SUBMISSION FROM AQUAMARINE POWER LTD 1. Aquamarine Power Ltd Aquamarine Power Ltd is a leading marine energy company. We specialise in developing multiple technologies designed to deliver clean power and fresh water from ocean energy. Our goal is to deliver large-scale wave and tidal energy projects, using Aquamarine’s technology to help tackle climate change and global fresh water supplies. Based in Scotland, our engineering team brings unrivalled experience from the offshore wind, marine energy, and oil and gas industries. Aquamarine’s project development services support the identification and development of commercially viable marine energy sites. The result of a longstanding partnership with Queen’s University Belfast, the company’s first product is Oyster®, a simple, robust and reliable hydro-electric wave power converter. The device has been manufactured and is now ready for full-scale testing, prior to installation and grid-connection at the European Marine Energy Centre (EMEC) in Orkney next summer. The following commercial demonstrator will be the 2.4MW NeptuneTM tidal stream device. 2. Response to Key Consultation Questions We respond below to a number of the specific questions and key issues outlined in the terms of reference and call for evidence. We have answered the questions we feel impinge most on our company and the marine energy industry. 2.1 What type of future is needed in Scotland in terms of the production, distribution and more efficient use of energy, given the issues of price, security of supply and sustainable development? Scotland is uniquely placed to create and lead an export-oriented renewable energy industry. The products of this new industry will deliver sustainable economic growth and will include the following products. • Electricity – Exported via the National Grid to England and Wales, and via a Celtic, and eventually, European Supergrid to our nearest neighbours. • Technology – The opportunity for Scotland to be a world leader in the wind sector has passed; it must now focus on the marine sector. By supporting marine renewable technologies, Scotland will cultivate and champion world leaders in this pioneering industry; just as Denmark spawned industry leaders such as Vestas and Bonus in the wind sector. • Green Certificates – Originating in Scotland, Green Certificates will be sold on world markets. • Employment – The wind industry in Germany, Denmark and Spain currently provides 73,800, 21,000 and 35,000 jobs, respectively.1 The marine renewable industry in Scotland has the potential to create tens of thousands of jobs on a similar scale and will minimise unemployment resulting from the decline in the oil and gas industry. Two of the most critical issues of present times are: the security and affordability of energy supply; and action on climate change. In order to support sustainable economic growth over the long term, Scotland must focus on achieving self- sufficiency and international leadership in the renewable energy sector. Production and distribution of marine renewable energy will be key to achieving this. • Production - Production of electricity from renewable sources will move increasingly to the marine environment in the form of offshore wind, wave and tidal. A mix of “uncorrelated” resources will reduce the risk in the generation portfolio and reduce the risk-adjusted cost per MWh. • Distribution - Historically, electricity grids have been designed to carry power from a single large power station to the centres of load. A rethink of the electricity grid design needs to be undertaken, with priority given to the technical requirements of renewable resources. Flexible and lower cost connections need to be delivered. Development of the marine energy industry as a key part of a diverse renewable energy portfolio, supported by upgraded grid infrastructure, will enable Scotland to meet domestic demand and ensure security of supply and price. In addition, it will enable Scotland to meet crucial environmental targets, in support of international action on climate change and sustainable economic development. 2.2 How can this future be delivered in Scotland and how will we meet all the various targets and obligations? The following recommendations support a renewable energy mix for Scotland, but in particular focus on measures supporting the wave and tidal energy sector in which Aquamarine is involved. • A diverse renewable energy portfolio A mix of renewable energy sources should be the goal of Government (see Section 2.1). We are pleased with the targets set. A wide range of renewable will be necessary to sustainably meet energy demand over the long term or deliver security of supply. 1 Strategic Overview of the Wind Energy Sector, 2008, European Wind Energy Association (EWEA) According to a survey of Scotland’s renewable resource,2 the country’s total renewable electricity resource could supply over 10 times the domestic peak winter electricity demand. Such considerable resource evidences the potential for Scotland not only to meet its own energy demands but also to become a major renewable energy exporter. Marine energy has the capacity to provide a significant proportion of the energy mix, with Scotland hosting approximately 35,000 square kilometres of coastal waters3, providing 47% of the European marine energy resource. In order to capture this market, the marine energy industry initially requires Government support and investment (detailed below) to allow Scotland to build and secure its position as a global leader in the sector. The DBERR4 estimate of wave and tidal energy contributing less than 1% and 2%, respectively, to the energy mix by 2020 appears a pessimistic forecast providing little support to the sector and discouraging investment. • Skill transfer from the offshore oil and gas industry to the emerging offshore renewable industries of wind, wave and tidal Scotland’s oil and gas industry provides services and a 100,000 strong work force with valuable offshore skills and experience. As the North Sea oil and gas industry declines, the ability of Scotland’s oil and gas supply chain to apply its services in the emerging renewable industry will be key to sustaining Scotland’s socio-economic development. In order to encourage commercial success of the marine renewables industry, the Scottish Government should continue to support companies through Scottish Enterprise new business funding for management training, marketing and commercial development. Further, the reinstatement of the Marine Collaboration fund is also recommended to encourage collaboration between marine developers and the oil and gas sector. • Developing a streamlined consenting process for the commercial development of wave and tidal sites. The Scottish Government needs to encourage the various environmental, social and economic agencies to work together for sustainable development of the marine energy industry. This will necessarily involve agencies with potentially opposing polices working together resolve conflicting issues. These key stakeholder groups need to work together to develop a mutually acceptable policy on sustainable development of marine renewables industry in Scotland. In addition, clear guidelines and standards should be set for each renewable energy 2 Scotland’s Renewable Resource, Garrad Hassan, 2001 3 Preliminary Briefing of Renewables, delivered at the Saltire Prize Stakeholder Consultation, 13 August2008 4 UK Renewable Energy Strategy Consultation, DBERR, June 2008 type. Such action would improve the quality of applications from developers and help them to avoid unnecessary approval delays and associated costs. • Upgrading the domestic grid and delivering the Supergrid In terms of distribution, the grid (Scotland and UK wide) and Supergrid (links to Europe) offer the only true prospect of a channel to market. Without an effective grid system, there is no means of commercial supply and operation of thousands of MW of renewable energy. This prohibits Scotland’s economic development internationally and endangers domestic supply where other (external) power sources are able to compete using existing infrastructure. The grid system of the future should be able to accommodate both small-scale energy supplies from local community sources and large-scale decentralised renewables, such as wind, wave and tidal. Offshore wind, wave and tidal, by their nature, will feed into the periphery of the grid. As the grid was originally designed to take energy input from a centralised source, the current infrastructure is unsuitable. If Scotland is to meet its target of 50% renewable electricity by 2020, there is an urgent need to upgrade the existing grid system. These targets cannot be achieved by one singular, central source of renewable energy alone. • Effective, efficient grid planning Working with the regulators and developers, Planning Authorities should take responsibility for streamlining the consenting process both for new and upgraded grid infrastructure and for the development of renewable projects requiring grid access, ensuring efficiency and effectiveness of the consenting process to avoid unnecessary delays and costs. The prioritisation of power generation and grid reinforcements in the National Planning Framework 2 to provide domestic grid upgrades including Islands connections is essential in delivering a grid system to support renewables in Scotland. Additionally, it is imperative that the NPF2 includes development of a subsea Supergrid to ensure Scotland’s opportunity to become