Is it time to invest in wave energy?

Nancy T
Nancy T
Sep 4, 2020 · 14 min read

by Nancy Tanguay

A new wave of clean energy is on the horizon. Energy from clean technologies has the potential to supply four-fifths of the world’s energy by 2050 and achieve 90 percent of the emissions reduction needed to avoid catastrophic climate change [2]. While solar and wind energy have grown into significant resources, another source is being developed in test pools and open water sites and whose timeline to commercialization is getting shorter.

Wave energy’s tide is on the rise, and it may be time to take another look at investing.

Threats from climate change have made clear the need to transition away from fossil fuels to cleaner power sources. This is driving an increased use of renewables and investment. In 2019, renewable energy produced more power than coal by providing 23 percent of all U.S. generation. Combined, wind and solar accounted for about 50 percent of total U.S. renewable electricity generation [12]. Investments in renewables now exceeds investments in other power generation [4]. Declining costs and the growing competitiveness of storage are contributing to the growth of renewables [12].

Marine and hydrokinetic (MHK) technologies use waves to generate clean and consistent renewable energy. Compared to other forms of renewable energy, MHK technologies are at an early stage of development due to the fundamental challenges of generating power while operating in ocean environments [1]. Extreme weather can damage the converters, and seawater corrodes metal parts. However, there is room for wave energy in the world’s energy mix and government funding is driving innovation within the sector [1]. Consensus has yet to land on an optimal design of a generator, and in fact, there may not be just one optimal design. But the energy generated from devices currently being developed has the potential to meet approximately 25 percent of the overall U.S. energy demand, according to a 2015 U.S. Department of Energy report.

Wave Energy

Wave energy converters (WEC) are being developed to convert the power of breaking waves, swells, and wave pressure into electricity. Waves are a result of the interaction between the wind and the water’s surface [3]. Due to the global direction of wind, the energy potential for waves is greatest between 30° and 60° latitude on the west coasts of land masses in both the northern and southern hemispheres [3].

Waves can be energy-dense and consistent versus the variability of sun and wind [3].

https://www.sinnpower.com/waveenergy

Wave power is strongest in the winter months complementing solar and wind power, whose energy peaks in the summer [13].

https://blog.sintef.com/sintefenergy/wave-energy-wind-solar/

Similar to other renewables, wave generated electricity is a clean energy source and can supply power to coastal areas where 40 percent of the world’s population lives. The energy has can b used in electricity generation, water desalination and disaster relief:

Utility-scale grids: Wave energy offers system stability and complements solar and wind systems.

Micro-grids: WECs can replace costly and dirty diesel as a power source for island- and micro-grids.

Offshore: The need for remote offshore power is growing for ocean research and coastal security. WECs can replace diesel generators or batteries deployed on the ocean floor to provide power to navigational aids, and autonomous underwater vehicles.

Harvesting Approaches

Unlike the technologies for wind and solar, there is not one common prototype for WECs. Instead, different technologies are being developed to work with the variability of ocean geography and particular application. Generally, wave energy converters fall into the following classifications:

Point absorber buoys extract energy through the relative motion of the buoys in response to waves. The moving body may be on the surface or submerged, and attached to the seabed or a structure less affected by wave action [3].

Point absorber buoy illustration retrieved from https://openei.org/wiki/PRIMRE/MRE_Basics/Wave_Energy

Surface attenuators generally have multiple floating segments connected to one another and are oriented parallel with wave lines. They use the rise and fall of swells to create a flexing motion that may be converted into rotation or drive hydraulic pumps to generate electricity [3].

Surface attenuator illustration retrieved from https://openei.org/wiki/PRIMRE/MRE_Basics/Wave_Energy

Oscillating water columns use wave action to pressurize air and force it through an air turbine. As water recedes from the chamber, the resulting vacuum pulls air back through the turbine and into the chamber. They can be located onshore or in deeper waters offshore [3].

Oscillating water column illustration retrieved from https://openei.org/wiki/PRIMRE/MRE_Basics/Wave_Energy

Overtopping devices are long structures that allow wave motion to fill a reservoir to a higher water level than the surrounding ocean. The difference in pressure forces fluid through a turbine coupled to a generator similar to conventional hydropower. Devices can be either onshore or floating offshore [3].

Over topping device illustration retrieved from https://openei.org/wiki/PRIMRE/MRE_Basics/Wave_Energy

Oscillating wave surge converters typically have one end fixed to a structure or the seabed while the other end is free to move. Energy is collected from the motion of the body, driven by waves. Oscillating wave surge converters often come in the form of floats, flaps, or membranes [3].

Oscillating wave surge converter illustration retrieved from https://openei.org/wiki/PRIMRE/MRE_Basics/Wave_Energy

The development of ocean wave energy technology began in the 1970s in response to the global oil crisis. But despite decades of testing, the industry is still at a pre-commercial stage, and is estimated to be 10 years behind that of wind and solar. The harsh ocean environment, differing ocean landscapes, and complex regulatory requirements are barriers to commercial viability [3]. Maritime regions known for rough waters, like the Pacific Northwest, Alaska, Scotland, and Australia have developed hubs of wave-energy research and development.

The Changing Landscape of Wave Energy

Our energy needs will expand over the next three decades, as human population grows and as more devices, such as electric vehicles, use electricity or convert to electricity from another power source. To help meet the need, Ocean Energy Systems (OES), an intergovernmental collaboration, is working to accelerate the viability of ocean-produced energy through public and private sector funding and an improved ecosystem of non-financial support [22]. OES works closely with government agencies to share the industry findings. Open water test sites are becoming innovation hubs for the industry, resulting in an acceleration of research and development [22].

Although not all wave energy projects have been successful — several milestones have been achieved in the last decade. These range from commissioning grid-connected wave power plants, deployment of wave devices in open-sea waters for testing, and the development of technology better able to withstand the ocean’s power[22]. The wave energy market is predicted to have a compound annual growth rate of 10.2% between 2017 and 2023, with applications for nations of all sizes — developed, developing and island. Within the past decade, the cumulative energy produced from wave and tidal stream energy has increased from less than 5 GWh in 2009 to approximately 45 GWh in 2019 [22].

Several challenges lie ahead for ocean energy. In order to compete with other power sources, significant cost reductions and more standardization are needed. The technology needs to improve on reliability, operability, and capacity metrics [22].

Assessing the Economics

Understanding the cost and value of wave energy can help understand its potential and competitiveness versus other renewables. Wave energy can increase a power system’s stability, complements solar and wind energy, and can work as a cost-effective alternative to storage systems [13].

Ocean energy projects can generate revenue by selling power to the electrical grid or a third party such as an eco-resort. The revenue will depend on supply and demand and the price at which the energy produced is sold [9]. More power supply leads to lower prices. Electricity prices are typically higher in the winter when demand is higher. This is a disadvantage for wind and solar which generate most of their energy in the summer months. However, this is a competitive advantage for wave energy which produces energy in winter. Battery storage systems are being developed to balance the fluctuations of renewables, but so far, the systems are expensive and can drive up energy costs [14].

Wave technologies are still at the prototype stage, and therefore production costs are higher than for solar and wind. Similar to other forms of renewable energy, wave energy tends to have relatively higher capital expenditure costs due to the demands of working in the ocean, though costs can be lowered by sharing infrastructure with other renewables, wind in particular [9].

Access to capital is a barrier that prevents many technologies from making it from an idea through development to implementation. But experts are working to identify how public and private sectors partnerships can work together to bring promising solutions to scale. Combining early stage support from grants and public funding with commercialization funding from venture capital and private equity and with more risk-tolerant philanthropic investment can cover funding gaps. But funding needs to be coordinated with non-financial tools such as expertise and advocacy [21].

The Volatile History of VC investment

The history of venture capital (VC) investment in cleantech shows that a good understanding of the industry combined with public investment are necessary for success.

VC firms spent over $25 billion in funding across clean energy start-ups from 2006 to 2011 and lost more than half their money [4]. As a result, with a few exceptions, VCs have been reluctant to invest in the sector and funding fell during most of the past decade [6].

In 2008, VC cleantech investments exceeded $5 billion, but by 2013 funding had dropped to $2 billion [4]. Cleantech’s profile was a mismatch with VCs — the industry requirements were different from the sectors that had been successful investments, such as software. Clean technology needed significant capital and long development timelines and was unattractive for buyouts. The start-ups that did not fail returned limited capital to investors [4].

VC activity in wave energy follows a similar scenario: Pitchbook data shows that out of the last decade, 2011–2012 had the highest activity, with 10 deals each, worth $71 million in 2011, and $25 million in 2012. 2019 had only one successfully completed deal.

With some wave energy companies planning for commercialization as early as 2021, is now the time to invest in wave technology? Following the public investment pushing the industry closer to commercial use, it may be time for the new sector of impact-focused investors to consider providing the capital needed to advance the wave energy to its next stage.

A Spotlight on Wave Energy Startups

Wave energy has potential in the energy production market, despite the challenges. Innovations within the sector are being made by companies in the startup stage. A diversity of cutting-edge technology in various stages of development comes from the following startups:

Completed prototype testing:

Marine Power Systems’ WEC operates under the surface of the sea, moving in orbital motion with the wave. It alters its depth to optimize power and to duck under powerful storms. The converter can be combined with a floating wind power device to optimize energy capture. The converter has been tested at quarter scale in Cornwall, UK.

Wavepiston’s product is a chain of energy collectors stretched across two anchored buoys. When waves move across the collectors, plates move back and forth, pumping seawater into a pipe leading to a turbine. The company has completed prototype projects and is running two demonstration projects — one at the test site of Oceanic Platform of the Canary Islands which focuses on electricity conversion, and one at Isola Piana, Sardinia, Italy, as a commercial pilot including the combination of electricity conversion and desalination.

Wello’s WECs, called Penguin, include a wave rotating energy device fixed to the seabed that generates electric energy by capturing continuous kinetic energy with an eccentric mass rotating inside the hull and connected directly to a generator. None of the moving components ever come into contact with seawater. The company states its Penguin has been extensively tested in harsh sea conditions and can resist waves as high as 18 meters.

Undergoing prototype testing:

C·Power (formerly Columbia Power Technologies) has three product lines that can operate in a wide range of oceanic conditions without shutting down in heavy seas that are intended to provide energy generation to remote systems and for electric grid applications. Its StingRAY wave power system reacts to the shape of the passing ocean wave. Each float is directly coupled by a drive shaft to its own rotary generator. As the float rotates, so does its generator, which creates electricity.

Resolute Marine Energy has designed a WEC intended to improve access to water in developing countries and islands, and to displace the currently used diesel-electric desalination systems. The firm was recently awarded a grant from the U.S. Dept. of Energy for innovations that demonstrate technical feasibility during the first phase of their research. The company is in the process of evaluating the commercial feasibility of deployment in Cape Verde, a country off the west coast of Africa that suffers from severe water scarcity.

Sinn Power generates energy from modules mounted onto offshore and coastal structures like piers and oil rigs that move up and down in response to wave motion. The company is operating fully functional prototypes at their research location in Greece and are close to commercializing their technology.

Plans to test prototype:

Bombora Wave Power has patented their mWave technology which utilizes pumped air to harness wave energy. Its pressure differential technology is responsive to the full range of wave periods and wave heights, with reduced risks associated with extreme storms. Early next year, Bombora will deploy a full-scale 1.5MW prototype in Pembrokeshire, Wales, while progressing with a grid-connected 3MW commercial wave park project on the Spanish Canary Island of Lanzarote. Bombora is also seeking a certification partner to support the commercialization process for its utility-scale WEC.

CalWave Power Technologies has a short-term impact mission to provide clean energy to islands which typically generate 90% of their power with imported fossil fuels. CalWave’s patented WEC will be moored submerged offshore, allowing it to survive stormy seas while causing no visual pollution or posing any collision danger. In 2019, CalWave received two multi-million dollar awards by the DOE to 1) build a commercial scale drive train in parallel to their open water demo and 2) design the next generation of submerged pressure differential WECs. CalWave was also recently awarded the US Wave Energy Prize for meeting the threshold to double the energy captured from ocean waves relative to the state of the art. CalWave will soon enter their open ocean pilot phase and plan for commercialization in 2021.

CorPower Ocean is developing high-efficiency point absorber converters have a heaving buoy on the ocean’s surface which absorbs energy from the motion of the waves and is connected to the seabed using a taut mooring line. Its high natural frequency of oscillation enables energy producers to get a large amount of energy harvested at low cost. CorPower’s goal is to get its WECs on the market by 2023–2024. Several of their projects are looking at combined wave and wind arrays to take advantage of the natural complements between the two energy sources.

Ocean Motion Technologies focuses on off-grid lower power applications such as navigational buoys, offshore aquaculture and coastal security. This firm recently was recently awarded a grant from the U.S. Dept. of Energy for innovations that demonstrates technical feasibility during the first phase of their research.

Investors and Investment Opportunities

Renewable energy is steadily increasing its share of the world’s energy market. With governments and philanthropy funding research and development, it may be the right time for investors, particularly in the VC space, to bring wave technology closer to commercialization.

A strong understanding of the renewable market will help to not repeat the mistakes of the past. Challenges always exist when assessing infrastructure projects, but there are additional risks particular to ocean investing that need to be considered. These include assessment of the economic, environmental and technological viability and a consideration of differing timelines and type of operation [10].

Governments are funding the advances in ocean energy. In addition to providing grants and prizes, governments are funding testing tanks and open-water, grid-connected testing facilities​.

Significant international funding comes from:

European Union: Over the last decade, the European Commission and EU countries have spent over $1 billion to support developers, adapt infrastructure and generally support the groundwork for so the wave energy sector to grow. [20]

United States: The U.S. Department of Energy’s Water Power Technologies Office (WPTO) supports MHK technology. The WPTO program has four core R&D activity areas to address challenges faced stakeholders: foundational and crosscutting R&D, technology-specific system design and validation, reducing barriers to testing and data sharing and analysis [15].

Recently the DOE pledged $25 million to support 12 ‘next-generation’ marine energy projects [15]. In 2017–2019, $198 million was dispersed to the industry using mechanisms such as prizes and competitions, financial assistance and university and lab support. [15]

Scotland: Wave Energy Scotland (WES) supports innovative solutions to the technical challenges facing the wave energy sector, and reliable technology which will result in cost-effective wave energy generation. WES has funded 96 contracts, invested over $39 million, and been involved with 230 separate organizations, across 13 different countries [18].

United Kingdom: The UK has provided over $24 million to research organizations at universities within the UK to address the scientific and technological challenges of ocean technology [19].

Australia: The Western Australian government awarded $12.2 million to the Albany Wave Energy Project to support the design, manufacturing and installation of a 1MW unit offshore from Torbay and Sandpatch in Albany. In addition, the government awarded $2.91 million to the University of Western Australia to establish and manage the Wave Energy Research Centre [17].

VCs

According to Pitchbook, over the last five years there has been some investment coming from the angel / VC space, but this was limited in 2019–2020. VCs that have participated in earlier wave energy include: Scottish Enterprise, Almi Invest, and The Carbon Trust. Not-for-profit capital came from Oregon Wave Energy Trust and Breakout Labs.

Outlook for Wave Power

Wave power represents a relevant resource potential, delivering higher value to the electricity market, and complementing wind and solar. Its competitiveness can be achieved through cost reductions, information sharing and new technologies. Current trends that are helping to advance the industry include new designs of power generators that mitigate greenhouse gas emissions, wave energy converters that better withstand the power of the oceans and and combining wave energy with other renewables.

Operating in the ocean is far more difficult than on land, but technical progress has been made. The wave energy industry could be the cusp of commercial viability. Estimations exist that show grid-connected wave power will be available by 2035, but there are signs that it could be earlier.

References

1. https://www.power-technology.com/features/wave-power-energy/

2. https://www.irena.org/climatechange/Renewable-Energy-Key-climate-solution

3. https://openei.org/wiki/PRIMRE/MRE_Basics/Wave_Energy

4. https://energy.mit.edu/wp-content/uploads/2016/07/MITEI-WP-2016-06.pdf

5. https://disruptionhub.com/6-technology-companies-making-waves-in-ocean-technology/

6. https://www.inc.com/jessica-stillman/10-startups-working-to-fix-climate-change-with-technology.html

7. https://impactalpha.com/cleantech-venture-capital-rebounds-with-smarter-more-patient-investors/

8. https://www.smart-energy.com/industry-sectors/smart-energy/a-surge-in-wave-energy-activities-is-expected-in-2020/

9. https://www.etipocean.eu/assets/Uploads/KL0118657ENN.en.pdf

10. https://www.moodysanalytics.com/-/media/article/2018/Credit-Risk-Management-for-Renewables-Energy-Project-Finance.pdf

11. https://e360.yale.edu/features/why_wave_power_has_lagged_far_behind_as_energy_source

12. https://www2.deloitte.com/us/en/pages/energy-and-resources/articles/renewable-energy-outlook.html

13. https://blog.sintef.com/sintefenergy/wave-energy-wind-solar/

14. https://www.technologyreview.com/2018/07/27/141282/the-25-trillion-reason-we-cant-rely-on-batteries-to-clean-up-the-grid/

15. https://www.energy.gov/sites/prod/files/2020/04/f74/2019-wpto-peer-review-mhk.pdf

16. https://www.oregon.gov/energy/energy-oregon/Pages/Marine.aspx

17. https://www.powergenadvancement.com/press-statements/carnegie-wins-16m-government-grant-for-albany-wave-project/

18. https://www.waveenergyscotland.co.uk/

19. https://epsrc.ukri.org/

20. https://ec.europa.eu/maritimeaffairs/content/funding-ocean-energy-new-study-released_en

21. https://cbey.yale.edu/research/from-solutions-to-scale-considerations-and-insights-for-investing-in-nascent-climate

22. https://www.ocean-energy-systems.org/publications/oes-annual-reports/

23. https://link.springer.com/chapter/10.1007/978-3-319-39889-1_3

24. https://blog.sintef.com/sintefenergy/wave-energy-wind-solar/

25. https://www.oceanmotion.tech/

26. https://www.sinnpower.com/

27. https://www.marinepowersystems.co.uk/

28. https://wello.eu/

29. https://www.bomborawave.com/mwave/

30. http://wavepiston.dk/#top

31. https://www.resolutemarine.com/

32. https://calwave.energy/

33. https://cpower.co/

34. https://pitchbook.com/

Vectors Angel

Vectors Angel is the first and only angel group that…

Vectors Angel

Vectors Angel is the first and only angel group that focuses exclusively on impact investment. Our focus areas include but not limited to sustainabitliy, health and wellness, and empowerment.

Nancy T

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Nancy T

Vectors Angel

Vectors Angel is the first and only angel group that focuses exclusively on impact investment. Our focus areas include but not limited to sustainabitliy, health and wellness, and empowerment.