Wave and Tidal Energy: The Potential Economic 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
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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
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
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%]
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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