Marine energy market hit by economic storm

• 15 years ago (2009-11-17)
• David Flin

Europe 1088

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The European marine energy industry is still weathering storms unleashed by the global economic crisis. This market was hit especially hard by the recession because it relies so heavily on venture capital and private equity investment.

However, it now looks as though the EU will extend long-awaited lifelines helping companies continue to develop this energy source. Government support and new investments are key factors to boost the market.

Frost & Sullivan has estimated that if ocean energy technologies continue to be supported, it is possible that 3GW of installed capacity could be available in the EU by 2020. The recession has effectively bottlenecked investment, temporarily slowing down development. In response, the UK Government recently announced a raft of rescue measures. The UK Carbon Trust granted $250,000 and £150,000 to Pelamis and MCT respectively to focus on installation and maintenance, while the Marine Renewables Deployment Fund has offered a £22 million grant to wave and tidal developers. Part of £20 million of venture capital from the budget for low carbon technologies has been earmarked for marine energy technology developers.

Now more than ever, government support is imperative. However, such support alone will not be enough to boost the market and push it in the right direction. Investment from venture capital and private equity players would be ideal at this stage, but is unlikely to be extended at sufficient levels until the economy starts to recover.

It remains, then, for companies to try to weather the current economic climate. To do so, major players should strive to differentiate the merits of their technology in order to showcase the future potential of the device and solicit enough capital to be able to reach commercialisation. With investors getting more selective, the overall environment is becoming much more difficult and competitive.

The summit in December may pose further challenges as there is growing concern that it will not be able to produce a successor to the Kyoto Protocol, thereby undermining the carbon markets. "This will have very little effect on the marine energy market in ," explains Kumar. "Although a high long-term price of carbon will contribute to the growth of the renewable energy sector, there are other factors that will play a greater role in the growth of the industry. The high price and volatility of oil and gas in the future, energy security, the falling cost per kilowatt hour of renewables electricity and the ambitious renewable energy targets set by various governments and regions will collectively continue the push for renewables. The credit crisis and government support are the most important factors affecting the industry at the moment due to the stage of development the market is at."