PAOLO TACCONI
DAVIDE MAGAGNA
About Cost-reduction of Ocean Energy: Lessons from Horizon 2020
Source: ©bill oxford - istockphoto.com
Ocean energy comprises five distinct technologies: wave energy, tidal stream energy, tidal range energy, ocean energy thermal conversion and salinity gradient. EU policies focus primarily on tidal stream and wave energy development because of their market and resource potential in the EU. The sector is growing again, thanks to progress in technology and successful demonstration projects. The EU hosts 78 % of global wave and tidal energy capacity, which has itself doubled between 2017 and 2018.
The European ocean energy industry is making significant steps forward, and plans now to expand manufacturing facilities. The supply chain spans 16 EU countries, with a significant presence also in landlocked countries and regions, who provide valuable expertise for the production of components and sub-components (Figure 1).
Figure 1: Ocean energy supply chain in Europe. Source: Joint Research Centre
Cost targets for ocean energy were established in the SET Plan Declaration of Intent on Ocean Energy [1] (Table 1). These targets are ambitious and indicate that the levelised cost of electricity (LCOE) of ocean energy technologies needs to fall by 70-80 % from the 2015 level [2] . The SET Plan Implementation Plan for Ocean Energy proposed 11 actions in order to meet the targets. Amongst other measures, it calls for an increase in the number of demonstration projects to mitigate the risks faced by developers. Indications from ongoing demonstration projects show that steep cost reduction is happening, and that meeting the targets is feasible.
The European Commission supports 18 projects through Horizon 2020, focusing on research, development and deployment of ocean energy technologies. Many developers have been able to deploy their technologies and test them in operational conditions, obtaining information about performances and cost reduction.
| Technology | 2025 | 2030 |
|---|---|---|
| Tidal energy | 0.15 EUR/kWh | 0.10 EUR/kWh |
| Wave energy | 0.20 EUR/kWh | 0.15 EUR/kWh |
Table 1: Ocean Energy SET Plan Targets. Source: SET Plan Declaration of Intent on Ocean Energy
Tidal Energy
At the end of 2018, in Europe 18 MW of ocean energy capacity was operational, with tidal energy accounting for 12 MW of this. Data from the projects indicate that the LCOE of tidal energy technology ranges between 0.34 and 38 EUR/kWh (Figure 2) [3] , down from 0.60 EUR/kWh in 2015. This corresponds to a reduction of more than 40 % in three years. The current value is below the 2015 reference cost-reduction curve [4] , which indicated that LCOE would reach 0.40 EUR/kWh with the current deployed capacity.
Figure 2: Cost-reduction curves for tidal energy and LCOE estimates from ongoing projects. Solid dots represent data from ongoing demonstration projects, while hollow dots indicate developers’ estimates on the basis of technology improvements and increased deployment. Source: Joint Research Centre
These high cost reductions are related to the increasing reliability of the devices deployed in first-of-a-kind demonstration projects. Technologies are still in pre-commercial phase and operational strategies being implemented, tested and optimised. Ongoing demonstration projects show that electricity can be generated continuously, and that capacity factors of 37 % or higher are achievable.
'Ongoing demonstration projects show that electricity can be generated continuously, and that capacity factors of 37 % or higher are achievable.'
Capital expenditures are decreasing, thanks to the know-how acquired, e.g. more efficient installation techniques. Learning-by-doing, operational improvement, economies of scale, and technology innovations are driving tidal technologies towards commercialisation.
Wave Energy, the role of Horizon 2020
Most EU-funded wave energy projects have a strong focus on R&D, especially on improving the performance of wave energy generators. Compared to tidal energy, less information is currently available, especially in terms of electricity generated. Thanks to the contribution of Horizon 2020 [5] , wave energy developers are optimising the design of their devices, and of critical components such as power take-off and moorings. Through these technological advances, developers have identified ways to reduce costs.
'Horizon 2020 projects show that cost reduction is taking place, and are underpinning the path to market uptake. Further deployment is needed to exploit the full potential of the ocean energy sector.'
Future outlook
The expectation is that ongoing demonstration projects and R&D activities can further reduce the LCOE of ocean energy. For tidal energy, the 2025 SET Plan targets could be reached sooner than previously expected, provided that the current cost-reduction trajectory holds and that announced deployments become operational. By 2021, 160 MW of tidal capacity could be deployed and a further 1.5 GW is planned to be installed by 2025. Continued support in Horizon 2020 and Horizon Europe can help generate similar cost reductions for wave energy.
Ongoing Horizon 2020 projects show that cost reduction is taking place, and are underpinning the path to market uptake. However, further deployment is needed to exploit the full potential of the ocean energy sector. The creation of an Investment Support Fund, and of an EU Insurance and Guarantee Fund, as foreseen in the SET Plan Implementation Plan, can facilitate the deployment of ocean energy demonstration and pre-commercial farms. These and other actions are designed to reduce the risks faced by technology and project developers and to pave the way to commercialisation.
[3] JRC Calculation based on EC restricted data. Assumption: 12 % learning rate and 12 % discount rate
[4] Tsiropoulos, I., Tarvydas, D. and Zucker, A., Cost development of low carbon energy technologies. Scenario-based cost trajectories to 2050, 2017