Wave power, the sequel

I previously argued that wave power would, if anywhere, be commercialised first in Ireland — because our waves are second to none (in the populated world) — but that there is no reason to assume that it would be an Irish company that does the commercialisation.

Indeed, Ocean Power Technologies of Pennington, New Jersey, has kindly offered to accept the generous subsidies for wave power offered by the Irish government (see Irish Times).

As is customary these days, OPT promised to create “ten of thousands” of jobs. The jobs are in construction and therefore temporary.

OPT also called for a streamlined approval process.

41 thoughts on “Wave power, the sequel”

  1. @ Richard Tol,

    Construction jobs may be temporary but the devices will be operating in a hostile and corrosive environment. In fact as the seas warm up more the storm ferocity increases.

    Hence some jobs will be retained to carry out repairs after construction is completed. As to exact figures I could not offer a number.

    But the article mentions a one low power device being 30 meters high. The idea is to build a higher power device, presumably this will be a bit bigger / more substantial etc.

    Building all these devices will cost money, which will have to be recouped via higher electricity prices or subsidies etc.

    Is it the right thing to have these built in Ireland as against the lower cost of manufacturing in East Asia?

    Not that I am against home grown industries, but everything has a cost and that cost has to be paid for.

  2. @Sporthog
    Wave devices like OPT’s PowerBuoy need a lot of mass, so you would put them together locally as the transport cost are quite high.

  3. @ Richard,

    Even transportation on the back of a barge towed from China? If the devices are built in modular form then they can be manufactured in a low cost country, transported to site in kit form, assembled on site whilst never having touched Irish soil. To give the device the mass that you mention, perhaps concrete from a Irish cement plant would be used. The concrete could then be shipped out and poured into the structure as it is assembled.

    There are several projects where fabrication is undertaken in China, the module is shipped in kit form and the jig saw pieces are put together on location. All because it is cheaper to do so.

    The point I am making is heavy industry is gone east. Ireland is not a place of heavy industry. We don’t even have a working steel mill.

  4. @SportHog
    Sure. The trade-offs is between manufacturing and transport costs. The PowerBuoy is made of steel and you want as few pieces as possible.

    I guess that if this is done at scale, you would build a big plant in Vietnam or so and assemble the things at specialised ships at location. We’re still in the demonstration phase, however.

  5. I can’t make head nor tail of the numbers in this article. The vast majority of msm articles written on any form of renewable energy generation are not clear on what is being delivered or promised. They should all quote the capacity rating for the device/array as well as the load factor either in terms of annual energy generation in GWh or in annual average power in MW. This applies to government aspirations as well. 1000 x 40MW for a 500MW capacity government target???

  6. @Tim
    If I recall correctly, the government target is for installed capacity. OPT is apparently trying to convince them that the target really is for generation, and that the capacity target is therefore eight times as high.

  7. The sites they have identified are off Clare ( Loop Head) off Kerry ( Ballybunion) and off Cork Harbour somewhere.

    They are scared of their sh1te that the NPWS will arbitrarily extend a SAC or an SPA onto them before they apply for a licence was what I was told. They are not designated right now.

  8. 1000 * 40MW = 40,000 MW. That’s about 10 times peak Irish electricity consumption, and 80 times the Government target. Feels like there’s either a typo or something big not being explained in the article.

  9. @Holbrook Fields

    22c per KWt is 10 times as expensive as Nuclear Power.

    According to the US Nuclear Energy Institute the Total Production Costs per KWh for Nuclear Power in 2009 was 2.03 c per KWh. TPC includes all Operations and Maintenance costs + Fuel costs.

    Indeed if we burned petroleum it would cost half of what this wave technology would.

  10. @Holbrook
    The average households pays about 12 c/KWh for its electricity. This includes the costs of carbon dioxide emissions and the costs of complying with air quality standards.

  11. @mokabaybob

    I think your quoted price for nuclear of 2.03c per kWh needs to be taken in context with the reality such as indicated below.

    http://www.world-nuclear-news.org/NN-Construction_work_delayed_at_Levy_as_costs_rise-0705105.html

    What discount rate applies to nuclear energy projects? At normal rates these delays and that at the Oikiluoto plant in Finland for example would be crippling, not to mention the invariable cost over-runs.

    I think you would be very unlikely to pull off nuclear energy in an Irish context for less than €0.05 per kWh and it could possibly be considerably more than this. Bear in mind that some £70bn or so is currently allocated to decommissioning of UK nuclear plants representing a major opportunity cost.

    With regard to wave, as far as I am aware that 22c/kWh price is only an opening incentive to develop an immature industry and will not apply if it were to mature into a larger scale. At maturity I would expect wave to have to operate at a cost (without subsidy) of 8c/kWh or less and I also think that gas generation will be creeping up past 5c/kWh by that stage.

  12. @ Richard,

    How aware are you Richard of the activities of US companies in running all sorts of projects to build critical infrastructure in Europe, eastern Europe, Asia, North Africa – heck, just about any part of the globe you can possibly think of. I mentioned the fact Ireland was used as a base by many US consultants in the 1980s. They arrived in Ireland under the guise of building factories in Ireland. But of course, many were ex. military and got lots of contracts all over Europe and North Africa. I blogged some about it a while ago, called Development as Freedom. Renewable energy infrastructural roll out across Europe is simply too low hanging fruit to be ignored in 2010. Anyhow, the EU directives on public procurement specify that contractors need to establish a reputation or track record in order to tender for more work. Catch 22 if you are a small player trying to break in. We haven’t got the entire suite of human skills and resources necessary in Ireland. But if all the PIIGS countries worked together, given the combined offshore capabilities of Spain, Portugal, Italy and Greece – it could really be good for Ireland. But heck, we cannot seem to do anything right in Europe right now. The US consultants will more than likely carpet bag the lot.

    I have been talking with some consultancy groups based in the US, on matters to do with renewable energy in building construction myself for the last year. I can tell you, if the financing was to move here on this end – I would have no hessitation whatsoever in bringing in the assistance of the Americans to help run a project. I had experience of working with them in the food industry where they design and commission production systems here to a high level of sophistication. Think of many of the big name food companies here in Ireland, and what you put in your food basket at the super market. The US consultants, much of the time are behind the ‘process design’ which underpins many food companies here. What should renewable energy be any different? What’s nice though, is how Irish boys, if they are able to handle it are free to compete in the US market for renewable energy production. The Sunday Business Post had several articles over the last few months I recall. BOH.

    http://designcomment.blogspot.com/2009/07/development-as-freedom.html

  13. @Richard, Mokabaybob and Tim,

    Thanks for the info. So it seems that 22c per kWh is very expensive when making a direct comparison. But if a longer term analysis was done taking into account that this is, as Tim has pointed out, just an opening gambit to entice players into the market then is it a good investment to overpay that much for power in the short term in return for a renewable energy source? If what Tim is right about the cost at maturity being 8c/kWh it sounds as if it could well be, given that as time moves on the world that will be competing for ever scarcer and more expensive carbon fuels. And while I am not anti-nuclear, again, if you take a long term investment view to my non-expert eye it seems that this upfront investment in wave power may well pay dividends and even potential export opportunities. What I am getting at is – is the wave energy policy the right policy?

  14. @Brian OHanlon and Holbrook Fields

    Of course we require a turnkey project approach to Nuclear plant delivery. We do not have the expertise and cannot learn it in advance of a nuclear plant start. Our job is to prepare the ground and avoid the pitfalls in planning and support infrastructure. We wont have any of the engineering lead until our fourth or fifth plant gets the go ahead. If we adopt a strictly modular approach i.e. we don’t try any “first of its kind” engineering, we can get them built quickly and within cost and time frame. Its big engineering but within our capabilities for sure.

    Nuclear is as clean as wind or wave and decommissioning cost is always built into the price of electricity. These costs are much lower I suspect than the as yet, undefined costs associated with repair and maintenance of multiple moving part units located in some of the most hostile waters in the Northern hemisphere. Indeed the 2.03c price quoted above for the total cost per KWh of nuclear power includes the decommissioning element of these projects.

    Nuclear is well establish technologically, cheap and clean. There is a wealth of experience to tap into in order to get the job done. Cost overruns will occur due to project management failures which can and must be avoided. Environmental benefits are excellent and get us quickly to any of the lower targets for carbon footprint that may be set internationally.

    Tidal power is still aspirational and we don’t have the capital to embark on a world class R & D program to bring these technologies to fruition. This is not like the Nokia experience during the start of the mobile telecommunication revolution. The investments required will be bigger and more risky. There is no guarantee that the breakthroughs will be Irish. Why not Korean or Canadian?

    Our priority should be to get a clean and cheap baseload generation capacity built and operational as soon as possible. Ireland needs to be able to buy power at those low rates described above. This is the only way we will have a sufficient cost advantage over the British and Continentals to underpin our future economic strategy.

    There is a whole lot to be said about economic strategy but one of the essentials is the securing of our energy needs. No one has suggested a convincing and sure fired alternative to nuclear. So I stick to my oft stated belief that nuclear is the way to go for Ireland.

  15. US nuclear costs are going to be low because it is based on already built stations from donkeys years ago which they are doing their best to extend. Since Three Mile Island I don’t believe there has been a new civilian power reactor commissioned in the US? A new build plant is a whole different cost structure – as Ontario discovered when looking to build a new nuclear fleet to replace its 1st generation reactors.

  16. Everytime this topic of greenie-style electricity generation pokes its little piggy snout above the parapet we get the usual nonsense.

    Cost: Its the energy cost of the energy silly! NOT the cash cost.

    Nature of: Electricity is a wonderfully versatile energy source. Just a pity it does not drive commercial vehicles (ususal ones), planes or ships. So what energy source does? Yep, I thought so!

    Use of: Conservation, conservation, conservation. That’s it!

    Apologia: Taxpayers will be stiffed for the ‘encouragements’. Again! Must be a very large population of fat-cat taxpayers out there. Tell me about it.

    Please try and get back to basics on the energy predicament. It’s a somewhat complex issue that is not amenable to the usual algebraic economical (sic) models. Thanks.

    B Peter

  17. @Tim, Holbrook
    Two things.

    First, offering government support for infant industries has not been particularly successful in the past. This creates weak companies that are good at lobbying but not at much else. Think of your favourite product innovations of the last 10 years and wonder what government had to do with it.

    Second, wave is not more virtuous than wind or solar, so there is no justification for additional support. In fact, fossil energy is taxed for its carbon emissions and regulated for its air pollutants, so there is no environmental ground for additional support for renewables — let alone differentiated support.

  18. @ Holbrook Fields,

    But if a longer term analysis was done taking into account that this is, as Tim has pointed out, just an opening gambit to entice players into the market then is it a good investment to overpay that much for power in the short term in return for a renewable energy source?

    Interesting comment.

    I would like you to cast your mind onto something very mundane and everyday – a product such as the Sony Playstation. It is commonly understood within the computer industry, that Sony has to cover significant losses on selling its Playstation product for a number of years after release to the market. But inevitably what happens is the price of production comes down. Within a couple of years, all of the components within the product are obtainable at much lower costs. That is when Sony really brings in the money from its investment. Sony are experts at this now. Initially, they have to push the technology to the edge, which costs money. But that also means the Playstation product remains attractive to kids over an extended period of several years. By the end, Sony are churning out the units for buttons and profits go through the roof.

    I am sure that renewables do have a slot in the overall strategy, if for no better reason than when carbon emissions are traded like any other commodity on the global exchange markets, Ireland will become a strong player in that league. Some of the poorest countries in Africa will be able to play also, by the fact they have huge carbon sinks in the form of ancient forests and habitats. It is only a question of when the world can agree on a format for the measurement of carbon in the biosphere, as well as the atmosphere. The biosphere of course is inscribed by various national boundaries, in a way the atmosphere never was. While it is possible to have meetings like Copenhagen about the atmosphere, the discussion has expanded to include the biosphere ever since Kyoto was agreed. When the sums are done, renewable energy generation in Ireland will allow us to offset an awful lot of carbon emissions in other parts of the Irish economy. For that reason, the investment long term could prove very worthwhile. BOH.

  19. @ All,

    It is important to look at products such as WaveBob in the same way as the Sony Playstation. This is why WaveBob as a company have spent so much time getting the initial product (and the whole system surrounding it) just right. The WaveBob has to be set up so that it is easily to manufacture in bulk and it sells to a wider market than just Ireland. The product has to be set up, so that franchises can be sold for production rights etc, and that cost of production can be kept down. In the same way the Playstation connects to a wider system or campaign. At some stage, many governments in many parts of the world start to view a WaveBob as a solution to many of their problems. Like a parent would buy a Playstation for the kids at Christmas time. We don’t read many stories in the newspapers of something going horribly wrong with a Playstation product. It doesn’t break. The kids put it through the destruction tests, and yet it manages to service their need for entertainment for hours and hours. In a similar way, the WaveBob when deployed has to suffer the same inhospitable environmental conditions on the open seas, get dragged around by various nautical contractors who deploy and manage it etc. Realising a product which causes trouble in the field would not be a good idea. The products reputation would get shot. The Irish wave energy company is going about their design process in a very sensible manner, on the whole, I would say. BOH.

  20. @ Richard,

    Second, wave is not more virtuous than wind or solar, so there is no justification for additional support. In fact, fossil energy is taxed for its carbon emissions and regulated for its air pollutants, so there is no environmental ground for additional support for renewables — let alone differentiated support.

    I can’t argue with that.

    On a slightly silly note, I found a really dreadful DVD in the local rental store the other day. It was called ‘The Deal’, released in 2005 starring Christian Slater. Altogether it was worth the rental, if only to see how cheese-y and awful, that Hollywood attempts to tackle these issues are. Worth a look some night, if only for the cringe factor. BOH.

  21. @ Richard,

    If Sony were to present their business plan for Playstation to any government, I am positive, the government would kick them out the door, and tell them they were crazy. But Sony are so expert in wheeling and dealing on prices and cost curves – through doing business with Michael Dell for flat screens, or working with Apple on something else – Sony are just so well attuned to production management, they can pull it off. The real question is, how can any wave energy company sell a product at a loss for a number of years in order to get to the sweet spot between costs of production and profit margin? Lets face it, if a wave energy product becomes viral, like the Playstation, then you are made. But its a long shot to say the least. BOH.

  22. Brian Woods is right on the money—–it is energy in versus energy out, not the monetary cost versus the monetary gains by which wave converters should be evaluated.
    It is called Embodied Energy, and an energy analysis should be applied to all forms of energy conversion such as solar voltaics, wind turbines, wave and tidal machines, and of course nuclear power.
    For a more detailed discussion, see my post on renewable-and-local-communities@googlegroups.com or consult Howard Odum in his seminal work ” An Energy Basis for Man and Nature “

  23. @all

    There are better figures on the cost of nuclear below, and compare the difference for the 5% and 10% discount rates shown.

    http://www.world-nuclear.org/info/inf02.html

    I think there is too much emphasis on the negative aspects of this 22c/kWh wave subsidy. None of this money will be paid out for a while yet and it can be monitored as to its efficacy or distortion as the case may be. Companies may become expert lobbyists but at the end of the day they have to have a worthwhile non-subsidized product and utilities will require detailed cost breakdowns if they are going to get involved in a major way. If the subsidy runs for too long for any particular technology then it will be a bad idea, it needs to have a timeline as well as limits on the number of annual GWh it would apply to.

    @ Brian Woods

    Conservation and improved energy efficiency are important factors but we also need sustainable electricity generation if we are to maintain a certain standard of living. There are no easy options for this and some may require starting subsidies but I think irate taxpayers should be far more exercised by other cost factors in Ireland.

  24. Sorry—- you will find that discussion a groups.google.com/group/renewables-and-local-communities

  25. General Electric established a wind farm off the cost of Arklow (Google “Arklow Wind Park”). I wonder how much money it added to the Irish economy (employment or otherwise). Of course, it’s a different technology, but there may be an argument for taking a look at that case and seeing how it might relate to the wave energy proposal.

    The success or otherwise of the GE project could be used as a blueprint for further energy investment in (around?!) Ireland. Wave energy has several large flaws that this sort of wind farm doesn’t suffer from. Wave energy can have knock-on effects on the coastline as it takes energy out of the waves (which shapes the coastline through erosion and deposition). Additionally, wave energy turbines are under the sea (obviously). This makes them hard to replace when damaged, difficult to service and maintain, difficult to put in place, and prone to erosion because it is constantly submerged in sea water.

    I suppose the argument here is, why subsidise a foreign company to invest in experimental infrastructure in Irish waters, when we could be encouraging Irish companies to invest in tried-and-tested infrastructure in Irish waters in the manner of GE?

  26. @ Tim,

    On the standard of living point, I watched the movie length PBS documentary on Earth Day and the environmental movement the other evening. There was interesting footage of a TV election debate between Jimmy Carter and Ronald Regan. I didn’t know this before, but Carter was exceptionally good at supporting the environmental cause, and increased the budget consistently over his years in office. But Regan was able to ‘score points’ from Carter, by pinning him down in the TV debate, on Carter’s insistence that citizens would have to endure a curtailment of their living standards. Basically, Regan was clever enough to persaude Carter to take his own sword and allow him to run onto it. The rest is history as they say, and Regan even removed the few solar panels that Carter had put on the roof of the white house. The sad thing is that Regan was ‘popular’ in the US amongst the electorate for those kinds of jestures. Yet the debate about fossil fuels the US always revolves around the Bush family, and Regan is never mentioned. I wonder how Richard Tol’s arguments would stack up, when seen through the views expressed about Jimmy Carter in the video linked below? BOH.

    http://video.pbs.org/video/1463378089

  27. @All

    All the enthusiasm for wave technologies is based on an anticipation of the future which may not be true for Ireland. There is no guarantee that we will be the first to develop anything marketable. There are other nations much better placed to do so and it would be a miracle were Ireland to be regarded as world leader in this technology twenty years from now. We are more likely, in the absence of a nuclear strategy, to be late adopters of someone else’s technology. At a premium price no doubt. It is an absolute fact that nuclear will get us our baseload at under 5c/KWh. Any higher than this and we are at a competitive disadvantage. If in the meantime we have expended heavily on front-line R&D on wave technology and fail to hit the mark, we will have wasted resources and suffered inordinate opportunity costs. Our energy disadvantages would be compounded.

  28. My understanding is that OPT have not built any device larger than an experimental 150kW since 1997, yet we are expected to believe they are about to manufacture 2 or 5MW machines here. Sorry, but this sounds like this is another puff piece in the IT designed to support Ministerial fantasy.

    I am a shareholder in OPT (ouch!) and the stock has done nothing recently (apart from yet another sell-off in January). Tells you ALL you need to know about the recent “news”.

    btw any Greenie out there wanna buy my shares? Wonderful opportunity.

  29. @ Tim Morrissey: Yep. I have a notion that we are a tad ‘over budget’ with our electricity use. A -15% reduction should be possible – without any meaningful decline in our SoL.

    The idea that you should have to provide ‘encouragements’ to developers of sustainable energy just beggars belief. Its pure insanity.

    I suppose the cent will eventually strike the floor. The taxpayers of this state are rapidly running out of taxable income – we need bigger incomes!!
    Know what [tY – G] means? Well the value of Y is decreasing, whilst the value of G is increasing. So -PS gets bigger and BIGGER! BOOM-time!!!

    Forget about wavepower. Just cut back on electricity usage.

    B Peter

  30. I wonder what are the chances of developing nuclear power in Ireland. I remember Eamon Ryan saying there should be a debate on the topic, but there hasn’t been one. From a quick search of FG, FF and Labour websites it appears there is no support for it from those parties – if anything there appears to be consistent opposition to it and all those parties appear to just be following the Green’s lead into renewables.

    Back to wave power. I hear what Prof Tol is saying that the govt should not be picking winners – but is this not a policy found in many countries? When people say that Scotland and Portugal are ahead of us in wave power, is this not due to their subsidisation of the industry? From what I can gather the cost of the REFIT scheme (Renewable Energy Feed In Tariff) is €119m over 15 years. Russia is building the first nuclear plant in Turkey and that will cost €20 billion. I know these are simple figures, but I am trying to get my head around the issues, and it still strikes me that the REFIT scheme is a price worth paying for the development of a renewable sector.

  31. @ Mokabaybob,

    I am not fully up to speed with Nuclear costs / technology etc. So I cannot comment about the actual cost of nuclear in c / kwhr terms.

    But lets say you are corrrect in stating 5 c/kwhr, or maybe even less.

    There is no way I could see electricity being sold at this price in Ireland.

    The Govt / Revenue would jump on the opportunity with large taxes / vat rates.

    So even if power was generated at 5 c/kwhr or less, the people would pay over 10 c/kwhr for the states coffers.

    It’s a bit like the tax on petrol / diesel. You get stuffed every time.

  32. Holbrook Fields wrote:

    “@Pat Donnelly: I think your link is off topic and has little relevance to a discussion about […]”

    Well I never.

    bjg

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