ARENA’s ocean energy
sector review
Clean Energy Week 2014
Andrew Newman
Strategy
ARENA
23 July 2014
Aims of the review
•
SNAPSHOT OF KEY CHALLENGES AND
OPPORTUNITIES
•
ASSESS AUSTRALIA’S CONTRIBUTION TO POOL
OF GLOBAL KNOWLEDGE
•
HOW ARENA/AUSTRALIAN GOVERNMENT CAN
BEST SUPPORT THE MARINE ENERGY SECTOR
2
Today’s presentation
•
INITIAL FINDINGS (DRAFT ONLY)
•
MARINE TECHNOLOGIES
•
STATE OF THE INDUSTRY
•
COST CURVE FOR MARINE ENERGY
•
OPPORTUNITIES AND OUTLOOK
•
ARENA’S FOCUS ON DATA
ARENA welcomes comments from the sector on our initial findings
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Initial findings from ARENA’s review
•
TECHNOLOGY
o Some Australian companies at cutting edge of marine R&D
o Designs yet to converge, reducing economies of scale
•
DATA
o Paucity of data in real operating conditions
•
•
•
OPPORTUNITIES
o Significant global investment planned in R&D
o Largest wave/tidal market projected to be in Europe/Canada,
some opportunities in Asian/South American markets
Biopower’s O Drive
ARENA’S CONTRIBUTION
o Data on economic case, environmental impact and grid
integration
o Monitor progress of ARENA projects, encouraging
dissemination of energy output and environmental impact
data, re-evaluate following project completion
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Wave, tidal, other ocean were considered
for this review
W
a
v
e
Oscillating Wave
Surge Converter
Oscillating Water
Point Absorber
Column
Chamber part
Use surge motion of
filled with water Buoy connected to
waves to produce
to drive air
fixed mooring
horizontal oscillating
through a turbine heaves with waves
motions
Attenuator
Terminator
use oncoming waves to
induce an oscillatory
motion between two (or
more) adjacent
components
converts wave energy
into potential energy by
collecting water in
reservoir and releasing
it to flow through
hydraulic turbine
•
5 main types of
wave devices
demonstrated
•
Power can be
generated either at
sea or water
pumped to
onshore turbine
•
Tidal current
devices sit in water
in arrays like wave
devices, wind
turbines
•
Tidal barrages are
dams which
control the flow of
water across tidal
waterways to
generate power
•
Other ocean
technologies
including thermal
current and salinity
gradient at very
early stage
•
Offshore wind not
considered
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ARENA supported
Tidal
Horizontal axis device common (see left)
Similar to underwater wind turbine
Little convergence in design of foundation and support structures.
Sources: SI Ocean, State of the Art (2014) ; UK Carbon Trust, Accelerating Marine Energy (2011)
Both Atlantic and Pacific nations have invested
in marine energy
Technology Push
(Grants)
Market Pull
(Revenue support)
China
A$172.8m
US$0.15/KWh
United
Kingdom
A$150m
A$513/MWh (contract for difference strike price – auction, caps to be advised)
Ireland
A$49.3m
Proposed
Canada
A$7.1 m (+ provinces)
A$382.50-A$586.50/MWh (depending on stage of project)
France
Grant figures not supplied
$A259.50/MWh
Portugal
Grant figures not supplied
Halted –A$285-390/MWh
Spain
A$34.5m
Suspended $A103.50/MWh
Australia
A$21.3m (spent to date)
REC price approx $30/MWh
Denmark
A$23.2m
$A120/MWh
US
A$17.3m
RPS rates vary from state to state
Chile
A$15.1m
N/A
South
Korea
Approx A$1 billion invested by state owned power company in deployment of tidal barrages
Sources: SI Ocean: Ocean Energy in Europe’s Atlantic Arc; US Department of Energy; Wall
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Street Journal;
A$1 = US$0.93, 0.67 euros, 5 Danish Krone, C$1.02
Significant challenges facing marine energy
CAPITAL INTENSITY
• Initial mooring, cabling costs high,
decrease with economies of scale
$0.18m$0.9m
$18m$54m
$54m$180m
Sources: SI Ocean, State of the Art (2014) ; UK Carbon Trust, Accelerating Marine Energy
(2011)
POWER OF THE OCEAN
• Specific technology issues not
faced by on-land renewables
AETA 2013 Cost Projections
Technology
2020
2030
2040
2050
Onshore wind
84
87
90
92
Combined cycle gas
120
135
144
146
Supercritical coal
135
163
187
195
Solar PV single-axis
139
120
86
80
Offshore wind
161
147
137
127
Solar parabolic
trough + 6hr storage
197
166
155
147
Tidal*
260
194
199
197
Wave (AETA)
300
218
224
224
Wave (AETA – high
Capacity Factor)+
276
179
184
184
Source: BREE, Australian Energy Technology Assessment (2013)
PROJECT FINANCING
• UK and Ireland recovering from
GFC
• Australian banks, utilities reluctant
to invest at early stage
MARKET
• Low demand in eastern Australia
• Developers targeting
competitiveness with offshore wind
by 2030
• Dependent on global deployment
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Deployment key to reduce costs for wave, tidal
UK strike
price for
marine
UK strike price
for marine
Wave
Tidal
UK LCOE expected to be around $A225/MWh for wave/tidal current if 2GW installed globally (green
line)
UK government has indicated it will enter into wave/tidal current contracts for difference up to a total
value of £305 (A$513)
UK contract for difference scheme uncertainty affecting market investment
According to above, only the most competitive wave would be supported, but tidal current more viable
Blue line indicates projected build by 2020 with current funding (assuming split 50:50 between wave
and tidal current – approx 25MW of each)
Note – LCOE in Euro cents
Sources: Renewable UK, Wave and Tidal Energy in the UK Conquering Challenges, Generating Growth (Feb 2013) ; UK
Carbon Trust, Accelerating Marine Energy (2011)
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Australia’s marine sector and market outlook
•
CURRENT LCOE APPROACHING REMOTE DIESEL COST
o niches such as off-grid, coastal infrastructure protection
o Australian companies targeting cost competitiveness with
diesel by 2020 and ultimately on-grid power
o European companies are not generally considering niche
opportunities
•
SYNERGIES MAY FURTHER REDUCE COST
o cooperation between companies
o capitalise on wave, tidal and offshore wind deployment globally
o alignment with offshore gas, automotive, shipbuilding
manufacturing skills
•
POSSIBLE DEPLOYMENT OF INTERNATIONAL DEVICES
o tropical tidal testing if European companies wish to explore
Asian/South American/African markets
o wave/tidal testing if Southern hemisphere lessons transferrable
(i.e. to South Africa, Chile etc)
•
COMMERCIAL ON-GRID POWER POSSIBLE IN AUSTRALIA
o Depending on pace of deployment overseas, cost reductions
expected to occur – timing to commerciality - tbd
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Sources: Conversations with Oliver Wragg (EMEC), Shawn and Glen Ryan (Bombora), Dr Peter Osman (CSIRO)
Europe, Canada key markets with opportunities
in Asia, S America, Southern Africa
Wave
Country
RE target
(2020)
RE
target
(2050)
Wave/tidal
capacity
target (2020)
Ireland
16%
N/A
500 MW
France
23%
~75%
380 MW
Canada
UK
250 MW
15%
80%
Taiwan-
Tidal
200-300 MW
200 MW
Portugal
31%
N/A
250 MW
Spain
20%
N/A
100 MW
China+
~400 GW
N/A
>50 MW
Denmark
35%
100%
N/A
Australia
20%
N/A
N/A
US
25%*
N/A
N/A
South
Africa
6.7 GW
N/A
N/A
+ China target for 2015
Sources: SI Ocean: Ocean Energy in Europe’s Atlantic Arc; Marine
Energy Development: Taking Steps to Develop the Chilean Resource
- Taiwan target for 2025
*US Federal Government including Defence, 2025
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Our resources are great but challenging to exploit
• Wave resources excellent in South-West
Australia between Geraldton and
Melbourne, but accessibility and
Southern Ocean conditions challenging
• Demand an issue in Victoria
• Water depth, grid makes Australia
largely unsuitable for fixed offshore wind
Sources: CSIRO, Ocean Renewable Energy 2015-2050
• Tidal resources at King Sound (WA) and
Banks Strait (NE Tas) 2nd and 3rd best
in the world, but remote
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Data from ARENA projects will add to pool
of global knowledge
•
ECONOMIC CASE
o where the best sites are for marine energy investments
o understanding of performance and project cost
o skills and infrastructure needed to support wave energy
projects
•
ENVIRONMENTAL IMPACT
o impact of wave arrays on marine environments
o managing risk issues
•
INTEGRATING WAVE POWER INTO THE GRID
o better understanding of how marine energy fits with demand
Cable laying at test site: Source,
European Marine Energy Centre
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Thank you
arena.gov.au