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23 Jul 2018
New market study on ocean energy
EC report estimate the financial needs of the sector, identifies financing gaps and analyses recommendations of the ocean energy roadmap.

The European Commission has recently published a new market study on ocean energy, prepared by WavEC Offshore Renewables and the Italian company COGEA. Based on the 2016 Ocean Energy Strategic Roadmap published by the Ocean Energy Forum, this new study estimates the potential for future development in Europe according to three scenarios (optimistic, average and pessimistic), the investment needed to achieve this potential, and the gaps, barriers and challenges related to private investment. The study also proposes recommendations to respond to the actions proposed in the 2016 Roadmap.

The main results of this study indicate that ocean energy can reach 3.9 GW in cumulative installed capacity by 2030 in Europe. This value drops to 2.8 GW in the average scenario, and to 1.3 GW in the pessimistic scenario.

Excluding tidal containment projects, the investment needed to reach the optimistic scenario's capacity is 9.4 billion euros. In the average scenario this figure drops to 7 billion, and in the pessimistic scenario to 2.8 billion. To date, 6 billion euros have been invested globally, mostly from private sources. The EC, through funding programs, has already invested more than EUR 200 million in research and development in the sector, and Member State investment through the Structural Funds will reach the 1 billion mark by 2020.

Although there are different national and European funding instruments for prototypes and demonstration projects, there is a lack of critical financial mass to accelerate the industry to projects of a commercial dimension. Because of the associated risk and the level of initial investment required, private and venture capital investment is often low and insufficient, and loans are subject to high interest rates. Thus, most private investment comes from own funds, which limits the availability of resources.

The funds proposed in the Roadmap for ocean energy could push the industry to maturity through the use of public funds to leverage private investment but may not be sufficient to advance the industry to the point of self-sustainability. It is recommended to implement production support mechanisms, if possible with consistency at European level, in order to reduce the uncertainty associated with the projects' income.

The offshore wind industry, a pre-commercial but still subsidized sector, took 13 years to reach the first gigawatt of installed capacity in Europe, less than three to double that capacity, and five to five times. Given the technical differences, it is possible that ocean energies do not follow exactly the same path, but a clear vision and stable support will allow the industry to advance with long-term gains.

Ana Brito Melo, Executive Director of WavEC, commenting on the study, says: "Gathering the financial resources needed to expand energy production by oceanic renewable sources and compete in the energy market is undoubtedly one of the most difficult challenges that this sector faces. This report, in addition to presenting results on the levels of funding required, discusses financial support mechanisms that should be implemented consistently by the European Member States."

The publication is available for consultation here.

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