1. 1/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester HMRC Marine Energy Economics Workshop 28 th Jan 2011 Tim Stallard School of Mechanical Aerospace and Civil Engineering, University of Manchester

2. 2/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Background 1996 – 2000: Civil & Structural Engineering MEng 2000 – 2004: Fluid Dynamics DPhil – Extreme wave loading 2004 – 2006: Supergen Marine “Lifetime Economics of Marine Energy” 2006 – Present: University of Manchester - Cost studies related to “Manchester Bobber” - EQUIMAR: Equitable Appraisal of Marine Energy Systems “Economic Assessment of Large-Scale Marine Energy Deployment” 2D

3. 3/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Equimar Review of Procedures for Economic Evaluation (EWTEC09) Principal costs of support structures for: Mooring systems Bed mounted support structures for wave devices Bed mounted structures for tidal stream devices Influence of accessibility on scale of deployment Influence of energy extraction limits on project economics → “Protocols” for project assessment

4. 4/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Wave Site Access Average number of occurrences, per month, of 24hr and 48hr calm conditions ( H s < 2 m) 1020304050 Wave power density (very approx.) kW/m

5. 5/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Tidal Stream Deployment Installation whilst U c < 1.33 m/s 28 devices (~ 14 MW) in six months 100 MW capacity if install 7 devices per 24 hr window Installation whilst U c < 1.13 m/s 15 devices (~7.5 MW) in six months 100 MW capacity if install 14 devices per 24 hr window Number of installations per Month

6. 6/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Cost Reduction? Expected CAPEX for increased deployment scale TOTAL Reduction: A: -20.6% B: -9.7% C: -18.0% D: -10.5% -50% -30% +5% Source: Equimar workshop & Survey, 2008/9

7. 7/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Performance limits Power output per device governs: –Revenue, Number of devices deployed.

8. 8/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Performance Limits Power output per device governs: –Revenue, Number of devices deployed. Device: Optimal output at peak period Resource: HSE (2001), 8 sites Revenue per unit: 3.5 p/kWh Discount: 8% OPEX: 8% CAPEX assumed Cable: site to shore transmission estimates based on distance & rated power (Boehme et al., 2006)

9. 9/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Project Assessment “Protocol” 1. Capital Expenditures 4. Risk Assessment 2. Operating Expenditures 3. Revenue 5. Project Assessment Conduct of an economic assessment should produce statements detailing: - Economic indicators against which the project is assessed - Major capital cost components - Major contributions to annual expenditure - Expected project revenue - Risk assessment and mitigation

10. 10/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester end

11. 11/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester Costs to-date…

12. 12/12 School of Mechanical Aerospace & Civil Engineering, University of Manchester ‘Protocol’ Develop framework for evaluating long-term economic viability of marine energy technologies. Summarise main drivers of cost of electricity from marine energy farms Develop methods for quantifying long-term cost-reduction of alternative generating technologies –Evaluate cost drivers for types of civil engineering infrastructure –Explore relationship between performance limitations and long- term revenue –Describe procedure to compare technologies in terms of potential cost reduction Evaluate influence of technology selection and deployment scale on economic viability