When harnessed effectively, oceans could prove to be one of the largest reserves of clean and sustainable energy. Ocean energy can be broadly classified into wave and tidal energy. Energy is harnessed through the movement of waves and tides, respectively. There are various methods of harnessing ocean energy; however, currently, wave and tidal are the most dominant methods. Tidal energy can be further segmented into tidal stream and tidal range energy. Tidal range energy is a relatively mature technology, which entails construction of tidal barrages. Both wave and tidal stream energy are relatively new concepts. These are in the nascent stages of technology development.
About 200 companies are either partially or fully involved in the development of the wave and tidal energy sector. Most of these are technology developers, with their own types of energy converter devices. There is no single dominant technology in the wave or tidal energy sector. Both wave and tidal energy are capable of reaping extensive benefits of economies of scale. Large-scale commercial deployment is imperative for wave and tidal stream power plants to generate electricity at cost-competitive rates. Currently, costs for such power plants are exorbitant. However, major cost reductions are imminent as the industry focus shifts from the prototype testing and project demonstration phase to large-scale array deployment phase. Benefits of economies of scale are likely to occur not only in the manufacture of energy converter devices, but also in power take-off systems and on-shore grid connection infrastructure. Cost sharing of fixed infrastructure by multiple turbines would contribute toward reduction of electricity generation tariffs from these power plants.
The tidal barrage power plant market is in the mature stage of development, with high plant operating experience in both France and South Korea. Currently, the largest tidal barrage power plant in the world is located in South Korea. The country plans to add nearly 3000 MW of tidal energy generating capacity by 2030 as part of its expansion strategy for generation of renewable energy. Scotland has emerged as the technology capital of the world for wave and tidal stream energy. The country is the most attractive market for project development due to the presence of a large number of companies coupled with strong governmental financial grant schemes. Europe is likely to lead in terms of capacity installations for wave and tidal stream power plants. However, Asia Pacific is anticipated to account for the highest overall growth in the tidal energy sector, with the construction of large tidal barrage plants in South Korea. Wave energy development in Asia Pacific is estimated to be concentrated in Australia. The wave and tidal energy sector in North America is still struggling as most demonstration projects are stuck in various stages due to inadequate financial grants and governmental sanctions. In Rest of World, countries such as Brazil, Ghana, South Africa, Grenada, and Guinea-Bissau are expected to add wave and tidal energy capacity during the forecast period.
Tidal barrage plants self-sustain through the sale of electricity. Both tidal stream and wave energy plants are still not capable of generating electricity at grid parity rates. Development of prototypes and demonstration of pilot scale projects are extremely cost intensive, rendering technology developers highly dependent on financial grants. Currently, the general trend in the industry indicates a retraction of grant and venture capital financing. The market would have to be dependent solely upon private equity or debt financing, for which commercial viability of projects is an absolute necessity. The sector would primarily focus on commercial deployment of these technologies and long-term power sales contracts with utilities during the forecast period. Large-scale patenting of established energy capture technologies is being observed by incumbent technology developers.
Large original equipment manufacturers (OEMs) are likely to enter the market by acquiring smaller technology developers or forming special purpose project companies. It is uncertain if the industry would face a wave of consolidation in the future. However, with the lack of project developers in general, small technology developers would feel an increased need to tie-up with large OEMs to accelerate the process of commercialization of their technologies. Technology developers could shift to technology licensing business as part of their business strategy. This would help them concentrate on making their technologies more robust. It would also enable technology developers to significantly lower working capital requirements and business risks.