Wave andTidal Energy:The PotentialEconomic Value

A step-change in innovation and technology development of the wave and tidal industries could result in significant benefits to the UK in the period 2030-2050 (pre 2030 is out of scope):

OVER £100BN in net economic benefits

1300 TWh of clean sustainable electricity generation over 20 years

Supported by

Wave and Tidal Energy:The Potential Economic Value

Key Outcomes .................................................................................................04

Setting the Scene .........................................................................................05

UK Resource .....................................................................................................07

Wave and Tidal Energy ...........................................................................08

Approach .............................................................................................................09

Assumptions .....................................................................................................10

Results ......................................................................................................................11

Conclusions .........................................................................................................14

Table ofCONTENTS

4

Key OUTCOMES

This work presents the potential market value of the wave and tidal sectors, under the hypothetical scenario in which a step change in innovation in the development of these sectors results in cost parity with other sources of generation in the UK by 2030.

• This equates to £41.5bn net GVA and a 7:1 ratio of benefit to industry support for tidal stream energy from 2030 to 2050 and £64.6bn net GVA and a 6:1 ratio of benefit to industry support for wave energy from 2030 to 2050.

• Based on the assumptions contained within this work, the UK could see over 1300TWh of clean, secure, sustainable electricity produced from 2030 to 2050. This represents 14% of GB demand met by marine generation. This results in £106.1bn net GVA created by the marine energy sector over this time period.

• Almost half of this GVA comes from the UK supply chain exporting to projects overseas within this time frame.

• If these benefits are to be achieved, significant effort will be required to produce the step change in innovation and technology development capability of the UK Ocean energy sectors.

2030 - 2050

Clean, secure, sustainable electricity produced 1300TWh

Net GVA (wave) £64.6bn

Net GVA (tidal stream) £41.5bn

Net economic benefit £106.1bn

Ratio of benefit to industry support (wave) 6:1

Ratio of benefit to industry support (tidal stream) 7:1

WAVE AND TIDAL ENERGY POTENTIAL ECONOMIC VALUE

5

SettingTHE SCENE

This work analyses a hypothetical scenario - presenting the potential economic benefit of the wave and tidal sectors to the UK, if we get everything right.

The key assumption of this scenario: wave and tidal generation have cost parity with other sources of generation by 2030.

CAPEX and OPEX of Wave and Tidal Stream set to be comparable with other sources of generation at 2030 – resulting in a levelised cost of energy of £90/MWh.

The intention of the study is to present the prize, not specifically how to achieve it.

SettingTHE SCENE

6

Wave and Tidal Energy:The Potential Economic Value

UKRESOURCE

TIDAL STREAM PRACTICAL RESOURCE

32GW total resource approximatedfor UK waters

WAVE PRACTICAL RESOURCE

27GW approximated maximum resource for UK waters

7

Source: The Crown Estate, UK Wave and Tidal Key Resource Areas Project, 2012

8

Wave and TidalENERGY

UK Progress:

• First arrays of Tidal Stream devices have been installed by Atlantis SIMEC in the Pentland Firth1 and by Nova Innovation in Shetland2

• 10GWh of tidal energy was delivered to the GB grid in 20183

• Orbital Marine’s SR2000 device in Orkney generated 3GWh in a single year4

• CorPower Ocean successfully demonstrated their half scale C3 WEC at the European Marine Energy Centre (EMEC) in Orkney in 20185

• Mocean and AWS Ocean Energy awarded funding for half scale devices at EMEC

in 2020 through the third stage of Wave Energy Scotland’s competitive programme6

• 2018 Minesto achieved initial electrical generation with the first sea tests of their DG500 tidal kite at Holyhead Deep, Wales7

1. Atlantis SIMEC Energy, Meygen https://simecatlantis.com/projects/meygen

2. Nova Innovation, Bluemull sound, Shetland https://www.novainnovation.com/bluemull-sound

3. Ofgem Renewables and CHP Register https://www.renewablesandchp.ofgem.gov.uk/Public/ReportManager.aspx?ReportVisibility=1&ReportCategory=0

4. Orbital Marine Power, https://orbitalmarine.com/news/115-press-release-public-debentures

5. EMEC, http://www.emec.org.uk/press-release-corpower-completes-stage-3-demonstration-in-orkney

6. Wave Energy Scotland, https://www.waveenergyscotland.co.uk/news-events/wave-energy-technology-projects-awarded-284m

7. Minesto, https://minesto.com/news-media/minesto-generates-electricity-first-time-commercial-scale-unit

Wave and Tidal Energy:The Potential Economic Value

9

APPROACH

Two models were used to estimate the size of the domestic (UK) and global wave and tidal markets:

Global - IEA’s TIMES Regional model

• The ETP model combines analysis of energy supply and demand to provide a technology-rich, bottom-up analysis of the global energy system.

• Global deployment has been informed by the Energy Technology Perspectives 2012 (ETP2012) “High renewable variant of 2 degree scenario (= delayed CCS and low nuclear variant)”.

UK –ESME Energy System

Modelling Environment

• ESME is a whole-systems model that deploys technologies for all parts of the energy system to produce a least-cost system capable of fulfilling demand subject to carbon targets and techno-economic assumptions.

• The ESME model is owned and run by in-house modelling experts at the Energy Systems Catapult.

10

ASSUMPTIONS

• Key assumption: wave and tidal generation have cost parity with other sources of generation by 2030, achieving a levelised cost of energy of £90/MWh

• Assuming a global lead, UK content in domestic projects was set to 80%

1. Department for Business, Innovation and Skills, The size and performance of the UK low carbon economy, 2015

Investment outside of UK 20.0% (%)

Invested in UK 80.0[%]

• UK content in global projects was set to 15% in 2030 reducing to 5% by 2050

• A Department for Business, Innovation and Skills analysis of Industry Input-Output

tables1 used to estimate ratios of industry spend to Gross Value Added (GVA).

• Industry support is represented by top-up payments generated by a CfD mechanism.

Invested in the UK 15.0% - 5.0%

Invested outside of UK [85.0%-95.0%]

11

RESULTS

12

Global DeploymentTIMES modelling results in ocean energy reaching a total of 337GW installed global capacity by 2050 (represents 2-3% of global capacity).

TIMES modelling results for wave and tidal are classified together as ocean energy. Post 2030, the largest portion of ocean energy mix assumed to be wave (70%) based on available resource.

Geothermal Plant (EGS) Electricity & Heat

Wave Power

Tidal Stream

Hydro Power

Solar PV (Domestic)

Solar PV (Farm)

Offshore Wind (floating)

Offshore Wind (fixed)

Onshore Wind

H2 Turbine

Anaerobic Digestion CHP Plant

Incineration of Waste

Converted Biomass Plant

Biomass Fired Generation

Nuclear (Gen III)

Nuclear (Legacy)

Waste Gasification

CCGT

PC Coal

OCGT

Oil Fired Generation

Ocean

Geothermal

Wind Offshore

Wind Onshore

Solar CSP

Solar PV

Hydro (incl. pump storage)

Nuclear

Biomass w CCS

Biomass and waste

Oil

Natural gas w CCS

Natural gas

Coal w CCS

Coal

RESULTS

TWh

0

100

2010(Historic)

2010(Historic)

2015

2015

2020

2020

2025

2025

2030

2030

2035

2035

2040

2040

2045

2045

2050

2050

200

300

400

500

600

700

800

45000

40000

35000

30000

25000

20000

15000

10000

0

5000

UK Electricity Generation

Global Electricity Generation

UK DeploymentESME modelling results in ocean energy reaching a total of 37.7GW installed capacity by 2050 (represents 14% of UK capacity).

Wave and Tidal Energy:The Potential Economic Value

13

Presenting the potential economic benefit of the wave and tidal sectors to the UK, if by 2030 the sector achieves at least cost parity.

Cumulative GVA from overseas projects

Cumulative GVA from UK projects

Cumulative Industry Support

Cumulative GVA from overseas projects

Cumulative GVA from UK projects

Cumulative Industry Support

Tidal Stream (2030-2050)Net £41.5bn GVA, 7:1 GVA to industry support ratio

Wave Results (2030-2050)

Net £64.6bn GVA, 6:1 GVA to industry support ratio

Wave: Total GVA vs Industry Support Tidal Stream: Total GVA vs Industry Support

£bn

(201

7)

£bn

(201

7)

80 40

100 50

60 30

40 20

20 10

(20) (10)

2030 20302035 20352040 20402045 20452050 2050

Wave and TidalGVA RESULTS

14

CONCLUSIONS

This work is a demonstration of how significant technology breakthroughs and the proper support to the wave and tidal industries through to 2030 can realise a large potential prize to 2050.

Based on the assumptions outlined, the UK could see over 1300TWh of clean, secure, sustainable electricity produced and £106.1bn net GVA (2017 real) created by the marine energy sector from 2030 to 2050 – over twice the value of the current UK automotive sector1.

This is equivalent to £63.7bn discounted at the Treasury Green Book rate of 3.5%.

Wave & Tidal: Total GVA vs Industry Support

£bn

(201

7)

90

110

130

70

50

30

10

(-10)

(-20)

2030 2035 2040 2045 2050

Cumulative GVA from UK wave projects

Cumulative GVA from overseas wave projects

Cumulative industry support - Wave

Cumulative GVA from UK tidal projects

Cumulative GVA from overseas tidal projects

Cumulative industry support - Tidal

1. SMMT, UK Automotive and the UK Economy, https://www.smmt.co.uk/industry-topics/economy/uk-automotive-and-the-uk-economy

The Energy Systems Catapult is part of a network of

world-leading centres set up by the government to

transform the UK’s capability for innovation in specific

sectors and help drive future economic growth.

By taking an independent, whole energy systems view,

we work with stakeholders across the energy sector

(consumers, industry, academia and government) to identify

innovation priorities, gaps in the market and overcome

barriers to accelerating the decarbonisation of the energy

system at least cost.

In doing so, we seek to open up routes to market for

innovators, as well as supporting them to understand how

their products, services and value propositions fit into the

transforming energy system.

http://es.catapult.org.uk

This work has been produced by the Policy and Innovation

Group at the University of Edinburgh, with modelling

support from the Energy Systems Catapult.

The Policy and Innovation Research Group is part of the

Institute for Energy Systems (IES), which is one of the six

research institutes within the School of Engineering at the

University of Edinburgh.

The University of Edinburgh’s School of Engineering is one

of the largest, most innovative and highly-ranked Schools in

the University and one of the leading centres of engineering

in the world. The School of Engineering’s vision is to

advance and transmit the knowledge base of engineering

to meet society’s aspirations, creating and engineering the

answers to global problems.

http://policyandinnovationedinburgh.org

The University of EdinburghPolicy & Innovation Group

www.policyandinnovationedinburgh.org