WAVE ENERGY NEEDS WORK, WILL GET IT AND BOOM

Marine power not ready for prime time, experts say
Colin Sullivan, April 14, 2009 (NY Times)

SUMMARY
The hydrokinetic energies, experts say, lag behind wind, solar geothermal and other New Energies, are still in an early research and development phase and are not yet commercially viable. The potential, the experts agree, is big.

Hydrokinetic energies come from waves, tides and currents.

Factors delaying the hydrokinetic energies from reaching technological maturity: Uncertainty about environmental effects, poor economics, jurisdictional tieups and scattered progress by the few leading entrepreneurs.

Roger Bedard, head of the Electric Power Research Institute wave power research unit, says the U.S. is 5-to-10 years away from a commercial ocean energy project. But its hydrokinetic potential is enormous: It could have10 gigawatts of wave energy from its coasts and 3 gigawatts of tidal and current energies from coasts and rivers by 2025.

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80 ocean, tidal and river technologies are being tested by start-ups. They have limited capital and no guarantee of long-term access to continued development. The investment community remains dubious and unsupportive.

But the hydrokinetic energies could be poised to surprise the experts.

Jurisdictional tieups are about to be resolved and that could lead to clarification of how to proceed without harmful environmental impacts. That could lead to long-term permits which could lead to more supportive venture financing.

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The biggest opportunity is on the West Coast. The continental shelf falls off into deep waters quickly there, allowing waves rolling across the Pacific to hit with the full force of their energy intact. Alaska, California. Oregon, Washington and Hawaii could reap big gains when hydrokinetic forces reach commercial readiness.

COMMENTARY
Progress (Not): (1) Finavera Renewables recently canceled all of its wave projects and closed out the its permit, the first wave power permit ever issued by the Federal Energy Regulatory Commission (FERC). (2) The California Public Utilities Commission (CPUC) denied a Pacific Gas & Electric Co. (PG&E) power purchase agreement (PPA) application for a Finavera Renewables project on the central California coast, judging the technology "immature." (3) The only wave energy device connected to the U.S. power grid is a single buoy at a Marine Corps base in Hawaii. (5) The first tidal project, in New York's East River, took 5 years to get permitted by FERC and has several missteps despite its very limited scale. (6) Most other U.S. tidal energy projects have yet to make it out of the prototype stage.

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Sorting out jurisdictional disputes: The Department of the Interior (DOI) is in the process of developing a comprehensive plan for all offshore energies and Secretary of the Interior Ken Salazar is himself actively engaged. According to the terms of a recently written Memorandum of Understanding, DOI will manage everything within 3 miles of the shoreline. Outside 3 miles, DOI’s Minerals Management Service (MMS) will issue leases for hydrokinetic projects but the Federal Energy Regulatory Commission (FERC) will license projects. MMS will retain exclusive jurisdiction over offshore wind and solar projects.

Crucial but yet to be determined: If DOI has determined how long the MMS leases will be issued for, it isn’t saying. Typical MMS leases are 2,3 or 5 years. Hydrokinetic projects require longer time frames to develop.

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QUOTES
- Edwin Feo, partner, Milbank, Tweed, Hadley & McCloy: "It's basically not commercially financeable yet…They are still a long ways from getting access to the capital and being deployed, because they are simply immature technologies…Most of these companies are start-ups…From a project perspective, that doesn't work. People who put money into projects expect long-term returns."

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- William Douros, National Oceanic and Atmospheric Administration (NOAA): "You would think offshore wave energy projects are a given…And yet, from our perspective, from within our agency, there are still a lot of questions."
- Maurice Hill, leasing program official, MMS/DOI: "These next couple of months are really exciting times, especially on the OCS…We don't know how they'll work…We're testing at this stage."
- Feo: "[2-, 3- or 5-year leases] just won't work…Sooner or later, you have to get beyond pilot projects."