The Ocean Could Be The Ultimate Renewable Energy Source

For all their hype as the biggest and final frontier in clean energy production, tidal and wave power have never quite lived up to their potential. The IEA estimates that we harnessed just 1.2TWh of energy from the world’s vast oceans in 2018--a minuscule fraction of the ~170,000TWh in global primary energy consumption.  This sad situation is not for lack of trying, though. 

More than 70 companies have developed various technologies to generate electricity from ocean tides or the kinetic power of waves, leading to global ocean energy production rising tenfold over the last decade. Yet, most never advance past the pilot stages into full commercialization. 

The sad tale of the leader in the space, Ocean Power Technologies Inc (NASDAQ: OPTT), serves as a sobering reality of the enormous challenge of turning an interesting science project into a profitable business venture. Ocean Power--a company mostly kept alive by government largesse--has crashed 99% over the past three years as it threatens to join the trash heap of tech companies that have experienced more false dawns than Groundhog Day.

But some experts now believe that the time for a Blue Energy revolution has come and new developments in the space could flip the script.

The Ocean Energy Systems (OES), an offshoot of the International Energy Agency, has been working round the clock to pool all the research it can in a bid to achieve large-scale ocean power deployment in the near future.

Source: CNN Money

Riding the Tidal Wave

The 24-member OES, including the U.S., China, most E.U. nations, and India, believes ocean power has the potential to become the Holy Grail of renewable energy due to its sheer potential.

The International Renewable Energy Agency (IRENA), an organization that promotes the widespread adoption and sustainable use of all forms of renewable energy, reckons ocean power has the potential to generate more electricity than either solar or wind power. 

According to IRENA, 2% of the world’s 800, 000 kilometers of coastline exceeds a wave power density of 30 kilowatts per meter (kW/m), with an estimated global technical potential of about 500-gigawatt electrical energy (GWe) based on a conversion efficiency of 40%. In other words, by just utilizing 2% of our coastlines, we can generate 4,383TWh of ocean power annually, enough to meet 16.4% of the world’s electricity needs. The U.K. and U.S. have said ocean energy could provide 20 and 15% of their electricity consumption, respectively.

In comparison, all renewable sources combined accounted for ~11% of the United States’ energy consumption in 2018.

Despite the vast potential, only Scotland currently generates any meaningful amounts of ocean power. 

Scotland has enormous potential thanks to its impressive archipelago of islands with heavy tidal currents that can be easily tapped. Located in the Northern territory of the U.K., the nation now boasts the largest tidal array of underwater turbines in the world. Scotland’s tidal turbines have even exceeded expectations, with the MeyGen company now planning to increase the number of installations vastly.

Other leading countries developing ocean power technologies are Canada and the United Kingdom, both endowed with some of the highest tides anywhere in the world. Canada has a number of tidal energy schemes along its Atlantic coast, primarily in Nova Scotia, where scores of competing companies are testing various prototypes. The U.K. has more than 20 of these projects in the pipeline, some still in the research and development stage, but many now being scaled up for deployment.

Meanwhile, China encourages tidal stream energy by offering a generous feed-in tariff 3x the price of fossil fuels. That’s similar to the rate deployed by countries that are trying to launch solar and wind power. The incentive is high enough that one Chinese company is already feeding ocean power into the main grid profitably.

Ocean Energy Benefits

Ocean power comes with some distinct advantages.

First off, it’s clean and compact, featuring higher energy density than either solar and wind projects. For instance, Sihwa Lake Tidal Power Station in South Korea, the world’s largest tidal project with an installed capacity of 254MW, was easily added to a 12.5km-long seawall that was built in 1994 to protect the coast against flooding. Compare that to the 781.5MW Roscoe wind farm in Texas, which takes up 400km2 of farmland, or the 150MW-Fowler Ridge wind project in Indiana that sits on a 202.3km2 parcel of land.

Even solar farms are usually bigger, such as the Bhadla Industrial Solar Park in Rajasthan, India, that is spread across 45km2 of land or the Tengger Desert Solar Park in China that covers 43km2 This means that even smaller countries with long enough stretches of coastline can use tidal power to compete with bigger, land-rich countries such as the U.S., China and India that can afford to dedicate large tracts of land for solar and wind projects.

Second, tidal power is much more predictable than either solar or wind, which can be extremely intermittent.

Finally, the equipment used in ocean power deployments such as tidal barrages are long-lived concrete structures that can have life spans up to 4x longer than typical solar or wind farms. The La Rance in France, for example, has been operational since 1966 and remains in good working order with 240MW generation capacity.

So, what’s stopping the rest of the world from jumping into the Blue Energy bandwagon?

The Cost Barrier

Money always gets in the way. 

The challenges of harnessing tidal and wave power, though, can be daunting.

Tidal power projects hold some of the loftiest up-front price tags in the renewable energy sector. The aforementioned La Rance cost 620 million francs back in 1966, or more than a billion dollars today after adjusting for inflation while Sihwa Lake Tidal Power Station cost $560m. The proposed Swansea Bay Tidal Lagoon project in the U.K. has been priced at £1.3bn ($1.67bn).

In comparison, The Tengger Desert Solar Park costs around $530m--roughly the same cost as Sihwa for 3.3x as much power. Likewise, the Roscoe Wind Farm cost around $1bn for an output of 781MW, about 1.7x better cost efficiency than Sihwa Lake. Although the long-term generation costs of ocean power projects are relatively good compared to other renewable energy systems, the initial construction costs can make them unachievable for poorer nations.

The second big challenge is the lack of sufficient research. One reason why Ocean Power Technologies has been going nowhere is mainly because it dedicates so little money to R&D. The $3.3M (market cap) company has racked up more than $200 million in debt since its founding in 1984 and spends ~$1.3 million a quarter on R&D. Many tidal power technologies are simply not deployable on an industrial scale, thus limiting the expansion of the energy system.

Of course, this is exactly what OES is trying to change through concerted R&D efforts between nations.

Bright Future

The OES has identified several challenges centered around affordability, reliability, operability, installability, standardization, funding availability, and capacity building that will require to be solved before ocean power can become a mainstream renewable energy source.

The organization, in particular, emphasizes the need for significant cost reductions required for ocean energy technologies to compete successfully with other low-carbon technologies. The European target is to get tidal stream energy down to €0.10 per kilowatt-hour and wave power down to €0.15 by 2030, which would also make them competitive with fossil fuels if these traditional sources were obliged to pay for capture and storage of the carbon dioxide they generate.

Unfortunately, the United States has no tidal power plants mainly because it lacks an abundance of sites where the technology can be economically harnessed. The country will have to be content with other low-carbon technologies such as solar, wind, and biofuels where it has better competitive advantage.