[e-mail] Assessment of Large-Scale Marine Energy Deployment

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Economic Assessment of Large-Scale Wave Energy
Deployment
Dr Tim Stallard School of Mechanical, Aerospace
and Civil Engineering University of Manchester.
HMRC Marine Energy Economics Forum Monday 13th
June 2011
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Content

• Background
• Economic Assessments of Wave Energy Projects
• The EQUIMAR protocols
• Attaining a levelised cost of 50/MWh
• Implications for expenditure
• Site device considerations
• Expenditure per device
• Idealised devices
• Site accessibility
• Summary

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Marine Energy Cost Estimates
CAPEX Cost of Electricity (COE) estimates from
14 publications 2001 2011. - Includes
Wave, Tidal-Stream Marine - Pre
2010 data adjusted by 3 per annum. -
All years, exchange rate 1.65US 1GBP.
COE reduction typically inferred by Learning
Curve approach.
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Economic Assessments

• Facilitate fair comparison of alternative marine
  technologies for large-scale deployment. (e.g.
  100 MW farms)
• To provide a summary measure of economic
  viability of an energy generating option to allow
  comparison to alternative options.
• Economic Assessment of a Project
• - Standard procedure for determining economic
  indicators
• - Identify the underlying processes that
  influence cost and revenue
• - Account for uncertainty consistent with the
  level of development
• To provide comparison between electricity
  generating options (e.g. between individual wave
  or tidal technologies).
• Economic Assessment of a Technology
• - Quantify limits to performance and to cost
  reductions
• - Quantify range of possible cost variations

A
B
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Marine Energy Project Assessment
Net Present Value indicates viability. Also
assess project specific risks Identify
Factors, or events, that could - alter the
quantity or unit cost of an expenditure item
or - alter the magnitude or value of energy
production. Quantify The impact of these
factors on the measures of economic
viability. Mitigate Explain measures taken to
limit each risk.
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EquiMar Protocol IIIA
Objective / Process / Method for each
stage Identifies - major items of capital
expenditure (excluding device component
costs) - factors that affect periodic
expenditures - factors that affect
revenue Describes - framework for assessing
project risks Economic assessment produces - a
summary measure of viability (NPV) - a
description of risks that would alter the outcome
of the assessment.
1. Capital Expenditures
2. Operating Expenditures
3. Revenue
4. Risk Assessment
5. Project Assessment
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Expenditure to attain 50/MWh
Project generates average output of 100
MW. Require NPV of Revenue gt NPV of all
Expenditures
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Expenditure Site Specific
36 kW/m
27 kW/m
35 kW/m
15 kW/m
10 kW/m
5 kW/m
15 kW/m
49 kW/m
Sea-state scatter plots for 8 sites (HSE, 2001)
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Expenditure per Device
Number of devices in farm dictated by power
output per device Type I Tuned to all
frequencies Type II Tuned to site peak frequency
Point Absorber Limit
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Expenditure per Device
Number of devices in farm dictated by power
output per device Type I Tuned to all
frequencies Type II Tuned to site peak frequency
Point Absorber Limit
Device Optimal output at peak period Resource
HSE (2001), 8 sites All projects COE 50
/MWh Cable site to shore transmission
estimates based on distance rated power
(Boehme et al., 2006)
OPEX 3 CAPEX (assumed)
OPEX 8 CAPEX (assumed)
OPEX Sensitive to site-accessibility?
CAPEX per device lt 0.70 1.5 M
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OPEX site device dependent

• Vessel cost for installation and maintenance
  large, uncertain expenditure
• Site dependent distance to site, duration of
  operational conditions
• WEC dependent frequency of failure, duration of
  work
• Vessel dependent speed, rental cost,
  operational conditions
• If all devices similar reliability e.g. 1
  maintenance visit per device per annum
• VesselCost (TTransit TActivity TWaiting)
  Rate
• VesselCost (TAvailable) Rate

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Monthly (in)accessibility
Tidal Site, UMAX 2.5 m/s From time-series
analysis of 1-decade of wind, wave and current
speed data.
Wave Site Average power 23 kW/m From
statistical analysis of monthly scatter
plots. Weibull method, BMT (2003)
If vessel requires Hs lt 2.0 m 1 to 2 days for
each day of operational conditions
Hs lt 1.5 m 1 to 3.5 days for each day of
operational conditions
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Access Constraints Tidal Site
Number of installations per Month
Installation whilst Uc lt 1.13 m/s 15 devices
(7.5 MW) in six months 100 MW capacity if
install 14 devices per 24 hr window
Installation whilst Uc lt 1.33 m/s 28 devices (
14 MW) in six months 100 MW capacity if install
7 devices per 24 hr window
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Access Constraints Wave sites
Average waiting required for 1-day and 2-day
weather windows (Hs lt 2 m)
For site Hs gt 2 m, 3 days extra vessel time
required for each day of operation
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Vessel Expenditure
Device Optimal output at peak period Resource
HSE (2001), 8 sites All projects COE 50
/MWh Cable site to shore transmission
estimates based on distance rated power
(Boehme et al., 2006)
OPEX Vessel Cost only 1 day maintenance per
device Site-to-shore transit time Site specific
waiting time
10k/day 1.0 to 2.5 CAPEX 20k/day 1.5 to
3.5 CAPEX
50 / MWh IF CAPEX per device lt 2.25 M (sites
with 35-50 kW/m)
CAPEX per device lt 1 M (sites with 15-20 kW/m)
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Summary

• Project assessment
• Summary measure for project comparison Net
  Present Value (NPV)
• Must also identify risks and mitigate
• Expenditure that allows COE lt 50 /MWh
• CAPEX less than 1.2M / MW approx.
• Vessel expenditure includes 2 6 days waiting
  per day of use.
• CAPEX per site-tuned device less than
• site WEC Vessels only 8 opex
• 15-20 kW/m site-tuned, 1 M 0.6 M
• 35-50 kW/m site-tuned, 2.25 M 1 M
• Single point absorber devices considered.

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Further Information

• www.equimar.org
• D7.3.1 WEC support structure design cost study
  (ODE)
• Stallard, Harrison, Ricci and Villate. Economic
  Assessment of Large-Scale Marine Energy. 8th
  EWTEC, 2009.
• D7.3.3 Review of cost reduction processes
• D7.4.1-2 Analysis of site access constraints
• Economic Assessment of Marine Energy Projects.
• Chapter IIIA, The EQUIMAR Protocols, Ed. Smith
  et al. 2011.
• Including risk assessment to identify factors
  that would change outcome of Project Assessment
• Also see www.tiny.cc/StallardTim
• www.manchester-uk.academia.edu/TimStallard

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• Notes

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Risk Mitigation
Factor / Event Mitigation
Energy production below predictions Energy production below predictions
- Resource different to predictions Resource Accuracy (I.A)
- Performance below prediction in known conditions. Testing II.A II.C (developer), Warranty to specification (investor).
Availability below prediction Availability below prediction
- Severity of resource extremes Resource Accuracy (I.A)
- Lower reliability than predicted Testing II.A II.C (developer), Warranty to specification (investor).
Value of generated electricity lower than predicted Value of generated electricity lower than predicted
Inaccurate prediction of output Testing II.A II.C (developer), Warranty to specification (investor).
Market value (/kWh) changes Risk for all projects over same period
Incentives (e.g. political)
e.g. Revenue risks
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Cost Changes Infrastructure

• Scale of project (projects at the same time)
• Supply of station keeping structures
• Vessel use
• Elapsed time (projects at different times)
• Procurement and process costs
• Experience of technology
• (projects at different scale of sector
  development)
• Standardisation, process efficiency

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Capital Cost

• CAPEX and expected reductions with increased
  project scale

-30
TOTAL Reduction A -20.6 B -9.7 C
-18.0 D -10.5
-50
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Source Equimar workshop Survey, 2008/9