By Jason Deign on Oct 6, 2014

Q: What is holding back greater supply chain activity in tidal right now?

A: The key problem is that projects aren’t progressing at the speed or with the volume which we all would have hoped. Developers’ lease plans that originally envisaged 10 or 20MW in the water by now are well behind.

The supply chain is thus paused, waiting, and is only going to spin up when significant tidal energy developments are being installed.

The issue is getting the projects running at a rate and volume of installation that allows the supply chain to a) supply but also b) test its products through operational experience to ensure the supply offering is right.

We’ve still yet to get a single tidal array in the world, anywhere, and until we do the supply chain will lack the feedback it needs to further develop. This is a doubly critical issue because there are so many parts of the array that we still don’t understand.

Ultimately, I suspect that what’s holding back tidal energy takeoff is a lack of risk capital in the industry and as a consequence of that the supply chain is paused and will remain so until the demand from the developers grows.

Q: What can the supply chain do to contribute to the faster deployment of arrays?

A: The only thing it can do is look at anything that contributes to clear reductions in levelised cost of energy, LCOE.

We, for example, with the HF4 vessel think we can reduce the cost of installation from GBP£5 million to £8m per installed megawatt down to £1m per installed megawatt.

Although I doubt anyone else in the supply chain will be able to make that quantum of difference, every little will help. In particular, because it will make it easier for project developers to secure cheaper project finance, and thus further reduce LCOE. 

Q: What kind of momentum is needed for the supply chain to kick in? Will one array do?

A: I think rather than one large-scale project it is five or so medium-scale projects.

So, for example, rather than a 100MW array, which is going to take time anyway, I would rather see five pilot or medium-scale commercial arrays running with different technologies, different foundations, different installation methods, or whatever the developers choose.

It then means we have got five horses in the race. The early pilot arrays will be key to this. A minimum pilot array is going to be about 10MW, but even better would be 30MW, because then we start to understand some of the operational complexities.

We get onto the challenges in array design, installation, cabling design, foundation choices for multiple turbines and so on.

My worry is the idea in some areas of the public sector that the market will provide the capital, which I doubt. Rather, for takeoff I think we need a NASA approach.

But not NASA approach based on one type of technology, but perhaps instead those five solid projects where the technologies can compete against each other.

And in an evolutionary sense, selections by success will then help us get toward the preferred technologies that will make tidal energy the success it so clearly should be.

Q: What can you tell us specifically about your vessel project?

A: It’s been 22 months of hard-charging research and development. We have now arrived at the vessel design that works, and in which we're extremely confident.

Of course, in this generic economic climate there are challenges in securing investment in new tidal energy technology, and a chicken-and-egg problem.

Tidal technology designers such as us need firm charters and contracts from project developers to help secure risk capital to bring our technologies to market.

And tidal developers need our technologies to help them secure project finance by demonstrating that competitive LCOE is possible. This is where a NASA type approach would help the industry make the jump to full commercialisation. 

But although it's the challenge overall, when you've got a technology such as HF4 that can reduce installation costs from, say, £5m to £8m per installed megawatt all the way down to £1m per installed megawatt, you can see why we're increasingly confident of success.