1. Wave Energy Technologies: Criteria for Success
Max Carcas, Managing Director, Caelulum Ltd
ISLAND ENERGY TRANSITIONS:
PATHWAYS FOR ACCELERATED UPTAKE OF RENEWABLES
Martinique, June 22-24, 2015

2. Caelulum
Independent company providing management and consultancy services in offshore renewables
Strategy advice to government in renewables adoption
Experienced in bringing new products to market and market enablement
>£70m funding raised in investment, sales, grants in marine renewables
Sales and joint ventures established with leading utilities and energy companies

3. Wave Energy Waves formed by interaction of the wind with the sea
Swell waves travel for thousands of miles without losing energy
Very concentrated form of renewable energy
Wave energy – stored, concentrated, wind energy

4. Predictability Benefits from consistent trade winds
Immunity to local climatic effects
Small hourly & diurnal variation
Numerous calibrated WIND-WAVE models
Existing offshore forecasting services
Wave power is also far more predictable than wind or solar power, an important issue for generators if the amount of electricity bid for in typical hourly trading slots is under or over supplied. Waves can travel great distances across oceans without losing energy; wind and solar are heavily influenced by local conditions that can be quick to change and difficult to predict.
Pictures show five day forecasts for wave height and period (wave energy = height squared x period).
However wave energy also does not change quickly – you just don’t get big waves one moment, nothing the next, so persistence tracking (ie no forecasting) can actually be pretty accurate in itself.

5. How much power can we get from ocean waves?
Length of coastline in m (eg 0 – 2000km)
Efficiency of wave energy capture (0-100%)
Wave Power generation in kW
Time period between wave crests (seconds)
P = L . W. E T
Wave Power kW per metre of wave front
H – peak to trough wave height (metres)
W = ρ g² H² T
32π x 1000
ρ - sea water density = 1024kg/m³
g – gravitational acceleration = 9.8 m/s²

6. How much is there? 60km x 15kW/m (est) = 900MW average; = 7.8TWh/year
….€2.7bn/year 35c/kWh
[Martinique demand =
1.1 TWh/year, ie average of 125MW]

7. What about the technology?
Key requirements:
Installability
Survivability
Reliability
Maintainability
Operability
Cost effectiveness
Pelamis Wave Power
Aquamarine Power
Vital to have a fully engineered solution to the all the requirements above to deliver commercial farm operation

8. Building on offshore technology
The offshore/marine sector’s contribution:
“No major technical barriers to the development of wave energy prototypes have been identified.
All issues raised under design, construction, deployment and operation can be addressed by transfer of technology from other industries, especially the offshore industry”
DTI Report - Wave Energy: Technology Transfer & R&D Recommendations
Ove Arup, October 2000
Worth pointing out that huge amount of infrastructure and investment deployed in the North Sea since the 70s is for a resource that will have been completely used up after only 60 years (despite taking millions of years to accumulate).
Perhaps wave energy at scale is not such a crazy idea given that the resource will never run out?
Although the UK oil and gas sector is in decline the many synergies mean there is potential for the sector to move into this field.

9. Wave technology path to success
4. The vision
- Significant economic, environmental and energy system benefits
3. Sustainable business model
Virtuous circle of cost reduction
profitable projects
profitable technology suppliers
£ /MWh with 1GW deployed
2. First investible power projects
Key performance indicators validated
Risks reduced that could impact projected returns
£305/MWh; projects <30MW
1. Full scale prototypes
Generating electricity
Technology validation & iteration
£305/MWh + capital grant

10. Where are we now?
1904
2006

11. Commercial criteria Energy yield (eg 25-35% capacity factor)
Validated power curve over tidal cycle
Availability (eg 80-95%)
Validated reliability and maintainability, ideally over period of 2-3 years
Capital costs (eg £3-7m/MW)
Correlation between prototype and production
Ratio of fixed costs in project to variable costs
Operating costs (eg 4-6% Capex/annum)
Grid costs
Ratio of fixed costs to variable costs
Lifetime (eg years)
Design & validation
Other risks eliminated/reduced
Wake effects, electrical interconnection, environmental

12. Technology take-off

13. What to finance? PROJECT DEVELOPMENT PROJECT BUILD PROJECT OPERATION
Project Owner
Build (9-24 months)
Wave Energy Converter assembly & installation
Component suppliers, subcontractors, fabricators, vessel operators
Balance of plant supply, substation, submarine cable, network upgrades
Project Owner Operation (>20 years)
Wave Energy Converter operation & maintenance
Component suppliers, vessel operators
Balance of plant maintenance, Insurers, site owner/lessor
Project Developer Development (1-3 yrs)
Wave Energy Converter Technical feasibility studies
Environmental & Technical consultants, Stakeholders, Government, etc
Electricity consumer

14. Who to finance? Utilities Energy companies Independent power producers
Pure project developers
Pure financiers
Industrials
Suppliers/ Contractors
Public sector

15. Decision factors for a project financier
Data from Test centre prototype
COSTS OF:
Machine
Installation
O&M
Insurance
Grid connection
Permitting & EIA
Seabed lease
Resource data
for site
INCOME:
- Grants
- Tariff
- Energy Forecast
Data from Test centre prototype
Financial Model
Machine
Power curve
Likely project
return defined
FINANCE/DEBT:
On balance sheet
or limited recourse?
Contracts/Terms
Coverage ratios
Warranties
CONSENTS &
PERMITS:
Environmental
Seabed lease
Fishing/Navigation
Onshore equip.
GRANTS
- secured
CONTRACT
PREPARATION:
PPA
EPC
I, O & M
Grid connection
Grant Assistance
Insurance
Approach to financing
Likely return
on equity
defined
Data from Test centre prototype
RISKS:
Machine:
Survivability
Reliability
Availability
Maintainability
Operability
Political:
Tariff variation
Contractual:
- Warranties
Does return on equity balance risk?
All
conditions
precedent
met?
YES
YES
Execute contracts, release finance
Order
Machines
OTHER BENEFITS Eg: PR, First
Mover, Exclusivity, Tech rights

16. Hurdle rate => Need to get above the line…. TEST & VALIDATION
INCREEASD YIELD
COST REDUCTION
TEST & VALIDATION

17. Affect of cost of finance

18. Diesel vs Wave comparison - same cost of energy….!

19. Need for scale - Capex

20. Need for scale – O&M

21. Project phasing Reduces risk Easier to scale
Potential for grant funding for initial phase

22. Back to the future? Back to the Future? Wind 1980: ~10MW installed?
Typical turbine 75kW
Capacity Factor 12% (1985, California)
Annual average: 9kW
Wind 2012:
>100GW Europe alone
Typical turbine 3MW
Capacity factor 30% (2012, California)
Annual average: 900kW
Back to the Future?

23. Opportunities for Martinique and other islands
Use only indigenous energy resources
Develop marine energy solutions appropriate to local conditions
Create conditions for inward investment
Create business and jobs – not just in technologies but also support services, tourism relating to innovative projects
Protect the environment
But first – understand what you have and where you want to get to!