Written evidence submitted by Mocean Energy (RES0034)
1 
Industry Leaders
Figure 1: Mocean team in front of our Blue X wave energy converter on its Launch Day
Mocean Energy was founded in Edinburgh in 2015 to build on technical and commercial wave energy experience by the Chris Retzler, former Principal Scientist at Pelamis Wave Power, and Cameron McNatt, a naval architecture software developer.
Mocean’s technology has been developed through the Wave Energy Scotland programme over 6 years, through 3 stage gates, evaluated by sector experts, beating out international competitors. Mocean’s business model was formulated as part of the Aberdeen-based Net Zero Technology Centre (then the OGTC), which got us speaking with customers and partners in the O&G industry. Last year, we did a seed round of investment from Scottish investors: Equity Gap, Old College Capital, and Scottish Enterprise.
Since 2019, we have grown from a team of 3 to 15 people located in Edinburgh, Aberdeen, and Orkney with specialists in wave energy research & development, engineering, operations, project management, health & safety, finance, and commercialisation. We expect to create 10 more direct jobs in the next 2 years.
Our £3.3m WES Novel WEC Stage 3 project used 80% Scottish content and 95% UK content; the number of individuals working on the project is at least 50 people. Blue X was built in Cowdenbeath, commissioned in Rosyth, and is being tested in Orkney.
In summary:
- £5m+ in grant funding to support research and development;
- One of two companies awarded a prototype build and test project from Wave Energy Scotland through three competitive stage gates;
- Built Blue X, 40-tonne prototype, which is being tested at EMEC;
- Developed a clear & up-to-date understanding of industry challenges through the world-class Net Zero Technology Centre (then OGTC) TechX business accelerator.
2 Innovation
Mocean’s wave energy technology is a hinged raft – two hulls connected by a hinge – wave forces and the hulls’ dynamics cause a rotation about the hinged that drives a generator.
Our innovation is in the shape of the hulls. Using AI optimisation software, we have developed novel, and patented, hull shapes that include plates or scoops, which we call wave channels. These increase wave forces and body motions so that the machine produced more power for its size – compared to traditional hinged rafts we estimate Mocean machines will produce 5x more energy per tonne.
More power for a smaller size machine means lower capital costs (less steel, smaller generators, etc.) and lower operations and maintenance costs (less expensive vessels and cranes needed for smaller machines).
3 Start Small, Go Big
Mocean’s business model is to start with relatively small machine in niche markets – including oil and gas – where wave energy has a significant value proposition, and through innovation, learning by doing, and revenue generation, scale up to large scale technology and utility-scale markets.
Our roadmap includes:
- Small-scale: Blue X machines providing power and communications to remote subsea equipment in the O&G industry, where currently power is provided with long (10+ km), expensive (£1m/km) subsea cables. Applications also include CCS injection wells, such as the Northern Endurance Partnership, injecting CO2 offshore from ZeroCarbon Humber and NetZero Teeside. This will help the offshore industry reduce operation emissions, and transition towards cleaner energy.
- Medium-scale: 250 kW Blue Horizon devices powering small-scale offshore platforms, offshore aquaculture, and remote or island communities and resorts, all places where power comes from diesel generators. Diesel generation is highly polluting (up to 6x emissions than onshore generation) and very expensive. Other renewables are often not suitable due to lack of sites.
- Large-scale: Farms of 1 MW Blue Horizon machines integrated with offshore wind farms providing clean, renewable, affordable power to the grid. By integrating wave technology with offshore wind, the overall cost of energy of the project will be reduced by maximizing the power per offshore footprint and the supply of electricity will be more predictable and reliable.
4 The Wave Energy Difference
The size of the prize for commercialising ocean energy is huge. In Europe alone, the ocean energy industry plans to deploy 100GW of production capacity by 2050, meeting 10 percent of electricity demand.
Deploying 100GW of ocean energy will also mean creating a new industrial sector in Europe, and 400,000 skilled jobs all along the supply chain. Given its early technology lead – many of these jobs could flow to the UK.
Although closely related to tidal energy, wave energy is different. The UK and global wave energy resource is significantly greater than tidal and is available in many more locations – including deep into the North Sea where there is potential to power subsea operations including carbon capture and storage (CCS) and co-locate with offshore wind.
Mocean Energy is already developing close synergies with the oil and gas sector, where we can contribute to a just transition though our near to market Blue Star technology, whilst wave energy is highly complementary to offshore wind – with potential to share grid infrastructure in combined wind and wave farms which drive down the overall levelized cost of energy (LCOE).
Wave energy is at a different stage in the technology cycle to tidal – and we estimate it will take around 5-10 years to develop our second-generation full-scale device (the current stage of Orbital). Our current focus is on generating performance data, confidence and credibility around our proof of concept Blue X.
5 Government Support
The principal requirement for the wave and tidal energy sector is continued long-term government support at all stages of the technology cycle – from pilot projects through to commercial schemes.
This pathway has worked for all other low carbon technologies. Solar power, onshore and offshore wind and nuclear power have all benefitted from in some cases decades of revenue support enabling new industries to scale up and costs to fall.
However, in the past (for example with onshore wind) the UK has failed to capitalise on its early technology lead through a lack of consistent support for commercialisation and has ceded its early technology lead to other countries[i].
Industrial investors require and visibility of support over a reasonable horizon in order to give the confidence to invest significant £millions to help technologies commercialise.
At Mocean Energy, we see markets and have customer interest, but our biggest barrier is trust in the performance of the technology. Customers never want to buy the first one. We need to prove the reliability of technology at various scales through hours, days, months, years at sea. Private investors, partners, and customers will help, but they won’t fund it all alone.
With the correct support there is no reason wave and tidal energy cannot become green energy success stories for the UK.
Forms of support required:
- Early-stage innovation support. The Wave Energy Scotland model has successfully driven innovation and collaboration through its 100% public procurement model which has provided close to £40 million investment into the wave energy sector. This model is now being replicated in the EU-wide EuropeWave initiative. Mocean Energy is also benefitting significantly from collaborative funding provided by the Net Zero Technology Centre (formerly OGTC). Both funding streams offer a model which can be continued.
- Capital grant funding for pilot farms. All marine energy technologies require significant grant funds in order to leverage the private investment needed to develop full-scale single devices and early arrays. One of the lessons of the past is that introducing one single funding competition can drive technology developers to move too fast in order to secure the only grant funds available[ii] – this could be avoided through providing longer-term visibility of grant calls (potentially using a ‘stage gate’ process) to ensure the right funds are provided at the right time.
- Revenue support for first arrays. Support regimes such as the solar energy FIT and onshore wind ROCs enabled these two industries to scale up and drive down costs over a number of years, whilst as recently as 2015, offshore wind projects were awarded a CfD of £119 MWh (2012) prices for a 714MW development[iii] - since then investment has rocketed and prices have plummeted. The wave and tidal sector is no different and will require revenue support for a number of years in order to drive down costs through learning by doing and economies of scale. The UK Marine Energy Council has proposed an “Innovation Power Purchase Agreement” (IPPA) for the very first wave arrays and a 100MW ringfenced minima in the next CfD Round with a £250MW strike price for tidal energy. As stated previously, this cannot be a “one-off” – investors will require visibility of a clear pathway for wave and tidal energy revenue support for a number of years in order to unlock the investment required.
- Access to affordable risk capital. Access to capital at a reasonable cost has long been identified as another important lever in financing first arrays[iv]. There is a requirement for government-backed institutions – such as the EIB, the Scottish Investment Bank or a UK body backed by new-announced green bonds to offer affordable risk capital.
- Insurance and warranties. Affordable routes to insurance and warranties for early projects are an area where pooling of risk could help deliver first schemes.
- Exemption from state aid.
6 Summary
In many respects wave and tidal energy technologies are no different to other low carbon technologies – many of which have received significant long-term grant and revenue support over a number of decades.
To become successful, our sector requires long-term, clear, consistent and patient support at all stages of the technology cycle – to support innovation and attract investment this decade and to create new jobs and new forms of energy to deliver a just transition to net zero in the decades ahead.
If the UK can continue to lead in the provision of this support, we can maintain our global lead in the wave and tidal sectors.
July 2021