Marine

ARENA’s investment focus is on supporting marine technology activities that involve:

• knowledge sharing activities that capture learning from existing activities, or build industry capacity, as part of global efforts to improve the competitiveness of marine energy
• niche applications that help to commercialise technologies that have high potential to drive down the cost of marine energy deployment.

Rationale

ARENA’s assessment of marine technologies is informed by market analysis and consultation with leading marine companies, researchers, energy companies and global experts. The investment focus areas are designed to maximise ARENA’s impact on the long term cost-competitiveness of marine-based energy.

Wave energy projects are the only marine technologies currently represented in ARENA’s investment portfolio. This is due to the sector having a number of promising technologies at demonstration scale and the potential to ultimately provide on-grid power at commercial scale to the larger markets of south-eastern Australia.

When evaluating funding applications ARENA intends the above investment focus areas to apply equally to all potential marine energy sources, in line with its technology-neutral approach.

Likely scale and potential for growth 2030-40

Australia has some of the world’s best wave reserves (from southern Western Australia around to eastern New South Wales) and tidal reserves (from the Kimberley across to the Gulf of Carpentaria and in Bass Strait).

Wave energy can be predicted over a longer timeframe than wind and also requires less space to generate the same amount of electricity. Marine energy technologies could potentially complement wind and solar, or be deployed to power or protect coastal or offshore infrastructure.

While Australia’s marine energy resources – particularly wave – are vast, it is challenging to access the resource. Numerous devices have been developed but few have been demonstrated at full scale in the ocean. Australia’s tidal resources are located away from main demand centres, and while wave energy is closer to end users it would only be cost-competitive in niche applications under a flat demand scenario, given the limited demand for new generation.

Under such a flat demand scenario, Australia’s on-grid demand for wave energy is expected to be limited until 2030, with possible deployment of tidal current technology in remote locations. Take-up after this time will depend on deployment-driven cost reductions and market conditions. Tidal range (dams) deployment is expected to be very limited in Australia due to high capital cost and environmental impact. Ocean thermal current energy supply resources are remote from Australia’s coast.

Based on analysis of overseas developments and discussions with industry, ARENA has formulated three deployment scenarios for each of the two main marine energy sources – wave and tidal current.

The medium scenarios are in line with IRENA deployment projections, while each of the cost ranges is within the LCOE range projected by BREE’s Australian Energy Technology Assessment and draws on work from the European Union’s Strategic Initiative for Ocean Energy (SI Ocean).

Three 2030 global deployment scenarios for wave and tidal energy with associated potential cost reductions

Under the medium and high scenarios, wave energy approaches cost-competitiveness with offshore wind. For locations such as Victoria with lower solar insolation, wave energy may become a valuable part of the energy mix. Under the high scenario, tidal energy could play a role in northern Australia depending on the availability of other energy options.

Investment influence

ARENA has identified four main barriers for the sector: capital intensity, durability in ocean conditions, project financing and market opportunities. While there is limited demand in the near term for on-grid marine power projects in Australia, there is scope for ARENA to have an impact on each of these barriers to some extent.

• Capital intensity: Marine projects are capital intensive relative to other renewables, particularly at the demonstration stage due to the high cost of deployment in the marine environment. Through both its existing projects and ancillary work testing innovative techniques and materials, ARENA could help reduce deployment costs, improving the competitiveness of marine energy in Australia and globally.

• Durability: ARENA’s investment portfolio includes support for some of the world’s most advanced wave projects, which are testing device performance in ocean conditions. Data and lessons learned from such ARENA projects will be crucial to demonstrating the capability of devices to produce energy and reduce operational and maintenance costs.

• Project financing: Data from ARENA’s wave energy projects will help inform the economic case for marine investment, environmental impact analysis, and global understanding of how marine energy can be integrated into the grid from both a technical and economic perspective. This knowledge will help both technology developers and potential investors considering investment in the sector.

• Market opportunities: In the near term, countries with more acute energy supply challenges and fewer energy options are anticipated to provide markets for marine energy and drive cost reductions through deployment at scale. ARENA can assist the industry in Australia with resource characterisation and development of commercialisation pathways. The ability to match marine projects with demand, both selecting the right locations and producing energy at the right time, will be critical for successful commercialisation.

Gap in ARENA portfolio

As at June 2015 ARENA’s marine portfolio included two studies and three demonstration projects, with a total ARENA commitment of over $39 million.

ARENA’s existing demonstration and deployment projects will provide valuable data and are adequate given the Australian marine industry’s stage of development. However there may be potential benefit from additional measures that address specific cost elements such as foundations and deployment methods in the marine environment. Such activities could complement or draw on international work on offshore wind technology deployment.

ARENA could also have an impact through niche projects that establish a commercialisation pathway for marine energy technologies.

Given Australian companies largely lack the capacity for engagement with international stakeholders, ARENA may have a role in facilitating the sharing of both Australian project knowledge and international experience in international forums.

Conclusion

ARENA’s investment focus is therefore centred on capturing and sharing data from its existing projects to add to the pool of global knowledge.

ARENA will also consider ways it can address technical barriers for the marine industry and work with Australian marine energy companies to improve the competitiveness of marine technologies.

ARENA will continue to engage with the industry, monitor global developments and review the outcomes of its existing projects to ensure its approach remains nimble.