Accelerating the Deployment of Offshore Renewable Energy Technologies Final Report February 2011 IEA-RETD Accelerating the Deployment of Offshore268370 Renewable RGE RGF Energy 6 D Livelink/PIMS Live (online)/Enterprise Workspace/ Units/Power (PWR)/Renewable Generation (RGE)/Renew Technologies 11 February 2011 Final Report February 2011 IEA-RETD Mott MacDonald, 1 Atlantic Quay, Broomielaw, Glasgow G2 8JB, United Kingdom T +44(0) 141 222 4500 F +44(0) 141 221 2048, W www.mottmac.com Accelerating the Deployment of Offshore Renewable Energy Technologies Issue and revision record Revision Date Originator Checker Approver Description A 08 December 2010 C Kolliatsas JB Porter S Harrison Draft Final Report G Dudziak S Harrison N Myers C Rhodes-James C Bayer J Schäfer M Schäfer G Doyle N Grieve D Holmes A Lagakos B Loney S Salter J Ingram G Davies B 20 January 2011 C Kolliatsas JB Porter S Harrison Final Report G Dudziak S Harrison N Myers C Rhodes-James C Bayer J Schäfer M Schäfer G Doyle N Grieve D Holmes A Lagakos B Loney S Salter J Ingram G Davies C 15 February 2011 Various G Dudziak C Koliatsas Final Report This document is issued for the party which commissioned it We accept no responsibility for the consequences of this and for specific purposes connected with the above-captioned document being relied upon by any other party, or being used project only. It should not be relied upon by any other party or for any other purpose, or containing any error or omission which used for any other purpose. is due to an error or omission in data supplied to us by other parties This document contains confidential information and proprietary intellectual property. It should not be shown to other parties without consent from us and from the party which commissioned it. Mott MacDonald, 1 Atlantic Quay, Broomielaw, Glasgow G2 8JB, United Kingdom T +44(0) 141 222 4500 F +44(0) 141 221 2048, W www.mottmac.com Accelerating the Deployment of Offshore Renewable Energy Technologies Acknowledgments: Michael Paunescu (Chair, Natural Resources Canda), Kjell Olav Skjølsvik (Enova Norway), Matthew Kennedy (SEAI Ireland), Melanie Nadeau (Natural Resources Canda), Mette Cramer Buch (Danish Energy Agency), Steffen Nielsen (Permanent Delegation of Denmark to the OECD), Dorthe Vinther (Energinet Denmark), Hoyt Battey (US Department of Energy), Kristian Petrick (RETD Operating Agent, All Green Energies, Spain). Mott MacDonald, 1 Atlantic Quay, Broomielaw, Glasgow G2 8JB, United Kingdom T +44(0) 141 222 4500 F +44(0) 141 221 2048, W www.mottmac.com Accelerating the Deployment of Offshore Renewable Energy Technologies Content Chapter Title Page Executive Summary i 1. Introduction 1 1.1 Industry Context_____________________________________________________________________ 1 1.2 Economics and Financing of Offshore Energy Projects ______________________________________ 2 1.3 Technical and non-technical Barriers and their Mitigation Measures ____________________________ 2 1.4 Findings, Conclusions, Recommendations and next Steps____________________________________ 2 2. Offshore Resource 3 2.1 Introduction ________________________________________________________________________ 3 2.2 Resource Assessment ________________________________________________________________ 3 2.3 World Distribution of Offshore Resources _________________________________________________ 3 2.4 Summary of Offshore Energy Resources by Country ________________________________________ 7 3. Offshore Renewable Energy Technologies 10 3.1 Offshore Wind Devices ______________________________________________________________ 10 3.2 Wave Energy Devices _______________________________________________________________ 15 3.3 Tidal Energy Devices ________________________________________________________________ 25 3.4 Foundations, Moorings and Grid Connection _____________________________________________ 34 4. Deployment Targets, Policies and Progress 42 4.1 Deployment Targets and Policies ______________________________________________________ 42 4.2 Deployment to Date _________________________________________________________________ 45 5. Economics of Offshore Energy Projects 47 5.1 Level of Maturity of Offshore Technologies _______________________________________________ 47 5.2 Comparison of CAPEX, OPEX and Cost of Energy_________________________________________ 49 5.3 CAPEX Cost Structure and Drivers _____________________________________________________ 50 5.4 OPEX Cost Structure and Drivers ______________________________________________________ 53 5.5 Cost of Energy _____________________________________________________________________ 53 5.6 Differences between Countries of Project Location_________________________________________ 54 5.7 Conclusions _______________________________________________________________________ 54 6. Project Risks and related Project Costs 55 6.1 Introduction _______________________________________________________________________ 55 6.2 Effects of Project Risk Assessment on Economics _________________________________________ 55 6.3 Key Technical Project Risks __________________________________________________________ 57 6.4 Impact of Key Variables on Total Cost Structure___________________________________________ 62 6.5 Conclusions _______________________________________________________________________ 66 7. Financing of Offshore Renewable Energy Projects 67 7.1 Financing Options __________________________________________________________________ 67 7.2 Balance Sheet Finance ______________________________________________________________ 67 7.3 Conclusions _______________________________________________________________________ 70 268370/RGE/RGF/6/D 11 February 2011 Accelerating the Deployment of Offshore Renewable Energy Technologies 8. Technical Barriers and Mitigation Measures 72 8.1 Barriers Common to all Offshore Renewable Technologies __________________________________ 72 8.2 Barriers Specific to Offshore Wind Technologies __________________________________________ 74 8.3 Barriers Common to all Offshore Renewable Technologies __________________________________ 74 8.4 Barriers Specific to Offshore Wind Technologies __________________________________________ 76 8.5 Barriers Specific to Wave and Tidal Technologies _________________________________________ 76 8.6 Mitigation and Removal of Technology Barriers ___________________________________________ 78 8.7 Electrical Connection, Transmission and Grid Integration Barriers _____________________________ 83 8.8 Mitigation and Removal of Grid Connection Barriers________________________________________ 89 8.9 Conclusions _______________________________________________________________________ 92 9. Non Technical Barriers and Mitigation Measures 94 9.1 Introduction _______________________________________________________________________ 94 9.2 Environmental Barriers_______________________________________________________________ 94 9.3 Mitigation and Removal of Environmental Barriers ________________________________________ 103 9.4 Health and Safety Barriers___________________________________________________________ 106 9.5 Mitigation and Removal of Health and Safety Barriers _____________________________________ 107 9.6 Regulatory and Permitting Barriers ____________________________________________________ 110 9.7 Mitigation and Removal of Regulatory and Permitting Barriers _______________________________ 118 9.8 Competing Use Barriers_____________________________________________________________ 123 9.9 Mitigation and Removal of Competing Use Barriers _______________________________________ 125 9.10 Skills Availability Barriers ____________________________________________________________ 125 9.11 Mitigation and Removal of Skills Availability Barriers ______________________________________ 126 9.12 Supply Chain and Infrastructure Barriers________________________________________________ 128 9.13 Mitigation and Removal of Supply Chain and Infrastructure Barriers __________________________ 131 9.14 Access to Capital and Financial Support Mechanism Barriers _______________________________ 132 9.15 Mitigation and Removal of Financial Barriers ____________________________________________ 134 9.16 Conclusions ______________________________________________________________________ 142 10. Guidelines for Project Development 144 10.1 Stage A – Opportunity Analysis _______________________________________________________ 144 10.2 Stage B – Project Materialisation______________________________________________________ 147 10.3 Stage C – Reliability and Sustainability _________________________________________________ 150 10.4 Conclusions ______________________________________________________________________ 150 11. Findings, Recommendations and Model Policy Framework 151 11.1 Findings _________________________________________________________________________ 151 11.2 Project Development Recommendations________________________________________________ 153 11.3 Model Policy Framework ____________________________________________________________ 153 Appendices 159 Appendix A. References_______________________________________________________________________ 160 Appendix B. List of Acronyms___________________________________________________________________ 171 Appendix C. Assumptions underlying the sensitivity analysis __________________________________________ 173 Appendix D. Exchange Rates___________________________________________________________________ 174 268370/RGE/RGF/6/D 11 February 2011 Accelerating the Deployment of Offshore Renewable Energy Technologies