UK’s Crown Estate to Invest in Ocean Energy Projects

One of the most surprising developments over the Christmas period was the announcement by the UK’s Crown Estate that it was to invest up to GPB 20 million in 2 tidal energy array projects. The Crown Estate’s objectives are to:

  • Establish the first (wave or tidal) array projects, which are ready for investment to be constructed and start operation as soon as possible
  • Facilitate the growth of the emerging wave and tidal energy industry to continue as rapidly as possible, building on industry’s experience of construction and operation of these projects.

The Crown Estate wants to make an acceptable commercial return for each investment and catalyze investments in the first array projects by virtue of sharing risk exposure and reducing capital others are required to invest. The first two projects that the Crown Estate will invest in must be:

  1. Wave or tidal energy array projects, whose primary purpose is to generate electricity for sale on a commercial basis in the UK.
  2. The projects must be in UK waters on seabed, which is part of the Crown Estate. The proposing developer must have an existing lease agreement with the Crown Estate.
  3. The total capacity of multiple devices must exceed 3 MW but is unlikely to exceed 20 MW.
  4. The chosen technology must be ready to be deployed, having already been tested as a full-scale prototype and have been subjected to engineering verification/certification by an independent third party.
  5. The developer must have a detailed technology cost reduction plan.
  6. All necessary consents must have been granted.
  7. Grid connection agreement must have been granted or expected to be granted before a final investment decision is made.
  8. The developer must provide a detailed project cost model.
  9. The project must be in receipt of UK Government funding already.
  10. Details of all potential investors are provided, together with a plan to obtain capital.
  11. The original equipment manufacturer must provide a performance warranty.
  12. The project developer must realistically expect to reach a final investment decision by March 2014.

Clearly there are few project developers, who can meet these criteria. A call for Expressions of Interest closed on 15 February and it will be interesting to hear, in due course, which technologies and projects will benefit from this support.