Staying afloat: Aquamarine Power is still going but is downsizing after struggling to commercialise its wave device
These are turbulent times in the fledgling marine energy sector, which has been hit by a triple whammy of bad news in the short space of a few weeks.
The succession of body-blows – including the demise of Pelamis, the most advanced wave energy device maker in the world, and plans by engineering giant Siemens to divest its tidal energy activities – has called into question the long-term future of a sector that had only just started to get off the drawing-board. While marine energy could one day provide as much as one-fifth of the UK’s current electricity demand, representing 30 to 50GW installed capacity, there are renewed doubts whether the industry has the necessary drive and resources required to capitalise on its enormous potential.
“I’ve always said that the marine energy sector should be our Apollo programme, enabling us to sell product around the world for years to come and to give us a sustainable energy future,” says Neil Kermode, managing director of the European Marine Energy Centre (EMEC), the ocean energy device test and development centre based at Orkney in Scotland. “But we are facing a period of readjustment – it’s been recognised that there’s still a lot more to do to make the industry as big as it might one day be. It is going to take longer than we imagined.”
The bad news began at the end of last year. Out of the blue, Siemens confirmed that it was looking to sell its ocean power generation business, comprising mainly Marine Current Turbines, based in Bristol. MCT had, until that point, been one of the flag-bearers of the marine energy sector, having been established in 2000 to develop the tidal power ideas of Peter Fraenkel, a hugely regarded renewables engineer. In 2003, MCT installed a 300kW experimental tidal turbine off the coast of Devon, before testing a 1.2MW device in Strangford Narrows, Northern Ireland, which was capable of feeding electricity into the National Grid. Continued refinement of the technology, called SeaGen, led to Siemens snapping up the company in 2012, in a deal that was welcomed by the marine energy sector as a sign that the technology had reached a level of maturity sufficient to attract some powerful industrial players.
But the marriage didn’t last long, with Siemens soon looking to divest MCT, saying that the market and associated supply chain in the marine sector had not developed at the speed it had expected. It insisted a dedicated tidal power industry of critical size would develop in the near future, but said it would only ever be a niche market. Finding a buyer is likely to take several months, it added, putting at risk the jobs of around 45 people, many of whom are engineers.
Then came a bigger surprise – the administration of Pelamis, the company that had been developing a ‘seasnake’ device that used the motion of ocean surface waves to create electricity. Pelamis’ distinctive form had made it a popular backdrop for politicians wishing to trumpet their support for renewable energy. Previous Scottish first minister Alex Salmond visited the company several times to prove his environmental credentials and provide support for a technology that held huge promise.
Seasnake project: The demise of Pelamis dealt a severe blow to the marine energy industry
But behind the scenes, all wasn’t well. While Pelamis had developed its seasnake to provide the first meaningful quantities of electricity from waves anywhere in the world, it was also burning cash at an alarming rate. Indeed, the company had spent £95 million over the course of 17 years, most of it private money from European investors and utilities.
Eventually, things came to a head at the end of last year, with Pelamis directors unable to secure any more funding, and it went into administration. No bidder came forward to take over the company as a going concern, leaving Highlands and Islands Enterprise, an economic and community development quango, to come forward to buy its assets and intellectual property. Most of Pelamis’ 55 employees subsequently lost their jobs.
And so to Aquamarine Power, another marine industry stalwart, founded in 2005 to commercialise a wave energy converter known as the Oyster. The concept originated from studies by the wave power research team at Queen’s University, Belfast, with the Oyster device undergoing constant refinement. In 2009, a 315kW demonstrator was installed at EMEC in Orkney, and began producing power. Further plans were announced to install 50 of the devices on the seabed off the Western Isles
of Scotland.
But as with MCT and Pelamis, that journey to commercialisation has proved more difficult than expected. Subsequently, at the end of last year the Edinburgh-based company said that after a strategic review it was to significantly downsize, cutting its workforce from 50 to 20.
Neil Davidson, public affairs manager at Aquamarine Power, says the twin issues of the slow pace of technological development and a lack of funding combined to have an impact on the company.
“There has been considerable progress in the wave energy technology, but thus far the sector has failed to produce energy reliably. The technology is still developing, it’s still promising, and we have not lost confidence in the Oyster concept. We have a lot of data, and have got a lot of modelling done.” But there remains a challenge around reliability, and that has to be the focus, he says.
As for funding, the slowness of technological development, and a lack of visibility over the long-term ‘strike-price’ that marine energy might achieve, have meant investors have been wary of committing to the sector, says Davidson. While the nuclear industry, for instance, benefits from 35-year contracts and government guarantees, the marine sector is left to fend for itself, he says. “It is hard to attract investment. Nuclear is one technology the government will take a long-term view on, but not wave energy.”
However, the company will continue operating, he adds. “This is not the end of Aquamarine Power, by any means. We acknowledge that we operate in a leaner funding landscape, but we still have huge confidence in the concept. We will emerge in a better position.”
Diverging courses: Aquamarine Power will continue operating but Siemens is jettisoning tidal energy
The difficulties at MCT, Pelamis and Aquamarine Power have sent ripples of anxiety around the marine energy sector. These have been felt most keenly at EMEC in Orkney, which since being established in 2003 has become the most advanced wave and tidal energy test facility in the world. It has a total of 14 full-scale and two smaller-scale test berths, attracting wave and tidal developers from around the globe. EMEC has also led on developing international standards for the marine energy sector.
Neil Kermode was appointed as managing director at EMEC in November 2005. He is one of the most knowledgeable individuals in the marine industry, taking a broad perspective across technical and financial issues.
For Kermode, the recent trials and tribulations at the main developers of wave and tidal devices are a failure of confidence, rather than technology. “In my mind, it’s just that people are not confident that now is the time to make the required scale-up of these devices,” he says. “There’s been a period of readjustment – a recognition that commercialisation is going to take longer to achieve.”
The reason, he says, is that there haven’t been enough iterations of the technology to give investors confidence that these are the right products to take the sector forward. “Pelamis effectively developed two types of machine. Yes, it got bigger and better and became a proper engineered product, but Pelamis still had only two goes at getting it right.
“MCT, meanwhile, has had one test rig and one machine. Aquamarine, two machines. I often wonder: how good was Henry Ford’s third car? These things take time. Marine energy device development takes repetition and practice to become polished and to allow the industry to progress.”
Meanwhile, at the Renewable Energy Association, there is palpable disappointment about the problems being faced by the marine energy sector. Dr Stephanie Merry, head of marine at REA, says the industry will take time to recover from the recent body-blows, which have shaken confidence and inserted doubt. Merry, as with Kermode, identifies the key issues as technology development and lack of funding.
“Wave and tidal device development is an expensive business,” she says. “Pelamis has had millions of pounds put in. It employed somewhere in the region of 70 people. Keeping all that turning over is expensive.
“In the past, developers have been forced to over-promise what they can deliver, in order to attract investment and persuade government to come on side. There have been expectations that we can do all this technical development in just a few years. That has proved to be over-ambitious.”
Merry is particularly disappointed with Siemens trying to divest its interest in MCT. “That’s really unfortunate,” she says. “MCT’s SeaGen device was, and probably still is, the most successful tidal generator in the world. While it was privately owned, it was still moving forward. Then Siemens came in, and we all waved and thought it would be the best thing since sliced bread for the industry. We were looking at Siemens to bankroll this thing, but now they are saying ‘no, we just wanted to make money’. Big investors need to be more patient with the industry.”
More work needed: Marine energy requires costly heavy engineering
Despite this despondency, there are signs that the marine energy sector is starting to take stock, to reorganise itself, and to lay the foundations for a more sustainable future. In the wake of the Pelamis administration, the Scottish government announced that it was to establish a wave energy technology development body to encourage innovation in the sector. Wave Energy Scotland will attempt to bring together the best engineering and academic minds to collaborate in a research and development programme to accelerate wave technology at a faster pace.
Then, a couple of weeks later, development agency Highlands and Islands Enterprise (HIE) said that it had reached agreement with administrators KPMG to acquire intellectual property and a range of physical assets previously owned by Pelamis. HIE obtained the assets on behalf of Wave Energy Scotland, and the deal means that valuable engineering knowledge that could otherwise have been lost to international competitors in the wave energy market will now be available to support the growth and development of the sector in Scotland.
Alex Paterson, HIE’s chief executive, says that while it was sad that no bidder had come forward to take over Pelamis as a going concern, the IP-and-assets deal would ensure that the work undertaken by Pelamis would help to drive future innovation. “These are challenging times for the wave energy industry across the world. Here in Scotland, however, we have outstanding natural resources, world-class test facilities, and engineering and academic expertise which Wave Energy Scotland will harness to ensure we can achieve our potential,” he says.
In recent weeks, HIE, the University of Edinburgh and the Carbon Trust have been developing a set of operating principles for Wave Energy Scotland. A recruitment process is under way to attract a small, core team of well-qualified people, combining technical, commercial and intellectual property skills, to establish a true centre of excellence.
Meanwhile, in the tidal sector, other device developers are still making progress.
For instance, MayGen is pushing ahead with plans to deploy up to 398MW of offshore tidal stream turbines over the next decade, in the channel between the island of Stroma and the north-easternmost tip of Scotland, having secured an Agreement for Lease from the Crown Estate. MayGen is working with two companies – ARC and AHH – to develop alternative turbine designs, with funding for an initial demonstration phase now in place. A tranche of up to six turbines are to be installed by 2016, before incremental development takes the project towards completion by the middle of the 2020s.
In addition, Bristol-based Tidal Generation, which was bought by Alstom two years ago, is pushing forward with its family of tidal turbines, which will power the GDF-backed Raz Blanchard pilot farm in a strait that runs between Alderney and Cap de la Hague in Normandy (see box below for more details).
And at EMEC, several demonstration projects are still being carried out. These include the recent deployment into water of the 1:10 scale Magallanes floating tidal turbines, as a first step towards testing, during the coming year, the full-scale prototype – 42m long and weighing 350t – that is being built.
So plans are still being made and projects are still being carried out, says Kermode at EMEC. “The technology is difficult but it is not impossible. There is still good work being done, and leases for parts of the seabed are still being issued. There are machines in the water; they are generating electricity which is going to the grid. And we are tackling grid shortcomings.
“We are signing up more developers and proving that the technology works. The challenge is to maintain interest and commitment. There is still a huge amount of work that needs to be done.”
Tidal turbine project on course
Alstom is one of the biggest companies with an active interest in the marine energy sector, having acquired Bristol-based Tidal Generation two years ago to progress a 500kW tidal stream turbine – Deepgen – which was deployed and connected to the grid at EMEC’s tidal test site at the Fall of Warness in September 2010.
Alstom’s turbine nacelle comprises a three-bladed, upstream pitch controlled rotor with an epicyclic gearbox, induction generator, frequency converter and transformer. The turbine exports grid-compliant power at 6.6kV via a three-phase wet mate connector mounted in the base of the turbine. This configuration is analogous to a subsea wind turbine.
The Alstom turbine has some innovative selling points. The nacelle buoyancy means that it floats, so it can be easily installed and retrieved in a single tidal cycle using small vessels, thereby reducing installation and maintenance costs. A thruster, meanwhile, intelligently rotates the nacelle to reflect the direction of the tide, managing ebb and flood tides to maximise energy production. The turbine blade pitch is also actively managed to control load on the turbine and to optimise use of tidal conditions locally.
Last year, Alstom deployed a 1MW tidal turbine, on the same tripod support structure as the 500kW Deepgen, in a project partnership with the Energy Technologies Institute known as Project ReDAPT (Reliable Data Acquisition Platform for Tidal). This project aims to collect and publish data to further the tidal energy industry during an 18-month test period.
Jon Rhymes, director of engineering at Alstom Ocean Energy, says: “The testing phase on Project ReDAPT is now complete – and we’ve met all the targets that were set. We will now strip the turbine to inspect it, looking at the mechanical condition of the components, and carry out more risk reduction work. We’ve just completed a three-month endurance test, and it ran perfectly and generated well throughout.”
The trials threw up minor control and electrical connection issues, says Rhymes. But on the whole, he was delighted with how the turbine performed: “In terms of its power curve, it produced better than we expected. We will continue to increase the power to maximise the yield, while working on maintainability and reliability.”
Rhymes thinks the inherent design of Deepgen gives it advantages. “We have a buoyant nose, which means it floats reasonably level, can be sunk level, and its centre of buoyancy and centre of mass are more or less over the top of the base tower, so it yaws in an appropriate way. It is much easier to install than other designs, as it can be towed out and lowered with a winch.”
Ultimately, Alstom wants to install its turbine at selected sites off the coast of France and the UK. The first project to come onstream will be a 5.6MW tidal farm development at Raz Blanchard in France, due to begin operation in 2017.