global tidal marine development market overview 2014

Global Tidal Marine DevelopmentMarket Overview 2014

Photo: Alstom

In Association with The 8th International Tidal Energy Summit (24-26 Nov, London) for event details visit the website:www.tidaltoday.com/tidal-conference/

The emerging global tidal sector now estimated to reach $10.1bn by 2020 with 3712MW of installed capacity is

one of the most exciting new energy sources in the world, so far demonstrating huge potential to become a serious contributor to the energy mix

But first tidal development must overcome some important challenges related to operating in the marine environment. There must be enough devices going in the water to demonstrate its potential to stimulate investment – so cost reduction and improvements in reliability over the next 5 - 10 years is critical. The government also needs technical direction to select where it should focus funding as opposed to trying to support numerous new devices at the same time.

The UK Marine Industries Alliance estimates that together, the offshore wind, wave & tidal sectors could generate over 80,000 jobs by 2020 – and with greater cooperation across the marine industries and maritime services sector, value to the UK economy could rise from £17billion to £25billion a year by 2020. The Renewable Electricity Regulations in Nova Scotia, the Clean Energy Act in British Columbia, and Quebec’s Plan Nord are all helping to move Canada’s marine renewable energy sector towards a scale of interest. Finally big players in France like EDF, GDF Suez and Akuo Energy are taking steps to significantly contribute to the development of tidal energy.

In order to get a more accurate understanding of the potential within the tidal sector we interviewed over 600 senior level executives within the global tidal industry to identify trends, growth areas and major challenges.

The purpose of the survey was to collate the results and share them with the industry in an effort to create transparency and demonstrate where there is room for commercial growth. There are mixed views across the sector and we would like to highlight where the common themes are and relay expert opinions to promote positive growth and layout realistic expectations.

This paper was produced in conjunction with the 8th Annual International Tidal Energy Summit (24-26 November, London). The data will give you insight from across the sector and will outline some of the challenges being faced and the potential for growth in this expanding region.

If you find this report interesting, please let me know – I’d be delighted to hear your feedback.

Elizabeth Demestiha Project Director Tidal Today [email protected]

Photo: Marine Current Turbines

www.tidaltoday.com/tidal-conference


Q1: What type of company/organization do you represent in the tidal sector?

Tidal Today took a cross section of the industry to ensure a fair forecast of industry movements and developments in the tidal marine sector.

Q2: What is your job function?



Q4: What is the most important area the tidal sector needs to focus on developing going forwards over the next 12-18 months?

Q3: In which geographic region are you based?

Some of the key responses we received were predominantly around reliability of components and technology in subsea environments. There is the need for robust inter-array cabling and hubs to get clean transmittable power from arrays to the shore.

We need to develop and validate design tools in order to reduce uncertainty of energy yield predictions and reduce development and design costs for O&M, grid, tech innovation and array projects in order to secure finance.

Finally, and perhaps most importantly, there is a need to create positivity in the industry and publicise achievements and success stories in the sector to ensure continued momentum.

The survey was completed by companies working in the key tidal hotspots around the globe.

The results demonstrate that the major areas we need to focus on are securing finance, technological innovation and development, and array projects.



Q5: What makes up the most significant part of the budget for tidal projects?

Q6: Where will the majority of funding come from for tidal over the next 12-18 months?

Q7: Which country/region will become commercialised the fastest?

Not surprisingly, the hot topic in tidal at the moment is how to secure funding to reach financial close. This is not to neglect the progress that still needs to be made in the technology field, supply chain, subsea environment and grid infrastructure – but securing finance is a critical part of the industries continued development.

The responses here show that government grants are still heavily relied upon. Investors will come in when they can see they are backing the right project, with the right technology and where the grid will come in with the chance of scale. Investors want to know there is a genuine path across the project to provide complete

system of technology, who is driving standardisation, who is driving O&M, how are you going to sort out installation and what’s it all going to look like as you industrialise it.

Based on the results the UK is the clear winner, yet with ongoing efforts to develop tidal energy in France, Canada and other global regions competition is growing to maintain the leading position.

As a basic breakdown it appears that everything is still very focussed on R&D, demonstrators, prototypes and technology developments.



Q8: Which country/region has the best model to support commercial tidal development?

Q9: Why? (In relation to previous question)

UK:Again the clear winner here is the UK with the main reasons listed as their experience, multiple test and demonstration facilities already in place, diversified systems under development, government support mechanisms and policy direction. It is widely believed that the UK has the most supportive mix of upfront grants, supporting organisations, political will test facilities, engaged academia, technology pull through and Government subsidy for projects.

The EMEC demonstration site in the UK is proving its commitment to not just test bedding technologies, but also connecting them to the grid with the best prerequisites to initiate commercial projects. Canada’s FORCE is the next best model albeit more recent.

The other area the UK is well versed in is its development of the supply chain - because of the number of companies working and developing this new technology it has been proactive in starting and supporting a local industry and nurturing key participants.

Non-UK investors can see the merits of the UK and this extends to both the physical

environment and the commercial one.

Yet if issues over capital funding and grid are not sorted within the next 6-12 months - the UK will quickly lose this advantage.

France: It is widely viewed that France has stronger government support, better grid structure in place, better availability of capital grants plus a tightly integrated industrial strategy with restrictive trading practices.

French local and national governments committed approximately 100million Euros to their 2 tidal projects in Normandy and Bretagne.

They benefit from more upfront capital with stronger tax incentives to offset high CAPEX with a strategic approach of `less politics and more do’. Although the FIT is lower than in the UK and Canada there is much more support from Government in the construction and installation phases, plus ownership of parts of the companies involved in manufacturing and installation.

Canada: In sum, feedback indicates that there are less regulatory obstacles in Canada, the

policy regime is stable and demonstrates greater support for tidal. The overall openness, commitment to renewables, resources devoted to the concept and competitive FIT makes Canada a strong option for tidal development and commercialisation.

The UK is currently dealing with uncertainties in the strike price (CfD) and in the grid connection to Orkney. Canada has an advantage here with a more generous energy rate and FORCE in the Bay of Fundy has few lease, permitting or power take-off delays.

Photo: Islay Pictures



Q10: Which global tidal project currently has the best model for reaching commercial deployment?

Open Hydro in Canada and France, Nautricity, Tidal Stream, Halycon Tidal

Power, Sustainable Marine Energy, Voith, Minesto, Tocardo and Alstom.

Q11: Why? (In relation to previous question)

Several models that currently exist will work, but technology must be advanced and project structure must include OEMS and sufficient finance. There are several projects ready to start but there is often a lack of financial commitment - except from turbine developers (that have already invested in the R&D of the machines) and Governmental entities. Traditional customers are still very risk adverse.

Based on feedback, the SeaGen project owned by MCT and Siemens was the most popular. Reasons included having the backing of a large OEM to resolve technical issues quickly and being best placed to demonstrate an array (Skerries).

The Atlantis / MeyGen project came in a close second in the results. Atlantis have a fully approved project, have received millions in grants and cash from their IPO - and hope to see fruitful results in the near future. Clearly as they will start onshore infrastructure work this year and commence turbine deployment in 2015 subject to financial closure which is imminent. They were also successful in

using a range of sources and opportunities to spread risk that appears to be working with good progress in the last 12 months.

Scottish Power Renewables was listed as having good corporate support. `They are years ahead of the competition and their R&D has been funded in large part by the UK government - reducing risk for developing technology with high initial costs and low yield.’

Alstom is a popular choice due in large part to having the `most focused project’ as well as on-going support from the French government. They are often referred to as being at the forefront of tidal development based on their years of experience with water turbines and `being the most technologically advanced in terms of O&M’.

EDF and Open hydro have big challenges to overcome in terms of technology, but they have grid connected full scale array with good investment and financial support.

DP Energy was sighted as having the `best development model, securing consents for sites which are technology neutral, with proven technology, site, planning and the backing of Siemens’.

Finally, Sustainable Marine Energy was noted as a popular new contender due to being focused on reducing costs first before growing the size of platforms, which is less risky for investors, plus being committed to reducing capex and opex costs.

Of course there are numerous viable projects, and with the industry not yet fully developed there is not the clear distinction between utilities, device developers and OEM’s that there is in other industries



Q12: What are the top 3 business development opportunities for new companies entering the sector?

Business Development Strategy

Business Development Energy Generation

Business Development Technology

Installation Remote monitoring & control Turbine design & efficiency

Operations & Maintenance (O&M) Balance of Plant - array turbines to shore & grid connection solutions

Materials fabrication

Low cost vessels Electrical infrastructure Use of proven & standardized technologies from parallel industries

Financial consulting Grid connection & development Offshore logistics

Surveying solutions Energy storage Blade manufacturing

Risk/Cost reduction Cables, connectors & subsea hubs

Monitoring - Control equipment

Maximizing reliability Low cost platforms Anticorrosion and biofueling

Array layout & Infrastructure planning

Grid expansion & distribution Technology to minimize environmental impact

Emerging markets Power distribution Forecasting

Key words that were mentioned in relation to business development opportunities:



Q13: Where does the tidal industry need to innovate the most?

Q14: Is there potential to make a serious contribution to the energy mix?

Without doubt, the overwhelming response was surrounding turbine development, grid connectivity, funding and scaling up. In more detail, low cost manufacturing with low operating cost, logistics, O&M, installation, reliability and raising capital investment were mentioned countless times.

“The tidal industry needs to recognise that large single seabed-mounted turbines will find it challenging to be sufficiently

cost-effective. Three of the main criteria for cost-effective tidal stream units are: 1. Large capacity; 2. Float-out installation using small plant; 3. Easy access for low-cost annual maintenance and repair” - this is where innovation needs to occur.

In terms of the electrical aspects there is a need to develop highly reliable and cost effective subsea electrical connectors and hubs.

We need to innovate most on installation costs, O&M costs and device costs. The cost of energy needs to be reduced ASAP - we are operating in a very hostile marine environment and none of these things are easy to achieve. There is a need for innovation to cut across the whole supply chain. In sum, continuous development, deployment and reliability of tidal stream turbines is critical, coupled with the need to find innovative ways to re-connect with investment communities.

Overall the industry is extremely positive about tidal power’s global development, commercial deployment and ability to contribute to the renewable energy mix. Making it not only a highly significant contributor to energy needs, but an income generator as well. Also it is worth noting that its reliability over wind power means that it can offer accurate predictions of energy generation which is a critical element if it will replace base load sources.

Whilst it is important to highlight success stories and talk about significant developments, it is also critical to keep key challenges front of mind. Tidal energy will make a significant contribution to the energy mix in time, but the associated costs will need to be reduced and it needs a renewed strategy to optimise the route to commercialisation. Throwing money at large-scale demonstration projects when the technology is not yet optimised is a big risk. The industry must first optimise the technology and then develop a strategy to up-scale. Tidal should draw lessons learned from parallel industries like offshore wind, oil & gas, shipbuilding and those with experience operating in subsea

environments to speed up development and apply best practice from other commercially proven sectors.

The potential for a major contribution exists, however there are hurdles to overcome, in particular availability of financial support and grid reinforcements. Grid is the major issue for development of these projects - the cost of grid reinforcement cannot be borne by project developers - this is where perhaps France and Canada have an advantage.

In conclusion, the tidal industry has huge potential due in great part to its reliability, however, at this point it still has some time to go before it can seriously contend with wind and solar on a commercial scale. For now the sector must focus on technological excellence, collaboration, on-going government support to enable development and bringing down the associated cost and risk to attract investment communities. Prototypes are continuously demonstrating the technology, now financial institutions need to get excited by the opportunity.

“To become a viable industry it needs to move beyond research-talk and engage with serious manufacturing and delivery capabilities properly funded. With the right commitment, there is definitely scope for tidal power to be making a major zero-carbon and low marginal cost contribution to the energy mix - as much as 10% of the UK’s electrical power.”

“Are you kidding? It’s the energy of the future”

Photo: Islay Pictures Photoblog



Global Tidal Marine Development 2014 Market Overview

WHAT IS NEW FOR THE 2014 ITES SUMMIT?• Commercialisation, technology and strategy focus with increased investor presence and in-depth finance panels to

provide insight and ensure you build a bankable project• Global development updates from all international stakeholders and exclusive panel sessions to review UK, Canadian

and French projects• 3 expert led workshops to address major challenges and ensure increased project ROI plus closed door roundtable

discussions allowing you to exchange valuable insight on key focus areas• 15+ hours of scheduled networking time with brand new interactive sessions to encourage collaboration including our

revamped awards ceremony to highlight outstanding achievements and set the bar for industry standards

KEY TOPICS TO BE DISCUSSED AT ITES 2014• Cost Reduction and Risk Mitigation: Demonstrate how to engineer out technology costs, mitigate the impact of

construction overrun costs and present a de-risked project to attract investment• Policy and Financial Commitment: Overcome perceptions, develop ambition and create positivity for the realisation of Tidal

power to attract political support and reengage with investment communities• Global Project Updates and Success Stories: Hear the latest from global projects and developments to find out where you

can on draw lessons already learned for your own benefits• Commercial Strategy and Upscaling: Understand how to position your business, organise your strategy to get financial

support and the strategy needed to develop arrays and grow the industry to 2GW+• Technical developments: Gain insight on latest technical innovations and turbine developments including warranties and

guaranties to reduce associated project costs and risk • Installation, environment and O&M: Discuss the challenges associated with installation on an array scale and best practices

for working in the marine environment to implement the most effective O&M strategy

WHY ATTEND ITES 2014? • Over 400 global leaders in the tidal energy field looking to secure contracts for commercial-scale deployment and

operation of tidal power projects• Connect with the key stakeholders paving the way in tidal turbine technology development and understand how they are

scaling up to commercial power turbines• 45+ key speakers that will share latest global insight, best practices and path forward including; DECC, Crowne Estate,

EDF, ScotRenwables, Atlantis Resources, Andritz Hydro, Sienens and many more…• 25+ exhibitor hall showcasing the latest component innovation and supply chain commitment to the sector• Multiple conference streams allowing you to tailor the entire event to your specific aims and objectives• Dedicated regional workshops, showcasing the unique opportunity and tidal resource in the international tidal community

– hear from the key regulators and stakeholders active in the space

Check out some of the top companies that have attended previously and will be back again in 2014:


global tidal marine development market overview 2014

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