WATERS3
Outline & Guidance
2014
Introduction
Background to WATERS
The Scottish Government’s Economic Strategy1 sets out ambitions for a supportive
business environment, noting that many of Scotland’s sectoral opportunities and its
wider business competitiveness rest on the delivery of a greener Scotland, and
reflecting on the significant potential which exists in renewable energy where
greater value could be extracted.
In line with the recommendation of the MEG Marine Energy Road Map 3, during
2010 Scottish Enterprise (SE), in partnership with the Scottish Government (SG) and
Highlands and Islands Enterprise (HIE) established the Wave and Tidal Energy:
RD&D Support (WATERS) Programme, complementing the earlier SG Wave and
Tidal Energy Scheme (WATES) programme and indeed wider UK funding
programmes such as the Carbon Trust’s Marine Renewables Proving Fund (MRPF) 4
Scotland is widely renowned for its large marine renewable potential, with its
exposed western and northern coasts an
d the areas of powerful tidal stream amongst its islands and in the Pentland Firth.
The Scottish Government has stated its desire to make Scotland a leading nation in
the development of these emerging technologies and to capture the economic,
environmental and security of supply benefits that this would create. To this end it
launched the £10m Saltire Prize2 in 2008 which sought to make Scotland a leading
centre for marine renewable energy.
The scale of Scotland’s marine renewable resource means that the sector, if
successfully developed, could make a major contribution towards renewable energy
targets – primarily in Scotland, but also contributing towards meeting demand
elsewhere in the UK and Europe.
Developing these emerging technologies is extremely challenging; the
environments within which they will need to be installed and operate are (by
necessity) energetic. Costs are thus currently very high, and the many competing
device designs , have yet to prove their capabilities and effective operation. Many
in the sector have struggled to balance developing and readying their technologies
with the need to pursue and raise investment capital to keep their businesses and
devices afloat. This type of investment capital has been difficult to attract owing to
the current global economic climate and the perceived risks associated with what is
still an immature industry
Government funding can play a vital role in leveraging match funding for these
technologies, particularly for the demonstration projects which will be vital to the
sector’s credibility and longer term growth, unlocking the envisaged benefits and
establishing Scotland as the leading nation in wave and tidal energy development.
In July 2010 the first WATERS call awarded a total of £6.9m to a range of projects.
This was followed by a second WATERS call in Spring 2012, which awarded a total of
£7.9m to further projects. All these have been focussed on the construction and
installation of pre-commercial full scale, wave or tidal stream device prototypes in
Scottish waters and also the development of new technologies aimed at increasing
the effectiveness of the installation, operation and maintenance of marine energy
devices.
As the sector continues to develop it is recognised that it has many challenges to
overcome in moving to full commercialisation and that the large-scale private
sector investment that is required to realise the commercial success of the Scottish
marine energy sector in the medium to long term will only be levered by continuing
to pursue de-risking activities such as the deployment and operation of precommercial arrays.
Public funding does have a strong role to play in enabling key technological
improvements relating to cost reduction, reliability and operability. The Scottish
Government and Enterprise Agencies continues to support a range of interventions
designed to de-risk investment in the sector, and address industry issues so that the
first arrays can be deployed.
Clearly a major component of enabling cost-effective arrays is the availability of
efficient, proven wave and tidal energy devices. Whilst WATES, MRPF and the two
WATERS calls (WATERS1 and 2) have made a substantial contribution to enabling
the development of technically viable devices it is apparent that there is still scope
for additional development to augment the availability of low cost-of-energy
devices in the marine energy market. Applications to MRPF, WATES, WATERS1 and
2, were heavily oversubscribed and there clearly remains a significant degree of
demand for funding support from device developers.
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1
The Government Economic Strategy
2 http://www.scotland.gov.uk/Topics/Business-Industry/Energy/Action/leading/saltire-prize
http://www.scotland.gov.uk/Publications/2009/08/14094700/0
4http://www.carbontrust.co.uk/emerging-technologies/current-focus-areas/marine-
renewables-proving-fund/Pages/default.aspx
The WATERS3 Call
In relation to the context outlined above, the third Call under WATERS (the subject
of this document) focuses on supporting the further development of wave and tidal
energy devices. In particular, priority for funding support will be given to viable
projects enabling full-scale proving of devices that have already been tested at partscale but smaller scale demonstration projects will also be considered.
We intend to make WATERS3 awards under Schemes which will be notified under
the proposed new European Commission General Block Exemption Regulation
(“GBER”)7, specifically the new proposed Articles 24 (Aid for research and
development projects) and 39a (Investment aid for the promotion of energy from
renewable sources).
We expect key outcomes from this call to include:
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The deployment of new wave and tidal stream technologies, both at EMEC
and elsewhere in Scottish waters;
Genuine advances in cost reduction and learning for wave and tidal stream
technologies;
Progress for successful projects and technologies towards commercial
exploitation;
Levering in additional private sector investment in the marine renewables
sector;
Economic benefit for Scotland and Scottish businesses, stemming from the
creation of R&D jobs, the development of technology which has global
potential, and the fabrication and deployment of wave and tidal stream
technologies in Scotland;
An increasingly diverse renewables supply chain in Scotland;
A significant contribution to the overall development of the wave and tidal
energy industry in Scotland
Applications are on a ‘single company applicant’ basis. We are particularly
interested in applications from companies that haven’t previously received public
sector support for full-scale demonstration of wave or tidal stream devices.
Legal Basis
This third WATERS call is open to businesses located in, or planning to establish a
base in, any area of Scotland. It operates under the terms of the Enterprise & New
Towns (Scotland) Act 19905. State Aid approval for the first two WATERS calls were
under: (a) the Scottish R&D&I Scheme N369/20086 for R&D support; and (b) the SE
Aid for Environmental Protection Scheme 2012 – 2013 (SA.35080). These Schemes
are due to come to an end on 30 June 2014.
5
We expect the new GBER to be published in May and new Schemes will then be
notified. As it is still to be finalised, the information provided here on what we can
support is for information only and may be subject to change.
How much is available?
£6m will be made available for this call, and SE will look to maximise the number of
recipients who are able to benefit from support.
Support is available for both capital and operational costs associated with Research,
Development and Demonstration activities in eligible projects. Note that the actual
aid level provided will be dependent upon company size and the nature of RD&D
being undertaken. For example R&D activities may be supported at a rate of up to
25% of eligible costs for large companies undertaking later stage development, with
higher rates potentially available for smaller companies undertaking early stage
research depending on the funding gap.
Support for capital demonstration is not expected to exceed 50% of eligible costs
(for small companies), but again varies depending on company size and the nature
of the project being undertaken.
Guidelines on State Aid are available from the SE website for details on eligible
costs.
For successful applicants, payments will be made against agreed milestones (subject
to review) for releasing grant, based on monthly cashflows.
It should be noted that the same eligible costs cannot be supported by different
state aid mechanisms. If the costs identified in your application have received
support from another public source, or an application has been made to another
public funding source, it is essential that this is made known at the outset.
http://www.opsi.gov.uk/acts/acts1990/ukpga_19900035_en_1
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7
http://www.stateaidscotland.gov.uk/state_aid/SA_ApprovalsView.jsp?pContentID=
340&p_applic=CCC&p_service=Content.show&
http://ec.europa.eu/competition/consultations/2013_consolidated_gber/index_en.
html
Further Information
We will expect applications for projects, and subsequent awards if successful, to be
on the basis of a series of project milestones, as amended and agreed between the
applicant and the technical assessor / assessment panel. These will map out clear
staging posts marking the progress, delivery and completion of a project, and the
dates by which these will be achieved.
Applications will be subject to independent due diligence, covering technical,
financial and commercial issues and an economic impact assessment. As part of
assessment process, we will undertake detailed financial diligence on both the
viability of your company (and for companies which are part of a group we will also
look at the parent company) and on your project costs and funding. It is essential
for applicants to recognise the time commitment and information provision
needed during this period to ensure a timely award.
The call will welcome applications from projects in a position to move quickly.
Please note that before any grant award is confirmed, applicants will need to
provide a guarantee in writing that all necessary match funding is confirmed and in
place.
Building on the experience gained through the administration of support to other
projects in this sector, the call will operate on a principle that projects failing to
advance or achieve agreed project milestones by a particular date could have their
award withdrawn and any previous payments of grant reclaimed. There are, of
course, always instances where slippage in timing is beyond the reasonable control
of operators and we will take account of this in deciding whether to stop or reclaim
support.
However, we strongly advise that you closely consider your proposed project
timelines as experience has shown us that projects are likely to experience a degree
of time slippage, this is particularly true of projects in this sector where a high
degree of risk and uncertainty are present.
Applicants must be willing to actively engage with SE and/or HIE to allow
monitoring of their project, as well as assisting the growth of the business to ensure
its successful exploitation. A rigorous process is in place for the monitoring of
projects, which requires a degree of commitment from the applicant, and the
provision of open and honest information through regular monitoring meetings.
The claims process itself requires a degree of rigour and the presentation of well
documented evidence detailing how the costs relate to the project and the
technical milestone. Please be aware that to ensure the timely payment of claims
these should be well documented to allow claims to be checked, validated and paid.
Applicants not currently in Scotland can benefit from the support available to
companies planning to locate in Scotland – see links below:
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Scottish Development International (SDI)
International Technology and Renewable Energy Zone (ITREZ)
Scottish Energy Laboratory
European Marine Energy Centre (EMEC)
European Energy Technology Partnership (ETP)
Contact
All queries regarding the call should be directed in the first instance to:
E-mail: waters3@scotent.co.uk
Telephone
0845 607 8787 (calls charged at local rates)
0141 228 2000 from mobile phones or if outside Scotland
Minicom 0800 023 2071 - if you are deaf or hard of hearing (BT helpline 0800 731
1888)
Eligibility
Applicant eligibility
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The call will be open to businesses that are legal entities registered or planning
to register in Scotland. This includes Scottish subsidiaries of overseas
companies.
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Applications are not invited for collaborative projects.
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Applicants must provide evidence that they have the legal right to all necessary
intellectual property related to the project.
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Applicants must be the legal entities who would hold beneficial ownership of
the completed project. This would include equity investors but not financial
organisations or individuals lending money to finance a project, even if loans
were secured against the project income.
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Demonstration projects must generate power but will be eligible for support
whether or not they are connected to the grid.
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Any project or device for which support is being applied should not have
received any additional financial support from any public sector body towards
the same eligible costs. Please note that this does not rule out applications
from companies who have previously been awarded a grant in respect of a
different device or project
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Projects must have the potential to deliver commercial benefits to Scotland’s
economy and the new product, process or service must, in the case of nonSMEs, be able to compete in a global marketplace
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Projects must demonstrate how the grant will be implemented to ensure longterm capacity building or capability building (more generally for SMEs) and
sustainability in Scotland to enhance the company’s future competitiveness
through R&D
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For non-SMEs seeking R&D support, the project must demonstrate the
incentive effect of the grant (i.e. how the applicant’s level of R&D spend or R&D
jobs will be increased as a result of support)
Project eligibility
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Projects must be strategically important to the company
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Applications must be for:
o The development of wave or tidal stream energy technology, including
hybrid devices that incorporate wave and/or tidal stream technology.
o The development and installation of wave or tidal stream generating
capacity
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Any project for which support is being applied must be located in Scotland and,
in the case of prototype demonstrators, deployed in Scottish waters
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Consideration may be given to the costs associated with creating the
infrastructure necessary for the deployment and installation of eligible devices.
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Any project or device for which support is being applied must be "new “, that is
developed or constructed specifically with the support of this call
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Demonstration projects currently in the development process (e.g. at the
scoping rather than proving stage) will still be eligible as long as contracts for
the creation of the demonstrator have not yet been placed
General Information
The Application Process
The application process will consist of an open competition.
Applications will be assessed on a competitive basis and assessments will be made
on the basis of the overall feasibility of the project, taking into account the
following factors:
a)
Potential Outcomes from proposal – what kind of economic impact will it
deliver?
i.
ii.
iii.
iv.
Local and global commercialisation potential
Scottish supply chain leverage
Jobs created or safeguarded in Scotland
Leverage on Scottish marine industry development
b) Technology advancement and development path
i.
ii.
iii.
iv.
c)
Is there a technological competitive advantage through innovation?
Is this backed up by research and a track record of development;
Does the cost-of-energy of the device represent a step-change advantage?
Does the proposal draw on industry best practice?
d) Company, Team & Project Management – resources to deliver the project
i. Financial viability of the company
ii. Are matched funds in place and does the company have the experience
and capability to raise more funding?
iii. A robust project schedule including deliverables and milestones in place?
iv. Key risk assessment and management processes in place?
v. Capability and capacity of project team to deliver project and beyond
vi. Appropriate business systems and processes in place to manage delivery of
project and claims process.
vii. Previous successful completion of other SE or publicly funded projects, e.g,
R&D Grants, SMART awards etc
Applicants must not submit further information after the deadline. Applications
which we wish to consider further will be subject to independent technical, financial
and commercial due diligence and an economic impact assessment.
Any
unsolicited material will be returned to the applicant. Any attempt to influence the
assessment process once it has begun will result in disqualification.
Prior to submitting a full application, applicants must submit an Expression of
Interest to waters3@scotent.co.uk by 12pm on Wednesday 16 April 2014.
Decisions regarding proceeding to full application will be given no later than
Wednesday 30 April 2014. Applicants should not submit application forms until
they have received instruction from SE to proceed.
Project Planning – how feasible is the overall proposal?
i. Does the project implementation plan, in relation to technical aspects, look
realistic?
1. Will the projected technical performance be delivered?
2. Are the proposed location and deployment proposals realistic?
3. For grid connected projects, do timelines associated with grid
connection and acquiring appropriate consents look realistic?
ii. Does the budget look realistic - reliable and accurate project costs?
iii. Does the commercialisation plan look realistic?
iv. To what extent is the necessary internal approval for the project in place?
Full applications and supporting materials should thereafter be submitted to
waters3@scotent.co.uk by 12pm on Wednesday 28 May 2014.
The Expression of Interest and Application Forms are available for download from
here.
Timetable for applications and decisions
Completed applications must be received by on or before 12pm Wednesday 28
May 2014.
Initial assessments will be undertaken and completed by Tuesday 17 June 2014, and
appropriate responses issued to applicants at that time.
For those applications which we wish to consider further, due diligence and more
detailed assessment will be undertaken during July and early August 2014 –
applicants must actively participate with assessors during this period.
All short-listed applicants will be invited to present to the WATERS3 Assessment
Panel on Tuesday 19 August 2014, final decisions on grant awards will be made by
the Panel and funding will be subject to approval by SE. Successful proposals will be
confirmed to applicants by Wednesday 3 September 2014 with offers issued shortly
thereafter. Offers must be accepted within a period of 4 weeks from the offer date.
A sample WATERS contract is available here. We have populated this with some
illustrative data to make it easier to read, to the extent that this was possible.
Please note that we are reviewing the format of the contract and certain wording
may change. Any offer we make will fully reflect the specific details of your offer
including a detailed summary of the project and how it is expected to be delivered.
Appeals
There is no formal appeals procedure, and the decision of the awarding body is
final. Unsuccessful applicants will be notified as early as possible in the process,
and the reason for their application being rejected will be given in writing. It may
be appropriate for applicants to work with others within SE or HIE to continue the
development of their proposal and where this is the case the written response will
include signposting to such alternatives.
Publication of Results
On acceptance of the Grant Offer, SE will publish the following information (where
relevant):
 The identity of the participant and its partners;
 The number of devices or projects being developed;
 For devices, their installed capacity;
 For devices, the estimated capital cost;
 Summary details of the type of technology involved;
 The geographical location of the business;
 The size of the grant award and the total project costs;
 Expected commissioning date; and
 Expected annual output.
On commissioning, the following will be published:
The capital cost of building the project broken down into the following categories:
 Physical site preparation;
 Grid connection;
 Device manufacture;
 Installation & commissioning; and
 Project management.
SE will not publish information that is in its opinion commercially confidential, such
as details of designs, know how, details of manufacturing processes, details of
installation procedures, details of operational and maintenance procedures, unless
required to do so in terms of the Freedom of Information (Scotland) Act 2002
Contractors
Contractors to applicants must be selected through competitive tender. A
contractor is defined as an organisation that carries out work as part of the project
but obtains no benefit from arising intellectual property and is not making any
investment of its own cash to the cost of the project.
Decommissioning
Decommissioning is a statutory requirement under the provisions of the Energy Act.
When the proposed project reaches the end of its life, the deployment site must be
returned to its original condition. This is a critical aspect of the project and must be
done properly. No separate funding will be given for the decommissioning of
technologies. The cost of decommissioning will be the responsibility of the project
team in accordance with any requirements of consent and The Crown Estate.
Decommissioning is not an eligible cost in the project.
Requests for increases
Requests to increase the grant contribution (either the percentage or the absolute
value in pounds) to projects will not be considered. Requests to extend deadlines
will be considered only where identified during project monitoring as a justifiable
course of action. Deadlines will not be extended by more than 6 months.
Changes in beneficial ownership
Entitlement to support under the call ceases on change of beneficial ownership,
including changes of partners within consortium unless otherwise agreed by
Scottish Enterprise. Agreement to any change of ownership is at the discretion of
Scottish Enterprise and only within the terms of this call. In the absence of written
consent from Scottish Enterprise, Scottish Enterprise will have the right to revoke its
agreement with the participant and any payments may be recoverable.
Other
Summary of Application Process
Incomplete applications and any containing incorrect or false information will be
rejected.
Costs should be denominated in GB pounds. Applicants should indicate where
conversion has been made to GB pounds from other currencies and indicate the
rate and assumptions used.
Launch
Authorised representatives of the applicant must endorse the application before
submission to SE. Where an applicant is wholly owned by a parent company, an
authorised representative of the parent company must endorse the proposal.
Authorised representatives endorsing the application must be a person authorised
to sign such documents in terms of the applicant's constitutional rules. All
signatures required must be on the same side of a single sheet of paper and must
be witnessed.
Expression of
Interest
Each applicant must undertake to proceed with the project as soon as possible if
the requested grant is awarded
Full Application
Due
Diligence
Projects
Commence
• 2nd April 2014
• Documents available on
www.scottish-enterprise.com
• Closing date on 16th April
• Successful companies invited to submit full
applications and notified by 30th April
• Closing date on 28th May 2014
• Sucessful companies notified by 17th June
• Full diligence and economic impact
assessment of selected proposals:
18 June 2014 to 5 August 2014
• Companies notified of outcome early
September
• Projects commence on 1st October