* Should focus on cutting costs, ambitious targets
* Marine industry, investors need more certainty on policy
By Nina Chestney
LONDON, Feb 19 Britain must not lose its
lead in the development of marine energy like it did with wind
power, and should focus on reducing costs and setting ambitious
deployment targets beyond 2020, a report by a parliamentary
committee said on Sunday.
Seven out of the eight large-scale prototype wave and tidal
devices installed worldwide are in the UK but are not expected
to make a large contribution to its energy mix before 2020.
"Britannia really could rule the waves when it comes to
marine renewable energy," said Tim Yeo, chairman of the energy
and climate change committee which produced the report.
"In the eighties the UK squandered the lead it had in wind
power development and now Denmark has a large share of the
worldwide market in turbine manufacturing.
"It should be a priority for the government to ensure that
the UK remains at the cutting edge of developments in this
technology and does not allow our lead to slip," he added.
Marine renewables are seen providing 20 percent of current
UK electricity demand and the government is targeting 200 to 300
megawatts (MW) of marine capacity by 2020, 1-2 gigawatts (GW)
less than its forecasts in 2010.
The government revised its figures based on what it said was
realistically obtainable by industry but RenewableUK, the voice
of the marine and wind industry, said 300 MW is achievable by
2017 and utility SSE alone expects to commission 200 MW
of projects around 2020.
Being overly cautious could negatively impact market
confidence about the long-term future of the industry in the UK
and allow other countries to steal the lead, the report warned.
It said the government should not rule out setting an
ambitious deployment target for marine renewables beyond 2020 if
cost reductions until 2020 remain on track.
Several firms are exploring marine energy's potential.
Alstom and SSE Renewables formed a joint venture to
develop a wave energy installation in Scotland and other
demonstration projects are gaining momentum.
But marine technologies are still in the early stages and
are a costly way to make electricity compared to other sources.
Baseline costs are likely to be 38 to 48 pence per kilowatt
hour (kWh) for the first wave farms and 29-33 pence/kWh for the
first tidal farms, compared to 9-10.5 pence/KWh, according to
the Carbon Trust.
The committee said the government should adopt a formal cost
of energy target of 14 pence/kWh by 2020 to give a clear signal
of its expectations to industry.
In terms of finance for projects, the costs and risks to
private investors of the technology are currently too big for
them to shoulder alone.
As project costs are set to rise to tens of millions of
pounds from just millions in the next stages of development, the
UK and Scottish governments' combined 38 million pound funding
will not be not enough, though it may be possible to get extra
cash from a reserve fund of EU carbon permits (NER300) and from
the UK's Green Investment Bank, the report said.
To help bring down costs, the UK plans to raise revenue
support to wave and tidal deployed before 2017 but more clarity
is needed as soon as possible on support levels after 2017.
"We welcome the (...) commitment to provide absolute
certainty on this issue by 2013-14. We will monitor whether (the
government) keeps to this timetable and urge the department to
deliver its decision in 2013 rather than 2014," the report said.
As the scale of deployment increases, inadequate grid
connection access, slow planning and consent processes, impacts
on wildlife and public opposition all have the potential to
derail marine development.
UK marine technology firm Ocean Power Technologies said it
welcomed the report, which makes a "timely and strong case" for
further action if the UK is to get the industry to commercial
scale and retain its leadership.