Innovation Energy: Tidal power is a promising source of electricity, but faces significant waves of challenges | Financial Post

Published July 10, 2019 • Source

The energy industry gets a bad rap when it comes to innovation, yet the oilpatch is by far the largest spender on clean tech in Canada, to the tune of $1.4 billion a year. As part of its continuing coverage of the innovation economy, the Financial Post reports on the intersection of technology and energy, from the oilpatch in Alberta, off the shores of Nova Scotia to the plains of Saskatchewan.

Cape Sharp Tidal in July 2018 successfully placed a colossal two-megawatt tidal turbine on the ocean floor in the Bay of Fundy and soon after connected the turbine to Nova Scotia’s electrical grid.

It was the second time Cape Sharp, a joint venture between Dublin-based OpenHydro Ltd. and Halifax-based Emera Inc., the parent company of Nova Scotia Power Inc., had installed a turbine in the Bay of Fundy, a stretch of water between New Brunswick and Nova Scotia that’s known for its high and powerful tides.

It was also the third deployment of OpenHydro’s in-stream tidal technology in the bay since 2009, at the time marking the company as a leader among the half-dozen companies trying to draw commercial electricity from the Fundy tides.

The deployment was considered a success for Cape Sharp and a major milestone for the Fundy Ocean Research Centre for Energy (FORCE), the main in-stream tidal energy testing ground in Canada.

But within days, OpenHydro imploded, its funding abruptly pulled by its parent company, Paris-based Naval Energies. The decision put OpenHydro in immediate liquidation. Suddenly, the in-stream tidal turbine developer was gone, local suppliers were out millions of dollars, and the successfully placed turbine was stranded — and remains so a year later — on the seabed.

In the bigger picture, OpenHydro’s implosion was a big blow to Nova Scotia’s fledgling attempt at tidal power innovation and the pursuit of commercial in-stream tidal electricity.

“I think everybody involved was just shocked and completely disappointed with how that unfolded, with no notice,” said Tony Wright, FORCE’s general manager. “We’re just mystified by the sequence of events … We’re still puzzled by how that could have happened. This industry cannot afford to let that happen again.”

Tidal power offers a compelling source of electricity — both green and predictable — for governments and utilities hoping to boost their renewable energy output, and Canadian companies have the technology to make it happen, though it is still relatively unproven and risky for investors since the full commercial potential has yet to be demonstrated.

It’s not for lack of trying. Companies are testing, altering and upgrading tidal turbine technology in Nova Scotia, as well as attempting to innovate in related areas such as underwater monitoring to determine how animals interact with tidal equipment, as well as how to launch and recover turbines, anchor equipment and deploy subsea cables in the Bay of Fundy — a difficult environment to work in due to its very strong currents.

The ultimate goal for developers at the FORCE site is to test, refine and de-risk tidal electricity production and prove the bay’s tides can be harnessed to generate electricity at commercially acceptable prices and output.

The process has taken longer than originally predicted and still faces significant hurdles, including much-needed funding and the general challenge of testing in waters that can easily tear equipment apart, as happened in 2009 to an OpenHydro prototype.

“It’s been a challenge, there’s no doubt about it,” Wright said.

Another major quandary is the cost of tidal electricity.

“Right now, developers are often faced with doing stuff for the very first time and that’s high risk and it’s expensive,” Wright said. “The challenge now is to … bring down the cost so that it becomes more competitive with other forms of renewable energy.”

The FORCE site, located in the Minas Passage area just off the Nova Scotia coast, gets funding from the federal government (the largest contributor), its private-sector berth holders (the companies sub-leasing demonstration spots at the test site), and the Nova Scotia government, which has contributed $11 million since 2009.

FORCE is the project steward and site manager, providing the basic infrastructure, including electrical interconnections, for developers to test their technologies. FORCE also does environmental monitoring. Developers each get access to a sub-sea cable, interconnection facilities and the right to sell power to the Nova Scotia grid.

“FORCE has put all of the necessary ingredients in place to build the first demonstration projects,” said Damian Bettles, Canadian regional manager for DP Energy Ireland Ltd., one of the FORCE berth holders.

DP Energy, a private renewable energy development company based in County Cork, Ireland, holds two of FORCE’s five berths through two affiliate companies, Halagonia Tidal Energy Ltd. and Rio Fundo Operations Canada Ltd.

Bettles said DP Energy is developing its two berths as a single project under the banner Uisce Tapa, which is Gaelic for fast water. The $117-million project is expected to deploy six seabed-mounted turbines to produce a total of nine megawatts, which Bettles said would generate enough electricity to power 3,500 average homes.

The turbines are slated to be in operation by the end of 2021, a delay from a previous 2020 goal. Bettles blamed the delay, in part, on sagging investor confidence.

“This is a stepping stone for us looking to develop utility-scale projects in the tidal space in Nova Scotia in the future,” he said. “Our ambition from this would be to successfully demonstrate the nine-megawatt project and then in the next couple of years move to a 30-megawatt project and maybe a 100- to 150-megawatt project thereafter.”

Currently, no turbines are deployed at FORCE, aside from the abandoned OpenHydro unit, which the provincial government said will be brought back to the surface at an unknown cost and date.

But Sustainable Marine Energy Canada Ltd. (SME), whose largest shareholder is Schottel Hydro GmbH of Germany, has technology deployed elsewhere in the Bay of Fundy and plans to eventually move its equipment to the stronger tidal currents at the FORCE site, where it is one of the four berth holders.

Jason Hayman, SME’s managing director, said the company is in the R&D stage, but believes it is “on the cusp” of commercialization.

“It’s basically learning by doing, as opposed to putting something down on the seabed and then hoping it will all work and if it doesn’t, you’re up for a massive couple-million-dollar bill to get it out,” he said, taking a shot at the Cape Sharp project. “It’s like doing some hill walking before we go mountaineering. And if you look at it, FORCE really is the K2 of tidal energy. You don’t want it to be your first time.”

The fourth FORCE berth holder, Minas Tidal Ltd. Partnership, didn’t respond to a request for its deployment schedule, although no deployments are scheduled at FORCE this year. Another company, U.S.-based Big Moon Canada Corp., has tested technology in the Bay of Fundy in recent years, but is not a berth holder. (Big Moon did not respond to a request for comment).

Is there a leader in the effort to turn ocean currents into electricity at FORCE?

“I’d say it’s neck and neck between SME and DP,” said Sue Molloy, a consulting engineer and adjunct professor at Dalhousie University in Halifax who specializes in ocean engineering. “We are at a point where we have enough information and enough knowledge to get things into the water and get them operating. We need to do that … Getting those first systems in the water is critical.”

Three of the four current berth holders must hit commercial operation by 2020, or risk losing their power purchase agreements, while Halagonia has until 2021. It may be that 2020 is an unrealistic deadline, as both SME and DP have said they need more time, but so far the Nova Scotia government won’t say if it will agree.

Hayman said the 2020 deadline must be changed so the companies can launch effectively.

“Otherwise, you create this gold rush mentality where people take silly risks,” he said.

Likewise, Bettles said DP is currently discussing an extension with the province.

“We will need an approval and change to that deadline,” he said.

DP is a project developer, not a technology company. Its turbine of choice is made by Andritz Hydro and, according to Bettles, has been used in Scotland since November 2016.

“For us, it’s about de-risking the technology, not going for big innovation steps,” he said. “It’s taking something that’s been proven elsewhere and taking a low-risk approach to development.”

DP is also developing tidal projects in Scotland and Northern Ireland, neither of which produces commercial power yet. The FORCE project is its lead effort.

“In the U.K., the support for tidal is not there at the moment to develop a commercial project,” Bettles said.

Last September, the Canadian government announced $29.8 million in funding for DP affiliate Halagonia, but Bettles said financing remains “a big challenge.”

The collapse of OpenHydro didn’t help.

“It shakes the industry,” said Molloy at Dalhousie. “It turns off the high-risk financing sources and makes people nervous.”

Molloy’s tidal expertise is not just academic. She was FORCE’s first science officer and previously served as the president and general manager of Black Rock Tidal Power (now SME). She said the main issue is not the technology, but money, noting developers will need tens of millions of dollars.

“It’s money. It’s all money,” she said. “We’re going to need more investment, but we will need success to build that investment … We need to see some successes.”

Molloy said the industry will benefit from the installation and maintenance innovation underway at FORCE.

“It’s coming up with economical ways to make tidal power viable. Because if we can’t come up with good systems for installing and maintaining, then tidal won’t be a viable option,” she said. “Canadian companies are a big part of learning how to … innovate solutions that bring the cost down. That’s happening on the ground here. We need to get the price of everything down.”

Derek Mombourquette, Nova Scotia’s Minister of Energy and Mines, said the demise of the Cape Sharp project has not impacted tidal investment and maintains the province can still be a world leader in the field.

“I feel very optimistic about the potential that we have just based on the investment that’s taking place within our province,” he said.

The Nova Scotia government expects one or more operators to be producing tidal electricity in the next three to five years, but does not have a predictive figure for how much commercial electricity could be generated from tidal power.

“But once a system goes in, the prospect for commercial development is very, very positive,” Molloy said. “We’re waiting for a system to be successful. The industry is not dead.”