Updated: Marine energy needs new wave of subsidy

Britain's marine energy policy is in danger of repeating the mistakes that allowed Germany, Denmark and China to outstrip the UK in the race to develop a domestic wind energy sector, according to a major new report from the British Wind Energy Association (BWEA).

The trade group, which also represents the UK's emerging wave and tidal energy sector, released its annual State of the Industry report this week warning that while the UK is home to many of the world's leading marine energy firms, significant increases in government support are required to ensure the development of a world-class sector capable of exporting wave and tidal energy generators.

The report concluded that "based on the experience of the solar and wind industries, the level of UK support for marine energy is not yet of the magnitude required to develop a world-class industry".

It recommended that the level of support available to marine energy projects through the Renewables Obligation subsidy mechanism should be more than doubled from two Renewable Obligation Certificates (ROCs) for each megawatt of marine energy generated to five ROCs per megawatt.

It added that based on the current level of support, commercial-scale projects were "unlikely" to be rolled out until over 100MW of marine energy capacity had been installed. Currently, under 2MW of marine energy capacity has been installed and connected to the grid, although 57.5MW of commercial-scale marine energy projects are currently being developed in UK waters with 27MW having already obtained planning consent.

In contrast, the BWEA estimated that awarding five ROCs per MW would make marine energy projects viable once 10MW of cumulative installed capacity is in place.

Speaking to BusinessGreen.com, Duncan Ayling, head of offshore at the BWEA said that the call for financial support at the level of five ROCs per megawatt was entirely reasonable and should be considered by the government.

"It might look like a hefty level of support, but when you compare it with the level of incentives being considered for small wind turbines or PV solar panels as part of the feed in tariff then it is basically the same," he said. " It is also worth remembering that this is a market pull mechanism - it is not going to be there for ever and can be scaled back as the industry develops and costs come down."

The report warned that failure to increase the subsidy would put many larger projects at risk and would mean "that the UK would not obtain the social and economic benefits generated by the development of a successful marine industry" .

Industry experts agreed that the UK had potential to generate up to 2GW of energy using wave and tidal energy, adding that British firms could still secure a 20 per cent share in the growing global market for marine energy systems.

In addition, the report said that despite the recent launch of a new £22m government-backed "proving fund" to help finance the development of pilot projects, the industry still believes that "there is a funding gap between the capital grants available for small prototype development and the revenue support for long-term operation of projects".

It also warned that projects in England and Wales could be sidelined and that most of the early UK marine energy projects will be located in Scotland as a result of the higher level of financial support available from the Scottish government.

A spokesman for the Department of Energy and Climate Change said that the government was fully committed to expanding the UK's marine energy sector and had committed an additional £60m in funding as part of the last budget to support wave and tidal energy projects.

He also said that the government was focusing on helping British marine energy firms move into the deployment phase through the new proving fund and the development of the wave hub research and development facility in the south west.