Tidal energy has potential to provide 11% of UK’s electricity demand, analysis says

Tidal energy has the potential to provide 11.5 GW to the UK energy system, 11% of the UK’s electricity demand, and tidal stream projects could contribute up to £17 billion to the UK economy by 2050, according to Offshore Renewable Energy (ORE) Catapult and Imperial College London (ICL).

In 2022, ORE Catapult led a study working with ICL to quantify the energy system cost benefit of tidal stream energy (TSE), which resulted in a whitepaper explaining the findings. A follow-up study was carried out by ICL researchers in 2023.

System modeling conducted by ICL found the gross benefit of TSE to be around £2 billion per year, which means an average saving of £71 for each UK consumer every year.

However, the cost benefits of TSE to the energy system will depend on several factors such as the deployed TSE capacity, the cost of other generation sources (wind/solar/gas/nuclear), and the cost and pace of integration of electrolyzers and battery energy storage systems (BESS).

ICL’s study ran a sensitivity analysis to better understand the effect of these. The figure below shows the gross cost saving to the energy system with tidal deployment in each scenario, relative to the system without tidal.

Source: ORE Catapult

The findings show that even with high nuclear deployment and low BESS costs, there continue to be cost benefits with tidal stream deployment. Additionally, the benefits of tidal to energy systems were found to remain largely unaffected by uncertainties surrounding the cost of variable renewable energy sources.

According to ORE Catapult, tidal stream improves the resilience of the energy system by diversifying renewable energy sources and tidal currents are consistent and predictable decades into the future, and therefore, they can ensure a stable power supply during challenging weather, reducing the reliance on imported gas or electricity. In a year where there is a one-week wind drought, the scenario with TSE has a £2.6 billion benefit over a non-TSE scenario.

Currently, gas/biomass/nuclear power stations generate the base load in the UK. However, in the case of gas, which makes up a large portion of this generation, this comes at the cost of vulnerability to global gas price fluctuations and significant greenhouse gas emissions. For nuclear, it is predicted that the cost of integrating TSE and displacing some gas generation brings down system costs by alleviating exposure to high fuel prices and increasing CAPEX savings with additional carbon offset technology such as carbon capture and storage (CCS). TSE is predicted to fall below the costs of nuclear, meaning savings over nuclear are a key system benefit.

As the installed capacity of offshore wind and solar panels increases, their system integration costs rise. There is an increasing need for energy storage solutions to allow energy demand and supply to match. After a certain point every GW of wind or solar capacity added to the system will require additional storage capacity and replacing this extra capacity with TSE reduces balancing costs, ORE Catapult said, adding that it increases the diversity of the energy mix, generating power based on different external factors. The optimum power generation portfolio calculated by the system modeling has at least 10 GW of tidal energy. This is true even when storage costs (such as electrolyzer and BESS) are 20% lower than anticipated.

For the benefits of tidal stream to be fully realized, we need sufficient deployment of tidal energy, and this will only happen with a fall in technology costs, ORE Catapult said, explaining that collaboration between innovators to standardize certain components would go some way to enable the supply chain to reduce manufacturing costs.

Long-term policy support from the government is another crucial factor in enabling significant tidal energy deployment. Positive steps have already been taken – the UK Government ring-fenced funding for tidal energy within the UK Government’s Contracts for Difference (CfD) scheme, including the allocation of 40.8 MW in the CfD’s Allocation Round 4 in 2022, and 53 MW in the Government’s AR5 in 2023.

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ORE Catapult believes that going forward, policymakers must prioritize industry deployment targets and support scale-up, continue to ring-fence funding and streamline the consenting process to strengthen the project pipeline. These actions will boost private sector confidence, unlock new funding sources, and accelerate cost reduction and addressing these factors will enable the UK to achieve substantial tidal energy deployment and fully harness its renewable energy potential.

In November 2023, the UK government increased the maximum price for tidal energy projects by 29% in its flagship renewables support scheme.

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