The latest report on Renewables from the Committee on Climate Change (CCC) offers lukewarm support for electricity generation from tidal streams. The UK has some of the fiercest tidal currents in the world, but the CCC says the tidal turbines will deliver energy at a higher cost than PV in 2040. The assumptions behind this pessimism are questioned in this note. The tides around Britain’s coasts sweep huge volumes of water back and forth at substantial speeds. The energy contained in the tidal races off the west of the UK is as great as anywhere in the world. Because water is a thousand or so times heavier than air, the maximum speeds of perhaps 6 metres a second are capable of generating far more electricity per square metre of turbine area than a windmill. The Pentland Firth, the narrow run of water between the north-east tip of Scotland and the Orkney islands, is possibly the best place in the world to turn racing tides into electricity. The challenges are immense: massive steel structures need to be made that survive huge stresses, day after day.
The rewards for tidal stream developers are commensurate. Unlike other renewable technologies, tidal power is utterly predictable for the entire life of a turbine. We know to the minute when the tides on a particular day will be at their peak. Once installed, the running costs of tidal stream technology will be low. The environmental impact of tidal turbines appears to be very small. And the UK could probably provide a quarter of its electricity from tides. (And much more if an environmentally acceptable means was found of damming the Severn tides).
The CCC might then have been expected to push for a significant programme of support for tidal. Its reservations appear to be as follows.
a) Tidal generation does not help with the ‘intermittency’ problem of renewables generation.
b) The levels of yield are relatively low. (Yield is the percentage of rated power that can be delivered in a typical day.)
c) The cost of capital is high for a developer using tidal turbines because of the risk of the technology not working
d) The relatively small scope for learning curve improvements.
An individual tidal turbine will generate most electricity when the tide is running fastest. This will be at approximately the mid point between high and low tides. The CCC therefore says that tidal power will not help deal with periods of low production.
The cycle of marine power (tidal plus wave) suggests that total output will fall to zero four times a day. This would only be the case if all the turbines were sited at the same place. Turbines placed, as they will be, all around the coasts of Great Britain will generate maximum power at different times of the day. On the day I looked at the tide tables, the tides in the Channel Islands (where there are some extremely powerful races) were completely unsynchronised with the tides in northern Scotland. Two turbines, one off Alderney, one off John O’Groats, would together produce substantial amounts of (entirely predictable) power every second of the day. Tidal power is as dispatchable as nuclear.
Yields are low
The CCC offers a view as to the output of a tidal turbine, suggesting that in a ‘high’ case the figure will be 40%. That is, the average electricity output of a 1MW turbine over the course of a year will be 400kW.
Actually, the one piece of reliable data on this number suggests a much higher figure. The UK’s hugely impressive tidal turbine developer, Marine Current Turbines (MCT), has had a device in the waters of Strangford Lough for several years. This early turbine has produced 50% of its rated power. The difference is important: it means that electricity generation costs are 25% lower than the CCC would otherwise have predicted.
The cost of capital is high
I think the CCC – normally so forensically rigorous – makes an error here, guided by its capital markets advisors Oxera. The CCC suggests that capital projects have to earn a return determined by the ‘riskiness’ of the investment. The debate over what types of ‘risk’ need to be paid for is complex and almost theological in its intensity. But I will not argue about this and will accept that early tidal power projects are ‘risky’ and that investors will therefore expect high returns to compensate for their exposure.
But let’s dissect what the ‘risk’ of a tidal project actually is. At its simplest, it is that the technology will fail. And, indeed, most tidal turbines have simply broken into pieces in the early months of their life in the seas. But this is the only risk. Once working successfully, the tidal currents will flow for as long as the moon circles the earth. There are no commodities markets to disrupt the returns, no risk of increased operating costs once the technology is proven. To say that tidal has a high cost of capital is wrong: the early developers take big risks but once the technology matures, the operating risk disappears. The right assumption to make about tidal is that has huge cost of capital today, but will have very low rates in the future once the technology is proven. Instead, the CCC’s advisers weight tidal down with high returns on capital for ever. This unfairly penalises tidal stream power, and all other sources of energy in their early stages of development.
Small scope for learning curve improvements
Other renewable technologies have generally reduced in underlying cost by 10 or 15% for every doubling of the output of these devices. (This is an utterly standard ‘experience’ effect- we’ll assume tidal turbine costs only fall by 10% for each doubling).
To date, the world tidal industry has probably installed less than 20 full-scale production devices on the seabed. In fact, you could plausibly say that the MCT Northern Irish turbine is the only such turbine. Assume nevertheless that today’s accumulated production experience is 20 units.
But the CCC, advised in this case by Mott McDonald, says that costs today are about 20.5 pence per kilowatt hour of electricity generated and will only fall to 15.25 pence in 2040, a reduction of slightly more than 25%. (1) The learning curve model assumes that a 10% reduction will typically come after a doubling of total production to 40 units. A further 10% reduction comes when accumulated volume rises to 80.
The arithmetic is not complex. If Mott McDonald thinks that the costs will only fall to 15.25, it must believe that the worldwide tidal industry will install less than 160 turbines before 2040.
The CCC’s analysis locks tidal stream technology into relative failure. Costs are high, and the technology risk is great. So no developers use the tidal turbines and costs remain stubbornly high. The cycle continues. Of course this could indeed be the future. But with sustained effort and support, tidal energy may become of the UK’s most important industries. In MCT – a business few people have ever heard of - the country has the most technically advanced marine energy company in the world. I think it deserves all the backing it can get.
(1,) The mid point of the cost ranges in Figure 1.10 of the CCC’s Renewables report. All numbers in real money.