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From the report (https://ore.catapult.org.uk/wp-content/uploads/2022/06/AI-paper-tidal-stream-benefits-to-the-wider-energy-system-v1.12.pdf):
"The breakeven LCOE of tidal stream was found to be £49-55/MWh, depending on the capacity installed. Below this level, tidal stream offers cost benefits to the grid and will displace other renewables (for example offshore wind and biomass with CCS). Above this level, tidal stream adds cost to the energy system when compared to the cost-optimised scenario with no tidal stream."
and:
"How does this align with cost projections?
Arguably the main finding from this study is the £49-55/MWh breakeven tidal stream LCOE by 2050. While certain aspects of the tidal technology could warrant a cost premium (for example the high predictability), from a purely economic perspective this is the level that the tidal technology must reach to start to reduce the costs of the overall energy system.
So how achievable is this? The current LCOE of tidal stream is in the range £250-300/MWh, depending on the technology and site conditions. This is reflected by the administrative strike price set for AR4, at £211/MWh (2012 currency, £254 in 2021 currency). Greater insight will be gained when the successful bids are announced later this year. The sector has seen rapid cost decrease in the last five years, even without revenue support. LCOE in 2015 was estimated at $440/MWh by Bloomberg New Energy Finance (BNEF) [11], equivalent to £380/MWh in 2021 currency. From 2015 to 2022 this implies a 33% LCOE reduction, a significant amount despite only a handful of turbine installations and one multi-MW array with government revenue support (Meygen, a 6MW project). Projections by Coles et al. estimate that tidal stream could dip below £150/MWh by 2030 if it keeps on its current cost reduction trajectory (assuming a learning rate of 17%) and the 124 MW of capacity that is currently eligible to bid into subsidy support auctions is installed [12]. Projections by ORE Catapult have estimated that tidal stream could reach £90/MWh by the time 1GW has been installed, which could be achieved by the early 2030s if upcoming projects can capitalise on the strong sector headwinds at present."
Thanks for this MT… good to see some clear cut numbers. Lot of moving parts to hit that goal. But those numbers will be important assessing performance in the future years.
Be interesting to see who the next UK government will be. Could be pivotal to any further domestic subsidies, CFDs and I’m also keen on seeing if the speeding up on connections to National Grid will help move BESS projects up the queue.
Back to the UK elections, it’s likely whoever wins un Autumn 24 will preside over the period which the first phase of MeyGen goes into production.
In for the long term here … Good Luck All.
** Next Phase(s) of MeyGen
You're welcome.
Imo the most important thing here is that LCOE must not be the only metric to look at as it's simply not telling the full story.
Wind and solar have the disadvantage of being unpredictable and therefore require additional considerations. Considerations that aren't necessary for tidal and which justify a higher LCOE. LACE (levelized avoided cost of energy) must be taken into account as well.
IMO very important not to talk too much about LCOE. Onshore wind has been cheaper than everything for a long time and got banned by Tories for thanks. Meanwhile nuclear is a regular overbudget, delayed white elephant and see how they chuck cash at it. Same for offshore wind... got its prices down nicely but still got screwed when it needed some support in face of rate hikes and inflation in material costs. No such problems with the oil & gas boys when they need a favour, because they made sure the political terrain was made for them, with no concern about the facts.
Very true that predictable tidal grid balancing is a fantastic asset in its own right, but UK supply chain, UK success story, Westminster not killing Scottish industry, are all just as valuable arguments, maybe even more so.
(Obviously this doesn't change that LCOE is definitely going fast in the right direction).
Good luck for 2024 everyone.
I keep getting torn apart. One day I get optimistic, on another something happens that raises doubts.
I think it's fair to be skeptical given how the past few years went..
It's always mixed signals. Selling ATES, winning CfD. Losing pellets, getting BESS. Seeing an insider buy, dilution follows..
SAE keeps playing with me 😅
I just hope that 2024 will finally be the year where we can recover and see a small but steady upward trend in valuation.
The next CfD round and whether or not we get a larger budget this time will also set the tone.
MT and all frequent followers -
something I think might play a factor in the long term value / attractiveness to investors may be whether the planning request to install the longer diameter turbines gets signed off. (I think it’s currently undergoing EIA Review - happy to be corrected on this!)
I’m hoping … the longer turbine diameter should increase output and reduce the amount of turbines required /reduce installation costs and thereby reduce maintenance costs.
Thereby make it more economically viable and reduce the time to implement the array. Time will tell but I think the EIA could be up to 12 months before we find out the result (keeping my ears and eyes open for news …).
If anyone knows any more info - please do correct me!
Keen to hear people’s thoughts on this
Https://marine.gov.scot/sites/default/files/eia_screening_report_redacted_redacted.pdf
FYI above is a link to “MeyGen Tidal Array - EIA Screening Report”