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Tidal energy misses out in latest CfD auction

By: Tom Russell 11/09/2017 Atlantis Resources

General Tidal

Atlantis Resources, a tidal energy developer, has responded today’s announcement from the Department for Business, Energy & Industrial Strategy (BEIS) regrading the outcome from the 2017 allocation round for contracts for difference (CfDs) for renewable energy projects.

Atlantis’s majority owned subsidiary, MeyGen Limited, was not awarded a CfD in this allocation round in respect of Meygen Phase 1C, poised to be one of the world’s largest tidal stream project in northern Scotland.

The Company had forecast a two-thirds reduction in the level of revenue support required for Phase 1C versus that enjoyed by the first phase of the project and submitted what is calls a "very competitive bid" into the auction process. Atlantis explained that its cost reductions were accomplished through improvements in the technology, larger turbines, higher volumes, economies of scale and reduced financing costs.

However, this significant cost reduction was not sufficient to allow the project to secure a CfD in this auction where it was competing with "other more established technologies" such as offshore wind, rather than within a sub-category of earlier stage marine renewables as was previously pledged by the UK government

The large-scale deployment of more mature technologies has driven down the costs of generation so that they are now approaching levels which mean projects require less subsidy support to be viable.

Given the significant subsidy reduction already forecast by MeyGen and the opportunity to preserve an important domestic and export tidal stream industry, Atlantis stated that it expects BEIS to recognise the benefits of either a bi-lateral CfD discussion or the reintroduction of a marine energy sub-category in the next allocation round, either of which would be welcomed by Atlantis. Atlantis has commenced this dialogue with BEIS officials.

Atlantis stated that since November 2016, when BEIS announced the removal of the previously pledged ring-fenced allocation, the company focused on developing marine power projects in other jurisdictions. In the near term, Atlantis stated it will focus on delivering projects in France, Canada and South East Asia where tidal stream is well supported, and the company has also started a three-year programme for the delivery of a 160MW tidal range and flood protection project in the Wyre Estuary.

Atlantis is in discussions with French authorities about establishing a multi-turbine array in French territorial waters which could commence construction in 2018, it has a 50% stake in a 4.5MW berth in Canada at the FORCE facility in Nova Scotia and explained it will soon be in a position to release updates to the markets on contracts and project development rights in Indonesia, China and South Korea.

Atlantis has also been awarded preferred developer status by the Duchy of Lancaster for the 160MW Wyre estuary tidal range and flood protection.

Tim Cornelius, Chief Executive Officer of Atlantis, said: “We’ve made great strides in reducing our cost of generation so that we can slash our requirement for revenue support, and I am incredibly proud of the work the Atlantis team has done in this respect. However, I must acknowledge the difficulties of competing on a level playing field with established technologies like offshore wind, which has been operating at commercial scale in the UK for over a decade.

“It would be a travesty if the UK were to lose out on another emerging industry where it has established a first-mover advantage and where the cost of energy is on a steep downward trajectory. We expect our ensuing discussions with BEIS to focus on how the future jobs and growth benefits of the sector can be secured for the UK. Our UK portfolio contains some of the best tidal stream sites in the world, and we support the ambition to ensure that the development of these sites is achieved through a UK focused supply chain rather than relying on imported skills and goods. We hope that the UK can continue to play a leading role in an industry it helped create over the past decade.”

The first phase of the project, Phase 1A, is approaching 2GWh of generation, and was made possible by the outgoing Renewables Obligation scheme, which provides a means of revenue support in addition to wholesale power prices. The four turbine project has a capacity of 6MW and was put into operation this year.

Atlantis stated Phase 1C is designed to provide nearly 240GWh of clean and predictable electricity to the grid each year from 2023. Phase 1B of the project (6MW) did not participate in the auction because it had been awarded funding support from European Commission mechanisms such as NER300 and Horizon 2020.

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Tidal energy misses out in latest CfD auction

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