Is the tide turning for marine energy ?  

Posted by Big Gav in , ,

The Climate Spectator has an article on tidal power hopeful Atlantis resources - Is tide turning for marine energy?.

Tidal energy costs are generally thought to be prohibitive, a belief reinforced by the UK government’s decision to drop plans for a £30 billion tidal barrage across the Severn Estuary. But the Australian head of one the leading tidal energy developers in the world believes the technology could match the costs of land-based wind farms – sometime soon.

Tim Cornelius, the head of Atlantis Resources Corp, a company founded in Australia but which moved to Singapore in 2006 for want of a supportive policy framework and financial backing in its home country, says the proof of this will be found out quickly enough, as a range of large-scale projects are deployed in coming years.

Cornelius says tidal energy costs are already competitive with offshore wind (which some estimates at around $220/MWh) but he expects tidal to be able to piggyback on that industry’s rapid deployment to achieve greater cost efficiencies of its own.

Indeed, Cornelius says tidal and offshore wind are likely to work in tandem – sharing infrastructure such as offshore transformer platforms – to make a compelling energy offering from anticipated “mega projects” that can combine the massive-scale of offshore wind farms with the predictability of tidal energy. He says it is a particularly attractive propostion for countries such as the UK, Ireland and India, which have limited alternative sources of renewable energy and/or a limited amount of available land.

“Tidal is a complementary technology to offshore wind,” he says. “But the challenge is to get from offshore wind costs down to onshore wind costs. If it can match those costs and also offer predictability, then that’s a compelling proposition. It’s the killer punch.”

Atlantis has recently signed a contract to build up to 250MW of tidal energy installations in the Gulf of Kutch, in the Indian state of Gujarat, adding to a 378MW project in Scotland. A third major deal is expected to be announced in coming weeks.

The impending transformation from an early-stage development firm to a full commercial operation has forced Atlantis to hit the funding trail – assessing options that might include a private equity offering and/or strategic partnerships in the regions where it expects to operate. Cornelius is coy about the amount of money being sought, but at least $50 million is required to meet the first stage of the Indian project. Other press reports suggest the initial fund raising could be as high as $150 million.

Atlantis is using its largest shareholder, Morgan Stanley (49 per cent) as its financial advisor. The next biggest shareholder is the Norwegian energy group Statkraft, while private investors and management make up the rest.

Although Atlantis launched its first prototype at its test facilities in San Remo, near Phillip Island in Victoria, its subsequent development and project pipelines have emerged elsewhere because of the lack of support in Australia. Both the Indian and the Scotland projects will benefit from feed-in tariffs from the local authorities – in India it will be comparable to that offered to large-scale solar, and in Scotland it will be comparable to offshore wind.

“Tariffs are essential,” Cornelius says, “because it provides certainty to create financial models. The world is still run by men with calculators. They need to work out where the revenue is coming from.”

But why should utlities or governments pay higher tariffs for such technologies? Cornelius says that overseas it is seen as part of an essential investment to create a new industry. “The economic stimulus that new industries can provide is a huge part of every bid,” he says. “We’re never asked that in Australia. We are only ever asked if we can compete with coal. I can’t and I don’t pretend to.”

Cornelius says marine energy is now attracting the attention of major utlities and the principal power supply groups. The MeyGen project in Scotland is partnered with International Power and Morgan Stanley, and Rolls Royce will test 10MW of its newly developed turbines as part of the consortium. Seiems, Alstom, ABB, are also entering the market.

The interest of the energy and engineering giants is putting pressure on Atlantis to make sure it gets it right when it rolls out its first commercial deployment. Last August, Atlantis deployed the first of its 1MW turbines – the world’s largest, but has since been forced to find a new blades manufacturer after the failure of its blades. “It’s all about credibility and execution. If we get the first arrays right, then it is about critical mass,” Cornelius says.

“We are just at the start of the development of supply chain. Wind has quadrupled in output and halved in price in recent years, the same thing is happening in offshore, and we can leverage off that.

Cornelius is still hopeful of doing business in Australia, and is encouraged by the huge developments taking place in the Pilbara, which is creating huge energy demands – and higher energy costs. Atlantis had planned to install a turbine at Koolan Island north of Derby, but pulled out because of the lack of grid connection.


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