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Utility Week 3rd March 2017

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14 | 3rd - 9th March 2017 | UtILItY WEEK Policy & Regulation Analysis C entral London generally feels pretty divorced from the elements. But that wasn't the case last Thursday when Storm Doris lashed the UK. The storm, which whipped up huge waves around the UK coast, provided a fitting back- drop for Renewable UK's annual marine and tidal conference at the Queen Elisabeth II centre in Westminster. Things should be looking rosy for marine energy. The recent Hendry Review gave a big tick to plans to build a pioneering tidal lagoon in Cardiff Bay. The scheme is just one of a host being developed from the Orkney Islands to Cornwall, a new report launched at the conference by Renewable UK showed. And yet the fledgling sector is weighed down by uncertainty. The main cause of this is the future of the contracts for difference (CfD) regime. Last November, the government published a proposed new framework for renewable pro- jects, which have until now been subsidised via Renewable Obligation Certificates (Rocs). The conference heard eloquent testi- mony on how successful the Roc regime had proved in attracting marine energy investors from across the globe to the UK. GWave board member Robert Bruce had flown in from the US to explain how his com- pany is deploying three huge devices – each the size of a 747 Jumbo jet and the weight of a nuclear submarine – off the Cornish coast to generate tidal power. With its plentiful wave resources on the Atlantic coastline, the UK is a good place to test out tidal power technology, Bruce said. And the country's legacy of high qual- ity shipbuilding means it would be a good place to manufacture the massive devices, he added. But he said that the Roc subsidies had been key to his company's decision to choose the English Channel as a destination for its devices. The problem for GWave is that it the Roc regime runs out at the end of the month before it can get a machine in the water. "It's almost inevitable that the path to development of sophisticated technology proves lengthier than hoped. Though we hoped we could get the device in the water by 31 March, there's no way it can be done," Bruce said. As a result, GWave will have to seek sup- port from the new CfD framework, which pits relatively untested tidal and marine technol- ogies against cheaper and more established offshore wind projects. The next auction contains £290 million-worth of support for emerging renewable technology projects. "It's important to find ways of channel- ling some support to these facilities," he said. This is just one example of what Claire Gibson, managing director of Cornwall's Wave Hub offshore renewable test facil- ity, described as the "cloud of uncertainty that has been allowed to descend" over the marine industry due to the CfD regime. Government support has an "important bearing" on the sector's continuing ability to raise capital, she said. Conservative MP for the Cornish constitu- ency of Camborne George Eustice said sup- port from the Roc regime had been a "game changer" for the county's marine sector, attracting the likes of GWave to set up pilot projects in Cornwall. "You always need to maintain support to deploy in the early commercial pioneering phase," he said, adding that he is lobbying ministerial colleagues to ensure the new CfD system continues to provide incentives for pioneering wave power technologies. However, the chair of the parliamentary all-party group on marine and tidal energy, Richard Graham, cautioned against the wind and tidal sector thrusting out a "permanent begging bowl" at a time when the govern- ment faced "the biggest mountain of debt in peacetime". "The renewable energy sector was in dan- ger of positioning itself as a sector of subsidy junkies, which was not a good place to be," he said, adding that some wave and tidal companies will be capable of competing with more established technologies when the CfD auctions take place. One of these is Atlantis Resources, whose project development director Cameron Smith told delegates he believes his company's MeyGen Orkney tidal stream energy project could compete in a CfD auction. Graham urged the marine and tidal sector to take advantage of the government's indus- trial strategy, launched in late January. Marine power ticked "nine-and-a-half " of the strategy's ten boxes, he said. The one partial fly in the ointment remained afford- ability, which he said would be the govern- ment's focus. But former energy and climate change select committee member and Conservative MP for Well, James Heappey, warned that the Department for Business, Energy and Industrial Strategy will be inundated with strong pitches for support from the industrial strategy. "You need to make the case as compelling as you can that you have an advantage over the rest of the world and why you should have a good slice of those green technology funds," he said The marine energy sector, by its nature, tends to be concentrated in peripheral loca- tions that are a long way from the corridors of power, such as Cornwall and Orkney. They will be hoping that they can get their mes- sage across. And not just on the days when the coast isn't battered by mighty waves. Will CfDs sink marine power? The Renewables Obligation regime offered guaranteed revenue to companies developing ambitious marine renewables, but will they sink or swim in CfD auctions? David Blackman reports. Key points The UK is a particularly promising location to deploy marine renewables. The Roc regime was key in the decision of global developers to come to the UK. The new CfD regime pits marine energy against established offshore wind. The government warns against renewable sectors holding out a "permanent begging bowl". The industrial strategy makes develop- ment funds available, but marine develop- ers will have to compete for a slice.

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