The Saltire Prize

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!

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

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

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

1. 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>
2. it looks a bit flimsy (although East Coast waves are relatively benign)
3. 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

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.