KEY MARKET METRICS
The importance of securing high confidence in the estimated costs and performance inputs to reliably ascertain the economic viability of a technology cannot be stressed enough if the industry is to move into a new era of commercialisation. There have been numerous studies conducted in the past on proposed commercial projects which have projected claims about the viability of differing technologies but it has come to pass that none have demonstrated viability. Our research shows that some of the assumptions and values used by these other projects were simply not realistic and therefore it is a primary aim of the Company to avoid this.
A case in point is the cost break up for the Levelised Cost of Electricity (LCOE) as used in a previous report as shown below. For instance, the estimated Submarine cable costs cited of approximately 1% are not consistent with a number of other references including the actual costs of the cabling for the UK’s Wave Hub project.
This may be for a shoreline project but as this is not stated one might well question the validity of this cost breakup. Examples such as this do little to inspire confidence and they have potentially left a wake of skepticism with key stakeholders such as Governments and private sector investors. Adding to the uncertainty has been the recent news regarding the liquidation of UK wave company Pelamis, once highly regarded as being a market leader, and the withdrawal by another company of an expensive proposed Australian project.
Following on from this, new objective initiatives have been recently announced by a number of leading industry organisations of different nationalities such as in Scotland and from the USA to identify potentially commercially viable technologies. These suggest a new more scientific, objective approach to identifying a high efficiency design at a material scale and sets the course for the industry to move into a new era of commercial reality.
By providing all results to best practice standards and explicitly mapping out our proposed project development plans, Perpetuwave aims to improve understanding of its process and therefor the value of the Company’s processes and detailed plans. At the same time this should raise the bar for the industry to strive to improve its integrity and transparency.
Perpetuwave has extensively modeled the various project phases of its proposed Xtracta technology commercialisation pathway to maturity. Best practice procedures have been used throughout, with quotes used where possible, and estimated costs based on best references where available and performance values of high confidence level etc.
Most of the major cost elements have high confidence while others have lower confidence. Hence there is scope for discrepancy so a contingency factor is appropriate. The electricity cable cost item which typically has a low level of confidence attached, is also discussed to raise the bar of transparency on this.
ELECTRICITY CABLING COSTS
The costs of submarine electricity cabling to offshore projects can be very expensive. There is obviously a higher cost the larger cable size is used but for the immediate future of wave energy, it is safe to say that project sizes will be limited.
With the WaveHub project publicly funded, costs of the 33kV cable are known and hence this provides an excellent reference to bring high confidence to the cable costs of other wave power projects. From a presentation received from the WaveHub team, the electricity cable to the project and connection to the grid cost a total of £35M including management. The length of cable over land, and the length of the submarine cable were measured from a plan of the project. An assumption was used that the submarine cable was 50% more expensive per km than onshore. The total cost of the project was then divided by the number of kilometers to determine the cost of the submarine cable which is over £1M per km.
The input costs and performance for Perpetuwave’s project modeling comprises the following:
- Structural power plant Costs – Detailed preliminary drawings and steel weight Excel spread sheet to determine total dry weight. Quote received from leading UK shipbuilder of £5,000/T of steel which converted to EU € at 1.4 = €7,000/T of steal. Fully costed fit out plan.
- PTO equipment costs – marine grade permanent magnet rotary generators quoted, drive train partly quoted / estimated.
- Anchor and mooring – Mostly by quote.
- Project costs – Based on a detailed internal plan or as recommended by leading consultants.
- O&M costs – Detailed O&M plan with service crew etc with a number of other O&M costs provided by best reference or as recommended by leading consultants. One major service is costed.
- Performance – Based on previously recorded electricity production from testing at scale
- Revenue – Feed in tariffs for wave powered electricity in relevant countries provide confidence of revenues.
Indicated project costs for a 2nd phase 25MW project at a slated European project as a function of the LCOE.
The graph above indicates the projected costs for the XTRACTA device and project costs etc for a second commercial phase project in a 30kW/m resource. The indicated LCOE is ~€.12c/kWh for a project life of 20 years and this is based on a number of assumptions.
Indicated O&M costs are approximately €.5.7c/kWh or €3.16M/MW and make up a significant part of these costs. The O&M costs are based on a detailed O&M plan with average wages for a maintenance team however other costs are based best reference, but inevitably there is an estimate component. The indicated O&M costs for the Xtracta fall between the actual O&M costs of one lifesaver device, and the lower projected O&M costs for a commercial Lifesaver project in a report titled, Marine renewable energy conversion Grid and off-grid modeling, design and operation, by Jonas Sjolte. The Lifesaver device shares a similar drive train system and hence provides a good reference for the case.