This report is an analysis of the funding requirements and investment situation for the wave and tidal energy sector in the UK and suggests solutions that could facilitate the required investment to materially progress the sector. We have made some high level assumptions to estimate that, on its current trajectory, the tidal industry will need upwards of £100 million to get the first arrays to financial close. Additionally, we project that around £200 million of investment is needed to drive the wave industry along a path to commercial readiness. Further investment over and above these sums will be required for further tidal arrays and for the first wave arrays.
Funding for first arrays and technology proving has become less certain as investors have been pulling out of the market due to lack of clarity on future investment return potential and timing. The current investment challenges are reviewed, followed by insight on the status of, and interest by, potential investor groups. From our assessment we clearly show that there is a lack of willingness from potential investors to invest in wave and tidal energy at the moment. The situation is becoming critical, as we have witnessed, with the UK Department of Energy and Climate Change (DECC) pulling a £10 million grant from what was to be one of the first tidal arrays. This market is strategically important to the UK but is on the brink of floundering. It is crucial that action is taken to bolster the prospects of the industry in order to get investors back in play.
We conclude by presenting several potential interventions in which the Offshore Renewable Energy (ORE) Catapult may play a role given its unique position as an independent centre of excellence with a mandate on wave and tidal technologies. The interventions include:
- Benchmarking / stage-gating of performance for both projects and technologies
- Purchasing of non-core (enabling) technology IP from leading wave tech developers for development and usage by the rest of industry
- Coordinated and syndicated public and private funding and support for technologies to derisk investment. Investment would be coordinated with and contingent upon technology stage-gate assessments
- Coordination of due diligence for both projects and technologies
- Contingent loan facility for first arrays