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PAPER 4: wave and tidal energy
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recommendations
✓ Providing financial
support through to
commercialisation of
developments

✓ Accelerating
affordable grid
access

✓ Ensure a clear and

timely consents
process

✓ Support supply chain

development Introduction
Scotland boasts 25% of Europe’s tidal stream and
✓ Building a strong 10% of Europe’s wave power, creating a combined
skillsbase 33 GW 1 potential of practical marine energy in
Scottish waters.

Whilst policy makers are wrestling with three major

challenges: reviving economic growth, reducing carbon
emissions and securing energy supplies, current
predictions are that, with an installed capacity of 1.5
GW by 2020, the industry could generate at least
10,000 jobs. Capital and operating expenditure could
top £3.7billion annually with at least £1.3billion retained
in Scotland. However, this investment can only be
realised with the right balance of legislative, regulatory
and fiscal framework.

This paper draws on the views of leading industry

bodies in Scotland and the UK and complements the
2009 FREDS Marine Energy Group Road Map 2 and
RenewableUK’s recent report, Channeling the Energy:
A way forward for the UK wave and tidal industry
towards 2020 3. It sets out actions for legislative,
regulatory and financial change which will support this
new industry to become the world-leading sector it
deserves to be.

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Policies To Drive
Progress...
Finance
Providing the right package of incentives and
support to drive confidence and certainty
“Market pull” support through Renewables
Obligation Certificates
The implementation of an enhanced Renewables
Obligation Certificate (ROC) banding regime offering
five ROCs for wave energy and three for tidal energy
has placed Scotland at the global forefront for
investment in marine energy and offers investors and
utility partners a clear, stable and well-understood
‘market pull’ mechanism to incentivise early
investment.
However, investment in early array projects (of up to
30MW rating, consistent with the Further Scottish
Leasing round in support of the Saltire Prize Programme)
will only take place if the ROC multiple level fully reflects
their costs. For both wave and tidal, costs are such that
a ROC multiple of five is needed to ensure the industry
benefits from its first-mover advantage.3
✓ The Scottish Government should retain the current
regime of 5 ROCs for wave energy, and should review
the ROC level for tidal towards parity with wave,
in line with evidence provided by industry in the
Renewables Obligation (Scotland) consultation
response and the Channeling the Energy report.
“Technology push” investment in early
marine energy arrays
A major challenge for the marine energy industry
is securing finance to move from deploying single,
full-scale marine energy devices to installing the first
small arrays. Technologies are not yet sufficiently
mature to make the first arrays commercially justifiable
investments without government support. To capitalise
on its global lead, Scotland must put in place a
mechanism which will supplement the Renewables
Obligation Scotland (ROS) and enable technology
and/or project developers to bridge this technological
and financial gap. Due to the range of levels of
maturity of marine technologies, there must be
diversity in financial mechanisms to support those
leading technology developments, while not blocking
new entrants.
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✓ The Scottish Government should provide a package
of grants and government-backed loans specifically
targeted at marine energy companies seeking to
commercialise their technology at 5-30 MW scale, by
the market pull incentives offered from banded ROCs.
✓ Scottish Renewables urges a settlement between
the Scottish and UK Governments that allows the
unfettered release of the Scottish Non Fossil Fuel
Obligation (NFFO) by early 2011.
✓ The Scottish Government should press the UK
Government for early access to the Green Investment
Bank to provide a package of government grants and
loan guarantees for marine energy from 2011.
Putting marine energy on the EU funding map
The New Entrants Reserve 300 (NER300) is a common
fund of 300 million EU Emission Trading Scheme (EU
ETS) allowances set aside for supporting 8 Carbon
Capture and Storage and 34 renewable energy
projects. The value of the fund is estimated to be at
least €4.5bn. The Department of Energy and Climate
Change (DECC) has stated that they will support one
UK bid for a wave or tidal project 4.
NER300 is the opportunity to mark wave and tidal
technologies on the European funding map – opening
up the possibility of wave and tidal’s inclusion in
the Strategic Energy Technology (SET) Plan and an
associated European Industrial Initiative (EII). Whilst
DECC have stated that it will not underwrite the pre-
financing of a successful project, it is unlikely that a
successful project would be deliverable without pre-
financing, therefore this European funding would be
lost from the sector.
✓ The Scottish Government should provide support to
the UK’s leading NER300 bid in Scottish Waters to
ensure this valuable opportunity is not lost.
✓ If the UK bid in Scottish Waters is successful,
match funding should be provided by the Scottish
Government for this successful project.
“To capitalise on its global lead, Scotland
must put in place a mechanism which will
supplement the Renewables Obligation
Scotland (ROS) and enable technology
and/or project developers to bridge this
technological and financial gap.”
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GRID
Matching the opportunities for growth with
fair access to the right infrastructure
Transmission charging
Scottish generators produce 12 per cent of UK
generation, but account for 40 per cent of the
transmission charges - or about £100 million per year
more than their proportionate share.
High transmission charges are acting as a significant
disincentive to investment in large scale projects which
is having a consequential knock-on effect on potential
grid infrastructure upgrades. Without grid upgrades
to the Western Isles, Shetland and Orkney, Scotland
cannot aspire to meeting its marine energy goals.
✓ Ofgem must reform transmission charging through
the Project TransmiT process to ensure a fair and
transparent scheme consistent with Ofgem’s own
objectives of promoting low carbon electricity
generation and energy security.
Grid infrastructure
There remain major concerns that grid connections
will not commence in time for early-mover developers
to connect their energy to the grid. A favourable grant
and loans scheme could enable a small number of
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developers to progress with 5-30 MW projects by 2015.
However, they will require upgraded grid connections
to be in place by 2013.
For example, at present there is no spare capacity
between Orkney and the UK mainland. With the
absence of developer commitment to grid connection
agreements no further work will be undertaken by
Scottish Hydro Electric Transmission Ltd (SHETL).
This excludes the initial feasibility work and subsea
route surveys carried out over summer 2010. A lead
time of three to four years from the date of National
Grid Energy Transmission (NGET)/SHETL entering into
connection agreement contracts should be assumed to
bring grid reinforcements to Orkney.
✓ UK and Scottish Government’s should press Ofgem
to enable SHETL to invest in these strategic grid
infrastructure projects on a ‘no regrets basis’ without
the requirement for SHETL to seek final sums liability
cover. This principle has already been used in the
Beauly-Denny upgrade and could be swiftly utilised in
the Western Isles, Shetland and Orkney.
✓ The Orkney, Shetland and Western Isles have massive
wave and tidal potential - as well as onshore and
offshore wind resource - and can and will contribute
disproportionately to progress towards renewables
targets.  In order to accelerate development in these
areas, grid connections should be considered part
of the strategic electricity transmission network and
costs recovered accordingly, as the current Final
Sums Liability and TNUoS charges are clearly acting
significant barriers to investment.
Aquamarine Power Oyster

PLANNING AND ENVIRONMENT
Getting the framework right to deliver timely,
efficient and inclusive decision making.
Marine (Scotland) Act 2010 implementation
National Marine Plan
✓ The National Marine Plan must take account of the
national renewable energy targets and the role that
offshore renewables will play in meeting those and
future targets.
Marine Protected Areas
The development of the network of Marine Protected
Areas (MPAs) by 2012 must take into account, as
stated in the Marine (Scotland) Act 2010, the social and
economic impacts of MPA designation and the MPA
network, and MPAs should not be designated where
these impacts are unacceptably high.
✓ Scottish Natural Heritage and Marine Scotland
should include full industry and local community
consultation at each stage in the MPA process.
Information must be provided as soon as possible to
sea users and local stakeholders on the prospective
location and possible management measures
being considered for MPAs, with an open dialogue
leading to a consensual conclusion about the actual
boundaries and management regimes put in place.
Deploy and Monitor Policy
The industry welcomes the use of a risk-based
approach to consenting wave and tidal energy
renewable, interpreting the precautionary principle in a
way that allows responsible progress.
✓ In order to build on this practical approach to
consenting, Marine Scotland and Scottish Natural
Heritage should ensure that the approach taken
for pre and post construction monitoring is not
obstructive to the safe and efficient deployment of
devices. It must focus upon generating information
useful to decision making about future deployments.
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Environmental Impact Assessment
We have concerns that requests within the
Environmental Impact Assessments (EIA) for onerous
information as part of the consenting process for early-
stage marine energy developments risks jeopardising
Scotland’s aspirations to continue our global lead in
marine energy.
Regulators should recognise the small scale of
development likely to take place over the next few
years and adopt a pragmatic, risk-based approach
to regulation, which is in proportion to the scale of
development.
✓ Publicly-funded initiatives should establish strategic
baseline conditions and undertake strategic
monitoring with industry responsible for site specific
baseline studies and site/technology monitoring.
✓ Regulators and their advisers must ensure a practical
approach to data gathering and monitoring protocols,
recognising the full range of existing uses made of the
sea; the relatively small scale of early marine energy
developments; the challenge in providing detailed
information for pre-commercial devices and the
fundamental environmental benefits that renewable
energy provides.
✓ Scottish Government and its advisers must ensure
that environmental policy objectives are aligned with
national and European policy on climate change and
renewables with the explicit recognition of climate
change benefits which renewable technologies
provide.
Open Hydro
Community policy
Renewable energy has a legacy of good
communication with communities through all, and
especially the early stages, of a project. This will
be strengthened offshore by the pre-application
consultation process built into licensable marine
activities under the Marine (Scotland) Act 2010.
There are many benefits that renewables bring to
communities including the boost to local business and
the creation of local skilled jobs that will increasingly
grow as marine technologies reach commercialisation.
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Licensing and Consents Leasing

To ensure the timely delivery of the industry, it is
vital that consents are obtained at reasonable and
proportionate cost. Gaining planning consent is a vital
milestone that can unlock future funding to carry out
detailed site assessment investigations that then inform
the final project design.
There is a clear precedent from offshore wind
consenting following the ‘Rochdale Envelope’
approach, within which consents are obtained for a
range of options based on the ‘worst case scenario’
when assessed by the EIA process.
The adoption of such a process mitigates the risk that
design changes required post consent to deliver a
project do not contravene agreed licence conditions,
even if these design alterations are not substantive in
overall environmental terms.
This process is equally important for applications where
it is intended to deploy a known technology concept
and where a range of technology concepts (technology
neutral) are still under consideration
The leasing round activity that has been delivered by
The Crown Estate is welcomed by industry as it plays
a significant role in Scotland’s lead in this industry.
With the announcement of the Further Scottish Leasing
Round (in support of the Saltire Prize Programme) it
would be of benefit to the industry that the whole of
Scotland’s territorial waters be available in this round
including the Pentland Firth and Orkney Waters’
(PFOW) strategic area, on the proviso that new leases
will not interfere with existing lease agreements. This
will ensure that investment in PFOW infrastructure is
seen to have longevity.
✓ There should not be any blanket “no-go” zones for
wave and tidal research, demonstration and commercial
development with each project considered on its own
merits within the context of the proposed site.
✓ The present moratorium on leasing in the Pentland
Firth and Orkney Waters should be lifted and any
such provisions in the future only imposed with broad
agreement of relevant stakeholders.

✓ Marine Scotland should ensure that the ‘Rochdale

Envelope’ approach as previously applied to offshore
wind developments will continue to be recognised as
a necessary licensing and consenting route.

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SUPPLY CHAIN
The industry welcomes the publication of the National
Renewables Infrastructure Plan Stage 2 and its
recognition of the different port and infrastructure
needs of the wave and tidal sector. We also
welcome the introduction of the £70 million National
Renewables Infrastructure Fund to strengthen port
and manufacturing facilities and supply chain provision
for manufacturing offshore wind turbines and related
components. Successful development of supply chain
infrastructure will require attention on both the need for
technology development and commercial roll out.
✓ The Scottish Government must continue to work with
enterprise agencies, local authorities and relevant
business and industry groups to ensure that the
ongoing and future needs of Scotland’s energy
future continue to be developed within existing and
proposed supply chain programmes.
“Successful development of
supply chain infrastructure
will require attention
on both the need for
technology development and
commercial roll out.”
CONCLUSION
To develop Scotland’s marine energy potential requires
a series of actions by government in the widest sense.
Delivering solutions to the challenges set out in this
paper will lead to massive environmental, economic
and social gains for our country.
Marine energy development will be technically
challenging, taking industry into largely uncharted
waters. Acting on the recommendations will reduce
uncertainty and provide the necessary catalyst for
developers to achieve commercialisation.
Scotland has both the resource and drive for a low
carbon economy. With the expertise and experience
gained from our successful hydropower, onshore wind
and oil and gas sectors we can realise our full potential
in our new, world-leading wave and tidal industry.
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SKILLS AND EDUCATION
The supply chain study commissioned by the Scottish
Government’s Marine Energy Group (MEG) concluded
that about 53 per cent of overall capital expenditure
on marine energy will be retained within Scotland.
The challenge for the Scottish Government, Scottish
Development International and the enterprise agencies
will be to increase this figure by strategically targeting
activities currently being taken forward outside of
Scotland which could be located within Scotland.
There is no reason why Scotland’s industrial base
and capability could not be extended to increase
its share of the supply chain to 75 per cent or more.
Scotland already has an experienced offshore industry
supporting the oil and gas sector, with additional skills
base in fisheries and shipping.
However MEG concluded that demand from the
emerging marine and offshore wind renewable industries
will create a heavy demand on the available workforce.
A strategic approach is required to the transfer of
existing skills and development of new skills across
Scotland’s workforce, not only in terms of working in
an offshore environment but also for engineering and
technical support during the development, design and
construction of planned projects.
✓ Scottish Government should continue to work with
the marine energy sector to identify current and future
needs and ensure Scotland has the skills base to
capitalise on a thriving marine energy sector. This
should include a broader spectrum of the supply chain,
particularly with regards to marine support services.
Footnotes
1 The Offshore Valuation, a valuation of the UK’s offshore renewable energy resource,
2010.
2 FREDS Marine Energy Group Road Map, www.scotland.gov.uk/Resource/
Doc/281865/0085187.pdf
3 Channeling the Energy: A way forward for the UK wave & tidal industry towards 2020,
RenewableUK. 2010.
4 DECC Initial Guidance on EU Funding Mechanism “NER300” for Carbon Capture and
Storage (CCS) and Renewable Demonstration Projects. www.decc.gov.uk/assets/
decc/what%20we%20do/uk%20energy%20supply/energy%20mix/carbon%20
capture%20and%20storage/333-decc-initial-guidance-on-eu-funding-mecha-
nism-ner3.pdf
Contact Offshore Policy Manager
Johanna Yates
E-mail: johanna@scottishrenewables.com
Tel: 0141 353 4987
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About Scottish Renewables

Scottish Renewables is Scotland’s green energy industry body with a
membership of more than 300 businesses and organisations working to make
renewable energy a success in Scotland.

Scottish Renewables is ‘member-led’ and has been operating since 1996. It seeks to work
with all stakeholders and decision makers to ensure that renewable energy in Scotland is able
to make a telling contribution in the fight against climate change, to deliver affordable and
reliable supplies of energy and to drive sustainable economic development in Scotland.

Scottish Renewables
T: 0141 353 4980
E: info@scottishrenewables.com
W: www.scottishrenewables.com
Scottish Renewables Forum Limited.
A company limited by guarantee in Scotland Number 200074
Registered Office: c/o Harper Macleod, The Ca’d’oro, 45 Gordon Street, Glasgow G1 3PE

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