Abstract
Tidal stream is an emerging and exciting renewable energy source, with 30-40MW of new capacity set to be announced in 2022 through the UK CfD Allocation Round 4 (AR4).
The resource is highly predictable and can be accurately forecasted years ahead of time, unlike other renewables like wind and solar. It is also completely decoupled from other renewable resources, improving energy source diversity and providing resilience against extreme weather events.
Tidal technology is currently expensive compared to other renewables, however it is on a steep cost reduction trajectory and has unique properties that give it advantages for a role in the wider energy system. This is because greater value can be placed on the quality of the energy (predictability and dependability), as this will reduce system costs in areas associated with balancing, reserve capacity and curtailment.
ORE Catapult commissioned a study to assess the potential benefit to the energy system. This was funded through the TIGER project. Imperial College London (ICL) used their Integrated Whole Energy System (IWES) model to investigate how the introduction of tidal stream impacted the overall cost and composition of the energy system in 2050. This assumed a Net-Zero UK energy system, matching government targets. Tidal farm power output estimates were provided by the University of Plymouth, a partner in the TIGER project, and the University of Edinburgh.
Results from the study indicated the following:
- The breakeven LCOE of tidal stream in 2050 was found to be £49-55/MWh, depending on the capacity installed. Below this level, tidal stream offers cost benefits to the grid and will displace other renewables (for example offshore wind and biomass with CCS). Above this level, tidal stream adds cost to the system when compared to the scenario with no tidal stream.
- Tidal stream was found to displace other renewable energy technologies and natural gas CCGT. In the baseline scenario the tidal stream reduced the CCGT capacity by 40%: from 8.1GW to 4.9GW. This shows that tidal stream contributes to security of supply, displacing the need for peaking and flexible CCGT plant, and also contributes to reduction in emissions.
- At a LCOE of £40/MWh, the optimal solution would be to install the maximum amount of tidal stream (which ICL set to 20GW in the model). At £50/MWh the optimal system contained 3.1GW of tidal stream. The latter LCOE is 42% above the 2050 LCOE assumed for offshore wind (£35/MWh). This shows that there is a lower system integration cost2 for tidal stream and that a premium for energy from tidal stream is warranted, vs installing additional wind, as it improves diversity in renewable outputs.
- At a LCOE of £50/MWh, tidal stream could reduce system costs by £100M per annum. This rises to a saving of £600M per annum at an LCOE of £40/MWh.
- The cost benefits to the energy system were greater when the wind resource was lower, the technology becoming more cost competitive. The P5 wind scenario increased the tidal system cost saving to £800M per year, with a breakeven LCOE of about £72/MWh. Tidal stream energy can help mitigate against low wind events that can have implications for the whole energy system (as was seen in 2021, where lower than average wind speeds contributed to depletion of gas reserves and hence a rise in energy prices.
In broad terms, the study indicates an LCOE target of £50/MWh by 2050 for the industry. This is possible to achieve with an average deployment rate of 420MW per year and a learning rate of 10-15%, as has been achieved historically for other renewable technologies.