By David Appleyard
Attending the Ocean Energy Europe event in Paris recently the considerable presence of developers and manufacturers signalled a long-term transformation for the sector, which – for tidal stream in particular – is now emerging as a technological reality. Indeed, though considerable engineering challenges remain, there appears to be a great deal of confidence among industry players that these challenges can be overcome. It’s not a case of if, so much as when.
In fact though, one of the most striking developments came not from technology at all but instead appears to signal a more radical change – a shift from addressing the engineering fundamentals and instead focuses squarely on financial engineering and the commercial realities of generating power from the waves and tides.
Atlantis Resources, owner of MeyGen and the world’s largest planned tidal stream energy project, had just announced a total of £51.3 million funding for Phase 1A of the project in the Inner Sound of the Pentland Firth, Scotland, had been secured. That will see four 1.5 MW turbines installed, three from Andritz Hydro Hammerfest and one Lockheed Martin. Andritz Hydro Hammerfest describes the move as “the first commercial order worldwide to supply tidal current turbines” with its three machines due for commissioning in 2016.
But more recently, the 398 MW MeyGen project was awarded the first ever ‘Navigator Award’ at the International Conference on Ocean Energy (ICOE), in “recognition of the project’s significant contribution to global marine renewable industry”. Chris Campbell, chair of ICOE’s international organisers, explains the reasoning behind the award: “MeyGen is the first project to secure leasing, environmental permitting, technology supply, power purchase and financial close agreements. The project has momentum and has potential to grow into an industrial-scale power plant.”
Certainly MeyGen has all of those, but as the Atlantis CEO, Tim Cornelius, explained at OEE, the company has something else besides – ambition. Fresh from the glow of securing project finance funding for Phase 1 of the project, Cornelius has already set his sights on the next tranche of finance. This time, the company is looking for perhaps £100 million or more as the scale of the fully commercial project is realized. More significantly, the company hopes to structure the project finance on more conventional lines, with around 70% of the finance coming from debt and 30% from equity, far more typical for the power sector in general and a radical shift from the current funding phase, which has a ratio of about 50:50 debt to equity. Achieving that goal will really signal that marine tidal energy has arrived, not in the laboratory, but in the boardroom of the institutional investor. And once that is a daily reality, the commercial viability of marine tidal technology will be a reality too.