1. filename.ppt1 The Pursuit of Economic Ocean Energy A Utility Perspective John Fitzgerald Technology Manager ESBI Ocean Energy

2. filename.ppt2 Contents Introduction to ESBI Ocean Energy Synopsis of 2010 presentation What’s New in 2011? Looking Forward Conclusions

3. filename.ppt3 Introduction to ESBI Ocean Energy

4. filename.ppt4 ESBI Ocean Energy Strategy Target by 2020 of 150 MW of Ocean Energy in Ireland ESBI aim to Consent, Own and Operate Power Stations Experience over 28 years in Ocean Energy developments Strong relationships with leading technology developers Identifying, exploring and seeking to consent sites in Ireland

5. filename.ppt5 Inform Developer Requirements Transparency and Confidence-building TECHNOLOGY PARTNERSHIPS Inform Project Requirements Develop Project Site Consenting, Grid Planning, Finance, O&M Plans, Logistics etc. Hardware spec and procurement, etc. System Requirements (Targets) Technology Development Verified System Specification Production ~ €100m Technology Development

6. filename.ppt6 Picture Area € 10 - 50k € 1.0 - 2.0m € 5.0 - 10.0m € 10.0 - 50.0m } } } € 100m ? Small farm complete. Technology ready for commercial revenue generating projects Full-scale experimental & commercial demonstration projects Part-scale sea-trials experimental projects & subsystem development Concept verification – tank scale tests & simulation, survivability, costing. Idea generation, small-scale tank verification, etc. Cumulative Spend Technology Readiness 2010 ESBI Technology Partnerships 2015 ESBI Pre-Commercial Projects

7. filename.ppt7 Synopsis of 2010 Presentation

8. filename.ppt8 Target Cost of Energy For Capacity Factors of 30% - 40%, to compete with Offshore Wind TARGET: CAPEX €1.6 - 2.2m/MW OPEX €80k -160k /MW /year

9. filename.ppt9 Projecting towards Commerciality (Summary of 2010 presentation) WestWave Project

10. filename.ppt10 2010 presentation conclusions: Technology developers need to be aware of cost targets and chase them as part of their technology requirements (e.g. €1m / MW quayside) 2010: Capital grant scheme required to support technology developers & investors through the current phase of experiment & demonstration. –Maximise benefit to Ireland by supporting location of activity here. 2015: Increase initial tariff to €300 / MWh to compete with 5 rocs. –Leverage support from investors and utilities to locate early projects with energy production in Ireland and to promote Irish supply chain. 2020: Use existing tariff of €220 / MWh to support the building of an economy of scale in Ireland. Beyond 2020: Expect long term cost of energy to become competitive with Offshore Wind, approaching €100/MWh as industry scales up.

11. filename.ppt11 What’s New in 2011?

12. filename.ppt12 WestWave Project To develop first wave energy farm in Ireland by 2015 ≥5 MW array of Wave Energy Converters Situated on West Coast of Ireland for 12 years operation Utility led pre-commercial project Develop the supply-chain to support the ocean energy sector

13. filename.ppt13 Support Pilot projects, new concepts Full scale demonstrators Small-scale arrays 10MW/20 devices Commercial Arrays of 100s MW 500MW installed Government Target SEAI Prototype fund Belmullet AMETS Test Site Ireland’s Ocean Energy Strategy 2009 20102011201220152020

14. filename.ppt14 Benefits to Ireland Deliver Phase 3 of Ocean Energy Strategy Leverage significant EU funding to match domestic funding Develop supply-chain enterprise in the sector Pave the way for commercial scale development Address key issues in developing wave energy projects in Ireland Give much needed confidence to all stakeholders in the sector

15. filename.ppt15 European Funding – NER 300 Application Timeline –ESBI Applied to DCENR on 9 th February –DCENR decision to submit to EC given on 9 th May –EC/EIB Due Diligence for 9 Months before decision Project must be operational by end 2015 Latest: –153 applications submitted across all categories. –10 applications submitted for Ocean (Wave, Tidal, OTEC). –8 have been forwarded to the EIB of which 3 are in Wave category. –Fund valued at €4.9 Billion

16. filename.ppt16 Project Partners

17. filename.ppt17 WestWave Project Phases Concept Development Construction Operations & maintenance 201120122013201420152016

18. filename.ppt18 2015: WestWave Finance Estimates Estimated initial capital investment breakdown (5-6MW): (Financial Close targeted for 2013)

19. filename.ppt19 MWh payments at risk to project developer: 2015: WestWave Finance Estimates NER300 Revenue years 2016 to 2020 REFIT 2016 to 2027 Total project funding breakdown, (NPV incl. OPEX) : 2009

20. filename.ppt20 Looking Forward

21. filename.ppt21 2020: Achieving Economies of Scale MWh payments at risk to project developer First circa 50MW large farm (possibly expansions of earlier consented sites) Using TRL 9 verified technology (type certified) – significant in-service data: –Credible reliability & availability projections for future project assumptions –Extended economic life and improved energy production assumptions. Amortisation of vessel hire and marine infrastructure costs over larger project. Some technology innovation around cost reduction. 2009

22. filename.ppt22 2030: Commercial Farms MWh payments at risk to project developer Long term electricity markets? Export infrastructure? Long term cost of carbon? Energy security premium? 50-100 MW large arrays Using TRL 9 verified technology already applied in large arrays – Proven technology. Dedicated infrastructure developed for target sites – Ports, Vessels, Grid,etc. Dedicated and competitive component and technical services supply chain. Significant Technology Innovation ? 2009 Recognise REFIT premium cannot perpetuate at current levels

23. filename.ppt23 Summary

24. filename.ppt24 Cost of Ocean Energy per MW Installed Pre- Commercial Arrays Single Device Demo Small Commercial Arrays Large Commercial Arrays Tariff Support Grant Support & Tariff Support Significant Technology Grant Support Reducing Tariff Support as costs approach off-shore wind €m/MW

25. filename.ppt25 Staying Ahead of the Curve Technology Innovation

26. filename.ppt26 Summary: The WestWave project has showed that previous targets for 2015 pre-commercial projects in Ireland are still on track. WestWave is a vital step in commercialising technology, developing an Irish supply chain and opening the Irish wave energy market for further investment. Grant support, REFIT and NER300 are essential components of delivering the pre-commercial WestWave project as it is currently envisaged. Up to 60% of the initial WestWave investment will be private finance based on MWh attracting REFIT and NER300 tariffs. REFIT payments will be spread over the period 2016 to 2027 and conditional on MWh produced. If energy production targets are met, total Irish state contributions to the project could approach 60% of total project costs. Technology developers continue to innovate and target commercial costs.