Sia Partners Energy Insight : Marine development

I NSIGHT E NERGY & E NVIRONMENT

December 2014

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INSIGHT ENERGY & ENVIRONMENT

I NSIGHT E NERGY & E NVIRONMENT BELGIUM: LEFT OUT OF MARINE ENERGY DEVELOPMENT IN EUROPE? More than 70% of our planet’s surface is in constant movement. The water that covers it is subject to numerous forces: wind blow, moon attraction, solar radiance, etc. This significant ever-moving mass represents a promising renewable energy source. On top of its large potential, marine energy also has a valuable characteristic: some of its technologies exhibit a very low or at least easily predictable intermittency.

The idea of harvesting this resource is not new: Jules Verne was mentioning it as from 1880.

However, in comparison with the development of wind and solar energy in the past 15 years, marine energy is unquestionably several steps back.

As the European Union announced an action plan to develop energy from the sea, here is an insight about these technologies and the situation for Belgium and its neighbors.

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I NSIGHT E NERGY & E NVIRONMENT OVERVIEW OF MARINE TECHNOLOGIES Water from the oceans and seas is filled with potential energy sources, from its movement, its chemical content, and its temperature differences. A broad portfolio of technologies has been developed to harvest these various energies. They can be grouped into five main families: - Wave Energy: using wave movements; -

Tidal range Energy: based on the water level differences between tides;

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Current Energy: related to tidal and ocean currents;

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Thermal Energy: depending on differences in water temperature;

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Osmotic Energy: relying on difference in water salinity.

The diversity of the underlying energy sources implies that the physical principles behind marine technologies also vary (Table ).

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INSIGHT ENERGY & ENVIRONMENT

I NSIGHT E NERGY & E NVIRONMENT Table - Description of the 5 main families of marine technologies Description and Main Physical Principles

Wave Energy

• The system uses the natural movements of the oceans to generate power.

• The general principle is to use the movement of the waves to compress a fluid, which is then used to generate power • Three main technologies are considered: 1. Oscillating Water Column 2. Oscillating Body 3. Overtopping • Most of those technologies are modular • All of them could be shore-based or floating • Multiple devices can be connected to a single cable laying on the seabed

Tidal Range Energy

• The system is based on the same principle as the regular dam • The physical principle is to contain rising water with large tidal range. The system adapts itself in function of the sea level. When the tide is falling, the water passes through water turbines and generates energy • The delivered power is very predictable hour by hour in function of the sea levels

Current Energy

• The technology aims to harvest energy of the ocean and tidal currents to generate power • The physical principle is the same as for wind installation. The difference in pressure within the streams generates a resulting thermodynamic power on the blades of a rotor • The axis can be horizontal or vertical • The diameter and the speed (> 2m/s) of the streams directly affect the output capacity

Thermal Energy

• The system is known as Ocean Thermal Energy Conversion (OTEC) • The thermodynamic principle is close to the conventional heat pumps. It uses the temperature difference between the warmer, top layer of the ocean and the colder seabed • Minimum water temperature difference: 20°C • The technology can be combined with desalination or HVAC (Heating, Ventilating and Air Conditioning)

Osmotic Energy

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• The system uses the difference in salt density between fresh water and salt water • Two different processes exist: 1. “Pressure-Retarded Osmosis” (PRO): fresh water migrates into a salt water container and increases the pressure, in order to drive a water turbine 2. “Reverse Electro-Dialysis” (RED): fresh and salt water flow between ion exchange membranes and thereby generate a voltage across the membranes

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I NSIGHT E NERGY & E NVIRONMENT Furthermore, the level of maturity strongly differs from one technology to the other. As shown in Table , some technologies have been successfully exploited since long – tidal range energy technologies have been deployed since 1960 – while others remain at the stage of pilot projects.

A third source of difference between technologies lies in the repartition of world resources. The specific water properties are indeed unevenly distributed around the globe (Table ) and this leads to large discrepancies between countries – even neighbors – as it will be developed later in this study.

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INSIGHT ENERGY & ENVIRONMENT

I NSIGHT E NERGY & E NVIRONMENT World Resource Repartition

Maturity of the Projects

Illustration

Global offshore annual wave power (kW/m)

• Numerous technologies are at a proof of concept step, with some pilots operating • 7 MW installed for testing: in UK, Portugal and Brazil • It is hard to assess the deployment schedule and the technology cost because of the diversity of the technologies and their early development stage

Pelamis – 2.3 MW Aguçadoura (2008)

World map of tidal amplitude (cm)

• This technology is mature and used since 1960 • 518 MW installed: this represents 97% of today’s total marine energy in France and South Korea • There are only a few projects because it is very locationspecific and has a high impact on the environment

EDF – 240 MW La Rance (1960)

Wave Energy

Tidal Range Energy

Surface ocean currents, warm (red) and cold (blue) systems

• 50+ pilot projects around the world • 5 MW installed for testing: UK and France mainly • 300 MW project for Channel Islands (UK) in 2020 • Testing is successful and the resources are identified.

Market deployment is thus close

EDF – 5 MW Paimpol (2011)

Average ocean temperature differences (°C)

• There are only a few pilot projects around the world with different technologies: open/close cycle • A 16 MW project is under development in Martinique for a planned commissioning in 2018 • Only applies to tropical areas and no full scale projects so far

DCNS – 16 MW Martinique (2018)

• Only two projects, with different technologies • 10 kW installed • High potential for industries that reject clear water in oceans • Resources are evenly distributed but the is still at an early 6 technology stage of R&D

Statkraft – 0,01 MW Norway (2009)

Current Energy

Thermal Energy

Osmotic Energy 30

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32

34

36

World Salinity (ppt)

38

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Table - World resource repartition and maturity of the ongoing projects

I NSIGHT E NERGY & E NVIRONMENT 44.000

30.000

ar /ye h TW

20,000 TWh World Electricity Consumption in 2013

Wave

500

800

Tidal Range

Current

1.650 Thermal

Osmotic

SOURCE : CGEDD and CGEIET [1] and Sia Partners analysis Figure - Global estimated resources by marine energy source (in TWh per year)

A WORLD POTENTIAL ABLE TO COVER DEMAND Before comparing the potential of European countries, it is interesting to form a conception of how large this potential is at the world level. Estimating the existing resources is a complex task, currently undertaken by the scientific community. The available figures are highly dependent on the ongoing pilot projects which are sometimes at an early stage, as described previously.

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INSIGHT ENERGY & ENVIRONMENT

I NSIGHT E NERGY & E NVIRONMENT The figures gathered by the French authorities confirm the incredible potential of marine energy: fully exploited, it could amount to 30,000 TWh/year for wave energy technologies and even 44,000 TWh/year for technologies using thermal energy (Figure ). In other words, these two technologies could individually meet – and even exceed – the world’s electricity consumption in 2013 (around 20,000 TWh/year). Taken altogether, marine technologies have the potential to cover four times electricity demand.

However, generating enough electricity on average is not always sufficient to guarantee security of supply. In particular, intermittency can require complex monitoring in order to ensure grid stability.

The most advanced marine energies – tidal range and current energies – are inherently intermittent.

However, unlike wind and solar energies, the characteristics of their intermittency have been known for centuries, allowing for a high predictability of those energy sources.

Thermal and osmotic energy can even generate electricity continuously and thus be used as base load, similarly to conventional thermal power plants (Figure ).

A PROMISING EUROPEAN MARKET Western Europe owns significant marine energy resources, especially for wave and current energy, says the European Commission [2].

The highest potentials are located on the Atlantic front (Figure ), and – to a lower extent – in the Mediterranean and Baltic seas. Looking at Belgium and its neighbors in more details, significant differences arise in terms of potential and projects.

France: a target of 800 MW by 2020 France, with its advantageous resources, has set national objectives. The target of the ADEME (Agence de l’Environnement et de la Maîtrise de l’Energie, a French public institution) is to have 800 MW of marine energy (0.6% of installed capacity) installed by 2020.

To reach this goal, the country relies on the development of current energy. Two high potential sites have been identified off the coasts of Normandy (Raz Blanchard, 3,000 MW) and Brittany (Ouessant,

Figure - Intermittency vs. Distance from shore Distance from shore More than 100 km

A few km

Thermal Energy

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Onshore

Current Energy

-8Osmotic Energy Continuous

Tidal Range Energy Easily predictable Intermittency

Wave Energy

Hardly predictable Intermittency

Intermittency

I NSIGHT E NERGY & E NVIRONMENT 300-500 MW) [1]. After a successful current energy pilot project of EDF and DCNS started in 2009 close to the island of BrĂŠhat (0.5 MW installed), the ADEME has launched a call for expression of interests for these two identified sites, where the objective is to install tests turbines on both sites, prior to a full installation [6].

France is also one of the few European countries to benefit from thermal energy resources, because of its overseas territories. Following a pilot project in La Reunion started in 2012, the NEMO project will be financed by the European Commission and includes the installation of 16 MW of thermal energy of the coasts of Martinique for 2018.

Belgium: a maximum potential of 100 MW Belgium has very limited resources, compared to France and the United Kingdom [5]. Tidal currents coming from the Atlantic Ocean loose speed once they have crossed the Dover Strait. Similarly, wave energy is reduced in the North Sea. Hence, no specific targets have been set and only a few projects are ongoing.

Launched in 2013, the Flansea pilot, off the coast of Ostend, is the first Belgian wave converter especially conceived for low amplitude waves, with energy density between 5 and 10 kW/m [7].

Figure - Wave (left, kW/m) and Current (right, kW/m²) energy potentials in North-West Europe

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70 50 30 10 0 Wave Power kW/m

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INSIGHT ENERGY & ENVIRONMENT

15 5 0.5 Current Power kW/m2

SOURCES : Aqua-RET [4], BOREAS [5] and Sia Partners analysis

I NSIGHT E NERGY & E NVIRONMENT In parallel, as the last offshore wind concession – “Mermaid” – has been granted, the winning consortium will add 20 MW of wave energy to the 450 MW of wind turbines, using floating buoys [8].

This project should come to completion by the end of 2017.

The approach followed by the consortium – namely, bundling the exploitation of wind and wave resources – is a real opportunity for the development of marine technologies. It indeed allows for economies of scope on multiple aspects [5] [7]. First, some fixed costs can be spread on a larger basis: the cost of winning the concession and building the necessary grid connection for instance. Second, operational and maintenance costs can be lowered. Lastly, the available area can be better exploited.

Wind turbines indeed need to be sufficiently spaced from one another. Leveraging the area in between with the development of another technology is an excellent way not to waste available resources.

Sia Partners estimates that combining wave energy with all the ongoing offshore wind projects would result in an installed capacity of 100 MW for Belgium. This represents 0.5% of the total installed capacity.

This modest potential nonetheless hides a greater opportunity for Belgium. As stated earlier, the country does not benefit from the same natural endowment as other European countries but faces instead radically different conditions. Developing a technology suitable for these conditions might turn to be an interesting niche positioning for the local industry.

The Netherlands: the promise of tidal range and osmotic energies In The Netherlands, the wave and current resources are also low. However, there are possibilities for tidal range technologies, and a 60-MW project is being considered on the Brouwersdam in order to take advantage of the local potential.

Moreover, the potential for osmotic power is substantial due to the geographic configuration of the coastline. The Netherlands are thus positioning themselves as leaders in this technology with the

May 2014

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I NSIGHT E NERGY & E NVIRONMENT Reverse Electro-Dialysis (RED) project for Afsluitdijk that will generate 50 kW by mixing fresh water from the lake Ijsselmeer with the Wadden Sea. The ultimate objective is to reach a capacity of 200 MW on this high potential site.

The completion of both projects would lead to a marine energy installed capacity accounting for 1% of the total generation capacity in The Netherlands.

A EUROPEAN INVOLVEMENT FOR A COMMON APPROACH Despite significant progress of certain technologies (wave, current), marine energies remain nonmature power production sources, with the noticeable exception of tidal range. The emergence of new markets for these technologies, which can be compared to the development of wind energy in the 1980’s, requires the set-up of a new industrial supply chain. By taking advantage of economies of scope, it could benefit from the ongoing progress of the offshore wind industry.

A clear and stable policy is nonetheless necessary to foster investment, enhance the development and reach the critical size enabling a full scale commercial deployment.

In order to remove the various barriers, the European commission published an action plan for marine energies in January 2014 [2]. The first participative phase, the Ocean Energy Forum, involves the various stakeholders on the questions of resources and technologies, financing ways, and environmental impacts of marine energy. The goal is to prepare the ground for a European Industrial Initiative and to identify guidelines for future legislation in order to unlock Europe’s potential.

Ocean Energy Europe – the trade association for ocean renewables in Europe – announced a goal of 188 GW of installed capacity in 2050 [3]. According to the association, such a generating fleet should be able to deliver enough power to cover 15% of electricity demand.

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INSIGHT ENERGY & ENVIRONMENT

I NSIGHT E NERGY & E NVIRONMENT A KEY MOMENT FOR MARINE TECHNOLOGIES The costs of marine technologies remain rough estimates, and real potential resources still need to be further detailed but, yet, this study has shown the opportunities that marine energy represents.

While at the global level, it has the potential to cover four times electricity demand, the European association of the marine energy industry has set the target of producing 15% of Europe’s electricity demand by 2050 using this energy source.

Marine energy is not only interesting for its huge potential. It also exhibits less intermittency than other renewable energy sources such as wind and solar energies. Hence, some marine technologies can generate a base load production, comparable to conventional thermal power plants. Others are inherently intermittent but the source of their intermittency has been known for centuries, making them highly predictable.

May 2014

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I NSIGHT E NERGY & E NVIRONMENT Belgium, because of Sia Partners specializes in Business and Management Consulting in Energy and Utilities, disadvantageous geographical Financial Services, Telecom and Public Service industries. Covering all aspects of the business conditions, seems to have been value chain and support functions, we assist companies in transforming their business and left out of marine development improving performance of daily operations. We manage entire projects and offer specific in Europe. Marine energies functional and operational expertise, assistance in IT strategy and design, HR Consulting and Change Management Expertise. Our consultants have built up in depth expertise in processes indeed have here a modest and systems relevant to your industry through broad project based and operational experience. potential of 100 MW in the coming years. Combined with offshore wind parks, they can nonetheless play their part in the energy mix. Moreover, as these technologies will have to be adapted to specific conditions, there is room for Author building a national expertise that could be leveraged internationally.

Camille Jaudeau Consultant

camille.jaudeau @sia-partners.com

Contact Jean Trzcinski Senior Manager jean.trzcinski @sia-partners.com Mob: +32 485 69 08 75

Sia Partners SAS Av. Henri Jasparlaan 128 1060 Brussels (BE) Tel: +32 2 213 8285

REFERENCES

Bd Montmartre 18 75009 Paris (FR) Tel: +33 1 42 77 76 17

[1] CGEDD and CGEIET (2013), Rapport de la mission d'étude sur les énergies marines renouvelables

[2] European Commission (2014), Blue Energy - Action needed to deliver on the potential of ocean energy in European seas and oceans by 2020 and beyond, COM/2014/08 final

[3] European Ocean Energy Association (2010), Oceans of energy: European Ocean Energy Roadmap 2010-2050

[4] Aqua-RET (2012), Tidal stream: European resource map, retrieved on 06/12/2014 from: http://www.aquaret.com/

[5] Mathys, P. et alii (2012), Belgian Ocean Energy Assessment (BOREAS). Final Report, Brussels: Belgian Science Policy Office, 171 p. (Research Programme Science for a Sustainable Development)

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[6] ADEME (2014), Investissements - 13 -d'avenir : Appel à Manifestations d'Intérêt Fermes pilote hydroliennes

[7] FlanSea E (2013), FlanSea Press retrieved on 06/12/2014 INSIGHT NERGY & EReleases, NVIRONMENT

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