The aim of this project was to provide an authoritative view on which cost reductions are feasible at a global level, taking into account the experience from other technologies. By undertaking a bottom-up assessment of the cost components of leading wave, tidal, and OTEC systems, this work investigated the development and fabrication of leading devices or systems, and their integration into commercial arrays and large scale power plants. The assessment included project development costs and operations and maintenance. The work was informed by a series of in-depth interviews with technology developers, and was build upon work carried out in European funded projects, such as SI Ocean, DTOcean, Equimar or Waveplam.
Current LCOE values are very high for wave, tidal and OTEC technologies in comparison to the incumbent power generation technologies, leading to significant cost-reduction requirements in order to become competitive. Although progress has been demonstrated to date, the level of progress is not on par with expectations. The rate of deployment has been significantly slower than anticipated by some investors and policymakers.
At this stage in the development of each technology, the best available data comes from pilot projects. In conjunction with a simplified cost model, as used within this approach, the uncertainty level was expected to be in the region of ±30%, consistent with studies in other technologies both within and outside of the energy sector. There were also a number of differences between the technologies that were clear within this study. Wave energy sector development lags that of tidal stream energy, and there is an identified lack of fundamental performance and operational data to validate the early stage projections made by wave energy technology developers.
Tidal stream energy converters have largely converged on horizontal axis designs; however there is a clear split in the development trajectory. The first considers large cale technology, greater than or equal to 500 kW in capacity, which has been the mainstay of development to date. The second considers the development of small scale technology less than 500 kW in scale. The data provided for this project suggests that the smaller scale technologies could offer a lower LCOE in the short term, with greater opportunity to achieve cost reduction targets through up-scaling of technology. Larger scale technology will reach cost competitiveness with the smaller scale technologies only after considerable deployment has taken place.
The economies of scale and LCOE analysis clearly indicate that OTEC plants at a large scale are economically more attractive for the first project. In contrast, while wave and tidal stream energy technologies could achieve lower LCOE through multi- MW array deployment, the route to multi-MW arrays must first allow for development and deployment of the earlier lower-capacity arrays. LCOE reductions for wave and tidal stream energy are dependent on build out of early arrays, and not immediate progression on to largescale multi-MW projects. Confidence in the technology must be gained at these early array stages prior to the progression and build-out of larger array capacities.
Wave and tidal stream energy technologies are modular in design, and therefore the range of perceived deployment capacities for future array projects varied widely. There was a limitation of data which restricted the OTEC data set to values obtained through literature review. Consultation with existing OTEC developers suggested that the values from the literature review were appropriate for the imminent deployment of larger scale power plant currently under development, validating the approach used within this study.
Geographic distribution of the OTEC resource is limited to near-equatorial regions, due to the need to maximise the temperature differential between the warm surface water and the cooler deep-ocean water. OTEC offers additional benefit of desalination in addition to electrical power production. This is particularly attractive given the suitable locations for OTEC technology deployment. This could impact the LCOE although it is an external factor. Wave and tidal stream energy offer the ability to be connected to a desalination plant, but would, in most cases, use the electrical energy produced by the ocean energy converter to provide the input power to a high pressure pump system for the reverse osmosis process (one exception is Carnegie Wave Energy’s Perth Wave Energy Plant).
The challenges for each sector are clear. Demonstrable progress in reliable unit operation is required in order to verify and validate the cost projections that have been made within this report. High costs are intrinsic to the early stage development of technology, but clear evidence of progression down the cost curve is needed in order to restore confidence in the ability of each sector to deliver the targets that have been set.
The outputs of this work have resulted in the generation of all input data required for the TIMES regional modelling, carried out by the IEA within their Energy Technology Perspectives document. By making a clear distinction among wave, tidal and OTEC technologies, the relevant parameters for each technology can allow for a more robust piece of modelling work that more truly reflects the diverse nature of these very different ocean energy technologies.