The competition for the UK government’s subsidy contracts has seen tidal energy projects lose out to those of more established offshore wind, prompting one of the leaders in the tidal energy industry, Atlantis Resources, to question UK government’s intention to capitalize on its vast tidal energy resources.
Even though the company had forecast a two-thirds reduction in the level of revenue support required for Phase 1C, which was in a competition for the second UK’s Contracts for Difference (CfD) allocation round, versus that enjoyed by the initial phase of MeyGen, the project was still left without the CfD in this phase.
The Edinburgh-based tidal energy developer said the significant cost reduction was not sufficient to allow the project to secure a CfD as it was competing with established technologies such as offshore wind.
The MeyGen project was competing directly with more commercially-ready renewables, rather than within a sub-category of earlier stage marine renewables, due to removal of the previously pledged ring-fenced allocation, enacted by the Department for Business Energy and Industrial Strategy (BEIS) in November 2016.
The move caused Atlantis to shift focus to developing marine power projects in other jurisdictions, including near-term plans for delivering projects in France, Canada and South East Asia where tidal stream is well supported, according to the company.
Tim Cornelius, Chief Executive Officer of Atlantis, said: “It would be a travesty if the UK were to lose out on another emerging industry where it has established a first-mover advantage and where the cost of energy is on a steep downward trajectory. We expect our ensuing discussions with BEIS to focus on how the future jobs and growth benefits of the sector can be secured for the UK.
“We’ve made great strides in reducing our cost of generation so that we can slash our requirement for revenue support, and I am incredibly proud of the work the Atlantis team has done in this respect.
“However, I must acknowledge the difficulties of competing on a level playing field with established technologies like offshore wind, which has been operating at commercial scale in the UK for over a decade.
“Elsewhere in Europe, we are being kept very busy pursuing opportunities in France and Canada, both of which have pledged capital and revenue support for tidal stream power.”
Atlantis is in discussions with French authorities about establishing a multi-turbine array in French territorial waters which could commence construction in 2018.
It has a 50% stake in a 4.5MW berth in Canada at the FORCE facility in Nova Scotia and will soon be in a position release updates to the markets on contracts and project development rights in Indonesia, China and South Korea, the company added.
In the UK, Phase 1C of MeyGen is designed to provide nearly 240GWh of clean and predictable electricity to the grid each year from 2023, with the total generating capacity of the MeyGen project set around 400GW.
Atlantis noted that the Phase 1B of the project, which involves adding additional 6MW to MeyGen, did not participate in the auction because it had been awarded funding support from European Commission mechanisms such as NER300 and Horizon 2020.
Also, Atlantis has been awarded preferred developer status by the Duchy of Lancaster for the 160MW Wyre estuary tidal range and flood protection project.
Commenting on the CfD2 allocation results, the Chief of RenewableUK, the country’s trade association for tidal, wave, and offshore wind, Hugh McNeal, said: “It’s great to see these excellent results for offshore wind. It’s important that innovative renewable technologies, including wave energy and tidal energy projects also have a route to market, so different mechanisms are needed to ensure these cutting-edge technologies can develop.
“Tidal energy projects are already showing cost reductions and with the right encouragement can undergo the same sort of journey as offshore wind.”