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The Pursuit of Economic Ocean Energy A Utility Perspective
John FitzgeraldTechnology ManagerESBI Ocean Energy
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Contents
• Introduction to ESBI Ocean Energy
• Synopsis of 2010 presentation
• What’s New in 2011?
• Looking Forward
• Conclusions
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Introduction to ESBI Ocean Energy
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ESBI Ocean Energy Strategy
• Target by 2020 of 150 MW of Ocean Energy in Ireland
• ESBI aim to Consent, Own and Operate Power Stations
• Experience over 28 years in Ocean Energy developments
• Strong relationships with leading technology developers
• Identifying, exploring and seeking to consent sites in Ireland
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Inform Developer Requirements
Transparency and Confidence-building
TECHNOLOGY PARTNERSHIPS
Inform Project Requirements
Develop ProjectSite Consenting, Grid Planning, Finance, O&M Plans, Logistics etc.
Hardware spec and procurement, etc.
System Requirements
(Targets)
Technology Development
Verified System
SpecificationProduction
~ €100m
Technology Development
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Picture Area
€ 10 - 50k
€ 1.0 - 2.0m
€ 5.0 - 10.0m
€ 10.0 - 50.0m
}
}
}€ 100m ?
Small farm complete. Technology ready for commercial revenue generating projects
Full-scale experimental & commercial demonstration projects
Part-scale sea-trials experimental projects & subsystem development
Concept verification – tank scale tests & simulation, survivability, costing.
Idea generation, small-scale tank verification, etc.
Cumulative Spend
Technology Readiness
2010
ESBI Technology Partnerships
2015
ESBI Pre-Commercial Projects
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Synopsis of 2010 Presentation
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Target Cost of Energy
For Capacity Factors of 30% - 40%, to compete with Offshore Wind TARGET:
• CAPEX €1.6 - 2.2m /MW
• OPEX €80k -160k /MW /year
5% 10% 15% 20%OPEX €M 0.05 €M 0.08 €M 0.10 €M 0.11CAPEX €M 1.08 €M 0.83 €M 0.67 €M 0.56OPEX €M 0.08 €M 0.12 €M 0.15 €M 0.17CAPEX €M 1.62 €M 1.24 €M 1.00 €M 0.84OPEX €M 0.11 €M 0.17 €M 0.20 €M 0.22CAPEX €M 2.17 €M 1.65 €M 1.34 €M 1.12OPEX €M 0.14 €M 0.21 €M 0.25 €M 0.28CAPEX €M 2.71 €M 2.07 €M 1.67 €M 1.40OPEX €M 0.16 €M 0.25 €M 0.30 €M 0.34CAPEX €M 3.25 €M 2.48 €M 2.01 €M 1.69OPEX €M 0.19 €M 0.29 €M 0.35 €M 0.39CAPEX €M 3.79 €M 2.89 €M 2.34 €M 1.97
40%
50%
60%
Affordable CAPEX-OPEX combinations for Power Producing Projects
(Hurdle=10% Tariff = €100 per MWhr, 20 year project life)
€(2010) / MW installed Annual OPEX as % of CAPEX
Cap
acit
y F
acto
r20%
30%
70%
5% 10% 15% 20%OPEX €M 0.05 €M 0.08 €M 0.10 €M 0.11CAPEX €M 1.08 €M 0.83 €M 0.67 €M 0.56OPEX €M 0.08 €M 0.12 €M 0.15 €M 0.17CAPEX €M 1.62 €M 1.24 €M 1.00 €M 0.84OPEX €M 0.11 €M 0.17 €M 0.20 €M 0.22CAPEX €M 2.17 €M 1.65 €M 1.34 €M 1.12OPEX €M 0.14 €M 0.21 €M 0.25 €M 0.28CAPEX €M 2.71 €M 2.07 €M 1.67 €M 1.40OPEX €M 0.16 €M 0.25 €M 0.30 €M 0.34CAPEX €M 3.25 €M 2.48 €M 2.01 €M 1.69OPEX €M 0.19 €M 0.29 €M 0.35 €M 0.39CAPEX €M 3.79 €M 2.89 €M 2.34 €M 1.97
€(2010) / MW installed Annual OPEX as % of CAPEX
Affordable CAPEX-OPEX combinations for Power Producing Projects
(Hurdle=10% Tariff = €100 per MWhr, 20 year project life)
Cap
acit
y F
acto
r20%
30%
40%
50%
60%
70%
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Projecting towards Commerciality
Pre
-Com
mer
cial
Dem
onst
rato
r
Pre
-Com
mer
cial
Pro
ject
5M
W
Ear
ly C
omm
erci
al
Pro
ject
(50
MW
)
Com
mer
cial
P
roje
cts
Project Commisioning Year: 2010 2015 2020 >2020Project Size: ~1MW 5MW 50MW 50-100MW
CAPEX range (€/MW) € 8-14m € 6-8m € 2.6 - 3.6m € 1.7 - 2.3OPEX range (€/MW/yr) € 0.5m € 0.3m € 0.25m € 0.1m
Initial Investment:Private Equity (%) 50% 55-70% 100% 100%Public Grant / Infrastructure (%) 50% 30-45% 0% 0%
Tariff required (€/MWh) N/A €300/MWh €220/MWh €100/MWh
(Summary of 2010 presentation)
WestWave Project
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2010 presentation conclusions:
• Technology developers need to be aware of cost targets and chase them as part of their technology requirements (e.g. €1m / MW quayside)
• 2010: Capital grant scheme required to support technology developers & investors through the current phase of experiment & demonstration.
– Maximise benefit to Ireland by supporting location of activity here.
• 2015: Increase initial tariff to €300 / MWh to compete with 5 rocs.– Leverage support from investors and utilities to locate early projects
with energy production in Ireland and to promote Irish supply chain.
• 2020: Use existing tariff of €220 / MWh to support the building of an economy of scale in Ireland.
• Beyond 2020: Expect long term cost of energy to become competitive with Offshore Wind, approaching €100/MWh as industry scales up.
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What’s New in 2011?
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WestWave Project
• To develop first wave energy farm in Ireland by 2015
• ≥5 MW array of Wave Energy Converters
• Situated on West Coast of Ireland for 12 years operation
• Utility led pre-commercial project
• Develop the supply-chain to support the ocean energy sector
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Support Pilot projects, new concepts
Full scale demonstrators
Small-scale arrays 10MW/20 devices
Commercial Arrays of 100s MW
500MW installedGovernment Target
SEAI Prototype fund
Belmullet AMETS Test Site
Ireland’s Ocean Energy Strategy
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Benefits to Ireland
• Deliver Phase 3 of Ocean Energy Strategy
• Leverage significant EU funding to match domestic funding
• Develop supply-chain enterprise in the sector
• Pave the way for commercial scale development
• Address key issues in developing wave energy projects in Ireland
• Give much needed confidence to all stakeholders in the sector
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European Funding – NER 300
• Application Timeline– ESBI Applied to DCENR on 9th February
– DCENR decision to submit to EC given on 9th May
– EC/EIB Due Diligence for 9 Months before decision
• Project must be operational by end 2015
• Latest: – 153 applications submitted across all categories.
– 10 applications submitted for Ocean (Wave, Tidal, OTEC).
– 8 have been forwarded to the EIB of which 3 are in Wave category.
– Fund valued at €4.9 Billion
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Project Partners
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WestWave Project Phases
Concept
Development
Construction
Operations & maintenance
2011 2012 2013 2014 2015 2016
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2015: WestWave Finance Estimates
Estimated initial capital investment breakdown (5-6MW):
(Financial Close targeted for 2013)
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MWh payments at risk to project developer:
2015: WestWave Finance Estimates
NER300 Revenue years 2016 to 2020
REFIT 2016 to 2027
Total project funding breakdown, (NPV incl. OPEX) :
2009
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Looking Forward
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2020: Achieving Economies of Scale
MWh payments at risk to project developer
• First circa 50MW large farm (possibly expansions of earlier consented sites)
• Using TRL 9 verified technology (type certified) – significant in-service data:– Credible reliability & availability projections for future project assumptions– Extended economic life and improved energy production assumptions.
• Amortisation of vessel hire and marine infrastructure costs over larger project.
• Some technology innovation around cost reduction.
2009
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2030: Commercial Farms
MWh payments at risk to project developer
Long term electricity markets? Export infrastructure? Long term cost of carbon? Energy security premium?
• 50-100 MW large arrays
• Using TRL 9 verified technology already applied in large arrays – Proven technology.
• Dedicated infrastructure developed for target sites – Ports, Vessels, Grid,etc.
• Dedicated and competitive component and technical services supply chain.
• Significant Technology Innovation
?2009
Recognise REFIT premium cannot perpetuate at current levels
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Summary
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0
2
4
6
8
10
12
14
16
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
€m/M
W
Cost of Ocean Energy per MW Installed
Pre-Commercial
Arrays
Single Device Demo
Small Commercial
Arrays
Large Commercial
Arrays
Tariff SupportGrant Support
& Tariff Support
Significant Technology
Grant Support
Reducing Tariff Support as
costs approach off-shore wind
€m/MW
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£-
£100.00
£200.00
£300.00
£400.00
£500.00
£600.00
£700.00
£800.00
£900.00
£1,000.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Reve
nue
of W
ave
Pow
er (£
/MW
h)
Calendar Year
Scottish Wave Power Revenue
Ireland Wave Power Revenue
Portugal Wave Power Revenue
Low Energy sites
Med Energy sites
High energy sites (Ireland)
Staying Ahead of the Curve
Technology Innovation
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Summary:• The WestWave project has showed that previous targets for 2015 pre-commercial
projects in Ireland are still on track.
• WestWave is a vital step in commercialising technology, developing an Irish supply chain and opening the Irish wave energy market for further investment.
• Grant support, REFIT and NER300 are essential components of delivering the pre-commercial WestWave project as it is currently envisaged.
• Up to 60% of the initial WestWave investment will be private finance based on MWh attracting REFIT and NER300 tariffs.
• REFIT payments will be spread over the period 2016 to 2027 and conditional on MWh produced.
• If energy production targets are met, total Irish state contributions to the project could approach 60% of total project costs.
• Technology developers continue to innovate and target commercial costs.