Mapping out a powerful future for Scotland6 October 2009
Scotland has the potential to build a world-leading marine energy industry. Although significant advances have been made over recent years, development has been slower than expected. The introduction of new legislation and government bodies, plus the publication of an industry-led report, looks set to accelerate the pace of change. Suzanne Pritchard gives an insight into Scotland’s marine energy prowess, assessing the current status of the industry and explaining the importance of the Marine Energy Road Map
Scotland has the potential to be a powerhouse of marine energy. Although this is the firmly held belief of those working to develop such technology within the region, the facts do speak for themselves.
Scottish seas account for 25% of Europe’s tidal stream resource and 10% of Europe’s wave resource. And Scottish government estimates suggest that 21.5GW of wave and tidal energy could be generated from Scottish waters – providing almost 50% of the country’s energy demands. Furthermore, the marine energy industry has the potential to provide up to 12,500 jobs, contributing up to £2.5B (US$4B) to the Scottish economy by 2020.
Scottish company Aquamarine Power is one of the key players in the wave and tidal power industry, having developed Oyster – the UK’s first nearshore wave energy converter. The company’s chief executive, Martin McAdam, spoke about the importance of securing the future development of this industry.
“We have a vast resource, and the vital engineering and manufacturing skills,” he said. “As a nation we have the necessary drive and determination to lead this brand new industry. At this early stage of development, the marine energy industry needs consistent support to help reach its full potential. It’s not just funding and investment that is required; it’s the solutions that help to save our most precious commodity: time.”
Although it is recognised that Scotland has the potential for the healthy development of marine energy technology, these technologies have very different development paths compared with other ‘wet renewables’, such as tidal impoundment, marine biomass and offshore wind. Scotland’s marine energy industry has made significant steps forward over the past five years, but the technology has not developed as quickly as analysts had predicted.
The story, however, may read differently over the next five years. The wheels of change are in motion and the industry may soon be accelerating down the road to progress. The Scottish government recognises that this is a key growth area, both in terms of increasing the rate of economic growth and in addressing the pressing needs of climate change. Over the past six months the engines of the Scottish powerhouse have been finely tuned to help deliver a new future for the country’s seas.
The first step has been the establishment of an integrated marine management organisation. Marine Scotland is a directorate of the Scottish government, bringing together the functions and resources of the former Marine Directorate, Fisheries Research Services and the Scottish Fisheries Protection Agency. As McAdam said: “Marine Scotland will be a one-stop shop for developers to get our wave and tidal power devices from the drawing board and into the water for testing as quickly and efficiently as possible.”
Then on 29 April 2009, the Scottish government introduced its first Marine Bill. Its aims are to balance the protection of the marine environment while supporting the sustainable economic development of marine industries; ultimately providing a coherent framework and stable environment to promote investment in renewable projects. Marine Scotland, through the Scottish Marine Bill, will make planning and consenting a more streamlined process.
“Compared to the rest of the UK, in Scotland the waters tend to be more oceanic and deeper, the coastline is less heavily populated and fishing and aquaculture are a much larger part of the marine picture. However, as in the rest of the UK, competition for marine space and resources can be intense. The need to manage such competition is at the heart of the Scottish Bill,” John Booth, spokesperson for the Scottish government, explained.
The Bill introduces a framework to deliver sustainable economic growth by improving stewardship of Scotland’s seas, including:
• Marine planning – a statutory planning system will manage the increasing and often conflicting demands on the seas.
• Marine licensing – a simpler licensing system will minimise the number of licences required for development in the marine environment to cut bureaucracy and encourage economic investment. In addition, provisions in the Bill allow Section 36 consents for renewable generation to be considered alongside a new licence for construction and navigation issues.
National marine plans will also set out the objectives and broad targets for the marine renewables industry at a Scottish level. Marine plans at the regional level will add a greater spatial dimension to the national plans identifying areas that could be appropriate for a variety of activities. This enhanced level of spatial information will provide developers with more information on possible sites reducing search costs and hopefully reducing timescales.
Powerful road map
The latest development was the publication of the Marine Energy Road Map in August 2009. The report was produced by the Marine Energy Group (MEG). This is an industry-led collaboration under the auspices of the Forum for Renewable Energy Development in Scotland (FREDS).
The vision of FREDS Marine Energy Group is to create a world-leading marine energy industry. In order to achieve this, the group has recognised a distinction between two needs:
• Promoting market opportunities for marine energy generation.
• Ensuring that Scottish companies and communities are well placed to capture these opportunities.
The group’s road map gives an up-to-date assessment of the status and potential of the marine energy industry in Scotland. Ultimately, its aims are to chart a course for wave and tidal power around Scotland, recommending actions to ensure Scotland takes full advantage of the vast power of the seas. The recommendations are industry driven and will be presented to Scottish and UK government ministers, public bodies, regulatory and enterprise agencies, and the private sector. At the heart of this work is the agreement that the government, its partners and industry will continue to work together to build a world leading renewables sector.
The road map makes various recommendations, the most important of which is the urgent need for financial support. Since 2004 the industry has achieved some significant milestones. Investment-wise the sector now attracts blue-chip and institutional investors who are viewing Scotland as a preferred investment location due to its high support tariff, strength of commitment to the sector, and consistency of support from the government, local communities and industry. Utilities are closely involved with pre-commercial projects indicating confidence and a belief that the basic building blocks for growth are largely in place, while national grid and transmission operators are also giving assurance about the recognised need for new grid connections, in time for proposed technology deployments in the islands and coastal areas of Scotland. In addition, confidence that the investments meet wider economic performance standards has been demonstrated through the market listing of leading marine technology developers.
However, MEG states that given its emerging nature the industry still faces relatively high costs and perceptions of high risk. Ultimately this means that it is more difficult to attract private finance here than in other renewable sectors, particularly for prototype and pre-commercial developments. And now such difficulties are taking place within the context of a global recession. Indeed, the pace of advancement has been slower than previously estimated, due to underestimating technical challenges and difficulty securing sufficient financial support. But the marine energy industry now needs the devices to develop from the prototype stage.
MEG recognises that insufficient or misdirected financial support is a key barrier to the pace of success. Current funding for the different technology stages includes The Carbon Trust Applied Research Fund, the Energy Technologies Institute, the Scottish government’s Wave and Tidal Energy Support Scheme (WATES) and the banded renewables obligation.
However MEG recommends that there is now a need to create a market pull and reduce financial risk for marine energy. As capital risk peaks at stages two and three of project development, MEG recommends that up-front capital risks are diluted in order to attract the private sector commitment needed to deliver these schemes. The Marine Energy Road Map emphasises that continued investment is vital and lists various funding recommendations throughout the stages in order to ensure a consistent innovation pipeline. These include:
• Get the Scottish government to consider the roles of various public bodies to ensure that they are supporting marine energy projects.
• Encourage funding councils to award more to marine energy.
• Ask the European Commission to include marine energy within future work plans under its seventh framework programme.
• Introduce a flexible WATES-style initiative as an open call with an annual allocation.
• Get the government treasury to include marine energy technology in the Energy Technology Criteria List to enable devices at stages 2 and 3 to attract a capital write down allowance of 100%, opposed to the current 10%. Plus release funding for renewables, including marine technology, from the Fossil Fuel Levy.
• Get the government to introduce a WATES-style stage 3 support in recognition of increased capital costs at this stage.
• The government should review the level of renewable obligation banding for tidal stream in line with the band for wave energy. There is no strong evidence to support a banding differentiation between the two technologies.
Overcoming barriers to development
In its road map the Marine Energy Group identified other areas needing further development. For example, grid capacity is very limited in the north and northwest of Scotland where much of the marine energy potential is located. Additional upgrades will be necessary for future development. Through its grid sub group MEG will identify long term grid infrastructure upgrades on the basis of expected development locations. It also urges Scottish Ministers to give the go ahead for the Beauly-Denny link as it will not only provide capacity for renewable projects most ready for connection, but it is also the key to unlocking further progress on network upgrades. Scottish Hydroelectric Transmission is also encouraged to build two new transmission routes.
Other recommendations pinpointed by MEG include a focus on infrastructure. The Scottish government is currently undertaking a National Renewables Infrastructure Project which is set to report in late 2009 on the current facilities available and future opportunities for expansion. MEG wants to feed into the spatial framework being drawn up and give information on infrastructure requirements for marine renewables.
Closer links with Europe are also required. MEG recommends that the Scottish industry works with the European Commission to raise the profile of marine renewables within Europe. It believes that the EC does not yet perceive marine renewables to be commercially viable, and as a result they are not featured in the European Strategic Energy Technology Plan. Therefore, amongst other actions, MEG wants to present its road map to the EC and a wider European audience to promote more effective support for the technology.
The Marine Energy Road Map acknowledges that the large-scale deployment of marine technology in Scottish water is possible by 2020, but it requires fast and concerted action by all players, coupled with a strong leadership role for the public sector. In order to assess progress, MEG will review the report’s recommendations in the summer of 2012.
“The road map shows that Scotland has the potential to build a world-leading marine energy industry,” said McAdam from Aquamarine Power. “Scotland had a global lead in marine renewable technology but the next step, building and developing commercial wave and tidal farms to prove long term viability of the technology, will cost each developer between £30-50M. Much of this is being raised from the private sector, but at this early stage of the industry, government support is essential.
“If the Scottish government continues to support us, together with the UK parliament and Europe, we can build an industry to make Scotland proud.”
Marine energy denotes both wave and tidal stream technologies, as defined in the Marine Energy Group’s Marine Energy Road Map
|Marine Energy Group|
Membership of the Marine Energy Group includes: