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BWEA Press Release

Tuesday 18th May 2004

Time for Government Action to kick-start the UK's Wave and Tidal Industry

Launch of 'Into the Blue: Financing the Future of the Emerging Wave and Tidal Power Sector'

The British Wind Energy Association (BWEA), the UK's largest renewable trade association, today released new research recommending urgent Government action to kick-start the UK's wave and tidal sector to ensure the country doesn't miss out on becoming world leaders.

The study, 'Into the Blue: Financing the Future of the Emerging Wave and Tidal Power Sector',(1) has been undertaken by Climate Change Capital, a specialist merchant banking firm focusing on climate change and energy security, and examines the level and type of financial support that the sector needs to move it forward from its current research and demonstration phase.

Over forty five companies, organisations and individuals from the city, the utility sector, the wave and tidal industry and from within Government were interviewed over a two month period. The report recommends a series of actions that have been presented to Government over the past few weeks by the BWEA.

Key conclusions are:

• The UK has a fantastic opportunity to become a world leader in the development and deployment of wave and tidal power. Most of the companies involved in the sector, including those not currently based in the UK, see the UK as the place to develop their businesses
• Government financial support should focus on rewarding success and offer the tax payer best value for money
• A £75 million Marine Performance Fund is proposed for the first 50 MW of wave and tidal projects and developers would obtain premium payments for a suggested five years following production of electricity (2)
• Given the right support framework, private capital will continue to be attracted to the sector removing the need for the Government to 'pick winners' through allocation of capital grants to companies in advance of deployment
• Government support in the form of capital grants for grid connection, decommissioning and consenting work should also be made available at a potential cost of some £40 million
• Continuation of capital grants at the research and development stage is also needed to bring through the next generation of technologies

The Government is close to finalising its 2004 spending review plans and the total amount proposed by the study for allocation to wave and tidal amounts to some £130 million.

Marcus Rand, BWEA CEO, said:

"While wind is key to delivering most of the 10% renewable target we need the emerging renewables, like wave and tidal, to begin to play a major role as soon as possible. The Marine Performance Fund is a smart and innovative idea as it rewards the winners but doesn't ask Government to pick them in advance.

"The tax payer will be rewarding successful projects and catalysing the private sector to invest in the industry at this critical stage. If we get this right we will be taking the first steps in creating a world beating industry."

Ian Temperton of Climate Change Capital said:

"Private capital will continue to be attracted to the sector, if the right policy framework and level of government support is put in place. The proposals derived from this study create the opportunity to combine the entrepreneurship already evident in the industry with the risk capital it needs to fund its next stage of development."

Simon Roberts, Advisor to the project and Chair of the Government's Renewable Advisory Board's Finance Working Group said:

"This study has really got to grips with the issues for supporting these new technologies as they take the next vital steps towards commercialisation. The proposals work with the grain of the market and represent a genuine breakthrough in thinking about how Government and renewable energy entrepreneurs can work together to build a low carbon economy for the UK."

The 'Into the Blue' proposal is merely the first, albeit vital, step in the emergence of the UK marine renewables industry as a significant player in the UK power portfolio. The study therefore recommends that the Government state that future transitional support will also be necessary for a successful industry.

Notes:

• The full report can be downloaded here.
• The study recommends that the first 50 MW of wave and tidal projects will receive extra financial support of £100 per MWh (10p/kWh) on top of the market value of a renewable obligation certificate (ROC).
• BWEA began championing marine renewables at the beginning of 2004. Some 70 companies from BWEA's 300-plus membership are part of the BWEA Marine Group.
• More information on the UK's vast wave and tidal resource and the various technologies being developed to harness it can be found on our marine pages
• The research team comprised Marcus Rand, Michael Hay and Alan Moore of BWEA, Tony White, Tracy McDonald and Ian Temperton of Climate Change Capital, Simon Roberts of the Centre for Sustainable Energy in Bristol and Robert Gross from Imperial College.
• Climate Change Capital (CCC), established in London in 2003, is a specialist merchant banking firm providing financial services and products to companies and financial institutions whose activities, value or investments are affected by policy and market responses to climate change and energy security concerns, particularly in the areas of emissions trading, renewable energy and clean energy technology. CCC's management and core team personnel are experienced financial, legal, policy, risk and energy professionals. For more information on CCC, see www.climatechangecapital.com.