Abstract
The oceans represent the world’s largest potential for renewable energy, with Europe at the forefront of ocean energy development, with wave and tidal energy representing the two most advanced technologies in the sector. Yet, tidal stream technologies are still at a pre-commercial stage and wave energy technologies, still at demonstration level. Thus, notwithstanding the significant progress of the sector in recent years, particularly in tidal stream, these technologies require further research, development, and innovation (RD&I) efforts to advance demonstration projects and partake in grid power’s highly competitive markets. In addition, the high-up front costs and the embryonic stage of some ocean energy technologies make their development challenging.
Ocean energy in the present day has similar characteristics to the wind and solar sector of previous decades; as a developing technology, the LCOE is not cost-competitive with other alternatives for grid generation, making ocean energy a minority concern in the overall current generation mix. However, lessons can be learned from these sectors’ trajectory to date, which has seen these technologies become cost-competitive and revolutionise many countries’ generation mix.
The pathway to successful deployment required revenue support to bridge the initial gap to market; with costs falling through learning by doing, innovation, and economies of scale, the market matures. Thus, market-led revenue support is key; however, targeted R&D support is required to assist with the journey from concept to commercialisation. Therefore, this work highlights the need for alternative ocean energy applications as a good entry point into the market and to undergo product development whilst generating revenue. This could allow for additional RD&I funds to be developed by initiating small-scale projects, thereby placing ocean energy in a better position to power the main grid when the need arises. In addition, synergies exist with other offshore sectors for ocean energy to provide localised power. The aim was to build on Task 8.3 and define a scenario for industrial roll-out analysis. Standard approaches to business models were developed by combining the value of the DTOceanPlus suite of tools with a deep knowledge of the potential markets that ocean energy technology can be applied to and the supply chain in place to exploit the opportunities. The report demonstrates how various stakeholders' application of the design tools can support the sustainable impact of potential markets upon the sector and its commercialisation prospects by developing alternative business models. The alternative business model approaches include pricing methods that can support business, funding and support cases.
Potential scenarios for industrial roll-out are presented, with a focus on four of the most detailed alternative markets identified within Deliverable D8.1, namely: isolated power systems (islands or microgrids), offshore oil and gas, offshore aquaculture, desalination & coastal resiliency. Business modelling canvasses were developed for each potential alternative market to create a more robust business proposition and identify barriers to market access that ocean technology developers can address. However, following stakeholder engagements and market testing, there was recognition of similarities that cut across various potential markets and that standard business models may need to be applied across these distinct market sections. Therefore, the approach taken was to categorise these alternative markets into common themes that provide a clearer sense of progression for ocean generation technologies and insight into the shared technical considerations. These markets were reframed to consider business propositions for partial power supply for the whole system, primary power supply for subsystems, and supply applicable to regions with limited power options for resiliency markets for remote communities. Therefore, common themes and potential routes to market that arose from these were balancing requirements with hybrid systems, multipurpose solutions, and unique solutions for wave and tidal.
The alternative markets explored within this report may act as supply chain accelerators for ocean energy if collaborative projects are undertaken within these areas. Aquaculture and offshore platforms have already been identified as contenders for these activities within Deliverable 8.2, primarily because of their offshore location. Any identified collaborative areas could be worked into project proposals as an added benefit. The geographical spread of the markets was reviewed within this report, identifying potentially viable markets within Europe (aquaculture, oil and gas) and more prevalent ones elsewhere in the world (microgrids, desalination). This creates a discrepancy with manufacturing and component supplier location, which necessarily needs to be local (e.g., Europe-based). These alternative markets could provide an entry point to export markets.
When looking to access alternative markets and assess the suitability of business models, ocean energy developers could consider non-traditional procurement models to overcome potential barriers such as access to capital investment, technical and operational responsibilities. These procurement models, detailed in Section 0, could alleviate concerns and open up markets that may otherwise have been unwilling to change from standard diesel-based solutions.
The work also presents a series of potential market blockers identified that contribute to tidal and wave energy unable to access either mainstream grid or alternative markets; some recommendations to help alleviate some of these blockers are outlined in this document.
The open-source design tools developed in the DTOceanPlus project can contribute to the development of the ocean energy sector. The Structured Innovation design tool can assist with facilitating ways to identify and overcome blockers; the Stage Gate tool can then be used to assess and guide the technology development; followed by the Deployment and Assessment tools to design optimised arrays, facilitating a wide-scale deployment of ocean energy technologies to generate electricity for these markets.