The Topic of the Week

SCOTLAND’S CITY OF ATLANTIS

MARINE ENERGY- A VIABLE INVESTMENT?

Andrew Chappell 13 OCTOBER 2011

In an extract from Plato’s dialogues, Timaeus described the city of Atlantis as ‘Now in this island of Atlantis there existed a confederation of kings, of great and marvellous power’. Today, one can see a clear analogy between the legendary underwater city and the current activity arising off the North-East coast of Scotland. The Pentland Firth, the greatest source of untapped energy in Scotland, is the channel of water existing between mainland Scotland and the Orkney Islands. This stretch of water is being used as the testing ground for the underwater technologies capable of harbouring energy from wave and tidal power.  It is here where Scotland’s own confederation of kings, of great and marvellous power is being built. These Monarchs of the Seas, are marine turbines. Indeed harbouring energy from marine technology is at a fledgling stage, with only a small number of prototypes being tested. There are various current capture devices that are to be investigated, but the most popular one is similar to an underwater wind turbine. Some prototypes have received the backing of ten utility organisations from around the world with regard to the building and testing of six tidal and four wave commercial sized operations in Pentland Firth. Whichever of these utility giants will dominate is unclear; however it will come down to their technological superiority. However their investment is a sizeable commitment as the Pentland Firth project amounts to about £6 billion. Also the Severn Barrage projects which could produce almost 5% of the United Kingdoms electricity is estimated to cost £15bn. This project has been stop-start project for quite some time, hence one has to question if there is any potential in these multi-billion dollar projects? Read More…… 

THE POTENTIAL IN POWER

Many political visionaries have backed the potential of these projects, indeed Alex Salmond hopes the Pentland Firth to be the first ‘Saudi Arabia’ of marine energy and the Scottish and British governments along with the European Union have assisted in establishing a marine energy technology testing centre in Orkney to the tune of £23m. Indeed the marine energy hype is extending beyond the UK borders to Spain, Portugal, New Zealand, Australia and even South Korea.  These countries are now investing heavily in tidal and wave power.  However, many also see an opportunity for Britain to gain a head-start over the rest of the global playing field just as the Danes did in wind turbines. Experts are expecting the UK to be a leader in such an industry due to its abundance of potential wave and tidal power. An ordinance Survey estimates that the coastline of Great Britain is about 18,000km long, much longer than some of their European counterparts. Published assessments suggest that the UK has a great resource of wave and tidal energy. Current estimates indicate that wave and tidal energy combined could produce as much as 40% of UK electricity demand. These figures should be music to the ears of those in Westminster struggling to meet the UK’s renewable energy targets of 15% of UK energy coming from renewables by 2020. 

ENERGY HITCHES

Good news for politicians and even consumers however marine energy development comes with hitches. The limited data will hamper the rapid widespread development of the technology. Planning permission is also a sticking point as gaining site permission can be a long and arduous process involving numerous governing bodies each with their own agenda.  Marine conservationists and environmentalists will want their voices to be heard. They have already opposed proposals for the investigation of the Severn estuary. Indeed, the real environmental and ecological impact of such schemes is yet to be fully understood. The ultimate success of these projects is with regards to the transmission of the power from source to consumer.  Once the power has been extracted from the source, it must be moved some way to be of use to consumers due to the rural nature of North-Eastern Scotland. This presents problems in building a network of subsea cables and attaching them to the national grid. Furthermore, due to the cyclical nature of tidal power; being unable to match it to times of peak demand adequate storage facilities must be created. One way around the discrepancies of timing would be to create a series of smaller, modular energy harbouring systems along a coastline, where the tides come and go at different times of the day thus harbouring energy over a longer period of time.  

FUNDING OUTLETS

As with any developing industry, funding is always an uphill struggle. Currently there is some funding from the state and other state affiliated organisations. Funding can be found in the early stages of development from the SuperGen marine programme. Later stage development and deployment funding can be sourced from bodies such as the Technology Standards Board (TSB), the Carbon Trust and the Energy Technologies Institute (ETI).  Significant technology risk, high costs from start-up to commercialisation perceived lengthy timescale to commercialisation and a lack of projects in full sea trials are just a few of the fears heard from investors.  Indeed Marine energy needs a particular type of investor: one who is willing to take a risk. The problem facing investors is the uncertainty surrounding the potential for success of these projects and technology as very few have had extensive testing out at sea. The banks are keeping an eye on the industry, however many say that the industry is small and fragmented. There is some corporate investment into the industry, Rolls Royce invested £1.5m on Tidal Generation, a sea bed mounted tidal current device. However the high technology risks and the time are major drawbacks for most investors. 

ALLAYING INVESTOR FEARS

So what can the government do to allay investor fears and fast-track the development of the industry? Relaxing the rules on venture capitalism, greater economic certainty and long term funding stability have been cited as some of the key areas by industry executives that require government support. A direct form of pricing structure instead of the current ROCs, whereby the government promises to buy back any power made by such projects at a fixed price would create the certainty investors so desperately need. The key here is long-term political backing and a strong commitment to the industry’s needs. The focus should be on testing and developing prototypes, such that one clear standout technology will become commercialised; as well as developing infrastructure which accommodate the needs of an expanding marine energy industry. Ultimately the success of the industry depends on the response of government, investors, environmentalists and the market…. Have your say…