When it comes to renewable energy the question is always the same: would it be a sustainable business if it was not heavily subsidised by public funds? In spite of the Gulf of Mexico oil spill and the nuclear disaster in Fukushima, investments in renewables are still considered by many as ideological statements. The reason being that the price of the electricity produced makes this type of energy an economically unsound choice for debt-riddled governments.
Generally calculated in euro per megawatt/hour, the cost of electricity is the basic factor guiding the decisions of public authorities and private investors. A report of the German Rheinisch-Westfälischen Institute for Economic Research –RWI - evaluates the costs of producing 1 MWh of energy using nuclear power at 107-124 euro, while the same amount of energy is produced by a solar panel at 284,30-391,40 euro. In this regard, marine energy is a no-go. Using waves and tides to produce electricity is even more expensive than using wind or solar energy for the same purpose. Tidal turbines, power machines looking like an underwater windmills, produce electricity at 300 euro/MWh for an initial investment of 100 million euro.
‘TIDAL SAILS COULD PRODUCE ELECTRICITY AT A PRICE COMPARABLE TO THE ONE OFFERED BY TRADITIONAL FOSSIL FUEL POWER PLANTS.’
For a similar energy output, tidal sails, a new technology on the market, requires a capital investment of 20 million euro and delivers electricity at a cost of 60 euro/MWh. The relative simplicity of the mechanical components of the sails accounts for the low cost of the technology, which is built using manufacturing capabilities already existing in Haugesund, Norway - a subsea technologies cluster born during the Norwegian offshore oil boom.
A CONTENDER FOR FOSSIL FUELS
The system replaces conventional turbines with a chain of submarine sails attached along cables secured to the seabed. The cables, strung between three underwater stations - one of which is a generator - support the sails. The current pushes the sails in both directions and the movement propels the generator. The result is a fairly simple structure, similar to a conveyer belt put sideways forming the shape of a gigantic triangle hidden in the sea bed.
The drive resulting from this gigantic Lego-like structure overpowers many currently exploited renewable energy sources. ‘One square metre of our sails equals an 830 square metre wind turbine – that’s the difference in power,’ explains Are Borgesen, the inventor of the technology, now CEO of the eponymous company Tidal Sails. Other factors such as the ease of maintenance and relatively low weight – about 5% of a turbine-based subsea station delivering a similar energy output – seem to indicate that Tidal Sails could produce electricity at a price comparable to that offered by traditional fossil fuel power plants.
‘IF WE HAD NOT RECEIVED FUNDING FROM THE EUROSTARS PROGRAMME WE WOULD NOT BE WHERE WE ARE TODAY.’
The much prophesied ‘tipping point’ where renewable energies become as good a deal as fossil fuels is known as grid parity. Grid parity will happen when alternative energy sources can generate electricity at a cost that is equal to the price of buying power from the electricity grid. It is considered to be the point at which an energy source becomes a contender for widespread development, without subsidies or government support, which is what Borgesen is now close to achieving.
REACHING NEW HIGHS
So much for the good news: as a company, Tidal Sails is in a difficult position: ‘None of our employees receives a salary,’ says Borgesen. ‘And most investors are friends and colleagues.’ Like many risky investments in the field of innovation, the development of the tidal sail technology has so far continuously relied on the support of public money. The first major investor in the company was Eurostars, a European public fund which helps small companies in the high-tech sector to deliver innovative products to the market. ‘If we had not received funding from the Eurostars Programme we would not be where we are today. Eurostars has given us the chance to go through all the stages of prototyping,’ Borgesen says.
Tidal Sails is now preparing for a last dry run before going commercial: the deployment of a new installation in Northern Norway in 2014, feeding energy into the grid for the first time. After several smaller size installations, the first large scale tidal sails energy plant will be set up near Hammerfest in Northern Norway. It will deliver a maximal power of 3 MW, enough energy to power 400 Norwegian households, with a total annual energy production of 8GWh: a power level considered by private investors in the sector to be sufficient for granting a safe investment.
This pilot power plant, will consist of some 500 composite ‘sails’, each with a calibre of 5X1m, attached to wires connected to power generators. The company expects its device to be ready for the commercial market in 2015. From the moment the plant feeds energy into the grid, the investment risk will drop significantly as it will be generating a positive cash flow.