Tuesday 22 March 2016

Six little questions

At a recent speed-networking event, I found myself at a table with the founders of a new wave technology development company. They were armed with a list of 6 substantial questions. As there was no way these topics could be covered in our 15 minute slot, I noted down the questions for further consideration. While writing the email reply, I realised that my answers might be of interest to other technology developers – no so much as advice, but as a starting-point for internal discussions about the questions posed.


Q: Big vs small?

A: When we talk about costs, it is useful to distinguish between cost of energy, and cost of development. To get low cost of energy, we want to minimise the proportion of overhead costs. This requires big wave absorbers in big wave farms, as there are overheads for each absorber and for each farm. There will be an economic limit to the absorber size, because upsizing increases the natural period, and the requirement to attract fewer loads at rated or storm operation limits the useful power that can be converted at higher periods. Nevertheless, even at this limit we are probably talking about something fairly large.

On the other hand, for low development costs and a flexible development path, lessons should be learned on the smallest version of the technology possible. There is much debate about how to interpret this. Some believe that nothing can be learnt on a scaled-down model, while others believe that a series of models of increasing scale is essential. My personal view is that, like wind energy, we need stepping-stone technologies; we can reduce development time and cost if the first commercial versions of the technology are smaller than the size required to give us the best cost of energy.

Q: Efficiency vs cost? Is it ok to have something with low efficiency if it is really cheap?

A: I’m guessing from the context that the question is whether efficiency or CapEx are more important to cost of energy? This is one area where rules of thumb are not helpful. I would recommend using a basic levelised cost of energy model to check sensitivity to design trade-offs between CapEx and efficiency.

This question is also interesting from the perspective of development path. A stepping-stone technology needs to be within the budget of those buying it, and it needs to have as few things as possible that could go wrong with it. This suggests that first commercial devices need to have low capital costs (probably smaller than the optimum for cost of energy), and low complexity. However, efficient operation across a range of conditions requires complexity. So first commercial devices are likely to be smaller and simpler than is required for the optimum for cost of energy. As the reliability issues become resolved, the commercial pressure for improved cost of energy will result in larger, more complex, devices.

Q: Advice for a start-up?

A: I have limited personal experience, so I can only offer the approach I would consider following myself. Getting some feasibility work done is a first step. One way to do this without strings attached to investment capital is to collaborate with a university, that has experimental facilities, on engineering student projects. For initial testing of a single unit of a wide array (such a duck) a flume is sufficient; otherwise a wide tank is required. Also, I think it is important to pick a viable route to market. The market for each stepping-stone of the technology must be identified. It is important to truly understand what potential partners and investors want, and whether their expectations are compatible with the chosen route to market. My understanding of the recent market failure is that the needs and capabilities of the stakeholders did not align with the intended route to market.

Q: What are the common challenges all wave energy developers share?

A: There are commercial challenges in finding a viable route to market; gaining a foot-hold in a market when competing with more mature renewables; getting permission to put intermittent supply on the edge of a remote grid; and competing for limited investment funds, public grants, and those first stepping-stone market opportunities.

The recent market collapse has caused a lapse in confidence in some circles. As more developers describe how commercial pressures lead to rushed development, concept lock-in, and over-promise, there is growing awareness that systemic problems were at the root of the recent market collapse. Nevertheless, this over-promise and under-delivery has had causalities, and it is understandable that those personally affected will find it easier and more palatable to blame wave energy (either the community or the technology) rather than a less tangible ‘system’. This dip in confidence is a challenge for today’s wave developers. In order to regain confidence, it is necessary to show both how the problems due to commercial pressure can be averted in the future, as well as how any new technology will address fundamental technical challenges which had previously gone unaddressed due to the over-riding commercial focus.

Personally I think the search for solutions to fundamental technical challenges is an incredibly exciting field. I like to consider ratios of the loads you get paid for, to those you pay for: revenue to cost ratios. The loads you get paid for have an associated direct cost, but there are other costs that don’t directly correlate with revenues, such as:
  • overhead costs
  • costs due to the plant being unavailable
  • loads that arise when the plant is in storm mode
  • loads that cause more instantaneous power flow than any subsystem can process
  • loads in directions that do not capture energy
This way of thinking can result in some surprising insights. For example, in order to be competitive with wind energy, wave technologies will need to find a way of appearing ‘transparent’ to waves during the most dangerous sea states.

Q: Survivability?

A: First it is worth noting that wind turbines are not designed to withstand hurricanes. As with any technology that needs to be cost competitive, you cannot design for the rare events that most devices will never experience. This is only worth noting to explain why I do not conclude that we should design for survivability at all costs, given that I am about to list the reasons survivability is so vital:
  • Firstly, there is the impact on cost of energy. Reduced lifetime can be reinterpreted as a reduction in ‘availability’.
  • The problems that eventually lead to fatal failure are likely to cause partial failures in the run up to this, reducing availability and increasing OpEx.
  • Many failures require unplanned decommissioning (i.e. salvage) which is more expensive than planned decommission.
  • If there is a delay between a failure and the salvage operations, this can have a negative impact on the social acceptance of wave power.
  • For prototypes and early commercial devices, de-risking and data collection are major goals. Premature project termination deprives the project of data and hands-on experience.
  • Another major goal is confidence building. There are several examples of companies that have closed down, been sold on, or discontinued wave power development, due to the consequences of a sea-trial failure.

Q: High vs low energy sites?

A: The need to reduce overhead costs favours high energy sites in general. However, resource variability is also a cost driver: you get paid for the mean power you are able to convert, but you have to pay for the extremes of power you encounter (whether or not you are extracting this power). There are many high energy sites with high variability, so the mean power alone is insufficient to judge a site’s merit. High energy, highly variable, sites result in a lower chance of survivability, and have fewer weather-windows during energetic months (hence lower availability). Many high energy sites are often physically remote from centres of population, leading to potential problems with connecting new resource to a grid designed for centralised generation.

My personal view is that we should test prototypes and first arrays in a resource with low variability and good infrastructure connections. The first stepping-stone technologies will probably need to follow the limited market opportunities; the high need for incubator markets will result in all potential sites being developed, regardless of the type of resource. However, the dice will be in the favour of those working with a less variable resource. The mature technology will favour sites with low variability and high energy.

Thankyou to Dragan Tutić and Renaud Lafortune of Oneka Technologies for their questions.

Image Credit
'Bonsai' by Lauren Young and Iain Braid: https://justrambleon.com/

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