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The Energy Market Reform (EMR) proposals will 'make or break' the wave and tidal energy sector, according to a report by Renewable UK.
The renewable trade association said the transition from the Renewable Obligation (RO) regime to the contracts for difference (CfD) regime is critical because it falls in the middle of the delivery period for the first round of wave and tidal arrays.
The report says EMR, and in particular the 2014 – 2017 transition from RO to CfDs, “holds the potential to halt or catalyse the development of the industry”.
Renewable UK warns “should the EMR regime not inspire confidence in the future of the UK wave and tidal sector, progress made to date will be threatened.”
However, the report does also say “correctly set up, EMR can be a springboard for successful delivery”.
To ensure EMR boosts and supports the sector, in their report, Renewable UK calls for an initial strike price of £280-300/MWh for tidal stream energy, and £300-320/MWh for wave energy.
It claims the high strike prices are required to “catalyse the industry” into developing the projects, which will lead to economies of scale and lower strike prices for the second generation of arrays.
Renewable UK also calls for a 20-year CfD period, rather than the proposed 15-year period. The report claims the length of the CfD contract needs to be longer for new technologies “to allow adequate investment return periods”.
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