1/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester HMRC Marine Energy Economics Workshop 28 th Jan 2011 Tim Stallard School.

1/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

HMRC Marine Energy Economics Workshop

28th Jan 2011

Tim StallardSchool of Mechanical Aerospace and Civil Engineering,

University of Manchester

2/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Background• 1996 – 2000: Civil & Structural Engineering MEng• 2000 – 2004: Fluid Dynamics DPhil – Extreme wave loading• 2004 – 2006: Supergen Marine

“Lifetime Economics of Marine Energy”

• 2006 – Present: University of Manchester

- Cost studies related to “Manchester Bobber”

- EQUIMAR: Equitable Appraisal of Marine Energy Systems“Economic Assessment of Large-Scale Marine Energy Deployment”

5 x 5 Array Interaction Experiments5 x 5 Array Interaction Experiments

2D 2D 2D

3/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Equimar

Review of Procedures for Economic Evaluation (EWTEC09)

Principal costs of support structures for:Mooring systems

Bed mounted support structures for wave devices

Bed mounted structures for tidal stream devices

Influence of accessibility on scale of deployment

Influence of energy extraction limits on project economics

→ “Protocols” for project assessment

0

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Catenary Catenary &Buoy

Taut Taut & Buoy

Novelty

Complexity

Umbilical

Footprint

O&M

Installation

Redundancy

Fatigue

Survivability

Anchor Type

4/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Wave Site Access

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0 0.5 1 1.5 2 2.5 3 3.5

Annual average Hs, m

Acc

essi

ble

cond

ition

s pe

r M

onth

48 hr 24 hr 24 hr summer

Average number of occurrences, per month, of 24hr and 48hr calm conditions (Hs < 2 m)

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0 0.5 1 1.5 2 2.5 3 3.5

Annual average Hs, m

Av.

wai

ting,

day

s

48 hr 24 hr 24 hr summer

10 20 30 40 50Wave power density (very approx.) kW/m

5/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Tidal Stream Deployment

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on

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es

se

l

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lInstallation whilst Uc < 1.33 m/s

28 devices (~ 14 MW) in six months

100 MW capacity if install 7 devices per 24 hr window

Installation whilst Uc < 1.13 m/s

15 devices (~7.5 MW) in six months

100 MW capacity if install 14 devices per 24 hr window

Number of installations per Month

6/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

0%

10%

20%

30%

40%

50%

60%

70%

A

B

C

D

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10%

20%

30%

40%

50%

60%

70%

A

B

C

D

Cost Reduction?

Expected CAPEX for increased deployment scale

TOTAL Reduction:A: -20.6%B: -9.7%C: -18.0%D: -10.5%

-50%

-30%

+5%

Source: Equimar workshop & Survey, 2008/9

7/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Performance limits

• Power output per device governs:– Revenue, Number of devices deployed.

8/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

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0 10 20 30 40 50 60

Average wave power at site (kW/m)

£k/M

W

.

NPV inc. OPEX inc. OPEX & cable

Performance Limits

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0 10 20 30 40 50 60

Average wave power at site (kW/m)

£k

pe

r D

EV

ICE

• Power output per device governs:– Revenue, Number of devices deployed.

Device: Optimal output at peak periodResource: HSE (2001), 8 sites

Revenue per unit: 3.5 p/kWhDiscount: 8%OPEX: 8% CAPEX assumed

Cable: site to shore transmission estimates based on distance & rated power (Boehme et al., 2006)

0100200300400500600700800900

1000

0 10 20 30 40 50 60

Average wave power at site (kW/m)

N. D

evic

es

Optimal at peak period Optimal in all conditions

9/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Project Assessment “Protocol”

1. Capital Expenditures

4. Risk Assessment

2. Operating Expenditures

3. Revenue

5. Project Assessment

Conduct of an economic assessment should produce statements detailing:

- Economic indicators against which the project is assessed

- Major capital cost components

- Major contributions to annual expenditure

- Expected project revenue

- Risk assessment and mitigation

10/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

end

11/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

Costs to-date…

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2000 2002 2004 2006 2008 2010 2012

CA

PE

X (

£k/k

W)

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2000 2002 2004 2006 2008 2010 2012

CO

E (

p/kW

h)

12/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester

‘Protocol’

Develop framework for evaluating long-term economic viability of marine energy technologies.

• Summarise main drivers of cost of electricity from marine energy farms

• Develop methods for quantifying long-term cost-reduction of alternative generating technologies – Evaluate cost drivers for types of civil engineering infrastructure– Explore relationship between performance limitations and long-

term revenue– Describe procedure to compare technologies in terms of potential

cost reduction

• Evaluate influence of technology selection and deployment scale on economic viability