1. 1 © 2009 Electric Power Research Institute, Inc. All rights reserved. Ocean Wave Power/Energy Economics Roger Bedard/EPRI September 17, 2009 A Wave Power Plant I s it a Money Machine? What will it Cost?

2. 2 © 2009 Electric Power Research Institute, Inc. All rights reserved. What will a wave power plant cost? Depends on many factors including –State of development of the device –Level of cost estimation –How much “learning by doing” has taken –How many you buy at one time Please have patience, I will give you a number answer soon

3. 3 © 2009 Electric Power Research Institute, Inc. All rights reserved. There is a Tendency to Under Estimate during the Early Stages of Development: Mountain of Death

4. 4 © 2009 Electric Power Research Institute, Inc. All rights reserved. In addition to the cost estimate itself, there is a level of uncertainty Which of course is greater for earlier stages of development and degree of sophistication of the estimation process

5. 5 © 2009 Electric Power Research Institute, Inc. All rights reserved. “Learning by Doing” Wind 40,000 MW – Wave 90 MW Cum Production WindWave Low Best High $/kW Install 706 1,7402,540 3,440 c/kWh O&M 0.9 2.9 4.2 5.4 COE (cents/kWh) Real 2.7 5.4 9.1 11.4 Market Price - Learning Investment Cumulative Production Volume Price Progress Ratio Break-even Point

6. 6 © 2009 Electric Power Research Institute, Inc. All rights reserved. Example Commercial Wave Power Plant Rated Power 90 MW Annual Absorbed Energy 359,460 MWh Device Availability 95% Power Conversion Efficiency 88% Busbar Electrical Energy 300,420 MWh Avg Electrical Power 34.3 MW Installed Cost Transmission & Grid II/C $2,500,000 Subsea Cables $1,850,000 Mooring Spread $21,104,460 PCMs $112,312,800 Concrete Sections $44,064,000 Facilities $12,000,000 Installation $9,691,340 Const Mgmt $17,647,000 Total Plant Cost $214,791,720 Const Financing $16,940,702 Total Installed Cost $231,732,422 Annual O&M Cost Labor $2,322,425 Parts $4,295,752 Insurance $4,295,752 Total $10.913,929 10-Yr Refit Operation Parts $9758,321 Cons Mgmt and Com $13,776,280 Total $23,534,601 UG COE 11 (Nom) 9.1 (Real) cents/kWh Preliminary Design,Reedsport Oregon – Pelamis WEC – see EPRI WP-006-OR at www.epri.com@oceanenergy/ Performance O&M Costs

7. 7 © 2009 Electric Power Research Institute, Inc. All rights reserved. Actual Wind and Projected Wave Power Plant Learning Curves Actual Wind COE History Projected Wave Upper and Lower COE Wind Plant 2003 Cum Prod Vol of 40,000 MW Wind Plant 1997 Cum Prod Vol of 10,000 MW Wind Plant 1982 Cum Prod Vol of 1000 MW

8. 8 © 2009 Electric Power Research Institute, Inc. All rights reserved. Comparison with Other Alternatives Capacity Factor (%) Capital Cost [1] ($/MW) [1] COE [2] (cents/ kWh) [2] CO2 (lbs per MWh) Wave (Oregon – 1 st 100 MW 10,000 – 10,100 MW plant 38 3 - 5 0.8 – 1.3 15 - 25 4.2 – 6 None Wind (class 3- 6)30 - 421.2 – 1.64.7 - 6.5None Solar Thermal Trough333.318None Coal PC USC)801.34.21,760 NGCC @ $5/MM BTU800.54.8860 NGCC @ $7/MM BTU800.56.4860 IGCC with CO2 Capture801.96.1344 All costs in 2005 Constant US$ with 2005 without financial Incentives GE 7 F machine or equivalent 600 MW PC Plant, Pittsburgh #8 Coal IGCC with 80% removal

9. 9 © 2009 Electric Power Research Institute, Inc. All rights reserved. Summary – What you have been waiting for Cost of electricity depends on ownership model as well as many other assumptions Danger – Beware of Cost Estimates and Cost of Electricity Estimates –Must know all the assumptions behind any estimate –If not provided, estimate is meaningless Estimating costs is not for the faint of heart –It is complicated –It is detailed –It is hard You can get just about any answer depending on the assumptions that you choose When using cost estimates, proceed with caution Installed Cost –~$8-10/MW –2009$ –Small order (1 to 5 MW) –No production base Installed Cost –~$3-5M/MW –2009$ –1 st 100 MW plant) Installed cost will be reduced by 18% for every doubling of production volume