Interview with Funding Entities

ALISON LA BONTE:
At this stage of technology maturity, a serious commitment does not yet exist from utilities, original equipment manufacturers, and other supply chain entities that are critical to the realization and larger-scale deployment of viable technologies, such as: port infrastructure, a dedicated supply chain, and access to installation, operation, and maintenance vessels. To attract this kind of commitment, the sector has to demonstrate that the business opportunity is real and achievable. The U.S. Department of Energy (DOE) focuses on addressing the following key challenges to make these opportunities real and achievable:

1. Accelerate technology convergence by focusing development on the most promising technology pathways. The marine and hydrokinetic (MHK) energy sector is currently made up of a diverse set of technology designs. At this time, limited data is available to identify the most promising configurations that have the potential to offer highperformance results at low-cost with high reliability.
    
2. Demonstration testing of existing devices that are ready to test at full-scale to validate operational performance in a realistic resource environment, while simultaneously monitoring environmental interactions. In addition, this testing will provide data and information on installation procedures, operation and maintenance logistics and procedures, and device reliability.
    
3. Assessing potential environmental impacts through scientifically designed field research, developing new—more cost-effective— environmental monitoring technologies and instruments, and then validating them during device demonstration testing. The lack of baseline environmental data at high-potential ocean energy deployment sites can drive environmental and regulatory approval expenses to 30%-50% of total early-stage MHK project development costs.

TIM HURST:
The commitment doesn’t exist at this time. The experience of Pelamis and Aquamarine in the UK and a shift away from marine renewables by the UK government has caused potential investors to step back from the industry. Before, these investors and OEMs will return there needs to sufficient technical success demonstrated to show beyond doubt that the large investment required to commercialise the technology can be justified. The objectives of WES are to fund core wave technology to the proof of concept stage and to demonstrate that wave technology is viable.

MATTHIJS SOEDE:
Indeed a medium-long term commitment is needed for the technology development. However, we should not forget that researchers and technology developers are already many years active in this field and there have been major investments already and everybody is expecting concrete results right now.

For sure there is commitment. From the policy site I see huge interest for Ocean Energy by the support for the Ocean Energy Forum, and different financing instruments on a national and international level. But also commitment from an industrial perspective. For instance, if you analyse the members of the Ocean Energy Europe Association you can see clearly that manufacturers and utilities are interested in ocean energy technology development.

Another example is that they are participating in our demonstration projects in Horizon2020. At the moment we have never financed so many ocean energy projects on a European level like now. I hope we will have great results in the coming year helping the whole sector to develop.

TAKAAKI MORITA AND SIMON ROBERTSON:
There is no widespread industry commitment to ocean renewables in Japan at this time. However, various stakeholders in the Nagasaki Prefecture located on the island of Kyushu in Western Japan have been making a gradual commitment to the development of offshore renewables. This commitment has been tangibly demonstrated by the installation of the first grid connected 2MW floating offshore wind turbine in Japan which was installed in 2013. At present a consortium formed from Nagasaki’s local industry, the Prefectural Government and other stakeholders are developing plans to establish a tidal energy and floating offshore wind demonstration centre within the Prefecture. Investment in the Nagasaki demonstration centre will serve as a key platform upon which Nagasaki, Japan and Asia can facilitate the commercialisation of offshore renewables. The demonstration centre will enable these novel technologies to demonstrate that they are effective solutions which can offer a competitive cost of energy to induce a serious long-term commitment from major industrial players and other investors.

In order to help trigger a long term commitment from the industry, it is necessary for the centre to successfully demonstrate renewable energy turbines, even at a modest level. In addition to proving the technology, a positive regulatory environment including public funding support is required to commercialise the sector.

Moreover, addressing the wide range of issues involved requires close cooperation between Government, industry, investors and device developers. Whilst much is being achieved by the strong long-term commitment at a regional level in Nagasaki, more widely in Japan higher levels of commitment from large industrials, utility companies and the Japanese Government is essential.

ALISON LA BONTE:
In the United States, funding for each of the ocean energy technologies has been primarily dependent on the relative abundance of the resource (wave, current–tidal, river, ocean, OTEC, and salinity gradient) at the national level. While the maturity of each of these technologies is indeed different and influences the funding approach, DOE maintains that the wave and current energy technologies still need fundamental research, development, and demonstration (RD&D) funding before larger-scale deployment funding can be effectively employed to incentivize commercial projects. The funding approach for RD&D is motivated by DOE Energy Efficiency and Renewable Energy’s five core principles: potential for impact; additionality (i.e. DOE investment will make a difference beyond what would otherwise occur through the private sector); openness to new ideas, approaches, and performers; results in enduring U.S. economic benefit; and a proper fit with the role of government.

I would like to give two recent examples of diverse funding approaches showing how the unique
role of the federal government can be leveraged: The System Performance Advancement funding opportunity, and the Wave Energy Prize. These two funding approaches were designed by DOE, drawing on the previously mentioned core principles, emphasizing the unique role that government can play in advancing technologies and establishing their
techno-economic competitiveness.

1. System Performance Advancement: This solicitation was designed to spur innovation for next-generation water power component technologies and attracting technology developers from related sectors to apply their expertise towards advancing componentry for marine energy applications. The selected projects will address technical challenges in three areas: a) advanced controls, b) power take-off, and c) innovative structures. Through this research funding, the projects will improve the performance and reduce the cost of MHK technologies. Research and development supported by this funding will advance the marketreadiness of MHK systems through the continued development and use of innovative components for wave and tidal energy devices.
    
2. Wave Energy Prize: DOE’s Water Power Program designed an aggressive and ground-breaking technology demonstration prize to spur innovation and establish pathways to sweeping cost reductions and commercial scale technology development. The prize approach was employed, because the wave energy industry is an emerging technology that has vast potential for innovation. The Prize provides a needed framework, complete with clear metrics and goals, necessary to develop game-changing solutions. 
   
   Specifically, the Wave Energy Prize has set a threshold goal to double state of the art performance, and is facilitating rapid advancements by offering incentives to attract new and existing players to the problem. The incentives are a monetary prize purse of $2.25M, and an opportunity for tank testing and evaluation of 1/20th scale WEC prototypes at the nation’s most advanced wave-making facility, the U.S. Navy’s Maneuvering and Seakeeping (MASK) Basin in Carderock, MD. The Prize also offers important non-monetary benefits that will result in additional value to the industry, such as publicity and investor engagement, along with the ability to compare performance across diverse device configurations.

TIM HURST:
Agreed, funding for wave should still be focussed on innovation support. One key difference between wave and tidal is that a number of key OEMs are engaged in Tidal.

CRISTOPH TAGWERKER:
I agree that wave energy needs a different funding approach with different goals. Perhaps incentives should be designed with a focus on driving driving convergence of technology solutions. Could incentives for collaboration between developers of similar technologies help here in order to somehow share lessons or information? This could somehow help reduce support needed due to synergies.

More public information is needed and non disclosure of information in the industry is a barrier for further development.

TAKAAKI MORITA & SIMON ROBERTSON:
Japan is still at the stage where it has to demonstrate a successful tidal energy turbine project to investors, the business community and other stakeholders. The proposed demonstration centre in Nagasaki Prefecture for tidal energy and floating offshore wind projects will facilitate this.

Nagasaki welcomes collaboration with developers from around the world to accelerate these developments. In addition, Nagasaki hopes that the development of other novel renewable energy technologies such as OTEC and salinity gradient generation will provide a positive effect to the development of tidal and floating offshore energy technologies.

It is essential that funding support is designed on a case by case basis to meet the needs of developers and the market situation at the time. Tidal energy, wave energy, OTEC and salinity gradient generation technologies and markets all face different development challenges. Funding support should be provided by taking into account the different circumstances surrounding the needs of individual developers and varying market environments that are prevalent at different times..

ALISON LA BONTE:
Transparency and open data is extremely important to accelerate technology development in order to avoid funding the same technology evolution by several different companies, and also to attract new players from related offshore and engineering sectors. Awardees who received U.S. public funding through financial assistance mechanisms are able to hold their data proprietary for a period of up to five years, after which it is to be made available to the public. To make this data easily searchable and of value, DOE has established the MHK Data Repository, which is a data sharing platform to help store and disseminate open-source data relevant to the design and development of marine energy technologies. DOE now also requires that a subset of the data collected during the award period of performance be made immediately available to the public through the MHK Data Repository.

Additionally, the degree to which applicants are willing to publically share valuable data is used as an evaluated criterion in both the merit review and award selection process.

DOE’s Water Power Program is also excited about a new initiative that is focused on creating a “Structured Innovation” framework to help develop optimal WEC technologies. This initiative has recently been kicked off through a joint effort by the National Renewable Energy Laboratory and Sandia National Laboratories. This project is not aimed exclusively at one technology, as the national labs and other partners in this joint development effort will have no attachment to a single “idea” or “innovation.”

By engaging with industry, the team will approach the engineering problem of defining what would be an optimal wave energy conversion based on fundamental design principles. First, they will specify the basic functional requirements of the system and then set minimum metrics that will serve as the required performance standard for each of these functions. Then they will employ a technique for innovative problem solving, which is based on a theory that defines generalizable patterns in the nature of inventive solutions, along with the distinguishing characteristics of the challenges that these inventions have to overcome.

TAKAAKI MORITA AND SIMON ROBERTSON:
Globally there have been many successes but also failures across all offshore renewable energy technologies not just wave energy. Given the finite resources available within the sector it would be a shortcoming to not make efforts to share key lessons and knowledge as widely as possible. Knowledge sharing would help the global community of developers and funders to accelerate progress and find the best solutions to reduce the cost of energy. Of course such knowledge sharing needs to be balanced with the commercial interests of device developers and in particular intellectual property requirements.

There are many opportunities for joint development projects within offshore renewables such as deployment methods for a turbine system as well as operations and maintenance activities. This requires the cooperation of multiple developers to agree to joint developments of such technologies. Public entities and funding organizations are well placed to facilitate the drawing up of the necessary  framework arrangements for undertaking such collaborations.

In Japan an appreciation of the advantages of knowledge sharing and collaboration is widely held by funders and industry. The Ministry of the Environment, acting as a key funder, has been supporting the 2MW Floating Offshore Wind demonstration project which is a joint project among industrial and academic partners in the waters off Nagasaki Prefecture and in 2013 this became the first grid connected floating offshore wind turbine in Japan. To help inform future projects, knowledge sharing reports and data relating to technical and environmental aspects of the project will be produced and disseminated.

ALISON LA BONTE:

DOE’s Water Power Program agrees that a diversity of test sites is required in order to span the range of energy intensity that developers are ready totest at as their WEC technology steps through the Technology Readiness Level progression. Where these test sites are located is important as:

1. The location of the site will benefit from the development of a supply chain and established capability in the local workforce, thus readying the broader region around the test site towards ultimate commercial projects.
    
2. Testing in proximity to the ultimate commercial site can help build knowledge and mitigate environmental and social impacts of project development.

For these reasons, the United States is investing in the development of a fully energetic wave energy device testing facility that will play an integral role in advancing wave energy technologies from early-stage prototypes through commercial ready products. In addition, this facility will provide a training ground for the next-generation of wave energy researchers.

TIM HURST:
There is no shortage of test sites for wave devices – the EMEC wave site has never been full! The idea of using a pre-defined/standard test methodology is good and would increase credibility and allow better comparison between technologies.

CRISTOPH TAGWERKER:
Yes, local test centres are important; however there should also be local funding support to create a feed/pipeline of projects to be tested at the sites. In other words make sure to have enough demand for the different sites.

 

MATTHIJS SOEDE:
We have in Europe already several test sites and in other parts of the world there are more. Think about PLOCAN, BIMEP and Wavehub, AMETS, Galway, FORCE Canady, Hawai USA. They all have their own characteristics. I don’t know in which way these sites are really sharing their knowledge. Or should I say ‘can share’ their knowledge. 

Most of these test sites have been set up by public finance and they are still financed by grant schemes. The demonstration projects which we are supporting are mainly using these test sites, because of the existing infrastructure the overall cost for these projects will be lower and they have in general already the necessary permits to do experiments.

I think the IEA OES can play a role in a better coordination and cooperation. It would help the sector and if the sector is successful it will be beneficiary for all test sites.

TAKAAKI MORITA & SIMON ROBERTSON:

Yes, the parties seeking to promote marine renewable energy projects in Nagasaki Prefecture support the development of a global network of test facilities to allow developers to undertake R&D and prove the effectiveness of offshore renewable energy technologies. In July 2014, Nagasaki Prefecture was designated by the Japanese National Government as a “Marine Renewable Energy Demonstration Field” which is suitable for floating wind and tidal energy generation. Nagasaki Prefecture will promote the development of the Nagasaki demonstration field by attracting various demonstration projects from home and abroad in cooperation with the national government, satisfying their 2012 decision to promote the development of a marine renewable energy demonstration field. Following these decisions Nagasaki has been actively developing the plans for a fully-fledged world-class tidal energy and floating offshore wind energy facility in an effort to operate on a full scale in the near future.

The Nagasaki Prefecture demonstration centre in Western Japan is ideally located to enable collaboration and knowledge sharing across neighbouring Asian and South East Asian countries and to act as an Asian hub for development, in much the same way EMEC is in Europe. Planners of the centre are ready to make it an active participant in a strong network of international test centres and to this end are already collaborating actively with top officials at EMEC, initially for the development of the test centre. In due course, the planners are also likely to do so regarding the R&D which takes place there.

It is expected that most projects at test centres will require grant funding and other support to access the sites. Such funding presents an excellent opportunity to require valuable knowledge sharing and publication measures whilst respecting commercially sensitive information.

ALISON LA BONTE:
DOE’s Water Power Program agrees with the need for a stage gate approach. The Water Power Program currently requires awardees to have metrics and measures for each stage of development. Applicants are required to quantitatively state the improvement that will be achieved at each stage with the awarded funds.

The most aggressive implementation of stage gates and performance metrics in the Water Power Program is through stage-gate down-selection in the Wave Energy Prize. In the Prize, competing technologies must measure up against stage-gate metrics transparently stated in the Prize Rules, and to be eligible to be awarded prize money in the Wave Energy Prize, teams must have met a minimum threshold performance metric. 

The Prize measures the state-of-the-art performance of WECs through a new metric created in the prize design process, the ACE metric-Average Climate Capture Width per Characteristic Capital Expenditure. ACE represents the energy captured per unit structural cost of WECs. This is a proxy metric for LCOE. LCOE is a metric that allows for comparisons of the costs of electricity produced by different means and sources (like solar, wind, fossil, and so on). The state-of-the-art value for ACE is 1.5 meters per million dollars (1.5 m/$M).

A Finalist becomes eligible to win the $1.5 million grand prize if they double ACE to 3 m/$M during the final round of testing.

To achieve the Prize goals stated above, the participants are required to undertake more and
more challenging WEC design and build tasks across each stage of the Prize - the results of which are evaluated by a Judging Panel. First, Registered Teams were required to submit a detailed Technical Submission describing their proposed innovative WEC technology. Qualified Teams are selected by the Judging Panel based on a rigorous evaluation of these technical submissions. Teams are then required to numerically model and build a small scale (1/50th) model of their device - a model that would be tested, and subsequently evaluated, and compared not only against other devices, but against performance metrics developed by the Prize, as well. Successful Qualified Teams will be deemed as Finalists after the second round of judging. Teams who pass through this stage will be given seed funding, and then be required to build larger (1/20th) scale models of their devices with control capabilities. These 1/20th scale models will be tested in the Naval Surface Warfare Center’s MASK Basin in Carderock, MD. The Judging Panel will evaluate whether teams double ACE during this final round of testing, thus determining which teams are eligible to win a prize, and which of these teams ranks the highest in Hydrodynamic Performance Quality to determine the winner of the $1.5 million grand prize. 

The benefit of this kind of quantitative and transparent approach is that the Prize will not only achieve the sector rapid innovation needed to reach a new state of the art performance of the
technology, but also will raise the confidence of investors in the technologies that have succeeded through the stage-gate process.

TAKAAKI MORITA AND SIMON ROBERTSON:
A stage-gate approach would deliver a robust technology development approach which in the long run should help reduce costs and risks. Most technology developers and funders acknowledge the importance of a stage-gate technology development but this can often be compromised by commercial and financial constraints.

Public entities and funding organizations therefore have a responsibility to set appropriate technological goals for developers as part of a stage-gate development approach. It is vital to carefully devise a system which is flexible enough to allow developers to progress rapidly when ready to do so but one which also permits further development iterations if required before the next stage and up-scaling.

A stage-gate approach to development has been adopted here in Nagasaki Prefecture with the 2MW floating offshore wind turbine having been preceded by a smaller 100kW part scale demonstrator. Having been successfully demonstrated and yielded much knowledge and learning, the next technology step is expected to involve a multiple-turbine farm based on the successfully demonstrated 2 MW turbine.

MATTHIJS SOEDE:
I agree that the technologies go through a phase of development. Recent project developments in tidal energy are really encouraging and I hope we will see great results in the coming year. We introduced in Horizon 2020 the Technology Readiness Levels and in fact we have different programmes for technologies in a different stage. We have calls for future emerging technologies for technologies on a lower technology readiness level, but also calls for large demonstration project, where you need to proof that the technology is already on a higher TRL.

We introduced in 2015 a new financing instrument InnovFin Energy Demo Projects to bring technologies further to the market. Unfortunately I see some developers trying to apply in all different possible programmes and just adopting their 'technology readiness level' according to the requirements of the respective funding scheme. I think this is not fair to the funding organisations and make makes them suspicious. It is also not fair to themselves; they are putting themselves in a situation which they shouldn't be and that enlarges the risk on failure. It
is also putting stress on the whole sector because 'again' an ocean energy project is failing.