Implications for the U.S. market

Congratulations are indeed due to Lunar Energy for their proposed 8 MW tidal project. As was noted in the analysis by Mr. Aldersey-Williams, it is a long way from announcement to operation, but it appears there is support and momentum for this effort to move forward in Britain. This nascent industry is going to go through a long period of development before it fulfills it potential. In the U.S. the coordinated support to take this industry to commercialization appears to be lacking, and this may result in the U.S. losing the opportunity to be a leader in this emerging technology much as it did in the wind industry.

If the U.S. is going to compete in the emerging world market of renewable kinetic water power technologies, it must institute programs that put this emerging technology on a level playing field with other renewable technologies. Those programs must include research funding, production incentives and proportional regulatory requirements.

In the late 70’s, wind research in the U.S. received strong government support in the form of research funding and a regulatory regime that did not place unnecessary burdens on development. The results were the launching of an international industry. As concerns for oil and gas prices diminished in the 80’s, efforts in the U.S. declined and development shifted overseas. Most notably, the European market has lead the way in technology development and systems deployment both on and offshore. U.S. deployment is once again picking up due to tax incentives and Renewable Portfolio Standards (RPS), but much of the research advance is going on overseas.

The emerging hydropower technologies are seeing this pattern repeat itself with the likely impact that the technologies will be developed and deployed overseas first. This will lead to other countries being able to take advantage of these reliable renewable energy technologies first; it will also mean others will benefit from the expansion of engineering and manufacturing jobs these new technologies will create. If the U.S. is going to share the benefits of these gains and capitalize on the domestic potential of these emerging tidal and wave technologies, it must:

Invest in research and development

Provide adequate incentives

Develop a regulatory scheme that does not handicap new technology

Investment in research is critical to any new technology coming to market. By one limited account, from 1999 - 2006, Britain spent over $ 230 million for research, development and infrastructure support to develop wave and tidal technologies. By contrast DOE spending on all hydroelectric research in 2006 was less than $500,000 and taken to zero in 2007. This simple comparison points to where the new developments are likely to occur.

In the 2005 Energy Policy Act (EPAct 2005), production tax credits (PTCs) for wind were extended for 2 years.

EPAct 2005 also included a reduced credit for capacity and efficiency improvements at existing hydroelectric facilities. It did not include wave, tidal or emerging hydrokinetic technologies. Without incentive programs comparable to other renewable technologies, wave and tidal generations will be severely handicapped as capital goes to programs that can utilize the credits.

Regulatory structure can serve as a support or hindrance to development. Currently, wind is not required to meet any national regulatory standards as is imposed on hydroelectric development. The growth in wind generation reflects a balance of local regulation with local concerns. FERC and DOI Mineral Management Service permit and license process revisions that reflect a balance of environmental concerns with technological development and deployment could accelerate waterpower energy commercialization in the U.S.

If the U.S. is going to compete in the world market of renewable kinetic water power technologies, it must support the development of these emerging technologies. To put them on a level playing field with other renewable technologies will require programs with long term commitments to research funding, production incentives and proportional regulatory requirements.