Redfield Consulting's blog

Orecon

2010-02-20T14:23:00.001Z

I saw a press report that ORECon was being wound up. Details are here.

The CEO said that the company had been negotiating to participate in the WaveHub project, and that it had been unable to secure funding.

ORECon's technology is an Oscillating Water Column device, which uses multiple resonant feeder pipes to optimise energy capture. I wonder if there's any IP worth buying from the Liquidator?

Apologies for brevity - posted from my iPhone

Hours on the clock

2010-02-16T10:15:00.006Z

Marine Current Turbines have now racked up 1000 hours of export to the National Grid, as reported here.

MCT claims an average capacity factor of 66% for the period of operation. We have calculated a capacity factor, based on ROC register figures, which shows a steady(ish) increase to around 25% in November 2009. This calculated CF does not make any allowance for downtime, availability of marine mammal onservers, or (crucially for MCT) the limitations imposed by daylight-only working.

Since daylight in November is less than 50% of the time, and the trend is upwards, we can see that a claimed 66% capacity factor in December could be realistic.

If true, it's excellent news for the company and the technology, as it's always all about cost per MWhr, and more MWhrs means a better metric.

More interesting marine recruitment

2010-02-16T09:08:00.003Z

Interesting to see that Atlantis Resources is beefing up its management team too, with the hiring of Jim Forbes as Chairman of the UK business.

Details here.

So just like Aquamarine, there's a real strengthening of management teams going on in the space right now, and a real commercial focus on the new hires.

Aquamarine recruitment

2010-02-10T09:53:00.001Z

Did anyone else notice that Aquamarine just recruited Richard Round, former FD and briefly MD of Novera as their new Finance Director?

This should strenghthen their fund raising capacity and demonstrates a new level of seriousness in the marine space.

Exciting!

Apologies for brevity - posted from my iPhone

UK 3rd Offshore Wind Round

2010-01-13T17:42:00.006Z

32.2 GW of potential new capacity has been identified under the Crown Estate's programme. From the Crown Estate website:

The developers who have signed exclusivity zone agreements are:

1. Moray Firth zone, Moray Offshore Renewables Ltd which is 75% owned by EDP Renovaveis and 25% owned by SeaEnergy Renewables – 1.3 GW

2. Firth of Forth zone, SeaGreen Wind Energy Ltd equally owned by SSE Renewables and Fluor – 3.5 GW

3. Dogger Bank zone, the Forewind Consortium equally owned by each of SSE Renewables, RWE Npower Renewables, Statoil and Statkraft – 9 GW

4. Hornsea zone, Siemens Project Ventures and Mainstream Renewable Power, a consortium equally owned by Mainstream Renewable Power and Siemens Project Ventures and involving Hochtief Construction – 4 GW

5. Norfolk Bank zone, East Anglia Offshore Wind Ltd equally owned by Scottish Power Renewables and Vattenfall Vindkraft – 7.2 GW

6. Hastings zone, Eon Climate and Renewables UK – 0.6 GW

7. West of Isle of Wight zone, Eneco New Energy – 0.9 GW

8. Bristol Channel zone, RWE Npower Renewables, the UK subsidiary of RWE Innogy – 1.5 GW

9. Irish Sea zone, Centrica Renewable Energy and involving RES Group – 4.2 GW

The clear winners, as shown in the graph above, are the big 6 utilities (except for Eon and especially EdF who are complete absent), plus Vattenfall, which is increasingly becoming a member of the big 6.

MCT power curve - analysis

2009-11-05T07:49:00.006Z

MCT has just published a power curve for its Seagen device in Strangford Narrows (see figure above and link here). The curve shows a period of output at the design capacity of 1.2 MW, in what is described as a “medium tide”. This tide appears to have peaked at 3.1 m/s, which may be medium for Strangford, but is pretty impressive for most sites.

We realised that it’s possible to drill into this curve to come up with some (very) theoretical ideas of the capacity factor which might be achieved by the technology. First we constructed a velocity lookup table by taking a ruler to the graph, which shows the power output (kW) at various stream speeds (m/s).

m/s - Power
0 - 0
1 - 20
1.25 - 100
1.5 - 180
1.75 - 400
2 - 600
2.25 - 900
2.4 - 1200

We then constructed a model which characterises a simplified tidal environment, with stream speed varying according to a diurnal cycle (sinusoidal variation over 24 hours, in 2 flood, 2 ebb tides) and a 28 day lunar cycle (again simple sinusoidal variation).

We entered a maximum stream speed (peak rate achieved at spring tide) and a minimum stream speed (peak rate achieved at neap tide) and constructed a lookup on an hour by hour basis to estimate the power output over a month.

Based on a maximum stream speed of 3.2 m/s and a minimum stream speed of 1.6 m/s (ie neap maximum is half as fast as spring maximum), we find that the average theoretical power output (assuming no outages) to be 450 kW, making the capacity factor 38%.

The model shows that output is sensitive to both maximum stream speed and the ratio between spring and neap peak rates. The table below shows the relationship between capacity factor and the maximum stream speed) assuming that neaps are limited to 50% of the maximum stream speed in springs. The month-average capacity factor for various maximum spring stream speeds is:

m/s - CF (%)
2.8 - 28%
3 - 34%
3.2 - 38%
3.5 - 45%
4 - 53%
The table below shows how the capacity factor is influenced by the ratio between the maximum neap speed and the maximum spring speed based on a maximum spring stream speed of 3.2 m/s. The table shows maximum neap speed and month-average capacity factor.

m/s - CF (%)
0.8 - 31%
1.2 - 33%
1.6 - 38%
2.1 - 45%
2.4 - 48%

All of these power output estimates are wildly theoretical – and should be treated with extreme caution. Next we’re going to combine this power curve with some actual tidal data from tidal diamonds on charts to see how that looks.

Another data point in windfarm valuation

2009-10-30T17:50:00.004Z

By now, you will have seen Centrica's announcement on the sales of 50% interests in windfarms at Lynn, Inner Dowsing (offshore) and Glens of Foudland (onshore).

The key section is here: Centrica also announced that it has agreed the sale of a 50 per cent equity stake in its Lynn, Inner Dowsing and Glens of Foudland wind farms to the US-based investment management company TCW for a cash consideration of £84 million, and entered into agreements to raise approximately £340 million of non-recourse project finance facilities from a consortium of banks for these assets. The transactions value the wind farms at approximately £460 million in aggregate.

Using a 10% discount rate, and what we think are reasonable electricity and ROC prices (£60/MWh and £37/MWh respectively), we see the values (100%) as:

Glens of Foudland (26MW) - £35 million
Lynn (81 MW) - £134 million
Inner Dowsing (81 MW) - £134 million
Lynn (extension, 90 MW)- £181 million
Inner Dowsing (extension, 90 MW) - £181 million

So we get a total of £675 million for 100% of the windfarms - a considerably higher number. We have to drop the power price to less than £40/MWh or increase the discount rate to around 15% to get the value to line up with Centrica's valuation.

Also, Centrica announced that the 270 MW of Lincs would cost some £725 million - £2.69 million per MW installed. Not bad - less than the equivalent (announced) amount for Greater Gabbard. I wonder if this suggests turbine prices are weakening somewhat?

Novera in play

2009-10-07T08:32:00.006+01:00

If you've got shares in Novera Energy you'll have noticed that they leapt by 32% this morning as the company announced that it had rejected an offer from largest shareholder Infinis to make an offer for the remaining shares at 62.5pence.

Using our Value of ROCs Model, we have valued Novera's assets, and applied a weighting of 100% to operational projects, 75% to projects under development, 25% to approved projects and 10% for projects in planning. We reach an asset value of around £312 million, and according to the last accounts, there is net debt of £112 million, making the net asset value £200 million or around £1.40 per share!

Even if Infinis is atttributing no value to the wind portfolio, the asset value of £244 million would justify a share price of more than 90p/share. We're holding on.

I don't believe it!

2009-09-22T20:38:00.002+01:00

Sad to report, Trident Energy's wave energy prototype which was being deployed off Southwold came off its barge and capsized. Details here and the company's own take on things here.

Fortunately no injuries were sustained, and the damage to the device is being assessed.

Aquamarine closes £10 million funding

2009-09-21T08:46:00.007+01:00

News today is that Aquamarine, developer of the Oyster wave devices recently installed at EMEC in Orkney, has closed a £10 million equity financing (as a precursor to another £40 million to be raised later). Details here.This funding, together with the deployment at EMEC, projects Aquamarine into the top rank of wave energy devices.

The company's press release is here.

Reading...

2009-07-19T17:20:00.001+01:00

Lots and lots to read following various publications this week. About 750 pages in fact. As soon as I've got my head around some of it, I'll post in more detail

Floating wind turbine - -near to installation

2009-06-10T20:33:00.003+01:00

Some while ago, I remember being rather dismissive of a floating wind turbine concept being proposed for the Minch. StatoilHydro has been approaching the problem with a rather more elegant approach, and is now close to installing the prototype 2.3 MW Hywind turbine offshore Norway. Details here.

The turbine is going into a water depth of 220 m, so the water depth is roughly twice the hub height. This may well be a solution to Norway's offshore wind needs, as the country isn't blessed with much shallow water shelf, but I'm struggling to think of suitable locations on the UKCS.

We haven't been able to find any cost information for the project though - it would be interesting to see how it stacks up against "conventional" offshore wind.

Whatever happens, we'll keep an interested eye on how the 2 year testing programme evolves.

42 bids!

2009-06-08T14:37:00.004+01:00

The Crown Estate has announced that it has received 42 bids from 20 organisations for Pentland Firth leases. Apparently lease applications for sites from 10 MW to 300 MW have been received, across a range of technologies and technology types (wave and tidal), and from small developers all the way up to large multi-national energy companies (I wonder if they mean oil companies, utilities or both?)

It seems to us that there is some risk here that bidders may be tempted to "land-bank", tying up sites without serious near-term development plans. I hope the Crown Estate is sensible enough to try to make sure that only really credible companies are awarded leases in the most energetic areas. We worry that putting today's devices into the Pentland Firth is like racing a Model T Ford around Brands Hatch - pushing early stage technology too far.

So while we're pleased at the level of interest, we hope that lessees are conservative in rolling out their technologies to less energetic sites first.

Sunday Herald story on wind resource

2009-05-26T21:49:00.005+01:00

Couldn't resist the opportunity to link to http://www.sundayherald.com/mostpopular.var.2509982.mostviewed.blown_away_by_the_north_sea.php">this story from the Sunday Herald this week. The gist is that Atmos Consulting has access to NASA wind data, which they appear to have processed to review the wind resource and potential energy capture from sites for Third Round offshore windfarms.

I was called up to comment on the analysis, and inevitably the quote is rather simpler than the half hour conversation I had with the journo.

Picking winners...

2009-05-22T20:55:00.006+01:00

Redfield Consulting has just published its new review of the marine energy sector, rating 120 wave and tidal devices on dimensions of technical and commercial feasibility. We've developed an objective scoring system, which hopefully takes woolly judgement out of the equation.

Technical feasibility: "can the device work?"

Our technical feasibility scores are determined by clear concept definition for the device, lab and tank testing, and ideally prototyping at large scale in the sea.

Commercial feasibility: "can the device operate and make money?"

Our scoring system on commercial feasibility tries to score whether the device has addressed the key questions of survivability, reliability and accessibility, as well whether the device developer has accessed third party investment, the breadth of management team and obviously whether commercial projects are under way or planned.

We're interested in your views on the scoring system and on how further discrimination can be introduced as more and more devices start full scale deployment.

We had lots of interesting feedback at the All-Energy Show, not least an impassioned plea for inclusion of a points score for greater swept area for tidal stream devices. We'd love to hear what you, the device developer and investment community think about development of the scoring system.

The report is available now: please feel free to contact us at Redfield Consulting (inforedfieldconsulting.co.uk, and we can let you have more information. And we plan to keep it up to date, introducing a time dimension so we can all see which devices are evolving fastest.

And the winners at the moment?...you'll have to get the report to find that out!

All-Energy triumph

2009-05-22T13:55:00.001+01:00

Another triumphant All-Emergy conference comes to an end. Very busy and very businesslike. All in all excellent. Get it in your diary for next year!

Apologies for brevity - posted from my iPhone

London Array green light

2009-05-13T09:40:00.003+01:00

So, the proposed further enhancement to ROCs (offering 2 ROCs/MWh to projects signing contracts by March 2010) seems to have been enough to push Eon, Dong and Masdar into committing to the London Array project (or at least phase 1 of it).

The companies have announced that the project will cost €2.2 billion (around £2 billion) and will have initial capacity of 630 MW. This makes the construction cost around £3.17/MW installed - higher than the announced per MW cost on Greater Gabbard, suggesting that supply chain constraints are not easing particularly for developers.

REH gives up on CETO and gets £30 million

2009-05-12T09:35:00.003+01:00

First an apology to regular blog readers for the recent silence.

We're back.

There's an interesting news story here that Renewable Energy Holdings (listed on the London Stock Exchange as REH), has sold its wave energy Intellectual Property rights to Carnegie for £30 million (in shares in Carnegie).

The CETO technology is among the more developed wave technologies, having spent some time in the water at largish scale in Australia, so this is an interesting value indication for other companies in the space which are looking to monetise their IP.

Renewables in the Western Isles

2009-03-24T10:22:00.005Z

On a trip to the Western Isles yesterday, where there's an emerging interest in marine renewables (specifically wave) as well as plans to push forward on some of the wind projects. The largest, the Barvas Moor windfarm operated by Lewis Wind Power, is still on hold, but others are progressing.

One interesting observation was that the bay at Siader (pictured, rather badly), where a 4 MW wave-powered breakwater is to be built by Wavegen and npower, is to deliver the same peak output as the now-operating 3 x 1.3 MW Nordex turbines at Arnish Moor.

Sad to see the Arnish fabrication yard all shut up against the weather but hopefully that will be back in business soon.

6.5 GW

2009-02-18T12:50:00.001Z

The Crown Estate has announced that ten companies or consortia have been awarded exclusive rights to negotiate for offshore wind leases in Scottish territorial waters. Eon, SSE, Scottish Power are the utilities represented, along with SeaEnergy Renewables, UK Renewables Development, Fred Olsen, Mainstream, Forth Ports, DONG and Fluor.

The largest project, Argyll Array to the west of Tiree, is planned to be 1.5GW and the smallest is 300 MW. The projects to the west of Tiree and Islay look to me to be in environmentally challenging locations, to put it mildly, but certainly aren't lacking in ambition.

-- Post From My iPhone

Thirty Eight!

2009-02-12T15:49:00.004Z

The Crown Estate has just announced that 38 companies and consortia have been invited to tender for leases in the Pentland Firth lease round.

Obviously there's no public information on who the 38 are, but it would be interesting to know.

236 pages!

2009-01-27T14:40:00.006Z

The Department of Energy and Climate Change has published its Consultation Document on the Severn Tidal Barrage. We've all got until 23rd April to wade through the 236 page document and make our responses to DECC.

The schemes reviewed include barrages and lagoons, and the consultation is here.

There's been some recent press coverage on a possible Solway barrage, details here.

So, barrages clearly flavour of the month.

The Saltire Prize

2008-12-03T15:46:00.006Z

The Scottish Government made an announcement on the Saltire Prize yesterday evening. Although some opponents point out that this is twelfth time this has been announced, this announcement adds some new specifics - most notably the target of 100 GWh over two years from wave or tidal devices in Scottish waters.

The text is here:

Purpose
The purpose of the Scottish Government’s £10 million Saltire Prize is to stimulate innovation across the world that will lead to delivery of the best wave and tidal energy technology.

Challenge
The Saltire Prize will be awarded to the team that can demonstrate in Scottish waters a commercially viable wave or tidal energy technology that achieves a minimum electrical output of 100GWh over a continuous 2 year period using only the power of the sea and is judged to be the best overall technology after consideration of cost, environmental sustainability and safety.

Outline of the Challenge
The Prize will be open to any individual, team or organisation from across the world who believes they have wave or tidal technology capable of fulfilling the Challenge.

Competitors will be challenged to deploy a device (or array of devices) in Scottish waters which uses wave and tidal technologies to generate over 100GWh of electricity in any 2 consecutive year period. Having reached this output threshold, competitors will be judged on the cost, environmental sustainability and safety of their projects.

Next Steps
The Saltire Prize is now open for initial registration. To register interest in the Saltire Prize, the registration form can be found at www.saltireprize.com

Registering interest in the Saltire Prize will ensure that you receive a copy of the Consultation paper on the Saltire Prize guidelines in January 2009. As part of our design process, the Scottish Government is keen to seek comments on the draft Saltire Prize guidelines in advance of publication. Following consideration of the comments received, the finalised guidelines will be published by 30 June 2009 and registration of interest will also ensure you receive a copy of the full application pack and guidelines at this time.

Speaking for Redfield, we'll be registering an interest, specifically to see the consultation paper in January. We have previously suggested a prize of this kind, although our initial reaction is that 100 GWh is maybe 5 times too high as a target...it would imply around 25 MW of installed capacity running at a capacity factor of 25% for the full two years - we think 10 MW running for a year would do the trick.

Present power prices and multiple ROCs (which make a MWh of marine power worth maybe £200) mean that the winning project would have received £20 million in revenue. In the context of such a project, the value of the prize is relatively small, but experience with the X-Prize (and other similar prizes) was that a chunky cash prize triggered development work worth a multiple of the prize fund, and that's clearly what aimed for here.

For reasons too complex to go into here, Redfield feels rather proprietorial about the Saltire Prize, so we're very pleased to see this announcement firming up the prize terms. We'd be keen that the subjective bit about "consideration of cost, environmental sustainability and safety." should be downplayed, or addressed very early so there's no question when a project crosses the 100 GWh finish line.

Ten more years!

2008-11-24T16:15:00.006Z

Just listening to the soporific Alistair Darling and the pre-budget statement.

High excitement as he extends the RO by ten years to 2037 - which should at least give a boost to companies exposed to ROCs (Novera springs to mind, and I think it means that companies which substantially don't meet their obligation under the RO (Eon, RWE, British Energy, Centrica based on 2006/07 RO data) might face more costs than they thought at this point yesterday.

Don't forget shares can go down as well as up, and I'm not licensed to give investment advice etc

Additions to tidal list

2008-11-14T15:54:00.004Z

Following a couple of interesting recent conferences, we've added some new companies to the list of tidal device developers on the Redfield website links page.

They are:

C-Energy - EcoFys led Wave Rotor (workable in tidal setting too)

Cetus Energy - Australian-based horizontal axis bladed turbine

Firth Tidal Energy - no website available yet (although the link is there)

Hydro Mine - high energy tidal turbine concept

Minesto - developing new "Deep Green" tidal plant concept

Verderg - marine engineering firm with energy capture technology applicable to tidal fences

And we've updated the links for Hydro-Gen and Tidalstream too.

Trident joins the "metal in the water" club

2008-11-09T17:44:00.009Z

Trident Energy was covered in the Eastern Daily Press online news site the other day.

Trident is joining the somewhat exclusive club of companies which have deployed significantly-rated wave (or tidal stream) devices in the water. The plan is to deploy this scale prototype for 3-6 months, before designing and deploying a 1 MW device.

Redfield's reaction to this prototype is

gosh- Trident's emerged from the left field, we weren't previously aware that Trident was at this stage of development (largely as the website was essentially a placeholder until very recently(/li>
it looks a bit flimsy (although East Coast waves are relatively benign)
there looks to be a fair bit of material for the rated power output (which we interpret as well under a MW, based on comments on the company's website

This announcement comes as part of the launch of the Orbis Centre (the Renewables East hub building - aiming to generate employment in offshore renewables.

SSE sells down on Greater Gabbard

2008-11-04T14:39:00.005Z

SSE has just announced the sale of a 50% interest in the Greater Gabbard offshore windfarm development to RWE (in the guise of npower renewables) for £308 million (which includes reimbursement of the 50% share of past capital costs).

So let's look at the values:

GG is planned to be 504 MW and is fully consented. A price of £308 million for 252 MW equates to £1.2 million per MW, but this number is confused by the capital reimbursement being made to SSE for money they've already spent on RWE's behalf.

SSE bought the 50% interest in GG from Fluor for £40 million earlier this year before any real money had been spent. So, if there's no uplift in the actual value of the project, this implies that the partners have spent around £500 million on turbines, steel orders and other big-ticket items since May.

Our instinct is that it's unlikely that SSE could have gone through all of this amount in six months (although it's not impossible: the turbine supply agreement was announced in May and might be worth a total of £750 million, although its unlikely that a large proportion of that money has been spent).

If our instinct is right, it suggests that SSE has pulled off an extremely nifty deal, stepping into a consented project and reaping all of the benefit of taking it to financial close., but the developers won't have spent all of that yet.

As an aside, we'd expect RWE to have negotiated the right to acquire the ROCs from the project, but this may not concern SSE which is currently in almost full compliance with the Renewables Obligation and presumably thinks it would have been oversupplied with ROCs if it owned all of GG. We also note the interesting detail that the project cost is now described as £1.3 billion excluding the connection to the electricity grid.

Lost at sea

2008-10-30T09:55:00.005Z

New Energy Focus has reported here that the Titan 1 jackup installation barge has been lost at sea. I'm glad to say that no injuries or loss of life was reported.

The Titan was on the way across the Atlantic on the way to undertake a long term (until 2022) contract for Siemens, including installation of the Rhyl Flats turbines.

The bigger question is how much of a hole this loss will leave in the general installation capacity for offshore wind as the UK (and much of the rest of Europe) over the coming years.

And the picture? It's the Lutine Bell, rung at Lloyds of London when a ship is lost.

Bang!

2008-09-29T18:08:00.001+01:00

Alex Salmond just announced that the crown estate will be leasing "substantial" areas of the pentland firth for tidal development...and Scottish power is at the front of the queue.

More later

The mighty Pentland Firth

2008-09-28T19:30:00.001+01:00

Ok a rainy September evening the Pentland Firth doesn't look like the Saudi Arabia of anything!

I'm here for a tidal energy conference on which I'll blog more later.

The Americans are coming...

2008-09-25T16:13:00.003+01:00

The US Department of Energy has announced grants to marine Renewables totalling up to $6.6 million for technologies and Market acceleration and up to $12 million for test centres in Oregon and Hawaii.

More details here.

Pelamis goes live in Portugal

2008-09-24T10:20:00.005+01:00

After what can fairly be described as an extended commissioning period, Pelamis announced today that the Portuguese project comprising 3 750 kW devices has been officially inaugurated by the Portuguese Economy Minister.

There's some interesting stuff in the press release. The project has an installed capacity of 2.25 MW and cost €9 million: put another way, that's £3.16 million/MW. Compared with recently published figures for Greater Gabbard offshore windfarm, which estimate capital costs at around £2.8 million/MW, this suggests that wave is almost competitive with offshore wind already. And wave gets 2 ROCs/MWh in the UK (maybe 5 in Scotland), against 1.5 ROCS/MWhr for offshore wind.

So unless there's a load of hidden cost in the Portuguese project, this is really encouraging for wave power.

OpenHydro's got themselves a boat

2008-09-14T19:10:00.002+01:00

Irish tidal stream energy company OpenHydro have commissioned their new dedicated barge (at a cost of €5 million) to enhance their capacity to install and maintain their equipment.

This is the first specialist bit of equipment I've heard of, and it's a strong statement of intent by OpenHydro. And better than that, it works!

Nothing new under the sun (or waves)

2008-09-05T12:52:00.005+01:00

Interesting article in the Guardian today about a horizontal axis transverse tidal turbine: a cylindrical rotor is placed across the tidal stream, and rotates in the tidal stream. I've borrowed the Guardian's illustration here, and their article is here.

The article quotes all sorts of Dons claiming fantastic unit generation costs (£1.7 million/MW installed - better than offshore wind), and a typical THAWT (Transverse Horizontal Axis Water Turbine) comprising two units with a total capacity of 12 MW.

Apparently the technology has been tank tested, and plans are afoot for a half scale device to be sea-tested in 2009 but there's not a peep about where the money will come from.

And why have entitled this blog entry as I have? Because we know of at least one other horizontal transverse axis device out there, among the more than 60 companies we follow on the main Redfield website.

Aquamarine gets (really) serious

2008-08-26T08:45:00.003+01:00

Aquamarine has just announced the appointment of a new CEO, Martin McAdam, who was last seen at Airtricity where he was Chief Operating Officer. Details here.

This is interesting, as Martin's clearly a serious player in the renewables space. Now, I think it's fair to say that some of the marine developers are thinly capitalised (putting it politely) and might struggle to attract a candidate of this calibre. So we take this appointment as very positive for Aquamarine, as we (perhaps rashly) infer a real commitment from Scottish and Southern to the success of the business, which might well take more investment than the £6.5 million it's put in so far.

An alternative interpretation would be that perhaps Mr. McAdam made such a huge pile of cash out of the Airtricity sale that he doesn't have to worry about money!

Cheeky Wavegen aiming for the Saltire Prize?

2008-08-12T12:41:00.005+01:00

In a press release in late July (here), Wavegen announced the "official start" of a 100 kW turbine at the Islay LIMPET site.

The odd thing is that the LIMPET has been operational since 2000, with turbines of more than 100 kW installed in the past. It's not clear to us how this is really news, although there is some limited discussion of "new breakwater turbines" being tested. Is this just Wavegen seeking to position itself as a contender for the Saltire Prize?

It's all go in Strangford Lough

2008-07-23T09:08:00.004+01:00

Oceanflow Energy has just deployed a 1:10 scale "Evopod" device in Strangford Narrows, presumably a hop and skip away from MCT's SeaGen device. The Evopod is a semi-submersible, moored energy converter which floats and yaws to optimise turbine alignment with tidal flow.

This company's been below the radar a bit, but seems to be making good technical progress. It's leading light is Graham Mackie, last seen as Technical Director at Wavegen, and founder of renewable energy consultancy Overberg (which has now morphed into Oceanflow.

Looking at Oceanflow's website, it appears that the plan is to develop a 1.5 MW evopod design.

MCT exports power to the Grid

2008-07-20T13:12:00.003+01:00

MCT has now joined the exclusive club of marine renewables developers who have exported power to the Grid. See their press release here.

The exciting and different thing about MCT's news, relative to earlier announcements from OpenHydro, WaveGen's Limpet, Ponte de Archimedes and a few others, is that the Sea Gen is a commercially sized device, with 1.2 MW installed capacity. Its competitors at this stage are in the hundreds of kW range, so this is a different level of achievement.

Well done MCT!

Don't let the windfarm spoil the view!

2008-07-04T21:48:00.008+01:00

Just back from a trip to the Mull of Kintyre. No sign of mist rolling in from the sea, but also it's hard to accuse the windfarms on the Mull (there are at least 3 - I couldn't find two) spoiling the view.

More posts later on the trip.

Minch madness(?)

2008-06-13T13:45:00.005+01:00

Just saw this in the Hebrides News. Seems like ideas for floating wind turbines are taking shape, although we remain extremely sceptical.

This new idea is for semisubmersible offshore wind turbines, generating hydrogen which they pipe to shore.

In addition to our earlier questions around the engineering challenges of floating turbines and bearing wear associated with the movement, our additional worries are:

How much will the offshore to onshore hydrogen pipelines cost?

Doesn't hydrolysis of seawater produce Chlorine gas - both poisonous and corrosive? How will the technology deal with this?

River power - time for some sums

2008-06-13T11:54:00.003+01:00

Just back from Budapest, where the Danube transects the city in a stately curve. It seems to run at a reasonable walking pace (this in June - faster in March/April, I'll bet), and must contain a fair slug of energy available for capture. Of course, this is exactly what Verdant are doing in New York at the moment.

The difference here is that Budapest has lots of lovely bridges, which could potentially act as foundations for tidal turbines (as Southampton University demonstrated at a small scale on Yarmouth Pier).

What the world needs now is some calculations on the possible power available from the Danube in Budapest. And once you've covered the Danube, there's the Rhine, the Rhone, the Volga, the Thames....

"have been deployed"?

2008-06-08T20:20:00.003+01:00

The Economist this week has a section on wave energy technology, and intriguingly refers to Pelamis as follows:

"Three such devices...have been deployed (my italics) off the coast of Portugal.

Now, the Economist is usually pretty reliable on its fact checking, but the Pelamis Wave Power website makes no reference to a successful installation. I wonder who's right...has the Economist got ahead of itself, or is PWP being unexpectedly modest?

Dollars vs Euros

2008-05-29T13:55:00.003+01:00

I thought it might be interesting to see how the oil price has changed in Euros over the last few months, rather than focussing on the headline dollar price (in a world where the dollar's melting).

The graph shows how the 38% dollar increase from $90 to $125 is equivalent to a 33% increase from euro60 to euro80. So the dollar weakness doesn't seem to have had that much effect over the past few months.

Tidal power into the Grid

2008-05-28T07:45:00.003+01:00

Congratulations to OpenHydro, who have achieved the first power export into the National Grid from a tidal turbine (at least that Redfield is aware of). The Telegraph's coverage of the story is here.

They've narrowly beaten Marine Current Turbines, who are installing and commissioning their device in Strangford Lough at the moment.

Floating wind technology - crazy or just mad?

2008-05-26T15:24:00.009+01:00

StatoilHydro has just announced that it plans to spend MMNOK 400 on a floating 2.3 MW wind turbine prototype to demonstrate the potential to build windfarms in water which would otherwise be too deep.

Now, there's a couple of things here. Redfield's experience in wind turbine tower construction tells us that the turbine nacelle is extremely sensitive to its orientation. The tolerance within which turbine towers must be delivered is extremely tight, because we understand that the turbine bearings would wear irregularly causing early and expensive failure if the turbine nacelle was not absolutely horizontal in space. So we're worried that it will be very hard to orientate the nacelle with the accuracy and stability required.

Even if you can achieve this stability, that assumes that the tower doesn't move at all. We're not sure that's realistic in a 65m tower (with a 100m spar anchor). Can bearings be developed which can tolerate the accelerations at the top of a tower like this? I'm going to try to do some sums on this, as I suspect the g forces may well be much more than bearings can take.

More apocryphally, at last week's All-Energy exhibition, I noticed that StatoilHydro couldn't even get their lovely shiny model of an offshore wind farm to work properly (half of the lights and turbines weren't working). Now, if you can't even get the model to work...

OPT joins the multi-MW club

2008-05-20T18:54:00.005+01:00

Ocean Power Technology has just announced a 10 MW wave energy project in Australia with potential for expansion up to 100 MW later.

It joins the exclusive club of wave energy developers with multi MW projects at some stage in development. Others which come to mind are Pelamis Wave Power with 2.25 MW in Portugal and Scotland, with expansion options, the WaveHub - comprising a few MW from each of Pelamis, OPT, Oceanlinx and Fred Olsen - and Finavera which has a couple of projects in the Pacific NorthWest.

Some other developers might claim to be near to joining the club (WaveDragon, Archimedes WaveSwing), but they're some way off yet (unless I've missed some!)

Northeastern NIMBYs

2008-05-19T11:24:00.006+01:00

It's enough to make you tear your hair out.

A company wants to build a 50 MW waste incinerator in Peterhead in the northeast of Scotland. They have commissioned an environmental review which states “An environmental study on behalf of the company found that, in the worst-case scenario, emissions would have no significant adverse impact on the health of residents.”

"No significant adverse impact in the worst case." So what's the response in Peterhead? - a 600 signature (and counting) petition against the proposal. It's enough to drive you mad. The proposed plant would dispose of up to half of Aberdeen and Aberdeenshire's residual waste (the stuff which would ordinarily go to landfill), and would power up to 10,000 houses.

Where do these people think economically priced power is going to come from if we don't allow developments like this? And since the proposed plant is situated on an industrial estate, I don't think there can be any great visual impact either.

Blog improvements

2008-05-15T14:27:00.003+01:00

I've added to the blog with a ZoomCloud tag cloud, so you can see where we have previously blogged on a topic. I'd thoroughly recommend www.zoomcloud.com.

Meanwhile, also on Lewis

2008-04-23T18:09:00.005+01:00

Elsewhere in the Western Isles, and in an announcement with slightly unusual timing, npower has announced that it has formally submitted a planning application for the 4MW wave-powered breakwater project at Siadar.

With the recent "no" decision on the Barvas Moor project, it will be interesting to see if the active community in the Western Isles is supportive of this much smaller project or not.

With 4MW of installed capacity, average output might be 1MW (based on a capacity factor of 25%). The usual rule of thumb is that a household uses c. 5,000 kWhr/yr. This is an average of just over half a kW - which sounds low to me, especially for the often electrically-heated Western Isles. If this is right, this project could power around 2,000 houses. There are probably 6,000-10,000 homes on Lewis (based on 2-3 people per home, and Wikipedia's population figure of 19,000), and if this average power usage figure is right, this would mean that 20% - 33% of local homes would be powered by this project.

There are many heroic assumptions in this back of an envelope assessment, but it's clear that the project could make a real local impact.

RIP Barvas Moor Windfarm

2008-04-23T17:41:00.004+01:00

The Scottish Executive has announced the decision that the Lewis Wind Power project for the development of up to 181 turbines on Barvas Moor in the Western Isles' Isle of Lewis will not go ahead.

Unsurprisingly, the antis are jubilant. They're not letting the decision get in the way of the self-righteous NIMBY dance: saying "we're in favour of windfarms, but just not in this particular special case".

The pros are obviously crestfallen, with the decision not to go ahead likely to sound the deathknell (again) for the Arnish yard, as well as for economic development in the Western Isles. No Barvas Moor probably also means no interconnector for other wind (and wave) projects, limiting development potential for the Isles.

An opportunity tragically missed, in our view, as this was one of the few areas where the Western Isles geographic position - in the area with second densest natural energy flux on the planet - could offer a rare developmental advantage.

Verdant Power - virtual tour of the RITE project

2008-04-19T11:46:00.005+01:00

It's not every day that the Pope has any impact on the marine renewables industry. But he did yesterday, as the security arrangements for his talk to the United Nations in New York made it logistically difficult for the delegates at the Global Marine Renewable Energy Conference to get from the conference hotel (Broadway and 44th St) to Roosevelt Island (aerial tram from 59th Street and 2nd Avenue).

So Verdant brought a virtual tour of the facility to the hotel, and very impressive it was too.

For me, the key points were

Verdant has generated nearly 50 MWh over 7,000 turbine-hours

The technology is on version 5 - this isn't an easy or quick process

The units are currently rated at 35 kW, and achieve a capacity factor in a tidal setting of c. 30%, but maybe 70%in run-of-river

Verdant was extremely coy about costings

Verdant has spent "as much" on environmental studies (lots of money on fish monitoring) as on the technology

I'm very impressed with the step-wise Verdant approach (reminiscent of the Pelamis staged development approach) and by the progress achieved.

Global Marine Renewable Energy Conference - New York, April 2008 - an investigation of wave energy and tidal energy

2008-04-19T11:12:00.008+01:00

The Global Marine Renewable Energy Conference finished yesterday with a tour de force by Verdant Power. More of that later, but first my reactions to the main agenda. I've summarised the highpoint of each session here

Session 1: George Hagerman, Virginia Tech: Resource potential and technology status - excellent and knowledgeable overview of technology

Session 2: Keynote addresses. For me, the best was Matt Simmons. Matt is author of "Twilight in the Desert" and founder of Simmons & Co. International, an oil-oriented investment banking firm. I first met Matt a few years ago, when I talked to him about a large UK offshore windfarm project. From memory, he was deeply sceptical then, but his thesis is now that oil production is soon to rapidly decline, and to avoid massive social dislocation and wars over limited resources, it's essential we now pursue alternative energy sources. It's a compelling thesis and convincingly presented. Matt's putting money where his mouth is, by supporting the new Ocean Energy Institute (to be built in Maine).

Sessions 3 and 4: Lots of worthy technical commentary and review of support mechanisms, from which nothing in particular lodged in the memory. Nice to see the UK well represented though.

Session 5: the main event - developers talking about financing their technologies. An interesting range of experiences and firms at different stages in the process. There was still some evidence of the wishlist - more complaining about the difficulties of getting across the "valley of death" than constructive suggestions on how to do it, though. Although, I suppose if you've got a great idea for closing the deal, you're going to want to keep it to yourself.

And that was day one. Unless you count the Canadian reception (and not a Labatt's in sight) and rumours of a bash at the Irish Embassy.

Day 2 opened with Congressman Jay Inslee, who put forward a very positive legislative agenda, which he promises he's working night and day to get through the House. These include a feed in tariff and a renewables obligation- which the conference participants rated the most important stimuli for the rollout of marine renewables.

Session 1 was a chance for EMEC and WaveHub to talk about their regulatory experiences, and for FERC and the MMS to talk about how consenting might work in the US.

Session 2 went through some of the environmental issues facing the Portuguese wave centre, and some other environmental matters. Bit of a chance for the academics to lobby for the "research feast" warned of by Neil Kermode of EMEC in the previous session.

Finally: closing remarks by Senator (R-AK) Lisa Murkowski. Unable to resist a certain partisan finger-pointing, but (unsurprisingly for a representative from Alaska), the Senator was pretty positive on marine renewables. Apparently, Alaska has more coastline than the rest of the US out together!

The final keynote was from NTSERDA's CEO, who's spending $2.5 million on R&D in the New York area (substantially on Verdent, I suspect), compared with a national total of $13 million from federal funds over the next two years.

In summary, as always with conferences the real value came from the talking to new people over the water cooler (or donut stand). I was very impressed that about 300 people made the trip to New York from all over the world, but also that many were from the US (where I hadn't thought so much was going on in marine renewables). The demographic split showed the largest groups were developers and academics - so the industry still needs to be attracting more investors, bankers and (probably) lawyers.

Off to New York

2008-04-15T11:53:00.003+01:00

So it's off to New York for the ambitiously-named "Global Marine Renewable Energy Conference."

I'm particularly keen to hear about developers, including

Ron Smith, Verdant Power, United States

George Taylor, Ocean Power Technologies, United States

John Cooper, Ocean Renewable Power Company, United States

Des McGinnes, Pelamis Wave Power, Scotland

Andrew Parish, Wavebob Ltd., Ireland

Martin T I Wright, Marine Current Turbines Limited, Scotland

and also about financing and revenue support in the US and Canada.

It's an early start: 0720 on Thursday, so I'm glad I'm flying west to attend the conference!

I'll be sure to report back as the conference progresses...

Pulse Generation - pulls the rabbit out of the hat

2008-04-07T21:48:00.004+01:00

John Hutton, the BERR Minister today announced that it has granted planning permission for a £2 million 150 kW (yes, kW) device in the Humber.

This project has been in the offing for a couple of years. The Pulse Generation website talks about hoping to install a prototype in 2007, and the magical £878,000 BERR grant is mentioned even then. Clearly getting through the planning process has taken longer than Pulse had hoped.

On the upside, the technology is a novel reciprocating hydrofoil device (imagine two of the Engineering Business's Stingrays back to back) but with the generator above the waterline. The site looks interesting too, with a sheltered wave climate and probably quite nicely bi-directional flow.

So the population of devices in the water looks like it's getting larger again.

Islay community steps up for tidal

2008-04-06T16:36:00.006+01:00

According to report in the Guardian (not dated 1st April, before you ask), the good folks of Islay are planning to install commercial scale tidal power (to go with the LIMPET wave device).

A look at the consultation document (on the Islay Energy Trust website) shows that the first £750,000 will be spent over the next three years as follows:

Phase 1 Consultation

Phase 2 Pre-feasibility

Phase 3 Feasibility

Phase 4 Consents

Impressively, the document includes a list as long as your arm of people who the Islay Energy Trust hopes might be convinced to pay for various elements of this work. This document goes on to say that the installed cost of the turbines will be £1.4 million/MW - £3 million/MW and aiming for a target electricity cost of 8.5p/kWh.

These figures would certainly offer a commercial return, but I don't think anyone could achieve these costs yet. So the project is relying on the technology advancing to meet the island's need, and there are plenty of companies seeking to develop their concepts to this point.

The document says that no choices have been made as to the technology to be deployed, so it would seem that the door is open for all developers!

Verdant Power - pluses and minuses

2008-04-03T20:45:00.008+01:00

In an earlier post, I promised to write more about my recent visit to Verdant Power...but first, don't let the picture fool you - there's a 19 hour non-slack period in this stretch of water, running at up to 3 m/s.

On the plus side:

Verdant's got kit in the water (at least I think it was in the water, the East River's a bit murky)

Verdant has made real progress with the technology, through umpteen refinements

It's got further development plans, both in the East River and elsewhere

The design is simple, with relatively few things to go wrong, and may be scalable

The site is fantastic, with well-behaved bi-directional flow at up to 3 m/s, within a 4-iron of the United Nations building (well, one of Tiger Woods' 4-irons), and better still a short taxi ride from Wall Street

The company's already raised some significant finance (exploiting that taxi ride from Wall St)

On the "still to do" side:

Installation is still difficult and expensive

Labour costs in New York are high

Reliability is still unproven, despite time in the water (due in part to the fast technology iterations)
Revenue support mechanisms in the US are not as clear as in the UK

On balance, I was very impressed with the company's progress, technology and concept. There's still a fair way to go, but it seems to me that there could well be commercial applications for the technology, particularly in more accessible run-of-river style applications.

In summary, nice one Verdant!

Saltire prize - £10 million (got your attention now?)

2008-04-03T20:25:00.008+01:00

Alex Salmond has announced the Saltire Prize - a £10 million prize for advances in clean energy.

Remember the Ansari X-Prize - the privately sponsored prize for the first people to put a craft into space twice within two weeks? Or the Orteig prize, which pushed Lindbergh to fly the Atlantic? Well, the Saltire Prize is intended to trigger and stimulate the same kind of step change in renewables. Obviously Alex Salmond wants the prize to nucleate industries in Scotland, where the wave and tidal (and wind) resources are exceptional.

To my way of thinking, the success of these earlier prizes was driven by the clear and unambiguous targets (getting into space, flying the Atlantic). It's not clear yet, from Alex's speech at least, what the criteria for winning the prize will be. There's a waffley bit in the press release:

The key elements of the Saltire Prize are:

capturing imaginations: challenge that can inspire a revolution in green energy

global challenge: high profile prize open to teams from across the world

relevant to Scotland: relevant to area in which Scotland has strong natural resource and can be demonstrated in Scotland

capitalises on Scotland's expertise: challenge will reflect area in which Scotland has strong technical expertise and people already working

achievable in the short-medium term: challenge ideally achievable within a 2-5 year timeframe

I hope the criteria are clearer when they get defined, as this prize won't pull in the effort and investment unless people know what it takes to win. I love the idea though (mainly because it's an idea I've had myself, but Redfield Consulting doesn't have the budget that Alex has), so let's hope it really gets things moving in the sector.

WaveHub "retimetabled"

2008-04-03T20:05:00.004+01:00

The Southwest Regional Development Agency has just announced a new timetable for the WaveHub project. The project has been pushed back by a year, to allow the developers to have another go around with tendering to try to get a better price on the deal. This has to be the most positive spin on a project delay that I've seen in a long time!

WaveHub says that it is still " at the forefront of wave energy development on a worldwide basis", but it's not really very clear how this can be the case when there's nothing in the water yet.

The remorselessly upbeat WaveHub website has yet to mention the news.

Newsflash - MCT installs in Strangford Lough

2008-04-01T14:46:00.006+01:00

Congratulations to MCT for getting into Strangford Lough. It's well known that the installation has been the victim of a number of spanners in the works, so a big hand is due. We'll be keenly interested to see how commissioning goes, and hope that MCT is successfully powering those thousand local homes in short order.

The Guardian has covered the story pretty thoroughly here.

Meanwhile, in the US...

2008-03-28T21:07:00.008Z

From this unprepossessing container, Verdant Power is running a 6 turbine, 200 kW installation of tidal turbines in the East River of New York.

Verdant has had devices in the water since 2006, and is now on the fourth iteration of its technology.

A simple-looking self-yawing downstream three bladed turbine (see second picture)

operates in this fast flowing branch of the East River (peak stream speed up to 3.1 m/s. I'll be writing more about this interesting technology when I'm back in the office on Monday.

Have a great weekend!

Lunar Energy £500 million project!

2008-03-17T15:30:00.004Z

Wow! Lunar Energy has announced a £500 million contract in South Korea to build a 300 turbine tidal farm.

The press release, also on Lunar's website, says that the project will involve 300 1MW turbines, implying a cost per MW of £1.67 - better than anything else we've seen by some margin!

It seems amazing that this contract has been landed without the technology being proven in the water at full scale yet, and we're also not clear how Lunar will deliver for this price. You can bet on much of the fabrication taking place in Korean shipyards, though.

I hope it all works out - it would be a fantastic boost for the tidal energy industry, but it's a long time to 2015 when the turbines are expected to be operational.

Lunar's got a fabulous visualisation here...

Relative costs of carbon abatement

2008-03-11T22:15:00.008Z

Here's a thought from the skeptical environmentalist school.

If we're worried about carbon abatement (and I am), shouldn't we be looking for best value least cost solutions? If so, let's look at the relative costs of abated carbon from difference sources:

Roughly speaking, a marginal MWh of power in the UK, as provided by gas-fired CCGT, involves 0.4 tonnes of CO2. A MWh from coal is responsible for around 1 tonne of CO2, and nuclear and renewables are effectively zero carbon (not including embedded carbon in construction, decommissioning and operation). There's an interesting factsheet here...

The current carbon price in the ETS is around €22/tonne, so a permit to emit this MWh from CCGT (in principle somehow magically making it carbon neutral, or at least "allowing" it), would cost around £12/tonne or around £5/MWh. For coal, the same permit would cost c. £12/MWh.

Now, I realise that the ETS doesn't correctly internalise the carbon cost yet. Or put another way, the current ETS price isn't sufficient to make generators indifferent between renewables and fossil-fired generation.

Under the Renewables Obligation, onshore wind gets an effective subsidy of 1 ROC/MWh, and a ROC is currently worth around £50. So the additional cost of a wind-generated abated MWh is around £45 relative to gas and £38 relative to coal. Wave and tidal power will get 2 ROCs per MWh from April 2009, and offshore wind 1.5 ROCs, making these premia nearly £100/MWh. There are good strategic national reasons for encouraging these technologies, not least that as fossil prices go up, having renewables capacity offers security of energy supply and also that these businesses, specifically offshore wind, wave and tidal, could be nucleated in the UK (which has world-leading resources in these areas).

At the moment, there's a lot of heat and not much light about Carbon Capture and Storage. At the moment, CCS looks as if it will benefit from the ETS value of the the carbon not emitted - but this benefit is nothing close to the value of RO. How about including CCS in the Renewables Obligation, to help meet these targets and provide a more attractive incentive mechanism?

Progress for Renewable Energy Holdings

2008-03-07T19:29:00.002Z

This, from the Renewable Energy Holdings website today...

Second CETO II Wave Energy Unit deployed & Sites under review in EDF EN collaboration

Renewable Energy Holdings plc (AIM: REH), the AIM quoted investor and operator of proven and innovative renewable energy technologies, is pleased to announce the successful deployment of the second CETO II Wave Energy prototype off the CETO test site at Fremantle in Western Australia.

In short, the CETO technology appears to use wave motion captured at tethered buoys to pump high pressure seawater which is then used to spin a turbine onshore. It's a great idea to keep the electrics out of the water, but I do wonder what kind of hydraulic losses there are. This schematic helps to describe the CETO technology.

This and the ORECon news in the same week - maybe wave's picking up steam again. Let's hope Pelamis can get deployed soon too, to really get some momentum in the sector.

In the meantime, nice one REH and CETO - we'll keep eyes open for more news.

ORECon closes $24 million fund raising

2008-03-04T19:51:00.005Z

ORECon, the southwest UK-based wave energy developer which had seemed to be somewhat dormant of late has just announced a $24 million fund raising.

This is terrific news, as it means another wave energy developer now has the wherewithal to fund the building of a full scale prototype.

Turnberry conference

2008-03-04T18:55:00.005Z

Just back from the Turnberry Infrastructure Journal conference. The photo was taken from my hotel room and shows the snow on Arran's Goat Fell this morning. Lovely.

Lots of interesting presentations and people to meet - developers, manufacturers, funds, but (shockingly) nobody from Government (except the European Commission).

Eddie O'Connor wasn't short of opinions, and when you've just sold a £1 billion business which you've built over seven years, you've got a right to be heard!

Lots of infrastructure funds were there, showing a real interest in renewables of all kinds, although a real warning shot to the UK industry that clarity of incentive was vital to attracting internationally mobile capital.

Lots of reminders, too, about how much additional renewables capacity is going to be required to meet the 15% of all energy from renewables targets. Roughly 40-45% of electricity from renewables would do the trick (cue Eddie on the need for an offshore SuperGrid).

One last thought: Chinese demand growth is equivalent to a new Germany in demand each year. Astonishing, but what a market opportunity.

Landfill valuations

2008-02-28T07:41:00.002Z

A recent potential deal, 3i's bid for Novera, has stimulated a need for a rule of thumb on the value of landfill gas.

Existing landfill projects receive 1 ROC per MWh, making their total electricity price around £90/MWh (electricity £40/MWh, ROC £35/MWh, recycle value c. £15/MWh).

Analysis of the OFGEM ROC register shows that, in a typical month, the UK's 800MW of operational landfill capacity generates 130,000 ROCs. Each MW of capacity therefore generates 165 ROCs in a month or 2,000 per year. 1 MW therefore enjoys revenues of £180,000/yr (at £90/MWh)

No, we know that landfill was economic even before ROCs, but only just, so let's assume £40/MWh of operating costs run at around the electricity price in those days, say £30/MWh, making the gross profit £120,000/yr/MW.

Now, If we assume this goes on in perpetuity (which on a DCF basis is fair enough, as landfill sites typically operate for 20 years or so - effectively infinite in DCF terms). With a discount rate, this would make 1 MW worth £1.2 million pretax.

The deals we found in the analysis of the Novera offer reassuringly bracket this figure: one was 7 MW for £25 million - about £3.5 million per MW, and the other was £30 million for 45 MW or £0.67/MW.

So a rule of thumb of £1 million/MW may be about right.

Novera in play

2008-02-19T10:46:00.010Z

Over the past few days, Novera has announced that it is in talks which may lead to a bid for the company at a price of 90p. 3i has just broken cover to day that it's the possible bidder. Now, there's many a slip twixt cup and lip, but let's see what this means.

A bid at 90p values Novera at £111 million. According to the company's website, there was a cash balance of c. £10.8 million at 31st December 2007, making the wind and other renewables assets worth near enough £100 million.

On a multiple basis, Novera's revenue for 2007 was expected to be around £34 million, making the offer price 3 times turnover. Figures for 2007 aren't available yet, but EBITDA in 2006 was just shy of £10 million on revenue of £31 million. Since the company was apparently debt free in 2006, let's assume that interest is minimal and the accounts show that depreciation was very small and there was no tax charge as tax losses exceed profits, so we can probably infer that the post tax profit was around £10 million, making the multiple an apparently conservative 10 times 2006 earnings.

Looking at the valuation from the asset side: the portfolio is dominated by the wind assets:

Status Capacity
Operating sites: Mynydd Clogau, Wales 14.5 MW
Consented sites: Lissett Airfield, East Riding 30 MW
Sites in Planning: Mount Boy, Angus, Scotland 6 MW
Sites in Planning: Fleeter Wood, Cumbria 10 MW
Sites in Planning: Glenkerie, Scottish Borders 22-27 MW
Sites in Planning: A'Chruach, Argyll and Bute 40-48 MW
Additional sites in pre-planning: 300 MW

The recent Airtricity experience suggests that buyers are prepared to pay £2 million/MW or more for installed capacity, and perhaps £1 million/MW for consented sites (leaving the other £1 million/MW to pay for the actual development costs of the project). This would amount to £29 million for Mynydd Clogau and £30 million for Lissett.

We think that Novera still has the 112 MW of landfill gas capacity it had in 2005. So looking for landfill analogues...

In 2004, Viridor paid £30 million for 45 MW of landfill capacity, and in 2006, Pennon paid £25 million for 7 MW of landfill capacity. Taking the lower basis for valuation, Novera's landfill would be worth around £60 million. (Taking the higher, it would be worth nearly £400 million, which seems extraordinary - there must be more in that deal we haven't seen).

So we've found £60 million of wind value, without the development pipeline, and £60 million of landfill value and £10 million of cash.

In the mid 2007 trading statement, net debt was around £72 million with £17 million in the bank, so if this hasn't changed, the asset value is £130 million plus the value of the development pipeline minus £90 in debt.

With the bid at £100 million, the development pipeline is being implicitly valued at around £60 million by 3i. For, say, 80 MW in planning you might apply a risk factor of 50% and value as if it's consented (ie, half the project capacity eventually gets consented). This would give you another £40 million, so you're getting the development pipeline for £20 million. If you were to risk this at 20% and apply the same valuation of £1 million/MW - you get to £60 million. On this basis, the development pipeline is worth £100 million, but it would seem that 3i is offering £60 million for it.

So either we've missed something important, or 3i is risking future developments more aggressively (or thinking they'll cost more to deliver) or 3i's getting a bargain if the deal goes through!

MCT/npower

2008-02-09T12:56:00.000Z

Interesting announcement from MCT and npower. npower has joined with MCT in a new company Seagen Wales, which will pursue the project.

They say that "Development of the site will start with a full assessment and detailed surveys of the environment and tidal resources, followed by preparation of an outline scheme incorporating the studies' outcomes.

Studies are about to get started and will last throughout 2008, with a consent application likely to be submitted in mid 2009. Construction and commissioning timescales will be subject to the length of the planning process, but it is anticipated this could take place between 2011 and 2012."

Of the big six utilities (Centrica, EdF, Eon, RWE, SSE, Scottish Power), five have now announced marine renewables aspirations:

EdF has a shareholding in Marine Current Turbines;
Eon has an involvement in the Lunar/Rotech Pembrokeshore tidal project
RWE (npower) has just announced this investment
SSE has the Neptune tidal and Aquamarine wave interests
Scottish Power (Iberdrola) has its Orkney Pelamis project

Surely Centrica's got to move soon?

More on the airtricity deal

2008-01-30T01:59:00.000Z

Latest information is that onshore developments might be costing as much as £1.5 million per MW installed, making SSE's deal look even smarter. Of course the nub of the thing is how much of the future capacity SSE can really make happen. With the SSE balance sheet and its share price's resilience in recent difficult market conditions, you've got hope a fair bit.

SSE/Airtricity - analysis

2008-01-08T19:01:00.000Z

So, we know that SSE paid around £1 billion for Airtricity.

The detailed breakdown of the portfolio from SSE's website is:

The principal assets of Airtricity which SSE will acquire comprise (net of joint venture interests):

a 308MW (megawatt) portfolio of operating onshore wind farms in Scotland, Northern Ireland and the Republic of Ireland;
a 187MW portfolio of onshore wind farms in Scotland, Northern Ireland and the Republic of Ireland which have full consent and are under construction, and on which €77m had so far been invested by 31 August 2007;

a further 104MW of onshore wind energy capacity in Scotland, Northern Ireland and the Republic of Ireland which has full consent but is not yet under construction;

a 50% stake in a 504MW offshore wind farm development, with full consent, at Greater Gabbard off East Anglia. Subject to a final investment decision, construction work on the first phase is expected to start later this year and turbines have been reserved;

a 288MW offshore wind farm in Germany which has full consent;

the 483MW onshore wind farm proposed for Clyde, between Biggar and Moffat in southern Scotland, which is at an advanced stage in the consent process;

a 1,434MW portfolio of other onshore wind energy projects in the UK and Ireland that are in various stages of development but not yet with full consent;

an option to participate in a 350MW offshore wind farm in Ireland;

a 1,222MW portfolio of early stage European wind energy development projects in Portugal (587MW) and the Netherlands (635MW; offshore);

a 6,675MW portfolio of wind energy development projects in China;

and an electricity supply business providing power to around 35,000 mainly commercial customers in Ireland, with related trading and risk management functions operating in the all-island electricity market.

In summary, it appears that Airtricity's portfolio comprises

308 MW in operation
187 MW onshore in construction on which €77 has already been invested
104 MW consented onshore
540 MW offshore consented
483 MW onshore near consent
1434 MW onshore unconsented
1222 MW in development in Europe
6675 MW in development in China

A rule of thumb for onshore windfarm development used to be around £700,000/MW installed, although recent increases to turbine, steel and associated costs have probably driven this up to £1 million/MW. So perhaps £300 million of the purchase price could be sensibly applied to the producing capacity (unless SSE is paying a premium to capture guaranteed capacity, rather than taking time and planning risk to develop its own portfolio).

If SSE is valuing installed capacity at £1 million/MW, that would make the price for the consented development £190 million (once developed). If our rule of thumb is right, there's a further £130 million or thereabouts to spend, around £60 million of the consideration might relate to this capacity.

In the past, a typical price for a fully consented offshore windfarm has been around £5 million for 100 MW consented. This might be be a sensible place to start with the development assets. This adds up to (generously) 1,000 MW, of which about half is offshore. Let's assume that onshore consented developments are worth £10 million per 100 MW, and the total value of this element of the portfolio around £75 million.

Valuing assets in the development pipeline is very hard: if we assume that they're worth 10% of the consented value, the 8,000 MW of (assumed most onshore) projects would be worth £60 million.

Finally, an electricity supply business with 35,000 customers might be worth...well, the only analogy I could find was a Canadian gas and electricity supply business which sold for C$130 per customer, which would come to around £2 million.

Summarising this analysis, we can find around £500 million of value. So, it must be that either we've woefully underestimated the future value of the development pipeline, or SSE is paying closer to £2 million/MW for installed and productive capacity.

Any way you slice it, this is a useful benchmark. It also gives a clue about how hard developers must consider it to be to drive a material development portfolio to justify a premium like this over ordinary development costs.

SSE buys Airtricity, sets a benchmark?

2008-01-06T10:58:00.000Z

Just announced, SSE has won the auction for Airtricity for around £1.1 billion (according to the Herald. The deal involves a purchase price of some £800 million and the adoption of around £300 million of Airtricity debt (which you'd expect SSE to be able to refinance cheaply).

The Airtricity website claims that the company has 455 MW in operation, with 636 MW under development and up to 9,000 MW of longer term projects in planning and pre-planning. The majority of these last projects appear to be offshore and aren't specifically identified.

The Herald article quotes from SSE's own press release and says "...Among the Airtricity assets to be acquired by SSE are a 308-megawatt portfolio of operating onshore windfarms in Scotland and Ireland, plus a further 187 megawatts of windfarms that have been given consent and are under construction. There is also a proposed 483-megawatt windfarm between Biggar and Moffat in the Borders, which is "in an advanced stage in the consent process"."

Over the next few days, I'll be undertaking an economic assessment of the deal...

EMEC wins award

2007-12-08T17:04:00.000Z

Now recovered from the Scottish Renewables Green Energy Awards dinner on Thursday, at which I'm delighted to report EMEC won an award!

AquaBuoy prototype sinks - allegedly

2007-11-10T16:39:00.000Z

It seems that the 2MW trial Aquabuoy prototype off the Oregon coast has met a watery end.

The news is here.

It's not really clear what this means right now, but this strongly suggests that OPD's approach of taking inordinate care with the prototype device may prove to be the right one.

Finavera, Aquabuoy's owner, has yet to update its website, but the MD is quoted as saying that the device was only engineered to survive 3 months: it survived for only two, and surely wasn't intended to sink without trace at the end of the period?

On the encouraging side, Finavera is telling the world that the prototype delivered what the company hoped.

The Councils

2007-10-31T17:01:00.000Z

For a while now, I've been a Council Member. The Councils are organisations of experts organised by the Gerson Lehrman Group, which offer expert consultations on a wide range of matters to interested parties (often investment banks or other financial institutions).

Gerson Lehrman has just produced the above graphic, which I've now incorporated into my blogspot profile too. If you'd be interested to have a specific discussion on the issues raised in this blog, or on other renewables topics, please click on it to make contact via Gerson Lehrman.

Pretty soon....

2007-10-31T16:32:00.000Z

you'll be able to walk across the Bay of Fundy, leaping from tidal device to tidal device, without touching the water.

The map (thanks Google) shows where the Bay of Fundy lies, on the eastern seaboard of North America.

Now Marine Current Turbines has announced an agreement with the Maritime Tidal Energy Consortium to develop a project in the Bay of Fundy. It joins Open Hydro, and Ocean Renewable Power in planning projects in this area, which benefits from the highest tidal ranges in the world. There are also some suggestions out there on the internet that a tidal barrage might be an option.

The question in my mind is whether there are areas with attractive stream speeds too, but this entry on the Bay of Fundy blog clearly recognises that sites are available.

Mackie's - Sustainable ice cream

2007-10-14T17:54:00.001+01:00

Mackie's Ice Cream - a proud Scottish company - now has a little logo on each and every pot of its ice cream showing that it is made with renewably generated electricity from these turbines.

Lots more details here...
Nice one Mackies.

Neptune re-awakened

2007-10-06T18:13:00.001+01:00

Interesting news that Scottish and Southern Energy has combined its tidal device - the Neptune - with Aquamarine's Oyster wave technology and some venture capital money.

Check out the press release here

EMEC Tidal open for business!

2007-10-01T08:18:00.000+01:00

I spent Friday on the Orcadian island of Eday, watching Alex Salmond open the EMEC Tidal facility. If you look at this carefully, you can see the OpenHydro turbine in the background, just next to Neil Kermode, EMEC's MD. (Alex managed to find some schoolchildren to pose with later on in Eday Comunity School, but I didn't get a photo of that.)

We took a ferry from Kirkwall to the island, looping around the OpenHydro turbine which has been in the Falls of Warness since earlier this year. The picture clearly shows the bow wave around the device in an equinoctal spring tide - about 7 knots.

WaveHub green light

2007-09-19T18:12:00.001+01:00

Not content with getting its funding finalised earlier in the year, the WaveHub has now obtained development consent from BERR (formerly DTI).

Assuming the local surfers who are reportedly unhappy with the project don't derail things, this should mean development should kick off pretty soon. Exciting news for wave developers across the UK!

Alkane Energy pulls out

2007-09-05T13:54:00.000+01:00

News from the Yorkshire Post- apparently Alkane Energy pulled an application for development of one of its Coal Mine Methane Energy Parks in Akworth Pit near Pontefract.

Local objectors were concerned that erection of the coal mine methane plant would impact property and amenity values in the area, and Alkane pulled the application shortly before the Council meeting which was expected to reject the plan.

Although Alkane has said that it might reapply in the future, it sounds pretty dead right now.

This is disappointing for a struggling company which is trying to make an honest buck reducing methane emissions to the atmosphere. It's hard to believe that a new small scale power station is somehow worse than a disused coal pit, but the locals clearly have strong views.

WATTS conference - impressions

2007-09-05T13:49:00.001+01:00

The WATTS conference seems to have been a success, although the overall vibe is that the wave and tidal industries are only beginning to come to grips with the breadth of challenges faced before commercial scale marine energy farms are in the water.

There's not just technology risk - although there's plenty of that - but also regulatory and consenting risk and difficulties of access to funding.

It's becoming clear that there are stacks of Environmental Impact Assessment and other monitoring and baselining required. The worry is that the costs of all of this will kill off any smaller wave and tidal demonstration and pre-commercial projects which can find the funding. Is this emerging industry being loaded with unnecessary costs at a stage when it really can't afford them?

It's hard to believe the ripping tidal resource in the Solent when it looks like this

2007-09-03T20:13:00.000+01:00

I'm crossing the Solent again today, on the way to the REA WATTS (Wave and Tidal Technology Symposium). It's a slightly strained acronym but should be an interesting event.

The Solent was like a millpond, until you saw the tidal stream around buoys and fixed structures.

I'm looking forward to buttonholing the Southampton University guy who put a tidal turbine under Yarmouth Pier. I hope he got good results - wouldn't it be marvellous to see a whole new generation of piers being built to access tidal resources and get people closer to the sea?

More tomorrow, after the conference

Tidal range - Yarmouth mill

2007-08-17T16:53:00.001+01:00

Here are the two photos of Yarmouth Mill - taken at roughly high tide, and mid-to-low tide in a relatively springy part of the tidal cycle.

You can see that the range is about 1 - 1.5 metres at this stage in the cycle. Plenty of tidal range to be getting on with (and large volumes of water to play with)

Tidal, tidal everywhere (again)

2007-08-15T16:08:00.000+01:00

Staying in Yarmouth, it's suddenly obvious that our forefathers knew all about the tides and how to use them.

For the first time in about 40 years, I've realised that the old Mill at Yarmouth must have been a tidal mill. A little research turns up this page on Yarmouth's history, which says that a tidal mill has been on the site since the 17th Century, with the current building dating from 1793.

The picture is taken at high tide, or thereabouts, and I'll try to post one at low tide so you can see the tidal range.

So, at least 300 years of tidal power use in Yarmouth!

Horizontal axis wind turbine

2007-08-15T15:58:00.001+01:00

Visited the Bembridge windmill - the only extant windmill on the Isle of Wight.

All of the main elements are similar to most of the wind turbines currently available. The main gearbox is in the nacelle, changing the direction of rotation from horizontal to vertical, and you can just about make out the yawing gears at the top, which allow the nacelle to rotate to stay head to wind.

The blade thrust is controlled by reefing the sails, rather than by fancy feathering technologies, and you can see how the blade geometry allows for different angles of attack at different radii from the hub.

The difference is that the majority of power offtake is lower down the tower, where additional gears drive the grinding stones, rather than in the nacelles as at present. Perhaps there's something to learn from our predecessors?

Another Needles trip

2007-08-08T18:01:00.000+01:00

Another trip to the Needles today, with a better picture of the tidal effects on the Shingles Bank (the dark in above the lighthouse).

Tidal, tidal everywhere

2007-08-07T17:53:00.001+01:00

I was out walking on Yarmouth Pier (the oldest wooden pier still standing the UK), and came across this sign and buoy. Seems that Southampton University has recognised the potential of the tides off Yarmouth and is trying out a turbine.

I'm planning to to drop them an email (srt@soton.ac.uk) to try to learn more.

More great tidal resources

2007-08-07T15:57:00.000+01:00

Just took a long walk along the chalk ridge forming the backbone of the Isle of Wight, from Freshwater Bay to the Needles. A lovely day, a lovely walk and fantastic views over the approaches to the Solent, including the notorious Shingles Bank.

The difference in the water over the Shingles Bank and in the Needles Channel stood out clearly (it doesn't in this picture, sorry), with clear rough water on the Bank and flat water in the channel.

The tidal streams through here run at 6 knots or so at Spring Tide, but the amenity impact would be an important factor (it's Cowes Week this week, and the Fastnet race with a few hundred yachts streaming through the Needles Channel starts on Sunday).

If someone could find a way of exploiting the tidal streams without upsetting other users of the marine environment, this woudl be a great place to start: generally not too wavey, close to markets, close to ports - magic!

Marine renewables devices

2007-07-26T22:35:00.000+01:00

Over the last few weeks, I've had the opportunity to look at three different (distinctly different) marine renewables devices, and the thing that's really impressed me is how much more credible they are than similar devices were only two years ago.

The amount and quality of engineering thinking, simplification and improvement is striking.

The EMEC Board took a trip out to Eday, to inspect the tidal site and the OpenHydro turbine (photo above) this week, and it was really exciting to see this impressive piece of kit in the Eday tidal stream. It wasn't even one of the three I've mentioned above!

New Value of ROCs Model

2007-06-12T17:31:00.000+01:00

Finally, the new Value of ROCs Model is available.

Building from the Red Book dataset, it allows users to develop forecasts of the numbers of ROCs which may be available in the future, depending on the users' assumptions on the proportions of each renewable technology which may come to productive fruition.

We like to think it offers the most powerful, flexible and justifiable forecast for ROC value now available: and of course it includes all of the changes in the Energy White Paper - banding, RPI linkage retention, grandfathering and cofiring rule changes.

Cap on ROC values in Energy White Paper

2007-06-04T15:05:00.001+01:00

Has anyone else noticed that the Energy White Paper has effectively capped the value of ROCs after 2015/16 when the headroom mechanism kicks in?

Assuming the 15% target has been met, the target for any year will be set at 6% more than the anticipated delivery of ROCs in that year - effectively limiting the recycle value to 6% of the buyout premium. This must be a slap in the face for people with long term ROC eligible projects (I'm thinking onshore wind), where this was going to be a big part of revenues in later years.

The flip side is that if (and it's a biggish if) additional renewables capacity comes through as a result of banding, at least the bottom won't fall out of the market.

All-Energy 2007 - "but because it is haaard"

2007-05-30T18:12:00.000+01:00

Another May, another All-Energy conference in Aberdeen.

Over the years, the mood seems to have gone up and down at All-Energy, but vibe this year was very positive. Over the years the suit count has increased, but the last couple of years had a rather downbeat feel, as if the renewables community was reaching the conclusion that this was all too difficult.

This year, there was a certain resolution amongst the attendees, as if the industry had collectively adopted Jack Kennedy's ethos - "we chose to do these things, not because they are easy, but because they are haaard".

The release of the Energy White Paper, which I'll be blogging on later, added a frisson of excitement, and the full range of renewables were well represented. By all accounts, we matched the total attendance from last year by lunchtime on the first day!

Scottish Power and Hammerfest Strom

2007-05-15T17:59:00.000+01:00

The tidal industry really seems to be picking up momentum, as Scottish Power announces that it has formed a new company to pursue a tidal opportunity in the Pentland Firth, using the technology tested by Statoil in the Hammerfest Strom project. Details from Scottish Power are here.

The press release talks about testing in Scottish Waters (EMEC anyone?), before an international roll out of the technology.

Sounds like the three years testing in Hammerfest has been pretty successful.

OPT taking on water?

2007-05-07T17:23:00.000+01:00

Ocean Power Technology, developers of the Power Buoy, successfully closed a $100 million IPO last week at $20/share.

Since then, the shares have fallen to $17.50, suggesting little support at these levels.

It's early days, but let's hope that the sentiment turns and the shares prove a sound investment - the better to stimulate investment in the sector.

Scottish election result determined by Lewis windfarm shock!

2007-05-04T17:44:00.000+01:00

So, it seems that the Scottish election has just been conceded by Labour to the Scottish National Party, with the SNP taking 47 seats, and the Labour party 46.

The interesting part here is that the (now former) Western Isles MSP, Alasdair Morrison, said that he supported the proposed Barvas Moor windfarm whereas his SNP opponent said that he supported a local referendum on the windfarm. The seat swung to the SNP (with 687 votes determining the outcome). So if 344 people voted on the basis of the windfarm, that was the determining factor in the Government of Scotland for the next 4 years.

Let's hope Alex Salmond can do a decent job, and can find ways to drive renewables forward north of the border without having to cut other expenditure or raise taxes too much!

Carbon capture from air?

2007-04-27T12:20:00.000+01:00

Global research Technologies and Columbia university have announced the successful test of a device to extract carbon dioxide from air. The link is here .

If this works and can be made commercial, it could allow the removal of emissions from a Thai taxi in Iceland, centralising CO2 removal from the atmosphere where it could be used (for enhanced oil recovery, chemical feedstocks or putting the bubbles into Coke).

The article pointedly doesn't say anything about costs or efficiency though, so probably best not to bet the ranch just yet.

WaveHub crosses the finish line

2007-04-26T12:07:00.000+01:00

According to the BBC, it seems that WaveHub has finalised its necessary development funding of £21.5 million from the South West Regional Development Agency. The news story is here: http://news.bbc.co.uk/1/hi/england/cornwall/6593921.stm.

What's interesting is that the funding appears to come from SWRDA, rather than from what you might think of as more normal sources for emerging technologies - DTI, Carbon Trust, European Sixth or Seventh Framework funding. SWRDA's clearly motivated to try to develop a wave industry in the southwest.

There's competition from EMEC (Orkney) and an Irish test centre in County Cork.

The Milibandwagon derailed - for now

2007-04-21T17:50:00.000+01:00

The Economist this week talks about how it now looks as if David Miliband will not challenge Gordon for the Labour leadership - - not this month anyway.

Seems to me that if Miliband doesn't challenge, he's a reasonable chance of maintaining his grip on the (possibly enhanced) DEFRA, and that feels like a good thing for continuity of support for renewables and carbon capture, especially if the energy portfolio is folded into an enhanced DEFRA as a bonus for staying out of Gordon's way.

From wee Davie's viewpoint, isn't a sensible strategy to let Gordon have a run at running the country, let him lose the next General Election and then be anointed as the saviour of the Labour Party to take on Dave Cameron?

Chevron joins the blue rush

2007-04-16T19:55:00.000+01:00

Just saw this little article, which didn't go into great detail, saying that Chevron has invested in the irish WaveBob technology. The link is here.

I think Chevron is the first of the US companies joining (albeit tentatively) the ranks of oil majors taking an interest in renewables. European companies got there first: BP (solar), Shell (wind, biomass), Total (wind).

Bush whacked by Supremes

2007-04-02T17:56:00.000+01:00

Here's a news story to sustainably warm the cockles: the Bush Administration has been told by the Supreme Court that the Clean Air Act does give the Environmental Protection Agency the authority to regulate the CO2 emissions of cars.

This might mean the Federal Government will have to have another look at US emissions standards - which Al Gore tells us are way behind everyone else's already.

Two cheers for the US.

The link is http://www.msnbc.msn.com/id/17911853/