Market study on Ocean energy

Europe is spearheading the world's ocean energy technology, and has today a strong pipeline of projects for a total capacity of 1 GW.

But it did not accomplish this overnight. According to a recent Commission study, the continent has been spending €3 billion on ocean energy over the last decade. This is the kind of investment required to develop the new technologies, test them both in the lab and at sea, and scale them up to commercial level.

The next decade could see the total installed capacity rise to almost 4 GW, with financial needs that would grow accordingly and could reach 9.4 billion euros. Most of the money is expected to go into tidal stream installations; this is to date the more "mature" technology, and promises to offset the high upfront capitals with low operational costs.

In the report three scenarios have been developed: Optimistic, (all projects in the pipeline are deployed and start at the proposed date), Medium (all projects are deployed, but some are delayed), Pessimistic (projects are delayed and some are cancelled).

Main findings:

  • In an optimistic scenario, given the current level of political support, about 3.9 GW of cumulative installed capacity are expected globally until 2030. The capacity falls to 2.8 GW in a medium scenario and to just above 1.3 GW in a pessimistic scenario.
  • Europe is to keep its global leadership in the ocean energy sector by 2030.
  • Tidal stream is expected to take off over the next few years. Even though not modelled in the analysis, the success of a few key projects, such as MeyGen and Cape Sharp Tidal may drive the sector further.
  • Ocean energy tends to have relatively higher capital expenditure costs (e.g. installing devices in the water) but lower operational expenditure costs (e.g. maintenance, fuel, etc.). Therefore, if projects prove to be successful, in time the initial investments will be repaid by the capacity generated, which will come at lower operational costs than the carbon sector. The LCOE of fossil energy might remain lower than ocean energy’s for a long time; but the higher CAPEX/OPEX ratio of ocean energy is promising because it reveals that money is being spent to create long-term value. Furthermore, cost reductions in capital expenditures per unit of power are expected with an increase in project capacity and overall cumulative installed capacity, meaning that there is real potential for LCOE reduction for ocean energy technologies. The target of 10c€/kWh could be reached once 10 GW are installed, which could happen by 2030 for tidal stream and 2035 for wave energy, according to Ocean Energy Europe and TP Ocean.

By Martine Farstad