high public support for the tidal and wave sector.

This sector, which has invested in creating home-grown companies capable of capturing significant industrial and economic benefits from the commercial exploitation of tidal stream energy, now has few options to grow commercially. It has to look overseas if there is no realistic commitment to establish a viable market in the UK.

There is undoubtedly some scepticism on whether tidal stream energy can achieve the same cost reductions seen in other renewable sectors. But like every other renewables success story, cost reductions do not appear from thin air. They come from consistent policy support (and targets) that give technology developers, their investors and the supply chain the confidence to maintain investments within a framework. Together, they drive down cost to meet targets and stimulate world class innovation.

Tidal technologies, such as Scotrenewables, will not require either the same level or duration of revenue support that other renewables industries have enjoyed. Scotrenewables platform technology takes existing generation solutions from analogous sectors, such as offshore wind, and configures them in a highly innovative way to allow low-cost installation, maintenance and servicing. We are not reinventing the wheel and commercialisation can be progressed much more swiftly. However, early commercial projects are at a disadvantage in technology maturity, project scale, supply chain experience and cost of capital.

It seems only right and logical that in a post-Brexit environment, we should be seeking to support and grow new and innovative industrial opportunities – and those for which UK businesses have low barriers of entry but which can ultimately service a global export market.

First published in the October 2108 issue of New Power Report

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