Ocean Power Delivery Harnesses Wave Power; E.U. Provides Incentives
Wave energy clearly lacks the scale of implementation of other forms of renewable energy. However, with the success of technologies such as Ocean Power Delivery’s Pelamis, the ocean won’t remain an untapped source of renewable energy for long. In the following VerdeXchange News interview, OPD’s Des McGinnes explains how Europe’s renewable energy incentives are paving the way for wave energy abroad and how the implementation of similar technology in the United States remains largely unexplored.
What is Ocean Power Delivery’s business plan going forward, especially as it relates to the United States and North American markets?
We are based in the U.K., we are active in Portugal, and we’re soon to be active in the U.K. with a number of projects. I can’t say that we take the U.S. very seriously as a market, since it’s a wee bit slow compared to Europe, but I do believe there’s a way for a number of the players over there to catch up with what’s happening in Europe. Our business model follows the wind model, where we seek to be an equipment supplier to the emerging wave development industry. We’re looking to work alongside people and give them support, potentially, but not to take the lead in project development.
Is this the business model you’re using in Europe. What have you been learning from the European marketplace about the economics and politics of wave and tidal power?
This is a universal model that we’re using. We have a project in Portugal run by Enersis, which is a wholly owned subsidiary of Babcock & Brown. We are learning certain things about permitting. These things can be streamlined quite considerably. But certainly the Portuguese take the market for wave energy very seriously. They want a big industry, with many jobs, and the renewable element that comes from this; they are making a very strong play to become one of the key players involved in waves. The U.K. market, and Scotland in particular, has had a long history in marine energy and is in the process of considering things so that there’s an adequate path in the United Kingdom and Scotland. We’re speaking to a number of the utilities, which are very active, really, in the U.K., to get two or three of these kinds of projects approved.
What political and economic conditions must be in place for wave energy to truly be a viable part of a country or company’s energy portfolio? What must be present for the OPD engineering and business plan to work?
Taking the resources of California, Washington, Oregon, and Alaska together, we feel that the Pacific Northwest have more than adequate resources to support this industry. Certainly, Oregon and Washington have a more robust engineering proposition in terms of metal bending capability and things like that. So looking at the political aspects that have to be there, Europe still has the best market-enablement mechanisms. You have to have an adequate financial regime in place; it’s most likely to be a mixture of capital, grants, and/or support mechanisms in terms of across the board top-ups. You also have to have a fair labor cost regime. Until lately there had been confusion in the thought process, with very little actual commitment to the project approval process, but that has been addressed by interim measures, and they are looking at how to streamline the whole process to enable companies to start small projects up to five megawatts in the first six months. So potentially you need great fiscal or financial mechanisms and resolution of regulatory issues as well.
Who are your present clients in Portugal, the U.K, and the rest of Europe? To whom are you now marketing?
In Portugal, we are speaking to a company I mentioned, called Enersis, which is Portugal’s leading renewable development company by a handsome margin. The Spanish government has woken up to wave, and they have a regime where you can get growth-related tariffs, and I look forward to that market developing. The Irish will have about 400 megawatts, I believe, by 2020 or 2025, so they are now looking to do things. The French now have a wave-specific tariff. And in the U.K. we’re speaking to ScottishPower, which owns PPM in the U.S., which in turn is owned by the Spanish company Iberdrola. We’re speaking also to Eon in Germany about an interesting project in Devon and Cornwall in the U.K. called the “Wave Hub,” which foresees significant grants from the U.K. government with the idea of building a public trade facility for offshore projects, one of which will be ours.
What is the selling point for wave energy with these clients and potential partners? Why have European governments adopted favorable rules and regulations and put seed money into wave technology? What’s the expected return on investment?
They see wave as being a key part of an overall renewable portfolio. They are seeing that there may not be one answer, but each technology may be complimentary with others. In the European context, there are a few key players at the moment. Scotland, the U.K., and Portugal are really making plays to be the Denmark of the wave industry, and maybe have the people who have seen the emergence of this technology and do not want to be left behind; that’s why you see these players making serious moves toward wave—and tidal technology as well.
What is the difference between wave and tidal energy technology? What rules and processes are unique and common to both?
The commonalities are tariff regimes and the fact that both are emerging technologies and need support. For the differences, tidal is essentially using the mass flow of water to create energy. With wave, we tend to use more of the volume element of the wave resource. So one’s using waves and the other is using the mass flow of water from one point to another.
How does the Pelamis produce energy?
There are a number of terms for it, but it’s essentially an articulated cylinder. It uses hydraulics; it uses the relative motion from the longer sections relative to the modules to connect into a number of hydraulic pumps, which store energy in an accumulator. And we then use induction generators to get a smooth output, which is attractive to generating companies. We’re also extremely forecastable, so two or three days out we are able to predict what we’ll likely be able to produce with a high degree of confidence, and then, by way of hour-by-hour variation, the actual drop-off is very small. It is not as unpredictable as wind, where you can have good wind one moment and very little an hour later.
Every emerging technology has its setbacks. Just this week on the East Coast, a competitor of yours, Verdant, got pulled from the water. Could you address the product development process for new technologies, the fits and starts of wave and tidal energy projects, and how Ocean Power Delivery is managing the challenges of being both innovative successful in the marketplace?
That’s a good question to speak of in generic terms. I don’t really want to get drawn in to talking about one alternative technology relative to another. Different companies have come at this market from different places. We have come through a very robust development phase. We have gone through all the modeling, and we’ve done small-scale deployments. We’ve had our device independently verified throughout. So we’ve checked all the right boxes. We’ve had some challenges, but we haven’t encountered any significant engineering challenges of late. The big challenge for us is getting the right mechanism in place so that the customers we’re speaking to actually get projects in the water, and that’s a large part of my goal this year.
If you were writing an open letter to elected and appointed officials in the U.S. Northwest and the federal government to move this process and conditions along to be favorable to wave and tidal energy, what would you say to them?
I would ask them to seriously consider following a model such as the Californian Solar Initiative, where you have robust financial support in the early days of the technology, and a performance-based tariff—where if you don’t produce, you don’t necessarily get. I don’t think we need to be embarrassed about asking for support mechanisms like those that have helped in California. I would definitely like to get some sort of adapted-production tax credit. Definitely, federal credits help. Clarity in permitting would certainly help, also. The front-end cost of the permitting situation in the U.S. has been detrimental to the industry. We could be talking upwards of $2 million, in some cases, just to get a small-scale project in the water. And that certainly hinders the industry.
If VerdeXchange News has an opportunity to again interview you next year to follow-up on OPD’s progress, what will be the topic of our conversation?
We’ll be talking about the first deployment in the U.S., hopefully. We’ll also be talking about some ambitious plans that we have for the West Coast.