The Impact of the Top 3 Strategic Imperatives on Breakthrough Advancements in Wave and Tidal Renewable Energy Generation

Industry Convergence

Why

• The levelized cost of energy (LCOE) for wave and tidal power is significantly higher than for solar and wind power. Using a mix of direct-to-consumer technologies can lower costs and create supplementary revenue streams. This approach includes the co-location of aquaculture and desalination systems and processes that can use energy from wave and tidal systems.

Frost Perspective

• The substantial energy costs associated with desalination and aquaculture facilities present an excellent opportunity for the joint placement of wave and tidal systems alongside these emerging technologies. This synergy can address the twin issues of energy and water scarcity.
• Additional intersectoral prospect involves harnessing the combined forces of wave and wind energy through a hybrid system. Beyond lowering the LCOE, this partnership holds the potential to enhance the stability of offshore wind systems and reduce fluctuations in energy supply resulting from low wind speeds.

Transformative Mega Trends

Why

• Wave and tidal movements, because of their predictable and consistent nature, are reliable for integration into energy grids, unlike solar and wind power, which are intermittent. Developing wave and tidal energy infrastructure promises economic revitalization by creating jobs, especially in coastal communities. This process will enhance local economies and foster energy independence.

Frost Perspective

• The seasonal variation of wave energy can supplement existing renewable energy sources, providing energy during reduced solar efficiency in winter. This renewable energy mix can offer energy security to coastal nations heavily dependent on fossil fuels.
• Solar and wind installations require sizeable areas to avoid shadowing and wake effects. However, companies can install wave and tidal units in close proximity. This proximity can allow them to penetrate islands with limited space, allowing them to harness substantial energy from the ocean.

Competitive Intensity

Why

• Start-ups and scale-ups with expertise in attracting investment drive the advancement of wave and tidal technologies, accelerating the technologies' journey to market readiness. Various wave and tidal energy systems will attain a technology readiness level (TRL) of 9 in the next few years because of the benefits of economies of scale.

Frost Perspective

• Through supportive policies and government investments, European start-ups and scale-ups led the wave and tidal energy system rollout. In 2023, Europe will finalize tidal power installations totaling 1.4 MW, in contrast to the 100 kilowatt (kW) expectations for global installations.
• This competitive environment drives start-ups and scale-ups to funnel funds into R&D to discover cost-effective and durable solutions for tidal and wave energy. These innovations include pioneering technologies such as rotating mass wave turbines to capture ocean energy.

Scope of Analysis

• The intermittency of wind and solar power sources presents a significant hurdle for large-scale integration into power grids. A need exists for extensive energy storage systems, which come with high costs to manage this variability. According to the National Renewable Energy Laboratory (NREL), the levelized cost of solar plus storage ranged between $55 and $91 per megawatt-hour (MWh) in 2020. Although technology advances, battery storage options still face capacity, longevity, and expense issues. These costs are even higher on remote islands because of additional transportation and space constraints. Therefore, it is vital to investigate alternative renewable energies to bypass these obstacles.
• About 2.4 billion people, a significant portion of the global population, live within 100 kilometers of the sea. Ocean energy is an increasingly attractive option to combat climate change. Out of the total 534.7 megawatts (MW) of ocean energy captured, tidal barrages contribute approximately 98%. Industry players are developing technologies, such as tidal stream systems and wave energy converters, to tap into tidal and wave energy. Although these developments are nascent, they show a strong potential to generate renewable energy, even on a smaller scale.
• The early development stages of wave and tidal stream technologies limit large-scale deployment, and the technologies project higher LCOE than established wind and solar power. However, as production scales up, these technologies will become more cost-competitive. The International Renewable Energy Agency’s report on ocean energy technology indicates that the LCOE for tidal stream energy could decrease to $200 per MWh for a 100 MW installed capacity and $110 per MWh for a two-gigawatt capacity. In addition, innovations such as turbine downsizing and overcoming supply chain complications could lead to cost reductions. Another LCOE reduction solution includes co-location for energy-intensive offshore processes, such as desalination and aquaculture.
• A Frost & Sullivan study delves into the breakthrough advancements in wave and tidal renewable energy generation, covering:
  • a comparative analysis of wave and tidal energy systems, including their strengths and weaknesses
  • the latest trends and technological developments in these systems, alongside a review of the patent environment
  • the driving forces and challenges in the market, potential growth areas, and main players influencing the development of tidal and wave energy technologies globally

Growth Drivers

• Need for Predictable and Reliable Renewable Power Generation: Unlike other renewable energy sources that face the challenge of weather variability, tides follow a regular cycle. Similarly, despite wind being an unpredictable energy source, the waves it generates can travel long distances with minimal energy loss due to water inertia. This predictability allows operators to plan wave and tidal power generation and manage power grids accurately. The technology enables the integration of wave and tidal energy while minimizing energy storage needs.
• High Energy Density is a Major Attractive Feature: The energy density of wind, wave, and tidal sources depends on both the velocity of the motion medium and its density. Water is approximately 800 to 1,000 times denser than air. As a result, a slow-moving current or wave can contain more energy than a slow-moving wind pocket, which means wave and tidal power systems can generate significant amounts of electricity in a small area, reducing capital expenditure (CAPEX) compared to offshore wind systems.
• Net-zero through Diversified Renewable Energy: Ocean energy, primarily from wave and tidal sources, must improve its potential contribution to achieving global carbon neutrality by 2050. The need to integrate ocean energy sources is noticeable in coastal regions where the energy is readily available. As per the International Energy Agency, ocean power production must show an average annual growth of 33% from 2020 to 2030 to achieve the global net-zero target. Wave and tidal energy play a vital role in energy security.

Growth Restraints

• Negative Consequences for Marine Life: The wave and tidal infrastructure can pose collision risks for larger marine species, such as whales and sharks. Operational noise from these devices might disrupt the communication and navigation of marine mammals dependent on echolocation. Electromagnetic fields from the converters could impact species sensitive to such changes, including rays and certain types of fish. The installation and ongoing operations can modify the seabed and local water flow, potentially affecting crucial habitats.
• Cost Barrier: The projected LCOE for the first large-scale wave energy venture was estimated to range between $120 and $470 per MWh. For tidal power, the cost was anticipated to be between $130 and $280 per MWh. This cost was over 3 times that of wind and solar power, which could discourage potential investments and impede R&D funding, ultimately hindering the growth and commercialization of tidal and wave energy technologies.
• Limited Number of Suitable Locations: The inherent reliance on specific geographical conditions limits the growth of the tidal energy sector. The technology demands areas with substantial tidal ranges or consistent ocean currents. Such prerequisites mean only selected coastlines are suitable for efficient tidal energy harnessing. This location specificity not only limits the global scalability of the technology but poses challenges in connecting to energy grids, potentially increasing infrastructure costs.