The challenge for Orecon has been to develop an OWC device that can generate commercial levels of electrical power with the minimum cost both economically and environmentally. This challenge has been accomplished in the development of the MRC wave energy device. The MRC combines multiple OWC chambers to enable energy capture over a much broader spectrum of wave climates than the typical single chamber OWC. The efficiency of the MRC is further improved by the use of Dresser-Rand's HydroAir impulse turbine which has been proven to far exceed the operating efficiency of traditional turbines used on OWCs.
The OWC method also enables the critical power take off components of the wave device to be housed away from direct contact with the waves, which in itself significantly reduces the risks associated with impact loads and fatigue. It also simplifies the mechanics of the wave device with just a single moving part, since the turbine is directly coupled to the generator meaning there is no need for a gearbox.
Orecon has won through to the final round of the €24 million Marine Renewables Proving Fund grant scheme (worth up to €6.6 million), received an offer by Carbon Trust Ventures to match fund third-party investors, and has obtained UK and US patents for its design.
Nevertheless, earlier this year Orecon saw a powerful syndicate of international venture capitalists led by Advent Ventures withdraw its support in the midst of the recession, and now, despite having a great product, site approval, and government backing, the company has hit stormy waters and faces closure early next year if new investors cannot be found.
In this exclusive interview, Renewable Energy Magazine talks to Orecon CEO, David Crisp, about the company current predicament and its immediate future.
Interview date: December, 2009
Interviewer: Toby Price
Thanks for taking the time to speak with us. So, first off. Could you explain what the company’s current position is?
Orecon is currently unfunded and on 26 January, we will close the doors and put the company into dormant mode.
Imagine I am a venture capital investor interested in funding a marine energy project. Why should I invest in Orecon and what makes its product stand out from the rest?
Simplicity, the Orecon MRC is an incredibly simple device with no moving parts in the water, no gearbox, no hydraulics or mechanical linkages. By being simple, the device can deliver high reliability and availability.
Large scale capacity. The initial device will be 1.5 MW and this expected to quickly increase to 3 MW.
Permanent deployment, onsite maintenance. Unlike almost all other wave energy converters, the Orecon MRC is designed for permanent installation and to be maintained onsite. This will facilitate lower O&M costs and higher availability.
All systems are above water. The Orecon MRC power take off is sited inside above water in a machinery room, there are no moving parts below water. The result is higher reliability, while maintenance can be done in situ. All electrical power conditioning and connections are above water, again driving lower cost and higher reliability and maintainability. The Orecon MRC outputs grid code power.
PTO isolated from direct storm loads. Unlike any other wave energy converter technology the OWC system means the power take system is isolated from direct linkage to the incoming waves. As a consequence the loads the PTO has to withstand are far lower than in mechanical or hydraulic systems and the PTO design can focus purely upon efficiency and reliability, it is also able to operate in more extreme conditions.
What is the next step for Orecon in relation to your request for financial support from the Carbon Trust’s Marine Renewables Proving Fund (MRPF)?
Orecon has been going through the due diligence process of the MRPF. The next step on from this, assuming Orecon is selected, is to enter into contract negotiations. Key to receiving MRPF is to have the necessary funding for the project.
As well as the MRPF, in its Renewable Energy Strategy and Low Carbon Industries Strategy, the UK government has earmarked £60 million of funding for the marine renewables industry and has committed to work with the sector to develop a Marine Action Plan by the end of this year. What would you like to see in this plan and where do you consider these funds would be best used?
In these early years of development the industry needs both capital and revenue support.
Marine renewables is a capital intensive business and in the early years building and deploying expensive initial units really needs some kind of capital support from government. In addition, utilities and other corporates need incentives to invest in the sector (accelerated capital allowances, for example).
Whilst capital support is essential, it is crucial investors and industry see an attractive, viable and exciting market opportunity, if they don’t, investment will not flow. To create that market goverment needs to ensure a suitable feed-in tariff (FiT) (or renewables obligation certificate (ROC) system) is in place. The UK ROC system is okay but inferior to FiTs (financiers do all their projections based upon the guaranteed minimum ROC price, not the market value). It is essential England at the least matches the 5 ROCs of Scotland or the €265 FIT of Portugal.
The European Marine Energy Centre (EMEC) is at the forefront of the development of marine-based renewables and is the first centre of its kind to be created anywhere in the world. The EMEC is about as far away from Orecon’s base as one could get in the UK (being located up in the Orkney Islands), but have you called on the Centre’s services at all?
EMEC is a test centre and is not actually developing marine based renewables, as such they provide a test site rather than development services. We have been in ongoing contact with EMEC in the context of a test site.
If you were able to present the UK’s Department of Energy and Climate Change with a wish list, what would be the top three things you would ask for?
• Serious targeted capex support: ~ £200m pa
• Feed-in tariff: £250/MWh
• Infrastructure acceleration (completion of SEA, streamline site consenting, grid connection etc.)
Assuming you manage to obtain the financing required to move forward. What does 2010 hold in store for Orecon?
If we were fully financed, we would commence construction of our full-scale MRC unit in April 2010 with deployment at Wave Hub in 2011.
Reflecting the reality of the current economic situation, we have developed a Plan B which requires less funding. In this plan, during 2010 we build a 1/3rd scale buoy in Falmouth and deploy it in Falmouth bay through the winter of 2010/11. The deployment will provide valuable proof of moorings performance, marine structure and storm survival and power capture. Going into 2011 with a buoy in the water and hopefully an improving economic environment, we would then look to raise funding for the full-scale MRC project.
The total cost of Plan B is around £4m. We hope to get grant funding plus some backing from Carbon Trust ventures, such that we would be left looking to raise £1-2m of private investment.
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