richard yemm chief technology officer pelamis wave power ltd
TRANSCRIPT
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RICHARD YEMM
Chief Technology Officer
Pelamis Wave Power Ltd.
Stanford School of Engineering
May 4 2009
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Cost reduction – the development cycleWave Energy – why?
• Resource is enormous
• Most ‘dense’ renewable resource
• ‘Out of sight & out of mind’
• Renewables needs ‘options’…
• Dependable & forecastable
• Aggregation with wind => good
Major energy source & industrial opportunity
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Cost reduction – the development cyclePELAMIS – Business Overview
Electricity Markets
Pelamis Wave Power
Pelamis assembly, installation,
operation & maintenance
Component Suppliers, Sub-
contractors and Fabricators
Power Generation Projects
Project
Development
Technology provider
Model adopted across power sector
Proven through wind industry success
Industry standard model
Incorporated January 1998
Private - UK Limited Company
Currently 78 staff
~$0.75m seed from ‘friends & family’, Angel
~$12.5m first stage VC 2002
~$60m since in 3 rounds
2 commercial contracts to date, ~$15m
Business & finance
Proven, accepted, financeable business model…
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Pelamis WEC technology - USPs
Breakthrough technology with unique competitive advantages
Forecastable output
Negligible visual intrusion
Minimal environmental impact
Minimum on-site construction work
Off-site maintenance
Offshore deployment
Non-site specific
Inherent survivability - CRITICAL
3 x power/tonne of competitors
Available technology
Designed to DNV standards
Patented core technology, all key know-how in-house
Acknowledged market leader
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Wave Energy – where have we got to?
• We have come a long way in 11 years…!!!
• Significant Venture Capital now engaged in sector
• We are at the stage of proving-out the technology:
– Prototype and now pre-commercial machines
– Manufacturing and supply chain development
– Project infrastructure
– Operational procedures
• We are putting in place industry design, performance & operational standards and best practices
• We have gained credibility, and the interest of energy sector
But… we have not proven full commercial operation yet
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FROM THIS….
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7Commercial in ConfidenceCommercial in Confidence
TO THIS….
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8Commercial in ConfidenceCommercial in Confidence
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9Commercial in Confidence
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10Commercial in ConfidenceCommercial in Confidence
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11Commercial in ConfidenceCommercial in Confidence
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12Commercial in ConfidenceCommercial in Confidence
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13Commercial in ConfidenceCommercial in Confidence
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14Commercial in ConfidenceCommercial in Confidence
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17Commercial in ConfidenceCommercial in Confidence
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18Commercial in Confidence
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19Commercial in Confidence
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20Commercial in ConfidenceCommercial in Confidence
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21Commercial in ConfidenceCommercial in Confidence
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22Commercial in ConfidenceCommercial in Confidence
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PELAMIS - Status
• ‘P2’, second-generation machine currently in build:
– Range of advances & improvements from R&D plus experience
– Approaching double annual yield for similar cost
– First machine currently being built under contract to E.on, launch
schedule for Q2 2010
CONCLUSION: First technology-cycle complete, P2 will be platform
for commercial roll-out
• ‘P1’, first generation technology demonstrated:
– 4 x 750kW machines built/installed
– All related wave farm infrastructure, operational procedures,
SCADA systems etc proven
– P1 machines have some limitations in terms of performance &
reliability
– ‘First-of-kind’ project costs fully defined
– Lessons learnt captured & fed into onward programme
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Cost reduction – the development cycle
Cumulative capacity
Conceptual phase
First-of-a-kind
Capital cost
Normal learning curve Extended learning
Rapid
learning
Cumulative capacity
Conceptual phase
First-of-a-kind
Capital cost
Normal learning curve Extended learning
Rapid
learning
Cumulative finance
Investment risk
Current focus
Wave Energy – costs
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Cost reduction – the development cycleWave Energy – parallels with wind
… and NOW
The wind industry….. 1980s
- Fully converged & consolidated…
- Into mainstream global roll-out
- Delivered by solid policy actions in EU
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Cost reduction – the development cycleWave Energy – costs & cost reduction
Wave
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Status of Markets – EUROPE
• Many initiatives have come through specific lobbying at
National level
• Scotland has led this with:– Saltire prize – (c.f. ‘X Prize’), ~$15m for first commercial demonstration
project
– EMEC test centre – 4 berth all inclusive test site for prototypes
– WATES grant scheme – 40% grant plus 5 years of revenue support at
15$c/kWh for prototype & pilot demos
– Feeder market support – 35-40$c per kWh for pre-commercial/commercial
projects
– Planning & regulatory framework - First Marine SEA, spatial planning etc
– Licencing – first managed sea bed licencing programme in process
• Attractive schemes also in Portugal, Ireland etc
• R&D support from European Union
• Many other countries assessing options
CONCLUSION: EUROPE IS LEADING WITH POLICY & ACTIVITY
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Status of Markets – UNITED STATES
• Lots if interest, enthusiasm & activity in various States
• West Coast leading as resource & renewables focus higher
• Wave energy eligible for tax credit, levels & timescale
insufficient
• Initial permitting requests/exercises in process – complex
• Various RFPs & grants schemes at Federal (+1 State) level
• Various companies active in US
CONCLUSION: COORDINATED ACTION WITHIN US ESSENTIAL
TO MOVE FORWARD STRONGLY
• At a state level (CA,OR, WA) there are significant individual
programmes & initiatives, but little sign of a holistic
coordinated plan so far
• Little concerted or coordinated action at a Federal level, there
is a need to move to push this up the policy priority list
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What are Key Industry Issues?
• Stepping to the next level of funding for technologies &
projects…
– Private Investment
– Grants
– Feeder markets
• Key issues – scale of finance required, perceived risks &
time to return
• Achieving industry convergence/consolidation
• Absence of clear National & Regional objectives & targets
• Poor industry coordination in some areas
CONCLUSION: UNLOCKING FINANCE KEY TO SECTOR SUCCESS
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What should Industry & Government do?
• Significantly raise the profile of the sector in forward thinking to enhance investor & customer confidence
• Move strongly to drive technology demonstration, refinement and early roll-out in key first-mover markets:– Address sector risk profile efficiently
– Learning from / mirroring experience of wind, oil & gas industries and other heavy industrial technologies
– Build solid domestic technology and industry base(s) in first mover markets before taking technology global
• Move strongly to lobby for holistic policy initiatives at US Federal level to provide solid and consistent investment, development and deployment platform
Above all else: CREATE A SOLID PLATFORM FOR
PRIVATE SECTOR TO DELIVER!
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www.pelamiswave.com
RICHARD YEMM
May 2009