Abstract
Tidal energy is an emerging marine energy technology that has the potential to contribute up to 220 terawatt-hours per year of renewable energy generation in the United States (Kilcher, Fogarty, and Lawson 2021). Since 2007, the U.S. Department of Energy Hydropower and Hydrokinetic Office (H2O) has invested in marine energy research and development to advance the technical readiness and increase the affordability of tidal energy and other marine energy technologies. In 2023, H2O released the largest tidal funding opportunity to date: $45 million for tidal energy advancement.
In accordance with the Government Performance and Results Act (GPRA), H2O annually assesses marine energy technology development resulting from government-funded research and development programs and strategy. For GPRA reporting, H2O uses the levelized cost of energy (LCOE)—which represents the total system cost per unit of energy produced—to measure the progression of marine energy technology development, assess the impact of their research and development programs, and identify future research priorities. To support H2O’s GPRA reporting requirements and inform future strategy, the National Laboratory of the Rockies conducted a tidal energy LCOE expert elicitation study to estimate present and future LCOE. This report describes the motivation and background for the elicitation study, the methodology used to conduct the study, and the study results. It also provides future recommendations for accelerated tidal energy LCOE reduction based on feedback from study participants.
Based on responses provided by study participants, the average LCOE for the year 2022 is $0.36 per kilowatt-hour (kWh) ± $0.11/kWh. On average, the study participants estimate that LCOE may reach $0.20/kWh by 2036 ± 6 years for the conservative case and 2033 ± 6 years for the optimistic case. The average LCOE estimates for 2050 under the conservative and optimistic scenarios are $0.17/kWh ± $0.08/kWh and $0.11/kWh ± $0.06/kWh, respectively. The participating experts identified the following cost categories as being the leading cost contributors to LCOE: (1) power take-off system, (2) maintenance, (3) structural assembly, (4) operation, (5) mooring, foundation, and substructure. The following are other key takeaways from the study:
- There is no single action to reduce tidal energy LCOE. Accelerated LCOE reduction depends on the combination of economies of scale, economies of volume, learning by doing, and innovation through research and development.
- The experts highlighted the mutually beneficial relationship between cumulative installed capacity and cost reduction, where more deployments lead to more cost reductions through learning by doing and economies of volume. Additionally, study participants emphasized the critical need for financial and revenue support to launch the advantageous cycle of deployments that will lead to cost reductions and drive future deployments.
- There is a need for a streamlined consenting process that enables faster and easier approval of tidal energy projects.
- Risk is a significant barrier to early tidal energy projects. It contributes to high insurance cost and high cost of capital and makes investors and project developers reluctant to support tidal energy deployments. The influence of risk highlights the importance of receiving financial and revenue support for projects to improve investor confidence, as vi This report is available at no cost from the National Laboratory of the Rockies (NLR) at www.nlr.gov/publications. well as completing thorough risk assessments prior to deployments to avoid preventable accidents that impact the demonstration of operational hours (and ideally high availability, which is defined as operational time divided by the total time deployed).
- Ongoing financial and revenue support1 throughout early deployments of single-unit and multi-unit array demonstrations is essential for gaining cumulative installed capacity, which will drive LCOE reductions and boost investor confidence. This support will help tidal energy technologies overcome initial deployment barriers associated with high costs and risks so they can accumulate operational hours to prove technical performance and reliability, thereby de-risking technologies and offshore operations with successful deployments.