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SSE is planning to scale back its involvement in marine power, in a move reflecting uncertain times for the emerging sector.
A spokesman denied the company was to withdraw completely, as suggested in a story by ReNews. He said SSE was trying to make sure the four projects it is involved in, with capacity of up to 800MW, can still go ahead.
This repositioning has emerged as industry figures warn existing projects are being held up by grid upgrade delays and future schemes are threatened by inadequate support. It follows similar moves by Eon and RWE.
According to the Carbon Trust, wave and tidal sources could provide up to 20 per cent of the UK’s power if fully developed.
Reaching that potential depends on getting commercial arrays running in the coming years.
Maf Smith, deputy chief executive of RenewableUK, warned that arrays previously expected to come online between 2014 and 2017 may not now get going until the early 2020s because the necessary transmission links have been delayed. Some schemes may be unable to meet the conditions of their grant funding as a result, he said. “Companies are treading water and that is pretty dangerous when they need to keep up momentum.”
In future, marine power projects will be eligible for contracts for difference with a guaranteed “strike price” of £305/MWh for the first 30MW, under government’s draft plans. That falls to £155/MWh for capacity above 30MW.
It is too low and drops too rapidly, according to the Renewable Energy Association (REA). The trade body has also raised concern that government’s scrapping of plans to set a minimum level of deployment for marine power could result in it getting squeezed out by more mature (and therefore cheaper) technologies.
“It is vital for the benefits in terms of jobs and investment that could accrue to the UK that wave and tidal are allowed to develop by being able to access reserved capacity in the allocation process,” the REA said in a consultation response.
The length of the contracts could also be a problem, according to Keith Patterson, head of projects and infrastructure at law firm Brodies. Wave and tidal assets are guaranteed to earn a return for 15 years but could last for 20-25 years, if maintained.
“There is the possibility of assets being stranded if the operational costs of the project are higher than the revenues generated,” explained Patterson.
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