USA Lags in Ocean Energy Development

Although it currently represents only a fraction of global energy supply, ocean energy has picked up momentum recently, albeit not in U.S. waters.

Mr. Kron wrote his view of current ocean energy development in the USA, where he believes that policymakers need to speed up the permitting procedures, as well as to give more financial support to the emerging technologies.

In February, Lockheed Martin announced a partnership with Ocean Power Technologies to convert wave energy into enough electricity to power 10,000 homes. The 62.5 megawatt facility will be located off the coast of southern Australia. It joins five other tidal range power plants that exist in the world today – two in South Korea, and three others in France, Canada and China.

While U.S. energy providers are responsible for many innovative technology developments in this space, no commercial scale projects have been deployed in the United States. In late February 2014, Ocean Power Technologies informed the Federal Energy Regulatory Commission that it would surrender a permit to build the Reedsport Expanded Project off the coast of Oregon due to regulatory and technical issues. The project was the first and only wave power station permitted in the U.S. to date.

Permitting has been the primary obstacle for U.S. projects, with environmental and process uncertainties providing significant roadblocks. The Ocean Renewable Energy Coalition, a trade group for marine energy industry, estimates that it will take roughly 5-to-10 years and up to 25 permits from Federal and state regulators for projects to achieve compliance.

In addition to permitting, many potential project developers have thus far been unwilling to accept the risks associated with the emerging technologies. And with incumbent forms of energy relatively less expensive, ocean energy suppliers face an uphill climb before the technology, installation experience and expected economies of scale allow project costs to be price competitive.

Some developers have taken steps to overcome these issues. On March 20, The Federal Energy Regulatory Commission (FERC) issued a license to Snohomish County Public Utility District for a tidal energy pilot project in Admiralty Inlet in Washington. The project will be the first grid-connected array of large-scale tidal energy turbines in the world. The project will includes installation, operation and evaluation of two turbines at a depth of about 200 feet.

To spur innovation, the Department of Energy (DOE) has invested over $100 million in grants for technology developers and testing facilities, including the Admiralty Inlet project. Last year, the Department announced plans to sponsor a Wave Energy Converter prized aimed at lowering the levelized cost of energy for wave energy to 15 cents per kilowatt hour (kWh) compared to the current rate of 61-77 cents per kWh.

Thus far, significant power generation from the oceans remains more theoretical that actual, both in the U.S. and around the world. Currently, ocean comprises only 0.01% of electricity production from renewable sources. According to the International Energy Agency (IEA), total worldwide installed ocean power was about 530 megawatts at the end of 2012.

IEA forecasts that ocean energy technologies could start playing a sizable role in the global electricity mix around 2030, and could be competitive sooner in some markets where the levelized cost of energy is higher and ocean resources more accessible. IEA estimates a worldwide potential of 337 gigawatts of wave and tidal energy capacity by 2050.

The long term potential for the U.S. is robust as well. The United States uses approximately 4,000 terawatt hours of electricity per year. DOE estimates that the maximum theoretical electric generation that could be produced from waves, tidal and ocean thermal energy gradients in U.S. waters is approximately 2,116 terawatt hours per year, more than half of the nation’s total annual electricity usage.

To realize this potential for domestic power, the United States would do well to emulate the business practices and policy mechanisms that have made ocean energy’s future closer to reality in countries like the U.K., Australia and Norway. To catch up, policymakers should consider streamlined permitting procedures, feed in tariffs which account for the higher costs of emerging technologies and continued grants to support technology development. U. S. businesses, particularly large industrial companies, can bring the installation, project management and operation and maintenance experience to bear to increase project size and drive down costs.

Press Release, May 06, 2014; Image: oceanpowertechnologies