Ocean Wave Power Energy Economics A Wave Power Plant

Ocean Wave Power/Energy Economics A Wave Power Plant What will it Cost? Is it a Money Machine? Roger Bedard/EPRI September 17, 2009 © 2009 Electric Power Research Institute, Inc. All rights reserved. 1

What will a wave power plant cost? • Depends on many factors including – State of development of the device – Level of cost estimation – How much “learning by doing” has taken – How many you buy at one time • Please have patience, I will give you a number answer soon © 2009 Electric Power Research Institute, Inc. All rights reserved. 2

There is a Tendency to Under Estimate during the Early Stages of Development: Mountain of Death © 2009 Electric Power Research Institute, Inc. All rights reserved. 3

In addition to the cost estimate itself, there is a level of uncertainty Which of course is greater for earlier stages of development and degree of sophistication of the estimation process © 2009 Electric Power Research Institute, Inc. All rights reserved. 4

“Learning by Doing” Price Progress Ratio Break-even Point Market Price Learning Investment Cumulative Production Volume Wind 40, 000 MW – Wave 90 MW Cum Production Wind Wave Low Best $/k. W Install 706 1, 740 2, 540 c/k. Wh O&M 0. 9 2. 9 4. 2 High 3, 440 5. 4 COE (cents/k. Wh) Real © 2009 Electric Power Research Institute, Inc. All rights reserved. 2. 7 5. 4 5 9. 1 11. 4

Example Commercial Wave Power Plant Preliminary Design, Reedsport Oregon – Pelamis WEC – see EPRI WP-006 -OR at www. epri. com@oceanenergy/ Installed Cost Transmission & Grid II/C Subsea Cables Mooring Spread PCMs Concrete Sections Facilities Installation Const Mgmt Total Plant Cost O&M Costs Annual O&M Cost Labor Parts Insurance Total 10 -Yr Refit Operation Parts Cons Mgmt and Com Total UG COE Const Financing Total Installed Cost $2, 322, 425 $4, 295, 752 $10. 913, 929 $16, 940, 702 $231, 732, 422 Performance • Rated Power • Power Conversion Efficiency • 6 Device Availability • $9758, 321 $13, 776, 280 $23, 534, 601 Annual Absorbed Energy • 11 (Nom) 9. 1 (Real) cents/k. Wh © 2009 Electric Power Research Institute, Inc. All rights reserved. $2, 500, 000 $1, 850, 000 $21, 104, 460 $112, 312, 800 $44, 064, 000 $12, 000 $9, 691, 340 $17, 647, 000 $214, 791, 720 Busbar Electrical Energy • Avg Electrical Power 90 MW 359, 460 MWh 95% 88% 300, 420 MWh 34. 3 MW

Actual Wind and Projected Wave Power Plant Learning Curves Wind Plant 1982 Cum Prod Vol of 1000 MW Projected Wave Upper and Lower COE © 2009 Electric Power Research Institute, Inc. All rights reserved. 7 Actual Wind COE History Wind Plant 1997 Cum Prod Vol of 10, 000 MW Wind Plant 2003 Cum Prod Vol of 40, 000 MW

Comparison with Other Alternatives Capacity Factor (%) Capital Cost [1] ($/MW) COE[2] (cents/ k. Wh) CO 2 (lbs per MWh) Wave (Oregon – 1 st 100 MW 10, 000 – 10, 100 MW plant 38 38 3 -5 0. 8 – 1. 3 15 - 25 4. 2 – 6 None Wind (class 3 - 6) 30 - 42 1. 2 – 1. 6 4. 7 - 6. 5 None Solar Thermal Trough 33 3. 3 18 None Coal PC USC) 80 1. 3 4. 2 1, 760 NGCC @ $5/MM BTU 80 0. 5 4. 8 860 NGCC @ $7/MM BTU 80 0. 5 6. 4 860 IGCC with CO 2 Capture 80 1. 9 6. 1 344 All costs in 2005 Constant US$ with 2005 without financial Incentives GE 7 F machine or equivalent 600 MW PC Plant, Pittsburgh #8 Coal IGCC with 80% removal © 2009 Electric Power Research Institute, Inc. All rights reserved. 8

Summary – What you have been waiting for • Installed Cost – ~$8 -10/MW – 2009$ – Small order (1 to 5 MW) – No production base • Installed Cost – ~$3 -5 M/MW – 2009$ – 1 st 100 MW plant) • Installed cost will be reduced by 18% for every doubling of production volume © 2009 Electric Power Research Institute, Inc. All rights reserved. • Cost of electricity depends on ownership model as well as many other assumptions • Danger – Beware of Cost Estimates and Cost of Electricity Estimates – Must know all the assumptions behind any estimate – If not provided, estimate is meaningless • Estimating costs is not for the faint of heart – It is complicated – It is detailed – It is hard • You can get just about any answer depending on the assumptions that you choose • When using cost estimates, proceed with caution 9