OES Annual Report 2012 - Ocean Energy Systems

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level of approximately £40/MWh 4 , this support is worth £200/MWh 5 (about US $320/MWh 6 ) on top of the
wholesale price of electricity. The move to 5 ROCs/MWh follows the 2011 Renewables Obligation Banding
Review and the level is set to take effect from April 2013.
DECC is currently developing a new revenue support system as part of a package of measures called
Electricity Market Reform (EMR). The new system will be based on Contracts for Difference Feed-in Tariffs,
which work by reference to a fixed ‘strike price’ for each technology and a variable ‘reference price’ reflective
of the wholesale electricity price. At times when the reference price is below the strike price, the generating
company will receive a subsidy equal to the difference between the prices, and vice versa (the company will
have to pay the difference when the reference price is above the strike price). This arrangement is intended
to ensure that the generating company always receives the strike price but not more than this. Initially,
strike prices will be set by an administrative process, but over time, the Government intends to move to
an auction system. Contracts for Difference will be available from 2014 (except in Northern Ireland, where
they will be offered from 2016) and the Renewables Obligation is planned to be phased out in 2017. In
the transition period, generating companies will be able to choose between revenue support under the
Renewables Obligation or Contracts for Difference 7 .
In addition to revenue support, DECC and the Scottish Government are offering capital grants for first array
projects in two parallel initiatives called the Marine Energy Array Demonstrator scheme (MEAD, £20m,
US $31.7m) and the Marine Renewables Commercialisation Fund (MRCF, £18m, US $28.6m). The Scottish
Government is also offering to invest in first arrays through its Renewable Energy Investment Fund (REIF,
£103m, US $163.4).
UK projects may also benefit from European support. In December 2012, it was announced that two UK
tidal projects had been offered funding through the European Commission NER 300 programme. These
are ScottishPower Renewables’ Sound of Islay project (€20.7m, US $27.5) and Siemens Marine Current
Turbines’ Kyle Rhea scheme (€18.4m, US $24.4m) 8 .
Progress in project development
As of January 2013, there are 41 wave and tidal projects under development or operation in UK waters on
The Crown Estate, with a total potential installed capacity of over 2.0 GW. The projects are of four main types:
ÌÌ
Managed test and demonstration facilities, which provide infrastructure and/or services for several single
prototypes and small arrays of devices;
ÌÌ
Test projects up to 3 MW, which typically involve a single prototype technology;
ÌÌ
Test and demonstration projects between 3 MW and 50 MW, which are generally for arrays of devices; and
ÌÌ
Commercial array projects of 50 MW or greater capacity.
Table 1 gives the number and total potential capacity of each type and Figure 2 shows the geographic
locations of the projects.
TYPE OF SITE NUMBER OF SITES TOTAL POTENTIAL INSTALLED CAPACITY [MW]
Managed test and demonstration facilities 7 See note*
Test projects up to 3 MW capacity 9 < 10
Test and demonstration projects,
3 MW to 50 MW capacity
12 > 190
Commercial projects, 50 MW+ capacity 13 1,800
Total 41 Over 2,000
TABLE 1: Types of UK wave and tidal site on The Crown Estate, January 2013. *Some test and demonstration facilities are not grid-connected.
Of those that are, the project capacity is variable depending on the technologies installed.
4
Source: Non-Fossil Purchasing Agency, www.e-roc.co.uk
5
Not including the recycling benefit. For further information about the Renewables Obligation, see the Department of Energy and
Climate Change website: http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/renew_obs/renew_obs.aspx
6
Exchange rates correct as of January 2013.
7
For further details on EMR, see the Department of Energy and Climate Change website, http://www.decc.gov.uk/en/content/cms/
meeting_energy/markets/electricity/electricity.aspx
8
Source: European Commission; see http://ec.europa.eu/clima/news/articles/news_2012121801_en.htm
ANNUAL
REPORT 2012