OES Annual Report 2012 - Ocean Energy Systems

109
05 / DEVELOPMENT OF THE INTERNATIONAL
OCEAN ENERGY INDUSTRY: PERFORMANCE
IMPROVEMENTS AND COST REDUCTIONS
The key challenge in predicting commercial opening costs in the wave energy sector is acquiring meaningful
data. Very few data points are available from actual deployments, and all existing data points come from
pilot demonstration projects, not larger-scale farms.
The following section discusses uncertainties inherent in the cost assessment process.
Uncertainties in Cost and Economic Assessments
It is important to understand that most cost assessments carried out to date were based on projected costs
and were not derived from direct project experience. The reliance on projected costs leads to uncertainties
in the cost assessment process that can be substantial and also that depend on the stage of development of
the technology and the assessment detail. Table 1 -- which was developed by the Electric Power Research
Institute (EPRI) and adapted by Re Vision Consulting from our experience working with cost estimates
from a wide range of power generation technologies -- shows the percent uncertainty as a function of the
amount of effort going into the cost assessment and the development status of the technology.
COST ESTIMATE
RATING
A
MATURE
B
COMMERCIAL
C
DEMONSTRATION
D
PILOT
E
CONCEPTUAL
(IDEA OR LAB)
A. Actual 0 - - - -
B. Detailed -5 to +5 -10 to +10 -15 to +20 - -
C. Preliminary -10 to +10 -15 to +15 -20 to +20 -25 to +30 -30 to +50
D. Simplified -15 to +15 -20 to +20 -25 to +30 -30 to +30 -30 to +80
E. Goal - -30 to +70 -30 to +80 -30 to +100 -30 to +200
TABLE 1: EPRI cost estimate rating table showing cost uncertainty (%).
The best cost and economic assessment datasets come from demonstration or pilot plants and hence
significant uncertainties remain, even if costs are predicted with great care. As shown in Table 1, the range
of cost uncertainty for a demonstrated technology is on the order of -15 percent to +20 percent, while the
cost uncertainty for a conceptual design has a -30 percent to +200 percent range.
Effects of Plant Size on Cost of Electricity
Wave energy technologies have been deployed in relatively small-scale plants as prototypes or small
farms of devices of a few units. The cost of electricity (CoE) from these deployed devices is driven by a
combination of factors, including:
ÌÌ
Lack of economies of scale in the manufacturing process
ÌÌ
Need to rely on expensive installation and maintenance methods devised for the offshore industry
ÌÌ
High borrowing cost of capital required to finance these early projects
ÌÌ
Need to overdesign early commercial machines to insure their survival in the harsh marine environment
Most of the above factors driving these high initial costs can be attributed to the lack of any significant
deployment scale. Establishing detailed cost breakdowns at different deployment sizes can help to identify
the cost-drivers and their importance as technology moves towards commercial scale 2 . (See Figure 2.)
2
A detailed assessment of the economies of scale in wave energy was carried out under a recently completed independent cost
and economic study for the US Department of Energy using inputs from a wide range of device developers. The study, “The Future
Potential of Wave Power in the United States,” can be downloaded from www.re-vision.net.