PSU Project-M3 Wave Market Entry Strategy

 M3 Wave Market Entry Strategy Prepared for M3 Wave Energy Systems LLC By Zhuan Ai, Casey Cleary, Caitlin Goold and Phattharawan Vanithbuncha Masters of International Management Portland State University Exit Project Academic and Project Client Paper November 18, 2009 This copy redacted by M3 Wave Energy Systems, Dec 28 2009 – M Miller, et al. TABLE OF CONTENTS PROJECT PARTICIPANTS 3 TRANSMITTAL LETTER 4 EXECUTIVE SUMMARY AND KEY FINDINGS 5 Oregon Market Potential, Regulations and Finance 5 Regulations 8 Finance 9 Scotland Market Potential, Regulations and Market Entry Strategy 10 INTRODUCTION 13 Problem Statement 13 Scope of Work 13 Desired Outcomes 14 Methodology 15 Market Research 15 Financial Analysis 15 Regulations and Permits 15 RESEARCH 16 United States................................................................................................................................ 16 Oregon Market Entry Strategy............................................................................................... 18 Oregon: Market Overview 18 Oregon: Projects and Competition 19 Oregon: SWOT Analysis 21 Federal and Oregon State Regulations................................................................................ 24 Phase One: Preliminary Permit and Other Beginning Permits 24 Phase Two A: Preliminary Permit Approval Subsequent Actions 26 Phase Two B: Beginning the Process for licensing 27 Phase Three: Licensing 31 Wave Energy: Development and Finance........................................................................... 36 Pilot 36 Demonstration 37 Commercial 39 Alaska Market Overview..........................................................................................................45 The European Union.................................................................................................................. 47 Scotland Market Entry Strategy............................................................................................. 48 Portugal Market and Regulation Overview....................................................................... 54 Spain Market and Regulation Overview............................................................................. 56 RECOMMENDATIONS 58 M3 Market Entry Strategy Timeline 58 BIBLIOGRAPHY APPENDICIES Marketing Appendices Appendix A: Competition Strengths Comparison Appendix B: Oregon EPRI Sites Interviews Appendices Appendix C: Gerry Langeler Interview Appendix D: Dee Outama Interview Appendix E: Bob Pasch Interview Regulations Appendices Appendix F: US and Oregon Alphabet Soup and Regulation Definitions Appendix G: Coastal Zone Management Act, Section 307 Appendix H: U.S. and Oregon Stakeholders Appendix I: State of Oregon/FERC MOU Appendix J: Oregon Statewide Planning Goal 19 Appendix K: State and Federal Permits and Licenses Appendix L Preliminary Permit Process Appendix N: NEPA Process Concept Map Appendix O: Hydrokinetic Pilot Project Licensing Procedures Appendix P: Biological Assessments Appendix Q: PATON Appendix R: Hydrokinetic Pilot Project Application Checklist Appendix S: Matrix Comparing Three Licensing Processes Appendix T: Guidance on Environmental Measures in License Applications Appendix U: Alternative and Integrated Licensing Process Flow Charts Appendix V: European Regulations including Scotland, Portugal and Spain Key European Stakeholders Appendices: Appendix W Financial Appendices Appendix X: Estimate of Future Cost Appendix Y: Exhibit 1 Cost centers and cost drivers Appendix Z: NUG Income Statement and Cash Flow Statement 60 67 67 71 73 73 75 78 80 80 85 90 91 95 98 100 111 112 113 114 118 123 124 126 130 140 143 143 145 147 Tables, Charts and Graphs NW Electricity Requirements and Resources Oregon Load Data Development and Funding Stages Prices/ kWh in Different Countries US Renewable Energy Map Oregon’s Wave Energy Projects Oregon SWOT Analysis Cost of Energy Formula Capital Costs and O&M Costs Pie Charts Estimates Capex and Opex Costs Cost/kWh of Different Resources Cost/kWh Among Different Competitors Electricity price in Europe from 1992 to 2000 Wave Energy Potential around Europe EMEC: European Marine Energy Center EIA DIRECTIVE (85/337/EEC) Wave Hub WavEc: Wave Energy Center Spain Market Conditions 7 & 19 7 & 19 9 & 36 10&43 17 20 21 37 38 39 -­40 40 42 44 47 49 52 53 54 56 PROJECT PARTICIPANTS Project Client M3 Wave Energy Systems LLC PO Box 942 Corvallis, Oregon 97339 Mike Miller, Director of Business Development, [email protected] Mike Morrow, PE, Chief Technical Officer, [email protected] Mike Delos-­‐Reyes, PhD, VP Engineering and Operations, delos-­‐[email protected] Project Team Casey Cleary (Team Leader), [email protected] Zhuan Ai, [email protected] Caitlin (Cat) Goold, [email protected] Phattharawan (Birddy) Vanithbuncha, [email protected] Project Advisor Bill Jones, PhD, [email protected] Academic Advisor Cliff Allen, Academic Director of the Masters of International Management, School of Business, Portland State University [email protected] Page 3 TRANSMITTAL LETTER November 18, 2009 Mr. Mike Miller, Mr. Mike Morrow and Dr. Mike Delos-­‐Reyes M3 Wave Energy Systems LLC PO Box 942 Corvallis, Oregon 97339 Dear M3, We are extremely pleased to submit this final report, entitled M3 Wave Market Entry Strategy. The purpose of this report is to give your organization our key findings, research and recommendations about entering the wave energy market and to fulfill the Project Team’s Exit Project requirement. The content of this report is developed around four areas of study, the wave energy market, technological development, finance associated with wave energy and the regulation and permit process surrounding wave energy. We have enjoyed working with you during these past four months and wish you the best of luck in the future. If you have any questions please feel free to contact Casey Cleary, team leader, [email protected] or 503.269.7769. Thank you, Casey, Zhuan, Cat, Birddy Casey Cleary, Zhuan Ai, Caitlin Goold and Phattharawan Vanithbuncha Masters of International Management Candidates 2009 Portland State University Page 4 EXECUTIVE SUMMARY AND KEY FINDINGS Wave Energy has the potential to revolutionize the renewable energy industry and the energy industry as a whole. It is estimated that the potential for world-­‐wide wave energy contribution to the production of electricity could be between 10 and 50 percent of the world’s annual electricity demand when the industry is fully developed.1 Currently, this industry is in pre-­‐commercialization with the majority of companies in the R&D stage. As one of these companies, M3Wave Energy Systems LLC (M3) is looking for the most effective way to enter this emerging market. This report will provide M3 with a market entry strategy they can build upon and adapt when they are ready to commercialize their wave energy converter, the Delos-­‐Reyes Morrow Pressure Device, or DMP. There are four key market entry areas this report focuses on: • Market Demand and Competition • Regulations and Permitting • Technological Development • Financial Analysis These four aspects are complex and completely interconnected from concept through development to commercialization. Therefore, the MIM team has incorporated them in the M3 Market Entry Strategy Timeline. This chronological timeline, dated from 2009 to 2025, gives M3 an accurate idea of the steps they will need to follow in order to successfully and enter the market. The first half of the timeline focuses on commercialization in Oregon (Oregon Market Entry Strategy Timeline) and the second half of the timeline focuses on commercialization in Scotland (Scotland Market Entry Strategy Timeline). These two locations have the greatest potential for M3 to effectively introduce their technology and begin to generate returns on their investment. The Following “Key Findings” highlights the most important aspects of our research. Oregon Market Potential, Regulations and Finance There are several factors that make Oregon a prime hub for wave energy development and an attractive market for M3: • Potential available wave energy on the west coast is approximately 440,000 GWh2 • Government support to encourage development of renewable energy (RE) 1
International Energy Agency. World Energy Outlook 2006. Retrieved October, 17 2009 from International Energy Agency: http://www.iea.org/index.asp 2
Oregon State University (OSU). Wave Energy Opportunities and Developments. Retrieved August 12, 2009 from OSU: www.oregonstate.edu/wesrf/projects/ Page 5 Coastal transmission infrastructure if updated for Ocean Energy, can deliver renewable energy to all Oregonians • Creation of new economic opportunities for a broad base of Oregon businesses, including in coastal communities • Seven sites identified by EPRI as prime potential locations for wave energy: Tillamook, Lincoln City, Newport, Reedsport, Florence, Coos Bay, and Bandon • Renewable Portfolio Standard (RPS) • Growing utility demand The Oregon Renewable Energy Act signed in 2007 requires utilities to purchase a certain percentage of their electricity from renewable resources. This RPS requires large utility companies to purchase 25 percent of their electricity from RE by 2025, whereas smaller utilities have to meet a target of five to 10 percent. Based on current consumption, this goal could be 50 percent satisfied by 700MW from wave energy3. It is clear that Utilities will be the major sector to demand wave energy in the future. The 2008 Northwest Regional Forecast 4 by the Pacific Northwest Utilities Conference Committee (PNCC) determined that Northwestern states, including WA, OR, ID and MT, will have: • A regional load deficient in 2009 of 1,200 MWa increasing to just over 3,000 MWa in five years. • A projected load growth at about 250 MWa annually • A decrease in firm regional imports by more than 800 MWa by 2012 The report also shows that by 2018, the annual electricity demand for this area will be around 25,000MWa where the annual supply will only reach about 21,000MWa, a 5000MWa deficient. •
In Oregon, this gap is marked by the state’s geography. The electricity consumption 3
OSU. PNUCC. Northwest Regional Forecas 2008. Retrieved on September 5, 2009 from PNUCC: http://www.pnucc.org/nwregionalforecast.html 4
Page 6 west of the Cascades is underserved by the electricity generated in this same area; this shortage will likely continue to worsen. Oregon Load Data Provided by PGE5 Oregon 2005 Avg Consumption Avg Generation West of Cascades: 3,488MW (68%) East of Cascades: 1,633MW (32%) 2,487MW (29%) (1001MW deficit) 6,163MW (71%) Total: 5,121MW 8,650MW Both the local and the regional resource gap along with the government mandated RPS, has put a lot of pressure on Utilities to seek out new renewable sources. They will be looking to local RE generators, such as wave energy, and to conservation in order to fill this gap. To date, there have been eight wave energy projects that have applied for a study permit from the Federal Energy Regulatory Commission (FERC). Five have already been approved, but after approval one has been surrendered, one has been withdrawn, one has been canceled due to unfavorable location conditions and a changing business plan. Of these project, and others around the world, the most noteworthy competitors are Ocean Power Technology (OPT), Columbia Power Technology (CPT), Oyster, Ceto, Pelamis, Voigth/Siemans and Oceanlinx. 6 For, instance, OPT has clear advantages with their APB Technology: • Ocean going “platform” for mounting communications and instrumentation • Accommodates and powers various payloads • Provides a stable communications & instrument platform including cell phones, allowing “Talk on Water”™ • Able to utilize various anchor and mooring systems Regulations Due to their bureaucratic nature, permitting and regulations are time intensive and costly. Many federal and state consultations must be conducted simultaneously. Much of the permitting and regulation process revolves around environmental assessments, including effects on wildlife, recourses and water quality. Stakeholder engagement is critical to this 5
Lincoln County Board of Commissioners. Wave Energy Community Forums: A Presentation. August 2009. Retrieved on September 23, 2009 from LCC: http://www.co.lincoln.or.us/counsel/Lincoln%20County%20Community%20Forums%202009.pdf 6
Refer to Appendix A: Competition Strengths Comparison Page 7 process. Virtually every permit granting regulating agency, both at the federal and state levels, requires that the applicant, contractors hired by the applicant, and agencies acting on behalf of the applicant effectively engage stakeholders throughout the consultation process. Each of these agencies takes stakeholder comments and concerns into consideration when granting permits, often requiring dispute resolution as issues arise7. The regulation process is lengthy. It is important to allow as much time as possible to obtain each of the permits and to recognize that acquiring one permit is often dependent on the receipt of a previous permit. The key to this process is to begin consultations and engagement early. Both the Oregon Wave Energy Trust (OWET) and Stoel Rives LLP recommend that any company beginning this process hire a qualified consultant to guide them through the process. This is additionally important as regulations in the wave energy technology industry are likely to change overtime as the industry develops. State regulations are likely to change quicker than Federal regulations. However, due to the MOU with FERC, Oregon State regulations should begin to follow the same methods as the regulations developed and established by the federal commission. M3 Wave will spend the majority of their time throughout the various regulatory processes working with FERC, the Army Corps of Engineers, the Oregon Department of State Lands, and Oregon Department of Land Conservation. It will be important for the company to develop contacts within those organizations. Due to the fact that the company is seeking to conduct the project as a Non Grid Connected Pilot Project, the ACOE will be the primary body to help guide M3 Wave through the environmental assessment process8. The key federal regulations M3 Wave should be aware of and which the ACOE will be consulting on are the National Environmental Policy Act, the Endangered Species Act, the Marine Mammals Protection Act, the Magnuson-­‐Stevens Act (regarding essential fish habitat), the Fish and Wildlife Coordination Act and the National Historic Preservation Act. Completing Oregon State’s Coastal Zone Consistency Certification will be critical to obtaining any federal permitting and licensing once the Preliminary Permit is obtained. Although the federal licensing process may change by the time M3 Wave is ready to acquire a license, they should be aware of the current options available (Verdant Order, Pilot Project License, Conditioned License) and how they differ. In addition to this, the company should consult with FERC to determine which process they should use in order to obtain a license (the preferred FERC Integrated Licensing Process, the Traditional Licensing Process, or the Alternative Licensing Process)9. M3 Wave should strongly weigh their options between the Verdant Order and the Pilot Project License depending on the readiness of the company to 7
Refer to Appendix H for a list of relevant stakeholders Pacific Wave Energy Ventures. (2009, July). Licensing and Permitting. Retrieved July 7, 2009, from Oregon Wave Energy Trust: http://www.oregonwave.org/templates/owet/documents/owet%20-­‐
%20licensing%20%20permitting%20report.pdf 9
FERC Licensing http://www.ferc.gov/industries/hydropower/gen-­‐info/licensing/licen-­‐pro.asp 8
Page 8 connect to the grid at the time of licensing. In conjunction with this, the Integrated Licensing Process will most likely be the best path for the company to use when obtaining the license. However, further consultation with FERC will be needed to determine this as the company draws nearer to the licensing phase. Finance Development and Finance for technology can be categorized into five steps: Conceptual, Pilot, Demonstration, Commercial and Mature. 10 At each stage of development, a certain type of financing approach can be used such as grants, Venture Capital (VC), corporate investment, loans and ultimately revenue. Development and Funding Stages Conceptual Pilot Demonstration Commercialization Mature Grants VC or Corporate $ Loans Revenue M3 is currently located at the beginning of the Pilot stage and is dependent upon grants and angel investors to continue to develop the DMP. While developing the DMP prototype and preparing to proceed ahead to demonstration, M3 should begin to engage VC’s for further funding. Upon presenting their company to a VC M3 will have to determine the market demand, create a differentiated value proposition, develop a thorough business plan and have “miles of patent protection”. VC funding typically takes around 10 years with expected market saturation within five years and return on investment starting year seven.11 If M3 plans to commercialize by <REDACTED>, they should begin the VC and Demonstration stage <REDACTED>. In comparing the cost/kWh to other renewable energy sources, wave energy currently has no comparative advantage. For example, considering that the current electricity generated by coal is $4.8 -­‐ 5.5 cents per kWh, while current wave energy (e.g. OPT Buoy) is estimated around $.15 cents per kWh, wave energy is at least three times the price of electricity generated by coal.12 Both Capital costs and Operations and Management (O&M) costs account 10
Mirko Previsic, Omar Siddiqui and Roger Bedard, EPRI Global E2I Guideline, Economic Assessment Methodology for Offshore Wave Power Plants, November, 2004, Retrieved October 2009, from EPRI: http://oceanenergy.epri.com/attachments/wave/reports/002_Rev_4_Econ_Methodology_RB_12-­‐18-­‐04.pdf 11
Refer Appendix C: Interview with Gerry Langeler 12
Ocean Power Technologies. (n.d.). Technologies Comparison. Retrieved September 2009, From: http://oceanpowertechnologies.com/compare.htm Page 9 for the cost of energy. M3 will either have to cut these costs or increase the DMP’s capacity to produce energy if they want to lower the overall cost/kWh to the company. Venture capitalists, corporate money and loans will help M3 continue through Demonstration, finally entering the water in Commercialization. It is in this stage that M3 will have to establish a competitive price/kWh. Currently, subsidies and other governmental incentives are making the price/kWh for developers very attractive in European countries, such as Portugal and Scotland. Price/kWh in Different Countries Location Price per kWh Europe 100 MW at $0.30 per kWh Hawaii 100 MW at $0.18 per kWh Pacific Islands 100 MW at $0.35 per kWh Portugal €0.28($0.39 per kWh) for first 3 MW, €0.22 for next 17 MW Ireland €0.30($0.42 per kWh) for first 75 MW Scotland 5 ROCs’-­‐ $0.45 per kWh plus Saltire Prize of £ 10 million By coinciding development of the DMP with financing sources, M3 should be able to recognize the best opportunities and attract the best investments. Scotland Market Potential, Regulations and Market Entry Strategy The Wave Energy Industry in the European Union is easily 10 years ahead of the U.S. Both the union and individual states have committed resources and support for wave energy technology development and will continue to foster the industry’s development well into the future. Scotland, Portugal and Spain are attractive markets for M3, simply because they have designated marine zones where energy can effectively be created. This makes navigating regulations, permitting and grid connection much easier than in the US. Each state has also adopted their own incentives for suppliers of wave energy. Feed in Tariffs give suppliers a premium for electricity generation in Portugal and Spain, whereas Renewable Obligation Certificates have created a trading market in Scotland that generates revenue for those suppliers who sell them. The MIM team has chosen Scotland as M3’s initial EU market entry location. It is estimated that up to 21.5GW (79.2 TWh/yr) of wave and tidal energy could be generated from the waters around Scotland. This is greater than the total amount of electricity likely to be generated in Scotland in 2020.13 The country’s mantra is “The Future is Not Green, 13
Scottish Development International. Marine Energy in Scotland: A Presentation. Page 5. September, 2009 Page 10 It’s Blue” and their ultimate goal is to not only supply all of the UK’s wave energy demand but eventually ship energy to the EU. The nation already has two demonstration and semi-­‐commercialization wave parks set up for domestic and foreign developers – the European Marine Energy Center (EMEC) and WaveHub. At EMEC, M3 can get assistance to obtain the necessary licenses under the Coastal Protection Act (CPA) and the Food and Environment Protection Act (FEPA). While testing at EMEC, M3 can enter into a power purchase agreement between EMEC and the government, so they can begin earning revenues. The energy transferred to the grid at these parks can also fall under Renewable Obligations (RO). These RO certificates give the developer a premium of up to $0.24/kWh cents more than what the price is to be expected in Oregon.14 The majority of Utilities, such as Scottish and Southern Energy, are already preparing to add wave energy to their renewable energy portfolio making the demand for wave energy in Scotland much higher than anywhere else in the world.15 After final testing and decommissioning at EMEC, M3 can either semi-­‐commercialize the DMP at the WaveHub Park, or fully commercialize with a marine lease from the Crown Estates. An Environmental Impact Study (EIA) will be required for the application to either of these locations but will be easy to prepare after thorough testing at EMEC. If all goes to plan, M3 could see revenues coming in as early as three years after entering Scotland. Another great advantage for M3 to enter Scotland within the next decade is capturing a large part of the market share before it is saturated by competitors. Compared to Oregon and the US, Scotland can offer M3 relatively stable demand, revenues and regulations in this emerging market. This will allow M3 to focus more on developing the DMP (i.e. reducing O&M costs, capitalizing on capacity, designing for Cradle to Cradle certification). The DMP has a unique value proposition and if it is the first (or one of the first) completely submerged energy devices in Europe the possibilities seem limitless. 14
Carbon Trust. Scotland ROC’s. Scottish and Sourthern Energy. Preliminary Results for the Year to March 31, 2009. Retrieved on October, 17 from SSE: http://investorcentre.scottish-­‐southern.co.uk/pdf/Financial_Results09.pdf 15
Page 11 INTRODUCTION Problem Statement The climate is changing. We can measure it and we can even feel it. We know that GHG emissions, created through human industrial development, are significantly affecting the planet. Five years ago, Mount Hood, a white beacon signifying Oregon’s unique and precious environment, shined brightly even during the heat of July. Today, it is barely visible during the summer months because the snow no longer highlights its shape. Elliot Glacier has retreated at an astonishing rate of 30 meters in depth and over 50% in volume since 1982.16 Yes, human activity has created a large problem, but we also have the ability to reduce our footprint and help our ecosystem begin to recover. Energy is one of most significant areas where we can make a positive change. To foster this change, a wave of targets is being set to reduce C02 all around the globe. Clean, renewable energy, conservation and a smart grid are the tools we will use to reach these targets.17 Installation and use of wind turbines and solar panels are increasing as demand for renewable energy grows. We still have yet to harness one of the greatest renewable power sources on this planet… ocean energy. It is estimated that the potential for world-­‐wide wave energy contribution to the production of electricity could be between 10 and 50% of the world’s annual electricity demand when the industry is fully developed.18 This industry is still in the pre-­‐commercialization and R&D stage. As one of these pre-­‐commercial companies, M3Wave Energy Systems LLC is looking for the most effective way to enter this emerging market. Scope of Work In order to successfully enter the wave energy market, companies not only have to strategically place themselves according to market size, demand and competition but they also have to be up to date on the permits, regulations and development/financial requirements to enter the water. It is also critical that M3 identify and begin to engage stakeholders as early as possible. Both EU and US regulatory agencies require that relevant stakeholders are consulted and engaged in the process of obtaining the proper permits and licenses. No wave energy technology project will move forward without proper engagement. It is important to keep in 16
Hess, S. Mt. Hood’s Glaciers Melting Away, Say PSU Glaciologists. March 8, 2006. Retrieved October 6, 2009 from New West Environment: http://www.newwest.net/index.php/topic/article/6796/C147/L38 17
We Can Solve It. We Can Solve the Climate Crisis. Retrieved October 6, 2009 from We Can Solve It: http://www.wecansolveit.org/ 18
International Energy Agency. World Energy Outlook 2006. Retrieved October, 17 2009 from International Energy Agency: http://www.iea.org/index.asp Page 12 mind that stakeholder engagement, while critical, can be extremely lengthy. Therefore, working with stakeholders at the beginning of the process will ensure greater success later on. For this reason, a list of relevant State and Federal stakeholders has been supplied in Appendix H, with relevant EU stakeholders in Appendix V. In response to these challenges, the MIM team has created a Market Entry Strategy for M3 that will suggest the best pathways for them to follow on their way to commercialization. The market entry strategy for M3 includes: • A Market Entry Strategy Timeline for Oregon and Scotland • A market overview of wave energy technology in the Pacific North West and the EU o Size o Demand o Competition o SWOT Analysis • Definitions and processes for navigating regulations and permits in the US and the EU • A financial analysis of costs associated with wave energy technology o Competitive Cost/KwH • Detailed appendices to support the market entry strategy recommendations and financial analysis The MIM team’s focus on research, analysis and interpretation is 80 percent for Oregon, 15 percent for the EU and five percent for Alaska. Desired Outcomes The MIM team hopes to create a market entry strategy and an accompanying timeline that lists all the major market, development, regulation and finance steps that M3 will have to complete before commercialization in Oregon and Scotland. The timeline will show approximate years that each step should take place; however, this could change at any time, so it should not be followed strictly. The dates are only to give M3 an idea of how long the process might take, assuming complete success of all previous steps. Each step will then be defined and interpreted in the research section of the report. The research section will include an in depth market overview of Oregon, Alaska, Scotland, Portugal and Spain, a detailed regulation and permitting process for the US and EU and a financial analysis describing the elements associated with the cost of wave energy. Since the team has an 80 percent focus on Oregon, the analysis will be concentrated here. For instance, the SWOT analysis will be presented in the Oregon section as will the majority of the financial analysis. It must also be stated, that because of the small size of the industry, competitors and costs listed for Oregon are virtually the same for Alaska and the EU. The regulations will be defined for both the federal (US and EU) and state (Oregon and Scotland). Page 13 Overall, the MIM team hopes to create a strategy that M3 can adapt and use to develop and commercialize the DMP. Methodology Market Research The process of gathering information on markets and customers can help an organization to develop its business strategy. Market research is used to determine how a company’s products or services will fit the needs or desires of the targeted customer base.19 Tools that can be used to help the effectiveness of market research are questionnaires, focus group discussions and surveys. Once that research is completed, it can be used to determine how to market a product. • Market Size: The amount of buyers and sellers within a targeted market. In the case of wave energy, market size will also refer to amount of energy generated by waves in a certain location. • Market Demand: Within a specific market, the amount of possible customers for a product at any given period of time. For M3, this will be crucial in attracting venture capital and/or angel investors. • SWOT/Competition Analysis: A method of analysis used to breakdown and evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project. It involves specifying the objective of the project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective including competition. Financial Analysis There are a lot of assumptions taken into account when determining a financial structure for a wave energy device. • Type of Costs: Costs are usually attributed to capital costs or Operations and Management (O&M) costs (refit costs are also applicable). • Cost/kWH: The key figure for M3, is cost/kWH. The data used for this analysis compares wave energy to other renewable and traditional energy sources as well as describing cost/kWH of wave energy in other areas of the world. 19
th
Kotler, Phillip et all. Marketing Management 13 Edition. 2009. Pages G1-­‐G10 Page 14 Regulations and Permits Understanding and appropriately navigating the state and federal permitting process is critical to success in the energy industry. In order to penetrate this seemingly insurmountable fortress to the report breaks the regulatory process into time periods based on applicability to the company needs. •
For Oregon: •
o
Phase One discusses the process leading up to obtaining the Preliminary Permit. o
Phase Two is truly a critical set-­‐up phase and was therefore, broken into two subsections, action items after obtaining the Preliminary Permit and action items leading to the licensing stage. o
Phase Three discusses licensing and the ambiguity associated with projects that are gird connected and non grid connected. As there is little information on the issues surrounding licensing a project that followed the non-­‐grid connected pathway, the information provided in this section will be useful, but needs to be reassessed once M3 is at this stage. o
Appendix F: U.S. and Oregon Alphabet Soup and Regulation Definitions will be helpful throughout the U.S./Oregon Regulations section. For the EU: The regulation and permit process is much more streamlined due to government support of the wave industry. Therefore, essential permits are listed in the Research section and the rest of the definitions are in Appendix U. Page 15 RESEARCH United States Development of renewable energy and energy efficiency marks "a new era of energy exploration" in the United States.20 In a joint address to Congress on February 24, 2009, President Obama called for a doubling of renewable energy within the next three years. Ultimately, the President hopes to gain support to establish a target of an 80 percent greenhouse gas reduction by 2050.21 This would greatly increase both the production and use of renewables across the country. In the first half of 2009, energy from renewable sources accounted for more than 11.1 percent of the domestically-­‐produced energy in the United States, surpassing that of nuclear generation for the first time.22 U.S. installed wind power now exceeds 25,176 MW which is enough to serve 7 million households.23 Other sources such as solar, bio thermal and hydro are also being developed to fill an emerging need for sustainable energy. Ocean energy is also beginning to build momentum on the wave of renewable energy development. The US has a vast amount of coastline which can be used to generate electricity. In 2004, data published by Electric Power Research Institute (EPRI)24 estimated that the total wave energy available in US waters is around 2.1 million GWh: • Alaska, along the Pacific coastline: 1.25 million GWh • Northern California, Oregon, and Washington: 440,000 GWh • Hawaii and Midway Islands : 330,000 GWh • New England and mid-­‐Atlantic states: 100,000 GWh Wave energy in the US, along with Wind, truly has the potential to meet President Obama’s stated 2050 goal. 20
Energy Efficiency and Renewable Energy (EERE News). President Obama Touts Clean Energy on Earth Day. April 29, 2009. Retrieved on October 1, 2009 from EERE: http://apps1.eere.energy.gov/news/news_detail.cfm/news_id=12475 21
President Barack Obama. Remarks by the President on Clean Energy. April 22, 2009. Retrieved October 13, 2009 from the White House Press Office: http://www.whitehouse.gov/the_press_office/Remarks-­‐by-­‐the-­‐President-­‐in-­‐
Newton-­‐IA/ 22
Energy Information Administration (EIA). Electric Power Monthly October 2009. Retrieved October 1, 2009 from the EIA: http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html 23
EERE News, 2009 24
EPRI. E21 EPRI Survey and Characterization of Potential Offshore Wave Energy Sites in Oregon. May 17, 2004. Page 5 Page 16 Oregon Market Entry Strategy Oregon: Market Overview In the past decade, Oregon has proven itself to be one of the nation’s leaders in both production and consumption of renewable energy. “Energy – where it comes from, how we use it, how much we pay for it and how we make the transition to an independent renewable energy future -­‐ will define us as Oregonians for generations to come.”25 The state, lead by Governor Kulongoski, along with public institutions and private developers are committed to fostering a market for wave energy in the near future and the companies who are a part of this emergence will benefit greatly. The Oregon Renewable Energy Act, 26 signed on June 6, 2007, is expected to support the development of 1,500 average megawatts of new renewable energy which is enough to meet the needs of 1.25 million average Oregon homes. Moreover, the Act requires Investor Owned Utilities (IOUs) to purchase a certain percentage of their electricity from renewable resources. These Renewable Portfolio Standards (RPS) require the large Utility companies (e.g., Portland General Electric and Pacific Corp) to provide 25 percent of their electricity from renewables by 2025. Smaller IOUs have to meet a target of five to 10 percent. Wave energy could provide a significant portion of the RPS electricity. Many Utilities in the state already offer consumers “green power” options to support development of renewable resources. PGE ranks second in the country in sales for green power options while PacifiCorp ranks fourth.27 It is clear that Utilities will be the major sector to demand wave energy in the future. The 2008 Northwest Regional Forecast28 by the Pacific Northwest Utilities Conference Committee (PNCC) forecasts that Northwestern states, including WA, OR, ID and MT, will have: • A regional load deficient in 2009 of 1,200 MWa increasing to just over 3,000 MWa in five years. • A projected load growth at about 250 MWa annually • A decrease in firm regional imports by more than 800 MWa by 2012 The report also shows that by 2018, the annual electricity demand for this area will be around 25
Governor Theodore R. Kulongosky. Ocean Renewable Energy Conference Welcome. September 15, 2009. Powering Oregon’s Future. Energy Independence for a strong economy. June 6, 2007. Retrieved on September 26, 2009 from Powering Oregon’s Future: http://www.poweringoregonsfuture.org/PoweringOregonsFuture/ 27
Oregon DEO. The Oregon Renewable Energy Action Plan. April 2009. Page 3 28 PNUCC 26
Page 17 25,000MWa where the annual supply will only reach about 21,000MWa, a 5000MWa deficient. In Oregon, this gap is marked by the state’s geography. The electricity consumption West of the Cascades is underserved by the electricity generated in the same area and this shortage will most likely continue to get worse. Oregon Load Data Provided by PGE29 Oregon 2005 Avg Consumption Avg Generation West of Cascades: 3,488MW (68%) East of Cascades: 1,633MW (32%) 2,487MW (29%) (1001MW deficit) 6,163MW (71%) Total: 5,121MW 8,650MW Both the local and the regional generation shortage along with the government mandated RPS requirements, has put increasing pressure on Utilities to seek out new renewable sources. They will be looking to local RE generators, such as wave energy, and to conservation to fill this gap. Oregon: Projects and Competition To date, there have been eight wave energy projects that have applied for their study permit from the Federal Energy Regulatory Commission (FERC). Five have already been approved but after approval, one has been surrendered, one has been withdrawn and one has been canceled due to unfavorable location conditions and a changing business plan . 29
Lincoln County Board of Commissioners. Wave Energy Community Forums: A Presentation. August 2009. Retrieved on September 23, 2009 from LCC: http://www.co.lincoln.or.us/counsel/Lincoln%20County%20Community%20Forums%202009.pdf Page 18 Oregon’s Wave-­‐Energy Projects30 NAME, LOCATION SIZE TOTAL CAPACITY Newport OPT Wave Park, near Newport Docket P-­‐12750 200 buoys Ocean Power 100 Technologies/local utility megawatts and government agencies Surrendered 3/09 Lincoln County Wave Energy Project, near Newport unknown 180 Lincoln County megawatts unknown Florence Wave Park, 3 miles offshore unknown unknown Docket P-­‐12793 WHO'S BEHIND IT Oceanlinx STUDY PERMIT STATUS Withdrawn 4/08 Reedsport OPT Wave 200 Park, 3 miles offshore buoys Docket P-­‐12713 Ocean Power 50 Technologies/local utility megawatts and government agencies Approved Feb. 16, 2007 Douglas County Wave and Tidal Energy Project, near mouth of 3 units Umpqua River Docket P-­‐12743 3,000 kilowatts Approved April 6, 2007 Coos Bay OPT Wave Park Project, 2½ miles 200 offshore buoys Docket P-­‐12749 Ocean Power 100 Technology/local utility megawatts and government agencies Approved March 9, 2006 Coos County Wave Project, 2 miles south 200 of Bandon buoys Docket P-­‐12752 100 Finavera Renewables megawatts Permit Cancelled w/out objection July 2008 Oregon Coastal Wave Energy – Tillamook unknown unknown County P-­‐13047 Douglas County Tillamook Intergovernmental Development Entity Filed October 2007 30
FERC Docket Search http://elibrary.ferc.gov/idmws/docket_search.asp Page 19 Of these projects, and others around the world, the most noteworthy competitors are Ocean Power Technology (OPT), Columbia Power Technology (CPT), Oyster, Ceto, Pelamis, Voigth/Siemans and Oceanlinx. 31 For, instance, OPT has clear advantages with their APB Technology: • Ocean going “platform” for mounting communications and instrumentation • Accommodates and powers various payloads • Provides a stable communications & instrument platform including cell phones, allowing “Talk on Water”™ • Able to utilize various anchor and mooring systems Oregon: SWOT Analysis Section Redacted Federal and Oregon State Regulations The research below is intended to provide a comprehensive timeline on state and federal regulation. Each section is broken out by phases and indicates the potential regulations and permits M3 Wave must follow or obtain. Many of these actions must be conducted simultaneously and will be separated according to federal and state regulations. Please refer to Appendix F: Alphabet Soup and Regulation Definitions for definitions on each permit and license, as well as acronyms. General Information Oregon and FERC have signed a Memorandum of Understanding (MOU) which was effective as of March 26, 20083233. As seen below, many of the state regulatory bodies are attempting to bring their procedures into greater alignment with the federal commission. This is further strengthened through Oregon’s Statewide Planning Goals and Guidelines: Goal 19 which focuses on ocean usage34. It can be reasonably assumed that this collaboration will continue and strengthen, potentially reducing existing regulatory hurdles. It is also important to note that the state of Oregon only has jurisdiction within the state territorial sea – an area up 31
Refer to Appendix A: Competition Strengths Comparison Stoel Rives LLP ch.3 pg.7 33
Refer to Appendix I for a copy of Oregon – FERC MOU 34
Refer to Appendix J to review Oregon State Goal 19 32
Page 20 to three miles out from the shoreline. As the DMP will be placed within the state’s territory, M3 Wave will be expected to comply with all effecting state regulations35. Phase One: Preliminary Permit and Other Beginning Permits Phase One Acronyms:
• FERC – Federal Energy Regulatory Commission • EA – Environmental Assessment • OWRD – Oregon Water Resources Department Federal Preliminary Regulations
In order to complete the application process for a Preliminary Permit the applicant does not need to complete any prior consultations with FERC. The permit itself is free to file. FERC requires several components on the application of a Preliminary Permit. • The applicant must identify any stakeholders who will be affected by the permit (see Stakeholder list36) and make its intentions for obtaining a permit known to the public through direct contact with specific stakeholders and a notice in the local paper. • The applicant needs to describe the facilities they are using or building off site, the surrounding location and its size. • They must describe their intended operations, how they will maintain operations through a maintenance plan, and how they intend to protect the surrounding environment. • Finally the applicant must include a draft EA listing potential environmental impacts the company will be testing and analyzing. • FERC does not require the applicant to own the land they are requesting for the Preliminary Permit3738. It is important to note that FERC has become more stringent on who it grants Preliminary Permits. “FERC’s ‘strict scrutiny’ policy limits the size of preliminary permit areas to encourage competition and prevent ‘site banking’.”39 Therefore, M3 Wave should be wary of outlining a site that may be considered too large causing FERC to dismiss the permit application. Receipt of the Preliminary Permit should occur in 60 days or more after FERC received the completed application. Although M3 Wave does not need to engage in consultations with FERC to obtain the Preliminary Permit, any stakeholder has the right to issue a motion to intervene in order to 35
Refer to Appendix K for a matrix on the necessary Federal and State permits and regulations including the governing agencies and respective timelines approval 36
Stakeholder list Appendix H 37
Refer to Appendix L for a specific outline on how to complete a Preliminary Permit, rules and regulations surrounding this permit. 38
Refer to Appendix M for a national map on locations of issued Preliminary Permits 39
Stoel Rives LLP ch.3 pg.3 Page 21 either prevent the company from obtaining the permit or to slow the process. FERC does take these motions into consideration when considering permits. M3 Wave should begin engaging stakeholders during this process so as to prevent these interferences. State Preliminary Regulations
The company is required to apply for the State Hydroelectric Preliminary Permit through the OWRD at the same time that they apply for the FERC Preliminary Permit in order to begin operations in Oregon coastal waters. Once the State Hydroelectric Preliminary Permit is received, M3 Wave should begin the process for obtaining the full State Hydroelectric License. When the company has a FERC license, the State Hydroelectric License will expire at the same time that the FERC license expires. This license can take up to eight months to obtain, or longer depending on if there are disputes. Phase Two A: Preliminary Permit Approval Subsequent Actions Phase Two A Acronyms:
• ACOE – Army Corps of Engineers • DLCD – Oregon Department of Land Conservation and Development • DSL – Oregon Department of State Lands • OCMP – Oregon Coastal Management Plan Federal
Once the Preliminary Permit has been approved, M3 will need to provide FERC with biannual progress reports. These reports ensure the commission that the company is actively assessing the site and updates the commission on the status of studies and target dates. State
Before any federal organization can issue a license, M3 Wave must certify that they comply with the OCMP. This is done through providing an application to the DLCD. Coastal Zone Certification40 requires: • A summary of the effects of the project on coastal uses and resources • a set of findings demonstrating that project adheres to state policies This process happens in four phases: • Applicant prepares consistency certification with relevant data and information • DLCD checks to ensure that the application is complete • DLCD conducts the consistency review; • DLCD issues a concurrence or an objection41 40
Refer to Appendix G: Coastal Zone Management Act, Section 307 Pacific Wave Energy Ventures, pg. 11 41
Page 22 DLCD has six months to review the documentation and inform ACOE that it confirms or rejects the certification. If the certification is rejected, the applicant can appeal. M3 should begin the process of obtaining a Removal Fill Authorization from DSL at this time. This will allow the company to attach any devises for testing the feasibility of the site to the ocean floor.42 Once M3 Wave has been granted the FERC Preliminary Permit DSL is authorized to issue a Temporary Use Permit. The state uses the Temporary Use Permit to ensure “the collective rights of the public to fully use and enjoy the Territorial Sea for commerce, navigation, fishing, recreation, and other related public purposes consistent with applicable federal and state laws”43. In order to obtain a Temporary Use Permit M3 Wave will need to consult with DSL staff, other state agencies that have authority in the states territorial seas and ocean users. Phase Two B: Beginning the Process for licensing Phase Two B Acronyms:
• 3PC – Third Party Contractor • BA – Biological Assessment • CZMA – Coastal Zone Management Act Certification • DEQ – Department of Environmental Quality • EA – Environmental Assessment • EFH – Essential Fish Habitat • EIS – Environmental Impact Statement • ESA – Endangered Species Act • IHA -­‐ Incidental Harassment Authorization • LOA – Letter of Authorization • MMPA -­‐ Marine Mammals Protection Act • NEPA – National Environmental Policy Act • NMFS – National Marine Fisheries Service • NHPA -­‐ National Historic Preservation Act • RFP – Request for Proposals 42
The Administrative Rules Governing the Issuance and Enforcement of Removal-­‐Fill Authorizations within Waters of Oregon Including Wetlands, accessible at http://arcweb.sos.state.or.us/rules/OARS_100/OAR_141/141_085.html, is a fantastic resource for better and more in-­‐depth comprehension about this regulation. 43
Division 140 Department of State Lands. Rules Governing the Placement of Ocean Energy Conversion Devices On, In or Over State-­‐Owned Land Within the Territorial Sea. 2007 Retrieved 8 23, 2008, from: www.oregon.gov: http://www.oregon.gov/dsl/lwdocs/final_wave_energy_rules_07.pdf Page 23 Federal – NEPA and Environmental Assessments
NEPA requires federal agencies to understand and address the impacts of environmental changes before granting permits and licenses through an EA or EIS. The information gathered in these reports can be used in conjunction with other state and federal agencies to further satisfy requirements and shorten permitting times. M3 will need to begin consultations with the ACOE to start the NEPA process. Due to the fact that M3’s initial project will not be grid connected the ACOE is the governing body that will determine the effectiveness, objectivity, and relevance of the study. It is important to note that all of the costs incurred in conducting the environmental assessment will be borne by the company. There are multiple steps to an EA/EIS process. M3 will begin by: • Scheduling a consultation with ACOE’s office. o The agency will determine if the use of a 3PC is necessary to perform the environmental assessment. o If a 3PC is deemed necessary, M3 will draft a RFP with the inclusion of a sample contract and submit it to ACOE for review. The company will not need to formally file this but, rather submit it straight to the office for staff review. • ACOE will approve the RFP allowing the company to formally issue the request. o It will be beneficial for M3 Wave to have already researched and preliminarily selected several 3PC’s to submit the RFP directly. Of course, the RFP can be issued other ways, such as through advertisement. • The company screens 3PC applicants and submits a choice of three for selection. It is critical that M3 Wave do everything in their power to avoid any conflict of interest with selected 3PC’s. Detection of any conflict of interest is grounds for invalidating the process and is highly frowned upon. • Once the ACOE selects a candidate and notifies the company, M3 Wave will have 14 days to award the contract to the 3PC, instruct the individual to schedule a meeting with ACOE staff, and formally notify the agency of the awarding of the contract. • At this point the 3PC begins to work directly with ACOE. o M3 Wave will not be party to these meetings and consultations. • The 3PC begins the EA. • Once the assessment is compiled the contractor will submit the document for public viewing and handle any responses, including those by the company. Page 24 o ACOE is responsible for final draft approval and has “complete control over the scope, content, and quality of the contractor's work [and] independently evaluate the results of the contractor's work”4445. Stakeholder engagement by the 3PC is a strong portion of the EA. Virtually any cooperating state body is able to participate in the process. “Cooperating agencies assist the action agency by participating in the scoping process, developing information and preparing environmental analyses on issues with which the cooperating agency has special expertise”46. However, none of these agencies are allowed to intrude or prevent the assessment from moving forward. The general public can participate in the assessment as well. This is typically done through “providing comments on the licensing application, participating in scoping of issues, filing of recommendations and conditions, and reviewing and commenting on the draft EA or EIS”47. ACOE takes into account all comments from the public on the assessment. Critical Federal Consultations
In conjunction with the ESA, ACOE will begin consulting with NMFS to determine if the proposed project will harm endangered species and/or their habitat. Through the use of a BA, M3 Wave will be expected to “document and implement a due diligence process that includes impact avoidance, minimization, enhancement, monitoring, and adaptive management to address unforeseen impacts to endangered and threatened species and their critical habitats”4849. If ACOE determines from the BA that the project site does not harm endangered species it will submit the BA to NMFS. They will then assess the document, either agreeing or not. If they agree this consultation is complete. If not, formal consultations begin. In order to comply with the MMPA, M3 Wave will be able to use the BA determine whether or not the project site will affect ocean mammals and endangered species. How much their activities affect ocean mammals will determine whether or not the company will obtain one of two authorizations, either an IHA or a LOA. In order for either authorization to be issued, the company must show that any harm will be insignificant. ACOE must consult with NMFS to ensure that the project site does not interfere with any EFH. This consultation can be incorporated into the EA if NMFS finds that essential fish habitat is within the boundaries of the project site. NMFS will make recommendations as to proper conservation of the habitat. 44
Federal Regulatory Commission. Applicant Handbook for Using Third Party Contractors in Support of the Application Process for an Electric Transmission Construction Permit. Retrieved 10 11, 2009, from www.ferc.gov: http://www.ferc.gov/industries/electric/indus-­‐act/siting/third-­‐party-­‐handbook.pdf pg.3 45
Refer to Appendix N for the ACOE NEPA process flow chart 46
Pacific Wave Energy Ventures pg. 20 47
Pacific Wave Energy Ventures pg. 20 48
Pacific Wave Energy Ventures pg.21 49
Refer to Appendix P for more detailed information on the purpose and requirements of a BA Page 25 ACOE must consult with the federal and state departments of fish and wildlife to ensure that the development of the project site does not damage the states fish and wildlife. FERC must incorporate preservation measures into its licensing for hydrokinetic projects. Abiding by NHPA requires a great deal of stakeholder engagement. In this situation the ACOE will consult with the state and tribal historic offices. There are three stages of consultation in this process: • Initiation of consultation • Assessment of adverse affects • Resolution of adverse effects • Each stage is expected to take approximately sixty days If the NHPA was incorporated into the EA a quicker and more streamlined process may take place. If any adverse affects are found, FERC will most likely have the applicant prepare a Historic Properties Management Plan for implementation if a license is granted. Other Federal Pre-License Requirements
Once the EA has been completed the ACOE will determine if a Clean Water Act Section 404 Permit and/ or a Rivers and Harbors Act Section 10 Permit are necessary. Although the DMP itself may require little fill removal, this permit comes into play in regards to the cables that will be necessary to hook the DMP to the grid. The ACOE requires that consultation begins early in the pre-­‐licensing process, starting with the application. Upon receipt of the application, the ACOE will begin consulting with other agencies to assess the various impacts the DMP may have on surrounding land and wildlife. After the completion of the EA, the ACOE will determine what type of the Rivers and Harbors Act Section 10 Permit is needed choosing between four options: • standard individual permit • letter-­‐of-­‐permission • nationwide permit • regional permit50. Before granting a permit, the ACOE must determine if the project disturbs or harms endangered species habitat. In order to confirm that the project is not and will not harm endangered species habitat “permit applicants will be required to submit a Biological Evaluation describing the species in the area, the impact the project may have on the species or its critical habitat, and measures that can be taken to minimize impacts”51. 50
Pacific Wave Energy Ventures pg.17 Pacific Wave Energy Ventures pg. 17 51
Page 26 State
ACOE will work with the DSL when reviewing the section 404 and section 10 applications. Section 10 applications are not always necessary. However, this must be determined through consultations with the ACOE and DSL after an EA is completed. DEQ typically oversees the Clean Water Act Section 401 application process except for when applicants are fulfilling requirements for a non-­‐grid connected project and therefore are overseen by the ACOE. In this case M3 is allowed to file a joint application that will satisfy the requirements for DEQ and ACOE simultaneously and should file this application with ACOE rather than DEQ. The DLCD may cancel approval of the CZMA certification if they believe that the applicant is not fulfilling obligations for the Clean Water Act. If this happens, the applicant will not be able to attain any federal permits or licenses. “States may also waive water quality certification, either affirmatively or involuntarily. If the state fails to act on a certification request within one year after receipt of a complete certification request, then it forfeits its authority to grant or deny certification”52. Although the DMP may not be polluting the water, they will need to work with ACOE to determine if a waiver is necessary. Phase Three: Licensing Phase Three Acronyms:
• ALP – Alternative Licensing Process • ILP – Integrated Licensing Process • PAD – Pre-­‐Application Document • PATON – Private Aids to Ocean Navigation • TLP – Traditional Licensing Process Federal
As part of the U.S. navigation standards, the US Coast Guard requires that all wave energy devises be clearly marked by PATON to prevent boating and other entanglements. Although the DMP will be located on the ocean floor, it is highly likely that M3 Wave will need to indicate the location of the devise on the ocean’s surface. In order to obtain PATON M3 Wave must obtain permission through applications in order starting with: • ACOE, • Oregon Marine Board • County Shore Management • City/Town Shore Management 52
Pacific Wave Energy Ventures pg.17 Page 27 • US Coast Guard53. Once permission is granted the company will be responsible for maintaining the PATON’s54. Federal: Types of Licenses
Toward the end of the Preliminary Permit timeframe, M3 Wave will need to work with FERC in obtaining a license. The license will allow the company to begin the process of connecting to the grid. All hydrokinetic projects hoping to connect to the grid must first obtain a FERC license. FERC offers three options for licensing hydropower devices: • Verdant Order o Using the Verdant Order is a likely best choice for M3 Wave at the beginning of the licensing process as the infrastructure to hook to the grid may not be fully developed. • Pilot Project License55 o Similar to the Verdant Order, but gives the company more options o the machine ought to be “original” in that it is not pre-­‐existing and must be:  “small (5 megawatts or less)  easily removed or shut down quickly  located in a non-­‐sensitive area  has the primary purpose of testing new technologies or locating suitable generation sites  lasts no more than 5 years”56 o Depending on the goals of the company, the DMP easily falls into this licensing category57. • Conditioned license o Used for projects that are either original or pre-­‐existing o Allows the licensee to begin developing projects and engaging in consultations before construction is necessary. o This license can also help the licensee secure financing • The Verdant Order, Pilot Project License and Conditioned License all allow the applicant to build, test, and maintain the hydrokinetic project 53
US Coast Guard. PATON (Private Aids to Navigation). July 7, 2006 Retrieved September 2009, from www.uscg.mil: http://www.uscg.mil/d13/dpw/docs/PATONGuide12Jul06.pdf 54
Refer to Appendix Q for a quick guide on obtaining a PATON 55
Refer to Appendix O for a conceptual map on Hydrokinetic Pilot Project Licensing Procedures 56
Federal Energy Regulatory Commission. Conditioned Licenses. 2007. Retrieved 9 20, 2009, from www.ferc.gov: http://www.ferc.gov/industries/hydropower/indus-­‐act/hydrokinetics/pdf/faq.pdf p.1 57
Refer to Appendix R for the Hydrokinetic Pilot Project Criteria and Draft Application Checklist, a useful tool on navigating the Pilot Project License Page 28 There are several differences between each of these licensing options. The difference between the Pilot Project License and the Verdant Order is that “the pilot project procedures (1) could lead to a license under the Federal Power Act; (2) will be reviewed and overseen by the Commission; (3) will allow the transmission of electricity into the national power grid if licensed; and (4) will be available to those who wish to test technology, whether or not they intend to pursue a standard license application to follow the pilot project license” 58 . Clearly, the strongest point in this procedure is that the project will be supervised by FERC. Although having the commission supervise the project may add a level of bureaucracy, it also ensures that FERC’s staff is more involved in the process from the early stages, allowing any missteps to be quickly found and corrected. There are strong differences between the Pilot Project License and the Conditioned License. The main difference being that FERC will not grant the Conditioned License until the commission has received all “necessary federal authorizations”59. The result is that M3 Wave would not be allowed to begin construction until FERC receives the authorizations and goes through the Conditioned License process. Due to the hassle of obtaining this license and the fact that the DMP is highly experimental, attempting to obtain a Conditioned License is not recommended. FERC Licensing Processes
With the goal of obtaining a license, FERC offers three types of processes: Integrated Licensing Process (ILP), Traditional Licensing Process (TLP) and Alternative Licensing Process (ALP)60. As of 2005 the Integrated Licensing Process has been the default and the commission strongly recommends applicants use this method. It is important to keep in mind that the ILP method is fairly new and subject to change by the time M3 Wave is ready to begin the process. In addition to this, the ILP, TLP, and ALP processes are developed from the standpoint that company is choosing a grid connected pathway, rather than a non grid connected pathway as in the case of M3 Wave. Therefore, while it is useful to know about these licensing processes, M3 Wave will need to consult with FERC when beginning the licensing process to ensure they are taking the correct steps. The purpose of the ILP method is to simplify the process through three goals: • “Early issue identification and resolution of studies needed to fill information gaps, avoiding studies post-­‐filing; • Integration of other stakeholder permitting process needs; and 58
Federal Energy Regulatory Commission. Licensing Hydrokinetic Pilot Projects. April 14, 2008 Retrieved September 2009, from www.ferc.gov: http://www.ferc.gov/industries/hydropower/indus-­‐
act/hydrokinetics/pdf/white_paper.pdf pg.5 59
Federal Energy Regulatory Commission Conditioned Licenses 60
Refer to Appendix S: Matrix Comparing Three Licensing Processes Page 29 •
Established time frames to complete process steps for all stakeholders, including the Commission”61. As with any licensing process there are several pre-­‐filing steps an applicant must follow. • The applicant must complete a Pre-­‐Application Document (PAD) and a Notice of Intent to File License. o In the PAD the applicant will incorporate all pertinent information about the project and “a well-­‐defined process plan that sets the schedule for developing the license application and a list of preliminary studies and issues”62. • Once FERC has received the PAD and Notice of Intent they will dig deeper into any issues surrounding the project and engage stakeholders. • The applicant will then file a Proposed Study Plan63, engage stakeholders, revise the plan, conduct the studies, and file a license proposal, providing copies to relevant stakeholders. • FERC will then engage in its own environmental assessment following NEPA guidelines64. After this point FERC will either grant or refuse the license. For the Traditional Licensing Process(TLP) there are three pre-­‐filing stages an applicant must go through. This processes is similar to the ILP, however, rather compartmentalized. • Stage One: the applicant must request the use of the TLP process with the commission and place a notice in the newspaper, after which they then begin the stakeholder engagement process. • Stage Two: the applicant conducts studies and provides this information to relevant stakeholders and FERC, engaging in dispute resolution meetings if necessary. • Stage Three: The applicant files the concluding application during65. The Alternative Licensing Process (ALP) allows the applicant to adapt the process to their own needs. “… Applicants can utilize the Commission's alternative licensing process designed to improve communication among affected entities”6667. 61
Federal Energy Regulatory Commission. Integrated Licensing Process. December 17, 2006 Retrieved 9 20, 2009, from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐info/licensing/ilp.asp 62
Federal Energy Regulatory Commission, Overview of ILP Pre-­‐Filing Steps December 7, 2006 Retrieved September 2009 from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐info/licensing/ilp/pre-­‐filing-­‐steps.asp, 63
Federal Energy Regulatory Commission Overview of ILP Pre-­‐Filing Steps 64
See Appendix For Guidelines on Environmental Measures in License Applications 65
Federal Energy Regulatory Commission, Traditional Licensing Process, May 27, 2009 Retrieved September 2009 from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐info/licensing/licen-­‐pro.asp 66
Federal Energy Reulatory Commission, Alternative Licensing Process May 27, 2009 Retrieved September 2009 from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐
info/licensing/licen-­‐pro.asp 67
Refer to Appendix U for a flow chart on the ALP and the ILP Page 30 State
In order to secure the use of a specific site, M3 Wave must obtain an Ocean Energy Facility Lease from the DSL. Prior to applying for the lease, M3 Wave must “meet with DSL staff, affected ocean users, and other government agencies having jurisdiction in the Territorial Sea to discuss possible use conflicts, impacts on habitat, and other issues related to the proposed project” 68. Much of this will have been covered by the EA; however, it is important that the company continue to engage stakeholders during this process. The length of time that the lease is applicable is equal to the length of time of the FERC license, once obtained. M3 Wave will need to obtain an Ocean Shore Alteration Permit once they are ready to connect the DMP to the grid. Any alteration done to the shore requires a permit, regardless of whether or not the cables will be buried. Potential for Future Development
One of the greatest challenges in the burgeoning wave energy industry is the potential for regulatory change. If the U.S. is to follow Europe, then it is possible the industry may see the formulation of Feed-­‐In Tariffs, Renewable Energy Credits, and Marine Energy Zones. Each of these aspects has been used to varying degrees in Scotland, Portugal and Spain. The most likely to occur in the U.S. are Marine Energy Zones. Pacific Gas and Electric (PG&E) is currently working to establishing one such zone, called WaveConnect, off the coast of Humboldt County in California. The zone itself is an 18 mile rectangle between two and three miles off the shoreline. The purpose of this project is to explore the “feasibility of using wave energy because of the large potential amount of renewable, carbon-­‐free electricity generation that is estimated to exist offshore of PG&E’s 600-­‐
mile long coastline”69. PG&E has received a Preliminary Permit from FERC and is working on collecting environmental assessment data as well as developing stakeholder engagement70. They have also solicited wave energy converter manufacturers and are in the process of final selection. PG&E will pay for the costs of permitting, licensing, and infrastructure connecting the machines to the grid. These costs are expected to be recovered through rate payers. No utility or government agency in Oregon has yet to begin the development of a marine energy zone. According to Dee Outama from Portland General Electric, PGE is not currently looking to invest in this type of project. Nonetheless, should PG&E be successful in their establishment of WaveConnect, more of these marine energy zones may begin to 68
Pacific Wave Energy Ventures pg.8 Pacific Gas and Electric, WaveConnect Program Overview 2009 Retrieved October 2009 from http://www.pge.com/waveconnect/ 70
Pacific Gas and Electric, PG&E WaveConnect Pilot Project Draft Schedule Retrieved November 2009 from http://www.pge.com/includes/docs/pdfs/shared/environment/pge/waveconnect/WaveConnect_Schedule_rev9.p
df 69
Page 31 formulate. In addition to this, these zones may help to streamline the regulatory process enabling companies like M3 to enter the water quicker. Page 32 Wave Energy: Development and Finance The developing and funding process for a company and its technology can be categorized into five steps: Conceptual, Pilot, Demonstration, Commercial and Mature. 71 At each stage of development a certain type of financing approach can be used such as grants, Venture Capital (VC), corporate investment, loans and ultimately revenue. Development and Funding Stages Conceptual Pilot Demonstration Commercialization Mature Grants VC or Corporate $ Loans Revenue M3 is currently located at the beginning of the Pilot stage and is dependent upon grants and angel investors to continue to develop the DMP. The following will describe how M3 can progress from Pilot stage to Commercialization and what they need to do to surpass each new level of finance. Pilot-­ Section Redacted While the technology is being developed, M3 will need to prepare certain documentation in order to solicit VC funding72 and/or corporate investment for Demonstration and further development. M3 will need: • Timing (must have a market need) • An attractive Business Plan that illustrates; o Demand o Competition o Location o Value Proposition • A Working Prototype • An estimate of simple economics (should be close) o Cost of energy conversion (cost/kWh) o Price of kWh o Costs: HR, Construction, Operation, Repair est. o (For early stage VC, revenue forecasts are not as important because, “they will be wrong.”) 71
Mirko Previsic, Omar Siddiqui and Roger Bedard, EPRI Global E2I Guideline. Refer to Appendix C: Interview with Gerry Langeler 72
Page 33 To begin navigating regulations and permits To create a “Selective Buzz” (i.e. publish papers, speak at conferences… influence the influencers) • “Miles of Patent Protection” Venture Capitalists typically look for a three legged stool of People, Market and Product. For instance the people need to present themselves as, “World Class” or unique individuals with ability to execute ideas that “win”. The Market leg needs to show that demand is big enough to matter and that the company understands both its direct and indirect competitors. The product should be differentiated with a value proposition but it should not be sold on the idea that it is “unique” because virtually everything has either been done or can be copied. It should also be pointed out that Venture Capital do not look heavily at discounted cash flows or other similar •
•
metrics for investing, because these numbers are most likely wrong and irrelevant at the technology development stage. The Venture Capital investment horizon can range up to 10 years. The company is expected to gain market share w/in first five years and ROI should start to generate around year seven. The general funding levels within Venture Capital are: • Up to $3 million for a “GREAT” business plan • Around $5 million for a “GREAT” business plan and a demonstrate-­‐able prototype • Up to $10 million when sales begin to happen Demonstration During demonstration, M3 should concentrate on establishing a competitive cost of energy (COE). Given a certain discount rate (usually different in states/ countries) and a time period (e.g. 20 years), the cost can be estimated using the following equation, where PV indicates the present value over the service life 73
Where: • An installation’s cost of energy is determined by a discounted cash-­‐flow • The key factors affecting the cost include performance, capital costs, operation and maintenance (O&M) costs and risks (e.g. due to offshore environment). 73
Mirko Previsic p17 Page 34 Capital Costs
Cost elements include onshore transmission, gird interconnection, subsea cables, and installation. Much of the initial capital costs might also fall under developing the infrastructure in the first place. Certain elements can be defined as: • Station-­‐keeping: mooring, foundation and outer structure components • Structural and energy conversion components: power train, hydraulic pistons, frequency • Converters, size, geometry • Sub-­‐assemblies and project costs: those items, excluding the device itself, which allow it to operate at the intended location (cables, transportation, commissioning) It is important to note that for capital costs, the cost of the device itself makes up only one fifth of the total project. So M3 will need to have a good idea of the other extraneous costs, in order to estimate the correct amount of funding they will need. 74
Pie Chart A: Capital Costs Pie Chart B: O&M costs NOTE: Both Pie Charts represent Operation & Maintenance Costs
an installed, single device. O&M costs are typically the easiest costs to minimize. They include: • Planned and unplanned maintenance • Licenses (consents and permits) • Insurance • Ongoing monitoring activities • Refit Costs The easiest way to lower the devices’ overall costs of energy can be done by reducing the costs of building and operation and by increasing the device’s energy production. It can be seen that about 1/7th of the total O&M costs are assigned to unplanned maintenance activities, which 74
Carbon Trust Page 35 reflects a degree of uncertainty in the device’s design for reliability. In reality of course, O&M costs are unlikely to stay exactly the same year after year. For early installations, the relative lack of experience of O&M procedures and opportunity/need for equipment modifications post commissioning could mean that O&M costs are higher in the first few years than in the remainder of the project’s life. In general there is a distinct relationship between wave energy capital costs and O&M costs. Individual cost centers of a design, affect capital expenditures (capex) and operation/maintenance expenditures (opex) together. For instance, the DMP’s size will affect both capex and opex from a perspective of material costs, more time consuming O&M procedures and a more complex power train system. Overall, a greater capex can lead to a greater opex. However, the exception to this rule is when duplicating items. If one piece fails and another can take over, capex will increase and opex will likely decrease. Opportunities for capex and opex reductions: • Change structural material, size and redundancy • Reduce distance to shore • Find a cheaper maintenance location (onshore or in the water) • Create a modular design • Use preventative or planned maintenance to advert the unplanned costs • Price types (and ownership) of vessels required for deployment and retrieval Estimates of capex and opex costs (Pelamis project in Sanfransico 2004) Major cost elements for Utility Generators Cost Element Low Best High Total Plant Investment $211,900,000 $279,000,000 $374,000,000 Annual O&M Cost $10,500,000 $13,100,000 $19,600,000 10-­‐year Refit Cost $18,900,000 $23,300,000 $37,800,000 Fixed Charge rate(Nominal) 8.8 9.2 9.6 Cost of Electricity(c/kWh)(Nominal) 10.0 13.4 19.1 Fixed Charge rate(Real) 6.6 6.9 7.2 Cost of Electricity(c/kWh)(Real) 8.4 11.2 16.1 Page 36 Major cost elements for Non Utility Generators Cost Element Lowest Estimate Best Estimate High Estimate Total Plant Investment $212,800,000 $280,100,000 $375,100,000 Annual O&M Cost $10,500,000 $13,100,000 $19,600,000 10-­‐year Refit Cost $18,900,000 $23,300,000 $37,800,000 Internal Rate of Return 34.3% 16.6% None Commercial With the last couple years of venture capital, M3 should commercialize so that revenue can take over when VC funding runs out. When the DMP is commercialized, it will have to have a competitive cost/kWh while at the same time M3 will have to offer a competitive price/kWh. Below is a comparison of wave energy cost/kWh to other direct and indirect sources of energy. This comparison is a bit tricky because data is still volatile and varies depending on information source. The following tables estimate kWh costs in the Northwest for a range of RE generation sources and traditional fossil fuel based electricity generation both current (2006) and forecast (2020). Cost per kWh of different resources 75 76 77 Wave Solar Wind Biomass Natural Gas and Coal Cent/ kWh 15 ¢* 24 -­‐ 34¢ 8 -­‐16¢ 14-­‐20¢ 4 -­‐ 7¢ (Source: Ocean Power Tech 2009) Wave Solar Wind Hydro Geothermal Nuclear Coal Natural Electricity Gas Cent / -­‐ 15-­‐30 4.0-­‐6.0 5.1-­‐11.3 4.5-­‐30 11.1-­‐14.5 4.8-­‐5.5 3.9-­‐4.4 kWh (Source: Green Arrow Investment April, 2008) Wave Solar Wind Wind Tidal Geothermal Biomass (offshore) (onshore) Cent / kWh 8-­‐20 20-­‐80 6-­‐10 3-­‐5 8-­‐15 2-­‐10 5-­‐15 (2006) Cent/kWh(2020) 5-­‐7 4-­‐10 2-­‐5 2-­‐3 8-­‐15 1-­‐8 4-­‐10 (Source: www.earthfuture. com 2006) 75
Ocean Power Technologies. (n.d.). Technologies Comparison. Retrieved September 2009, from: http://oceanpowertechnologies.com/compare.htm 76
Green Energy Prospecting: A Look at Ocean Power Technologies. by Stan Berenshteyn. (April 30, 2008). Retrieved October 2009, from http://greenarrowinvestments.com/gg043008.aspx 77
Energy Markets and Trends:The Emerging Renewables Sector, by Guy Dauncey.(April 2006). Retrieved October 2009, from http://64.34.178.148/resources/GuyDauncey.pdf Page 37 The tables indicate that when compared to fossil fuels and other renewable energy sources, wave energy is not cheap. Currently, coal generated electricity costs between 4.8-­‐5.5 cent per kWh, while wave energy (e.g. OPT Buoy) is estimated to cost around .15 cent per kWh, at least 3 times that of coal. In the short term wave energy cannot compete with fossil fuels or for that matter other RE energy sources. Fossil fuel continues to be the dominant resource for electricity generation. The generation industry and requisite infrastructure has been built around the use of fossil fuels and it will remain relatively plentiful into the near future. Estimates in the table also indicate that overtime the cost of kWh generation by most all renewable energy sources will tend to fall. This is generally due to the increasing investment in RE and technology innovations. Worldwide, the amount of investment in 1995 was $7 billion; in 2004 it was $30 billion and has been increasing ever since. Renewable energy accounts for 20-­‐25% of total energy investment around the globe. These investments help the renewable energy industry, recently including wave energy, to have an easier growth to maturity in financial areas. However, when compared particularly with wind, wave energy is still projected to be more expensive even in the long run. Indeed, it is clear that wave energy is not expected to be the cheapest source of electricity in 2020, but it will be competitive due to its reliability and ability to supply areas that other RE’s cannot. Finally, regulatory drivers are helping to advance ocean energy harvesting as a potential future RE source. For example, Oregon’s Renewable Portfolio Standard requirement has forced IOUs such as PGE and Pacific Corp to investigate RE options. Ocean energy harvesting is one of the technologies that qualify for meeting the RPS and though it is a technology that cannot currently meet RPS requirements, IOUs are interested in its long run potential. In Oregon and elsewhere, worldwide investment in wind energy continues to be the RE sector receiving the greatest investment. It will continue to do so simply because it has the highest possible rate of return associated with the least amount of investment for renewable energy – essentially more bang for the investment buck. For example, the U.S. wind energy industry has received approximately $9 billion in new generating capacity which has resulted in a 30 percent annual growth rate over the between 2002-­‐07 78 Cost per kWh among Different Competitors
As a new entry to market, M3 needs to take full consideration of its existing competitors. As far as we know, around the world, there are several leading companies in the industry, such as Ocean Power Tech, Pelamis, Wavegen, etc. In order to be profitable, it is necessary for M3 to know what level of cost per kWh competitors have and to help them make competitive cost decisions for their own company. 78
Wind Energy Could Produce 20 Percent of U.S. Electricity By 2030, (May 12, 2008) Retrieved October 2009, from http://www.energy.gov/news/6253.htm Page 38 Cost per kWh among Different Competitors 79 Companies Locations Cost per kWh Cost per kWh (without subsidiary) (with Subsidiary) Ocean Power New Jersey, US $0.15 $0.05 Technologies Pelamis Scotland & Portugal >$0.10 per kwh -­‐ Aquamarine Power Scotland $0.15(estimated) Oceanlinx Australia $0.15 $0.05 Wavegen Islay, Scotland $0.09 $0.06-­‐$0.07 (500kW Limpet) -­‐ California, US $0.079 $0.06 Aqua Energy Washington State, US -­‐ $0.045 (acquired by Finavera in June 2006) Blue Energy (Tidal) Canada $0.02 (promised) -­‐ Waveberg ( in R&D New York, US $0.06(now) $0.03-­‐$0.04(future) stage) Most wave energy companies are not public, for instance, Pelamis has not issued its IPO so far, and therefore they do not need to publish financial data. The data we collected above is put together from an array of various sources, such as wave energy articles, comments, slides and financial publications. As we see, in the future the cost could be $0.05; some companies (e.g. Waveberg) are estimated as lowest as $0.03, while others are $0.05 as an accepted cost. A Canadian company, Blue Energy, who has promised the price $0.02 to compete with Ocean Power Tech in the market, but further research we found that the business of Blue Energy is tidal energy. However, it provides us a broader spectrum to think about the competitors. It seems that there are around 30 companies in the wave energy market (globally); however, they have various wave energy technologies at all stages from concept to pre-­‐
commercial demonstration. The advantage in technology will bring about the reduction of cost, which is the key to market. So far, among the 30 companies, leaders include Pelamis, which had three machines in Portugal (planned to enter again in 2010); Aquamarine Oyster in Scotland, with demonstration plans since 2005; Ocean Power Tech, with reported cost per kWh 79
Ocean Power Looks to Hire a New Wave of Employees (2008). Retrieved October 2009, from: http://74.125.155.132/search?q=cache:kGwCilfsguMJ:www.swellgen.com/drupal62/%3Fq%3DnoDn/63+Ocean+P
ower+Technologies,+New+Jersey,+cost+per+kWh&cd=7&hl=en&ct=clnk&gl=us Page 39 of 15¢ and Oceanlinx in Hawaii, which has a ¼ scale demonstrator being battered off Australia.80 Price of Wave Energy in different countries
It is also critical for M3 to understand what the government or the market is willing to pay for the electricity generated by the DMP. Prices of wave energy in different countries 81 Location Price per kWh Europe 100 MW at $0.30 per kWh Hawaii 100 MW at $0.18 per kWh Pacific Islands 100 MW at $0.35 per kWh Portugal €0.28($0.39 per kWh) for first 3 MW, €0.22 for next 17 MW Ireland €0.30($0.42 per kWh) for first 75 MW Scotland 5 ROCs’-­‐ $0.45 per kWh plus Saltire Prize of £ 10 million We can see that the price per kWh in Europe and the Pacific Islands is higher than in Hawaii. In Scotland and Ireland, companies obviously have a higher return than in United State (so far). One of the important reasons why the business of wave energy can be operated and managed continuously in Europe is that wave energy companies are able to obtain subsidies, grants, rebates and tax incentives. As seen in the chart below, the price of wave energy is much higher than the consumer purchase price (average electricity price). Without financial and fiscal support from government, the business might not be able to start. 80
Business case, Waveberg Development Co.(n.d.) Retrieved October 2009, from: http://www.newenergyny.com/download.cfm/Waveberg_Development.pdf?AssetID=1191 81
Waveberg Development, Clean Energy Investment Presentation.(July, 2009). Retrieved September 2009, from Santa Barbara County Renewable Energy Blueprint (2006). Retrieved October 2009, source:http://www.cecsb.org/storage/communityenvironmentalcouncil/documents/ch7_ocean_power.pdf Page 40 (Source: Wave energy utilization in Europe, current status and perspectives) Figure 4. Electricity price in Europe from 1992 to 2000 82 When M3 sells their wave energy to the grid they will have to continually compete on both a cost and price level. They will need to keep their costs down in order to make a profit and they will have to keep their price down in order to attract purchasers. Their main customer will most likely be Utilities. When purchasing renewable energy, Utilities83 look for: • Cost competitiveness • Viable development and integration • Static hourly performance • Predictability: how far in advance can you forecast supply • Low maintenance/ shut down risk • Long term investments • ROI accuracy: How guaranteed are they to receive a return By thinking of development of the DMP as following the same path with financing sources, M3 should be able to recognize the best opportunities and attract the best investments. 82
Wave energy utilization in Europe, current status and perspectives. (2002). Retrieved September 2009, from http://www.cres.gr/kape/pdf/download/Wave%20Energy%20Brochure.pdf 83
Refer to Appendix D: Interview with Dee Outama Page 41 Alaska Market Overview The status of electricity in rural Alaska (which is most of Alaska) is unique in the US and probably worldwide. Infrastructure complications are prevalent with a lack of roads and no electric transmission grid. Typically, each rural community has its own generation plant. The majority of these plants are diesel-­‐fired and very few use other fuel sources. “Generating capacity at each location in Alaska must be at least three times the size of the peak load.” For example, reliable electricity can only be guaranteed if there is generating capacity to meet peak load in the circumstance that one generator is off for scheduled maintenance and the other is disabled from an unexpected breakdown84. These complexities lead to the Energy Information Administration to rating Alaska eighth in 2008 for high electricity prices. Some areas such as Ruby, Alaska, pay up to $1.00 per kWh while the average price of electricity in the US is around $0.11 per kWh.85 This electricity supply and price disparity clearly illustrates that it is in the best interest of Alaskans to develop cheaper, reliable, and environmentally sustainable methods of electricity production. The Alaskan government recently increased funding and support for renewable energy projects. In 2008, the state legislature approved the creation of the Alaska Renewable Energy Grant Fund. This program will provide $300 million to qualifying renewable energy projects and development studies through 2013.86 The potential for wave energy to fill this demand is fairly high. “With 44,000 miles of coastline and some of the largest tidal ranges in the world, Alaska has enormous potential to develop ocean energy as available renewable source of electricity.”87 • Alaska has over 75% of the nation’s wave energy potential. 88 • EPRI estimates the wave resource to be 1,250 TWh/y. o Assuming 15 percent is developed the resulting potential would be around 187 TWh/y which is enough to power about 17.5 million average U.S. homes89. • Organizations, which are interested in Wave Energy o Renewable Alaska Project o Golden Valley Electric Assoc. (GVEA) 84
Kohler, Meera. Rural Alaska’s Electricity Landscape. Alaska Village Electric Cooperative, Retrieved October 21, 2009 from www.calistacorp.com/RALS/.../ak_village_electric_coop.pdf 85
Renewable Energy Alaska Project (REAP). Alaska’s Resources. Retrieved October 15, 2009 from http://alaskarenewableenergy.org/alaskas-­‐resources/. 86
IBiD 87
IBiD 88
IBiD 89
U.S. Department of the Interior. Potential Offshore Wave Energy. Retrieved August 12, 2009 from www.doi.gov/ocs/slides-­‐Alaska.pdf-­‐ Page 42 o Ocean Renewable Power Company (OPRC) M3 should definitely keep an eye on Alaska because it could be a great commercial opportunity. However as of yet, the timing is not right. Due to incredible infrastructure hurtles and extreme weather conditions, this state is not ready to install wave energy devices and probably will not be for another decade. M3 should allow larger companies to enter first and “create” the infrastructure and market in order to minimize their own risk. Page 43 The European Union On March 9th, 2007 the EU Council of Ministers set a binding target for all EU members to reach 20 percent of energy supply from renewables by 2020. This 20/20/20 goal is challenging given that to date, only 6,5 percent of EU energy supply comes from renewable energy sources. Wind energy will definitely be the major source of the 20 percent of renewable target but many countries have committed that wave energy will also be a cornerstone of their renewables portfolio.90 Europe does have abundant potential for wave energy generation. More than 65 percent of the continent is adjacent to the sea. The long-­‐term annual wave power level of Europe increases from about 25 kW/m off the southernmost part of Europe's Atlantic coastline (Canary Islands) up to 75 kW/m off Ireland and Scotland around the North Sea. In the Mediterranean basin, the annual power level off the coasts of the European countries varies between 4 and 11 kW/m, the highest values occurring for the area of the south-­‐western Aegean Sea. The entire annual deep-­‐water resource along the European coasts in the Mediterranean is of the order of 30 GW, the total wave energy resource for Europe is estimated at 320 GW.91 Due to this great energy potential, the European Thematic Network on Wave Energy, a part of the European commission, was developed in 2000. The Network works to co-­‐ordinate the interactions between major players in the wave energy industry. The ultimate goal of the Network is to establish industrial confidence in emerging wave energy conversion technologies and to secure Europe’s place as a leader in wave energy generation. As part of the European effort, Scotland, Portugal and Spain have taken the lead to develop wave energy into a commercialized and profitable business. The governments of the respective countries have all committed resources to ensure wave energy’s success. For instance, they have established marine energy zones (MEZ) which set specific areas of wave energy. A developer in an MEZ does not have to negotiate with other users of the area such as fisherman, the permitting process is much easier since there is only one leasing body and the infrastructure is already set up for grid connection. These MEZ’s are truly what have given Europe the edge over the US in this industry. Along with MEZ’s, Feed In Tariffs (FIT) have been adopted in both Portugal and Spain to 90
EUROPA. Climate Action 20/20/20. Retrieved on September 24, 2009 from EUROPA: http://ec.europa.eu/environment/climat/climate_action.htm 91
European Thematic Network on Wave Energy. Wave Energy Utilization in Europe. Page 4. 2002. Page 44 motivate market demand and supply for wave energy. In Scotland, the Renewable Obligation Certificate (ROC) has been adopted to boost carbon credit trading for wave energy. The government support coupled with the further developed industry for wave energy in these three countries provides great opportunities for M3 to enter the market and capture a piece of the pie. Scotland Market Entry Strategy Scotland: Market Overview “The Future is not Green, It’s Blue.” 92 Scott Lamb, Head of Energy for Scottish Development International, predicts that Scotland will be the first nation to create an ocean power industry that will power not only itself but the rest of Europe. A 2001 study conducted by the government on ‘Scotland’s Renewable Resources’ estimated that wave energy could produce up to 14GW (45.71 TWh) of power to the total recoverable energy portfolio.93 This estimate has lead Scotland to develop one of the best incentive regimes and testing grounds for producing ocean generated electricity in the world. The Scottish Government has set an ambitious goal that by 2020, 50 percent of its electricity demand will be generated by renewable energy sources. This is the starting point that will lead to the nation’s 2050 goal of reducing carbon emissions by 80 percent. Wave energy will have a large piece of this renewable energy demand (at least 10 percent by 2020)94 Scotland has many public and private incentives to develop the ocean power industry. On the supply side, the nation provides: • A strong academic and research background that can provide expertise to any developer • Funding for development and testing: both government and private • Two Grid connected testing and semi-­‐commercialization parks: European Marine Energy Center (EMEC) and Wave Hub (located in Cornwall, Southern England and UK owned) • A centralized ocean property leasing body: The Crown Estate • The most streamlined regulation and permitting process in the world Government support is what has allowed Scotland’s wave energy industry to develop beyond that of Portugal and Spain. Both national and local governments, with the support of universities and private investment groups, are more willing to take on the risk and support 92
Scottish Development International. Page 5. Scottish Development International, pg. 6 94
Marine Energy Group. Harnessing Scotland’s marine energy potential. April 2004 93
Page 45 suppliers of wave energy because they are more able to foresee a positive return on their investment. For the demand side of the equation, Scotland provides: • Government purchase power agreements • Renewable obligations (RO) for electricity providers • Renewable Obligation Certificates (ROC) which are tradable between energy suppliers in order to meet the RO. • Primary purchasers who demand wave energy o The European Marine Energy Centre ( EMEC) o Wave Hub o Scottish and Southern Energy o E.ON UK o British Wind Energy Association o EDF Energy London o Renewable Energy Association (REA) London Government regulations and the nation’s carbon emissions goals have begun to spur Utilities and wave parks into demanding and purchasing wave power. For instance, Scottish and Southern Energy and Aquamarine Power entered into a joint venture in February aimed at developing sites in the UK and the Republic of Ireland capable of hosting 1,000MW of marine energy capacity by 2020.95 Both supply and demand for wave energy in Scotland is extremely promising and will increasingly offer many commercial opportunities for wave energy technology developers. It would be extremely beneficial for M3 to enter this market, before Scotland hits its 2020 target. Before 2020, M3 will have the advantage of coming in on the heels of the first to market competitors. This means that they will be able to overstep a lot of the unforeseen setbacks of a new industry, but they will also be able to capture a piece of the market without having to steal it away from the competition. 96 Scotland: Entry Strategy The most strategic place to enter the Scotland market is at the European Marine Energy Centre (EMEC). EMEC, located on the northern archipelago of Orkney, is the longest running, grid connected wave testing site in the world. It has been operating since 2004 and has four 95
Scottish and Sourthern Energy. Preliminary Results for the Year to March 31, 2009. Retrieved on October, 17 from SSE: http://investorcentre.scottish-­‐southern.co.uk/pdf/Financial_Results09.pdf 96
Refer to SWOT and Competition Analysis Appendix A for more information Page 46 designated and licensed test areas. It is where the first wave device (Pelamis) supplied electricity to the national grid. EMEC’s mission statement is, "To be the internationally acknowledged leading test and certification centre for marine energy converters."97 It is a place where M3 can: • Get extensive assistance with consent & regulatory issues and enter the water with a minimal amount of licensing • Connect to the Grid and receive ROCs (Renewable Obligations Certificate) accreditation • Have an independent assessment of the DMP’s energy conversion capabilities, structural performance and survivability • Have access to real-­‐time monitoring of meteorological and marine resource conditions, local research and engineering support and office support M3 will be offered an 11kv subsea grid connection, hydrographic and current environmental impact surveys and an opportunity to utilize EMEC’s Power Purchase Agreement from which they can earn income through Renewable Obligation Certificates (ROCs).98 Around <REDACTED>, when M3 is beginning to commercialize in Oregon, they should begin discussions with EMEC and the New and Renewable Energy Center (NaREC) about stakeholder engagement and the more detailed process that they will have to go through to enter the water. M3 should also begin looking for development and demonstration funding. There are many grants and investors that provide this sort of financing.99 For instance, the Scottish Regional Selective Assistance (RSA) fund is available specifically for foreign companies who wish to develop and commercialize in the UK. They are a government fund that is partnered with Highland and Island’s Enterprise Group.100 Finding efficient amount of funding could take a couple of years, and in the mean time M3 should continue consultations with EMEC, NaREC and the major permitting and governing bodies Crown Estates, the Marine Energy Spatial Planning Group (MESPG) and the Scottish Environmental Protection Agency. 101 Once development and demonstration funding has been granted, M3 will most likely have to complete an on land scale test at NaREC. Simultaneously, M3 should prepare the application requirements for EMEC. As a testing Center, EMEC applies for the necessary licensees for water testing and Grid connection on behalf of developers. However M3 does have to supply certain documentation to EMEC that shows full consideration of the range and scale of impacts both positive and negative to testing the DMP at the Center. The documentation process requires a: 97
The European Energy Centre LTD. EMEC Orkney. Retrieved on October16, 2009 from EEC: http://www.emec.org.uk/index.asp 98
Refer to the Scotland Cost/kWh Section 99
Refer to Appendix W: Key EU Wave Energy Stakeholders 100
Regional Selective Assistance. Scottish Business Grants. Retrieved on Obtober 16, 2009 from SBG: http://www.scottishbusinessgrants.gov.uk/rsa/208.html 101
Refer to Appendix W: Key EU Wave Energy Stakeholders Page 47 Developer Scoping Document that describes the technology and the project. This should be accepted by EMEC before any formal service/client contract can be written. • Environmental Statement (ES) that is similar to an Environmental Impact Assessment but much less intensive • Navigational Risk Assessment (NRA) describing the location and how the DMP will affect any vessel navigation • Third-­‐party Verification Report (TPV) EMEC can assist with this document • Decommissioning Plan which illustrates the process and how long it will take to get the DMP out of the water. A more detailed description of this process and what to include in the ES can be found on the EMEC website.102 As these documents are being prepared and submitted M3 must complete a scale test (typically 1/10 scale) at NaREC (New and Renewable Energy Center). This organization is dedicated to accelerating the deployment and grid integration of renewable energy and low carbon generation technologies. They have a large wave flume testing area with a simulated sea bed. The test flume is connected to the grid at their specialist electrical laboratory. They offer instrumentation, crane handling and other laboratory services upon request.103 With support by EMEC and NaREC, M3’s license applications will be sent to the local authorities and the Marine and Fisheries Agency (MFA) for consent. The DMP has to comply with laws set forth in the Coastal Protection Act (CPA) 1949 and the Food and Environment Protection Act (FEPA) 1985 PART II (Deposits to Sea). The CPA concerns safety and navigation issues as well as environmental issues. FEPA is a license relating to construction and deposits on the seabed. Their pimary objectives are to protect the marine ecosystem and human health while minizimizing interference and nuisance to others. If both liscenses are issued at the same time they will have an alligned expiration date of two to three years.104 While at EMEC, M3 will have time to collect data for a full environmental impact assessment (EIA) which they will need to gain or renew leases and licenses for commercialization. The requirements for the UK’s EIA comes from the European Union’s EIA Directive (85/337/EEC).105 The table below describes the main categories included in an EIA.106 •
102
EMEC EIA Guidelines. European Marine Energy Center. Retrieved on October 1, 2009 from EMEC: http://www.emec.org.uk/pdf/EMEC%20EIA%20Guidelines%20GUIDE003-­‐01-­‐04%2020081106.pdf 103
NaREC Marine Renewables Testing Services. New and Renewable Energy Center. Retrieved on October 1, 2009 from NaREC: http://www.narec.co.uk/sectors/marine_renewables/marine_testing_services/ 104
CPA and FEPA Liscensing. Marine and Fisheries Agency. Retrieved on October 1, 2009 from MFA: http://www.mfa.gov.uk/environment/works/consents.htm 105
Environmental Impact Assessment. Communities and Local Government. Retrieved on October 1, 2009 from GOV.UK: http://www.communities.gov.uk/planningandbuilding/planning/sustainabilityenvironmental/environmentalimpac
tassessment/ Page 48 EIA DIRECTIVE (85/337/EEC) Topics 1. Characteristics of projects The characteristics of projects must be considered having regard, in particular, to: 2. Location of projects The environmental sensitivity of geographical areas likely to be affected by projects must be considered, having regard, in particular, to: 3. Characteristics of the potential impact The potential significant effects of projects must be considered in relation to criteria set out 1 and 2 above, and having regard in particular to: Criteria • The size of the project • The accumulation with other projects • The use of natural resources • The production of waste • Pollution and nuisances • The risk of accidents, having regard in particular to substances or technologies used • The existing land use • The relative abundance, quality and regenerative capacity of natural resources in the area • The absorption capacity of the natural environment, paying particular attention to the following areas: (a) Wetlands (b) Coastal zones (c) Mountain and forest areas (d) Nature reserves and parks (e) Areas classified or protected under Member States’s legislation; special protection areas designated by Member States pursuant to Directive 79/409/EEC and 92/43/EEC (f) Areas in which the environment quality standards laid down in community legislation have already been exceeded; (g) Densely populated areas; (h) Landscapes of historical, cultural or archaeological significance. • The extent of the impact (geographical area and size of the affected) • The transformative nature of the impact • The probability of the impact • The duration, frequency and reversibility 106
Refer to Appendix V: Definitions of European Union Regulations for EU, UK, Portugal and Spain. Page 49 After testing at EMEC, M3 will have the option to commercialize at either WaveHub or through their own lease from the Crown Estates. WaveHub is similar to EMEC in that it is a park where developers can hook to the grid. It is still in project status but will be fully up and running by 2010. WaveHub will be the UK's first offshore facility to demonstrate the operation of different arrays of wave energy generation technologies and is located in Southern England in Cornwall. The project will have an eight square kilometer area that is Grid ready. WaveHub will work with up to four different technologies at a time. They will lease 1km x 2km sea area to each developer for up to five years. M3 will be able to generate a maximum of 4-­‐5MW of power and Wave Hub will enter into a power purchase agreement on the company’s behalf. The project is currently inviting approaches from wave technology developers wishing to install devices from 2010 onwards.107 A lease from Crown Estates will cover one energy device or a small array of up to 20 devises with a maximum production 10 MW. While choosing a site, M3 will have to gather data on the biophysical characteristics, environmental sensitivities and other sea uses in that area. The Crown Estate Application requires: • A Site Survey Report • Options Appraisal • A Business Plan which highlights why the developer has chosen a particular cite • An Environmental Impact Assessment • A Health and Safety plan for implementation, installation, operation and decommissioning • Assurance of financial, technical and environmental capability From 2010, all applications will be processed in April and September of each year but M3 should initiate discussions with The Crown Estate while they are still testing at EMEC. If M3 is granted the lease option agreement, they can only deploy if their FEPA and CPA licenses are renewed and if there are any local regulations to which they must adhere.108 107
WaveHub: http://www.wavehub.co.uk/ The Marine Estate. The Crown Estates. Retrieved on October 17, 2009 from Crown Estates: http://www.thecrownestate.co.uk/marine 108
Page 50 Scotland Price/kWh Scotland issues Renewable obligations (RO). The RO places an obligation on electricity suppliers to source an increasing share of their power sales from renewable sources. In case they should not meet this obligation, they have to pay a penalty. For each megawatt hour of renewable energy generated, irrespective of the technology used, a tradable certificate called a Renewables Obligation Certificate (ROC)109 is issued. • A £50 million (EUR 72.5 million) fund is available for the development of wave and tidal power, the Marine Renewables Deployment Fund. • The Government intends to allow “guaranteed headroom” between the current level of RES-­‐E and the target to try to ensure price stability for the green certificates (Renewable Obligation Certificates, ROCs). Separate ROCs are issued to generators in Scotland (SROCs) and Northern Ireland (NIROCs), but the three types of certificate are fully tradable and all can be used by any UK electricity supplier for compliance with the RO. Portugal Market and Regulation Overview Portugal has one of the highest ratios of renewable energy to total energy supplied among the EU countries. In 2009, renewable energy sources accounted for "40 percent of electricity production" in the country. Solar and wind power110 equaled around 12 percent of the final energy consumption. The country is in the midst of establishing an ocean energy market to add to this energy supply portfolio. The western coast of Portugal provides a strong wave energy climate: • Along 250km of coastline there is a potential of 5000 MW • If optimized wave energy could supply 20 percent of present electrical energy consumption This potential coupled with a proactive Government is developing favorable conditions for wave energy demonstration projects and for the further commercial development. The Wave Energy Centre 111 (WavEC) was developed to support the market’s growth. Established in 2003 as a private non-­‐
profit association, WavEC is a collaboration of developers, utilities, engineers, construction and institutions who all want to see wave energy become a cornerstone in Portugal. WavEC’s main 109
Refer to Appendix V: Definitions of European Union Regulations for EU, UK, Portugal and Spain. Mario de Queiroz. PORTUGAL: Waves of Energy Come Ashore. IPS News. 111
WavEC: http://www.wavec.org/index.php/1/home/ 110
Page 51 objectives are to help developers with the entire process of development from conception to commercialization and to collect and disseminate environmental, political and socio-­‐economic information that is related to wave energy. WavEC was also established to manage the 400 kW Pico OWC pilot plant (Azores). The success of the pilot plant lead the government to select an area of the coast for further development of wave energy. This Pilot Zone112 offers developers: • Area = 320 km2, wave depth = 30 m -­‐ 90 m, 5–8 km from shore • Total capacity: o 80 MW (medium voltage, EDP Distribuição Energia ) o 250 MW (high voltage, REN) • On shore grid connection • Three projects co-­‐managed by REN (the state controlled power grid operator) o Demonstration, up to 4MW o Pre-­‐commercial, up to 20MW o Commercial, > 20 MW • Fast Licensing o The only regulation for the Pilot Zone is for the developer to supply and Environmental Incidence Study (which is similar to the ES in Scotland) • Feed In Tariff (FIT)113 o Portugal was the first country to introduce a FIT for wave energy (2001, abolished 2005 and re-­‐introduced 2007), and is presently the highest generic feed-­‐In tariff in the world. It depends on the market price but it ranges from 0.26-­‐0.07 €/kWh, depending on the type of project (demo, pre-­‐commercial, commercial). The FIT guarantees a 15-­‐year 76-­‐260 €/MWh for wave power. Portugal is a close second behind Scotland in establishing a wave energy industry. M3 should also consider Portugal when entering Europe. 112
Ana Brito e Melo. Wave Energy in Portugal and the European Context. Presentation April 2009. Retrieved on October 23, 2009 from WavEC: http://www.wavec.org/client/files/Wave_Energy_in_Portugal_and_European_Context__2009_ABM.pdf 113
Refer to Appendix V: Definitions of European Union Regulations for EU, UK, Portugal and Spain. Page 52 Spain Market and Regulation Overview Government Companies with Pulling Power • National and Local Government support to foster investment environment for solar industries. • Favorable legal framework to support R&D projects • Main measures: –Attractive feed-­‐in tariffs. –Approval of the Technical Building Code –Investment Aids • Blue chip companies from other sectors (utilities, construction, tourism) have invested into RE market, bringing financial muscle, access to foreign markets, experience in project development and innovation • Despite local production capacity, Spain still imports many components., • Excellent renewable energy infrastructure and well developed local industry. • Presence of foreign companies Market Potential R D Centers • Excellent natural resources combined with high energy dependency (over 80%) •Within EU, Spain offers one of the most attractive combinations of incentives, low costs, political stability and economic transparency. • Geographical access to Europe and North Africa and cultural access to Latin America • The Public R&D System is financially committed to develop R&D projects. Several universities and research institutes involved. • Research projects on new technologies to improve efficiency: IES, ISFOC, Cener. • Renowned R&D Centers all over the country Spain is another leading country in renewable energy that provides opportunities to developers of wave energy. Energy potential of the Spanish coastline is around 21,000 MW. Spain’s government, large companies and R&D centers are all invested in developing renewable and ocean energy markets.114 If M3 were to enter Spain, they should look to development in the Basque country. This
is the leading location in Spain for wave energy development. “The prevailing NW winds on the
Cantabrian Sea generate waves with an annual average height of 2.5-3 metres. With the
technology available today this could produce 2,000 GWh per year, enough energy to cover 10%
of all Basque power consumption.”115
At the Biscay Marine Energy Platform116 (bimep), a wave power research platform run by the CIC energiGUNE (Basque energy research centre), wave energy development is cutting edge. The platform will have a capacity of 20 MW and will be able connect a diverse array of 114
Manuela Garcia. Opportunities in Renewable Energy in Spain: A Presentation. July 3, 2008. Eve: Ente Vasco de la Energia. Energy in the Basque Country. June 2009. Page 6-­‐7. Retrieved on October 23, 2009 from EVE: http://www.europeanfutureenergyforum.com/getdoc/8538675f-­‐517b-­‐44c6-­‐8e47-­‐
c01aab1562c5/energy-­‐in-­‐Basque-­‐Country_eng 116
Eve, Page 8 115
Page 53 wave-­‐harvesting devices. Fiber optic lines will transmit data from the devices so developers can follow in real time the performance, energy production and reliability in real usage conditions of their technology. The platform is intended to act as a benchmark in the field, attracting top international researchers and developers of wave-­‐based technologies. The aim is for the centre to become a focus for research and development, knowledge and investment. The focus of the project is on research and demonstration; it is the first plant of its kind in the world, and is intended to open the way to new and larger marine energy harnessing projects. Ongoing Marine Energy Projects in Spain117 • Project in Galicia, Muxia Main Characteristics: -­‐ Total capacity: 2,25 MW -­‐ Three Pelamisu units with a capacity of 750 Kweach unit -­‐ Distance to the shore: 2,5-­‐5 km 75 m. depth • GRANADILLA -­‐ Electricity generation from wave energy (on shore). Oscillating Water Column technology. Construction not started. -­‐ Promoters: Sea Energy -­‐ Power capacity 600 Kw • “A GUARDA” -­‐ Electricity generation from wave energy (on shore). Oscillating Water Column technology from Wavegenin the sea port “A Guarda”. Under construction -­‐ Promoters: Sea Energy -­‐ Power capacity 600 Kw Spain Incentives118 • Feed in Tariff for electricity generation • Special obligation for Solar Thermal • Investment subsidies for heating and cooling • Fiscal incentives and quota obligation for biofuels • FIT (fixed and premium) explicitly set for Ocean and Tide (65-­‐69 €/MWh, 30-­‐38 premium) o The fixed tariff for ocean power installations is 0.0689 €/kWh (for the first 20 years) and 0.0651 €/kWh (for the next 20 years) ( o A bonus for market participation, 0,038 €/kWh (for the first 20 years) and 0.003 €/kWh (from 20 years) 117
Manuela Garcia Refer to Appendix V: Definitions of European Union Regulations for EU, UK, Portugal and Spain. 118
Page 54 RECOMMENDATIONS M3 Market Entry Strategy Timeline The M3 Market Entry Strategy Timeline encompasses all of the MIM Team’s recommendations for M3 Wave Energy Systems LLC. We have outlined the main steps that M3 will have to climb on the way to commercializing the DMP. From <REDACTED> to <REDACTED>, M3 will have to simultaneously develop their technology, adapt to the changing market, overcome many regulatory and permitting hurtles and finance a project who’s cost is technically unknown, but estimated to be in the “millions.” There are many challenges ahead for M3 but, there are also great opportunities to capture market share directly behind the companies who are first to market. This means that M3 will be able to learn from those who went before them, but at the same time not compete in a saturated market. There are two key locations in the Strategy: Oregon Market Entry and Scotland Market Entry. These locations were selected due to overwhelming potential of their market demand, government support, grid access and invaluable outside knowledge. <M3 Specific strategy redacted>
Page 55 BIBLIOGRAPHY Ana Brito e Melo. Portuguese Pilot Zone. Energuika 2009. http://en.wavec.org/client/files/Portuguese_pilotzone_2009.pdf Alkyon. Wave models. Retrieved October 21, 2009 from http://www.alkyon.nl/Index.htm Alok Jha. Making waves: UK firm harnesses power of the sea ... in Portugal. The Guardian. September 25, 2008. http://www.guardian.co.uk/technology/2008/sep/25/greentech.alternativeenergy American Wind Energy Association. WIND ENERGY GROWS BY RECORD 8,300 MW IN 2008. Retrieved October 21, 2009 from http://www.awea.org/newsroom/releases/wind_energy_growth2008_27Jan09.html Auquaret. Case Study – Okeanos Pelamis Wave Energy Farm. December 2009. http://www.aquaret.com/test/images/stories/aquaret/pdf/cswavepelamis.pdf Book Rags “Wave Power”. Accessed October 2009. http://www.bookrags.com/wiki/Wave_power#Wave_farms BCC News. Wave Energy Contract goes abroad, (May 19, 2005), Retrieved August 12, 2009 from http://news.bbc.co.uk/2/hi/uk_news/scotland/4563077.stm Carnegie Company. CETO Technology. Retrieved August 20, 2009 from http://www.ceto.com.au/ceto-­‐technology/advantages.php Columbia Power. Technology. Retrieved August 20, 2009 from http://www.columbiapwr.com/technology.asp Division 140 Department of State Lands. (2007). Rules Governing the Placement of Ocean Energy Conversion Devices On, In or Over State-­‐Owned Land Within the Territorial Sea. Retrieved 8 23, 2008, from www.oregon.gov: http://www.oregon.gov/dsl/lwdocs/final_wave_energy_rules_07.pdf Electricity Innovation Institute (EPRI). Potential Offshore Wave Energy Sites in Oregon (May 17, 2004). Retrieved October 20, 2009 Energy Efficiency and Renewable Energy (EERE News). President Obama Touts Clean Energy on Earth Day (April 29, 2009), Retrieved October 21, 2009 from http://apps1.eere.energy.gov/news/news_detail.cfm/news_id=12475 Energy Information Administration (EIA). Electric Power Monthly (October 2009). Retrieved October 21, 2009 from http://www.eia.doe.gov Page 56 Equitable Testing and Evaluation of Marine Energy Extraction Devices in terms of Performance, Cost and Environmental Impact. Equimar and Commission of European Communities. DRAFT EUROPA Environnent “Environnemental Impact Assesment” . Accessed October 2009. http://ec.europa.eu/environment/eia/home.htm Federal Energy and Regulatory Commission. (n.d.). Five Part integrated License Application Process 5.16 Preliminary Licensing Proposal. Retrieved September 2009, from Title 18 Federal Energy Regulatory Commission . (n.d.). Hydropower Licensing Get Involved, a Guide for the Public. Retrieved September 20, 2007, from www.ferc.gov: http://www.ferc.gov/for-­‐citizens/citizen-­‐
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map.pdf#xml=http://search.atomz.com/search/pdfhelper.tk?sp_o=1,100000,0 Federal Energy Regulatory Commission. (2008, April 14). Licensing Hydrokinetic Pilot Projects. Retrieved September 2009, from www.ferc.gov: http://www.ferc.gov/industries/hydropower/indus-­‐
act/hydrokinetics/pdf/white_paper.pdf Page 57 Federal Energy Regulatory Commission. (2006, March 13). Matrix Comparing Three Processes. Retrieved September 2009, from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐
info/licensing/matrix.asp Federal Energy Regulatory Commission. (2008, March 13). Order Issuing Preliminary Permit and Denying Competing Application. Retrieved October 1, 2009, from ww.pge.com: http://www.pge.com/includes/docs/pdfs/shared/environment/pge/waveconnect/FERC_WaveConnect_
preliminar_pilot_permit.pdf Federal Energy Regulatory Commission. (2006, December 7). Overview of ILP Pre-­‐Filing Steps. Retrieved September 2009, from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐
info/licensing/ilp/pre-­‐filing-­‐steps.asp Federal Energy Regulatory Commission. (n.d.). Processes for Hydropower Licences -­‐ Alternative Licensing Process. Retrieved September 2009, from www.ferc.gov: http://www.ferc.gov/help/processes/flow/hydro-­‐3.asp Federal Energy Regulatory Commission. (n.d.). Proposed Licensing Processes for Hydrokinetic Pilot Projects. Retrieved September 2009, from www.ferc.gov: http://www.ferc.gov/help/processes/flow/hydrokinetic-­‐1.asp Federal Regulatory Commission. (n.d.). Applicant Handbook for Using Third Party Contractors in Support of the Application Process for an Electric Transmission Construction Permit. Retrieved 10 11, 2009, from www.ferc.gov: http://www.ferc.gov/industries/electric/indus-­‐act/siting/third-­‐party-­‐handbook.pdf Finlay Anderson, G. A. (207, July 22-­‐26). A Programmatic Approach to Wave Energy Planning: Opportunities for the Oregon Wave Energy Trust. Retrieved July 7, 2009, from www.longviewassociates.com: http://www.longviewassociates.com/documents_library/documents/ca07_abstract.pdf FWS, Interior/NOAA, Commerce. (n.d.). § 402.12 Biological Assessments. Retrieved October 18, 2009, from www.fs.fed.us: http://www.fs.fed.us/r9/wildlife/tes/docs/esa_references/402_12.pdf Gracie, Manuela. Opportunities in Renewable Energy in Spain (July 3, 2008). Retrieved October 15, 2009 from www.ahpkg.de/.../AHP/InvestinSpain/renewable_energies_AHP.pdf-­‐ Haresh Khemani. Bright Hub. Potential of the Wave Energy in US (May 31, 2009). Retrieved August 12, 2009 from http://www.brighthub.com/engineering/mechanical/articles/37230.aspx Kohler, Meera. Rural Alaska’s Electricity Landscape. Alaska Village Electric Cooperative, Retrieved October 21, 2009 from www.calistacorp.com/RALS/.../ak_village_electric_coop.pdf Marine Energy Group, HARNESSING SCOTLAND’S MARINE ENERGY POTENTIAL (Report 2004). Retrieved October 15, 2009 from www.scotland.gov.uk Page 58 Mario de Queiroz. IPS NEWS. PORTUGAL: Waves of Energy Come Ashore (September 24, 2009).Retrieved October 16, 2009 from http://ipsnews.net/news.asp?idnews=43988 Marx, J. (2009). www.scribd.com. Retrieved October 16, 2009, from Joshua Marx NEPA Process Chart: http://www.scribd.com/doc/18238603/NEPA-­‐Process-­‐Chart McDermitt, Mathew. Portugal’s Pelamis Wave Energy Project Dead in the Water. Treehugger. March 17, 2009. http://www.treehugger.com/files/2009/03/portugal-­‐pelamis-­‐wave-­‐power-­‐project-­‐
dead-­‐in-­‐the-­‐water.php Minister for Environment and Rural Development. Scottish Executive (August, 2002). Retrieved October 15, 2009. Muetze, V. (2007). Government Regulation of Ocean Wave Energy Converter Installations. Retrieved July 7, 2009, from University of Wisconsin: http://homepages.cae.wisc.edu/~vining/JVining_IAS07_WaveEnergyRegulation.pdf Non-­‐technological Barriers to Wave Energy Implementation. Waveplam and Intelligent Energy Europe. March, 2009. Ocean Power Delivery LTD. The Pelamis Wave Energy Converter. Retrieved August 20, 2009 from www.hydropower.inel.gov/...wave/.../09_heavesurge_wave_devices.pdf-­‐ Oceanlinx, Oceanlinx Advatages. Retrieved August 20, 2009 from http://www.oceanlinx.com/index.php/our-­‐technology/oceanlinx-­‐advantage Ocean Power Technology (OPT). Technology. Retrieved August 20, 2009 from http://www.oceanpowertechnologies.com/tech.htm OregonBusiness. Oregon Wave projects face challenges (June, 2007). Retrieved August 12, 2009 from http://www.oregonbusiness.com/articles/37/838 Oregon Department of Energy. Oregon Renewable Action Plan (April 12, 2005). Retrieved October 15, 2009 from www.oregon.gov/energy Oregon State University (OSU). Wave Energy Research & Demonstration Center. Retrieved October 15, 2009 from http://eecs.oregonstate.edu/research/members/vonjouanne Oregon State University (OSU). Wave Energy Opportunities and Developments. Retrieved August 12, 2009 from eecs.oregonstate.edu/wesrf/projects/.../Wave%20Energy_Final.ppt– Pacific Gas and Electric. (2007, February 26). Application for Preliminary Permit. Retrieved October 1, 2009, from www.pge.com: http://www.pge.com/includes/docs/pdfs/shared/environment/pge/waveconnect/humboldt_waveconn
ect_application.pdf Page 59 Pacific Gas and Electric. (2008). Permit Area Map. Retrieved October 1, 2009, from www.pge.com: http://www.pge.com/includes/docs/pdfs/shared/environment/pge/waveconnect/FERCPreliminaryPerm
itAreaMap.pdf Pacific Gas and Electric, PG&E WaveConnect Pilot Project Draft Schedule Retrieved November 2009 from http://www.pge.com/includes/docs/pdfs/shared/environment/pge/waveconnect/WaveConnect_Sched
ule_rev9.pdf Pacific Gas and Electric, WaveConnect Program Overview 2009 Retrieved October 2009 from http://www.pge.com/waveconnect/ Pacific Wave Energy Ventures. (2009, July). Licensing and Permitting. Retrieved July 7, 2009, from Oregon Wave Energy Trust: http://www.oregonwave.org/templates/owet/documents/owet%20-­‐
%20licensing%20%20permitting%20report.pdf PICO Plant. Accessed October 2009. http://www.pico-­‐owc.net/ Powering Oregon’s Future. Energy Independence for a Strong Economy. Retrieved October 15, 2009 from http://poweringoregonsfuture.org/PoweringOregonsFuture/ Power Technology, Industry. Pelamis, World’s First Commercial Wave Energy Project, Agucadoura , Portugal. Accessed October 2009. http://www.power-­‐technology.com/projects/pelamis/ Renewable Energy Alaska Project (REAP). Alaska’s Resources. Retrieved October 15, 2009 from http://alaskarenewableenergy.org/alaskas-­‐resources/ Renewable Energy Alaska Project (REAP). Ocean (Wave and Tidal). Retrieved October 15, 2009 from http://alaskarenewableenergy.org/alaskas-­‐resources/types-­‐renewable-­‐energy/ocean-­‐wave-­‐and-­‐tidal/ Rose, Chris. Renewable Energy for Alaska (February 18, 2009). Renewable Energy Alaska Project (REAP). Retrieved October 15, 2009 from www.alaskaconservationsolutions.com/acs/.../4_Chris_Rose.pps-­‐ State of Oregon. (n.d.). Oregon's Statewide Planning Goals and Guidelines Goal 19: Ocean Resources OAR 660-­‐015-­‐0010(4). Retrieved August 8, 2009, from www.oregon.gov: http://www.oregon.gov/LCD/docs/goals/goal19.pdf Stoel Rives Ocean Energy Team. (2009). The Law of Ocean and Tidal Energy, Second Edition. Stoel Rives LLP. U.S. Congress. (1972). Coastal Zone Management Act Section 307. Retrieved October 18, 2009 , from www.coastal.ca.gov: http://www.coastal.ca.gov/fedcd/czmacd.pdf US Coast Guard. (2006, 7 17). PATON (Private Aids to Navigation). Retrieved September 2009, from www.uscg.mil: http://www.uscg.mil/d13/dpw/docs/PATONGuide12Jul06.pdf Page 60 U.S. Department of the Interior. Potential Offshore Wave Energy. Retrieved August 12, 2009 from www.doi.gov/ocs/slides-­‐Alaska.pdf-­‐ Voith Hydro. Products. Retrieved August 20, 2009 from http://www.voithhydro.com/vh_en_pas_products.htm Water Resources Chapter 1 Part 5 Integrated License Application Process: http://edocket.access.gpo.gov/cfr_2006/aprqtr/pdf/18cfr5.16.pdf Wave Energy Centre. Portugal-­‐ready for a Wave Energy Market?, Retrieved October 15, 2009 from www.wavec.org/client/files/Portuguese_pilotzone_2008.pdf Wave Energy Centre. Potential and Strategy for the Development of Wave Energy in Portugal. Retrieved October 15, 2009 from www.wavec.org/client/files/Summary_DGGE_ingl.pdf Page 61 APPENDICES Marketing Appendices Appendix A: Competition Strengths Comparison M3: Ocean Power Technology (OPT), CPT, Oyster, Ceto, Pelamis, Voigth/Siemans and Oceanlinx. OPT Advantages of APB Technology • Powered by the endless source of ocean waves • Completely autonomous (independent of shore power) • Environmentally benign • Station keeping capability • Ocean going “platform” for mounting communications and instrumentation • Accommodates and powers various payloads • Provides a stable communications & instrument platform including cell phones, allowing “Talk on Water”™ • Easily deployed and retrieved in all water depths • Able to utilize various anchor and mooring systems • Designed for long term ocean survivability • Low life-­‐cycle costs Columbia Power Technology (CPT) Technology CPT is developing technologies that will generate energy between one and three miles offshore -­‐ where the available wave energy is greatest. The company believes that direct drive systems, which avoid the use of pneumatic and hydraulic conversion steps, are more efficient, more reliable and easier to maintain, and are therefore the most likely to deliver the lowest cost of energy. Their research path focuses on: • Point absorbers • Direct coupling of the wave motion to the generator • Innovative use of permanent magnets and other highly-­‐efficient components • Reducing the number of moving parts • Minimizing the number of conversion steps and associated losses Page 62 Aquamarine Power Oyster Technology Oyster is designed to be deployed in multi-­‐MW arrays. With a peak power of 300-­‐600kW per Oyster, a commercial farm of just ten devices could provide clean renewable energy to a town of 3,000 homes. Advantages • Simple is best; less is more Its offshore component is a simple, highly reliable mechanical flap with minimal submerged moving parts. There is no underwater generator, power electronics or gearbox. The complex power generation equipment remains easily accessible onshore. • Enhanced survivability it was designed to be deployed at depths of 10-­‐12m. Therefore, Oyster will benefit from the more consistent seas and narrower directional spread of waves found nearshore. • Maximum Efficiency; Cost-­‐Competitive Energy The calmer nearshore wave climate allows Oyster to capture a high percentage of annual average power and deliver consistent power supply. Its lightweight structure gives an excellent power-­‐to-­‐weight ratio with an annual average output competitive with devices weighing up to five times more. • Low ecological impact; high environmental gain Oyster uses water as its hydraulic fluid, eliminating environmental risks associated with oil hydraulics or underwater electrical equipment. Ceto Technological Advantages • CETO be placed underwater, moored to the sea floor, resulting in no aesthetic impact. • CETO units are designed to operate in harmony with the waves rather than attempting to resist them. This means there is no need for massive steel and concrete structures to be built. • CETO wave farms will operate in water deeper than 15 metres in areas where there are no breaking waves. • CETO is the only wave energy technology that produces fresh water directly from seawater by magnifying the pressure variations in ocean waves. • CETO contains no oils, lubricants, or offshore electrical components. CETO is built from components with a known subsea life of over 30 years. • CETO uses a great multiplicity of identical units each of which can be mass produced and containerized for shipping to anywhere in the world. Page 63 Pelamis Technological Advantages • Negligible visual intrusion • Minimal environmental impact • Minimum on-­‐site construction work • Offshore deployment • Inherent survivability • Highest power capture/unit weight • Available technology • Off-­‐site maintenance Voith/Siemans The joint venture of Voith and Siemens which was founded in April 2000 will now be known as Voith Hydro. More than 40,000 generators and turbines have been installed worldwide by Voith Hydro, positioning it as a leading manufacturer for clean and low-­‐carbon power generation from water. This not only applies to traditional hydro power but for energy from the oceans as well.
Technological Advantages • Excitation systems • Frequency converters, protection systems, switchyards for all voltages, transformers • Power plant automation, control centers for hydropower plants and cascades, including plant management and diagnostic systems • System/plant assessments • Service, modernization and rehabilitation of existing hydropower plants Oceanlinx Companies key strengths • Turbine technology: The patented Denniss-­‐Auld turbine: developed by Oceanlinx, this turbine is revolutionary in being significantly more efficient at converting the energy in the OWC airflow into electricity, and overcoming the endemic problems of turbine stall associated with the bi-­‐directional airflow of OWC systems. The unique characteristic of this turbine is its blade pitch control system which enables it to rotate in the same direction, irrespective of the direction of the air flow. • Efficiency: The Denniss-­‐Auld turbine is significantly more efficient than the Wells turbine (which is most commonly used in other OWC devices) at converting wave energy into electricity (source: Oxford Oceanics, 2007 – Internal Report) • Technology maturity: Oceanlinx is one out of only two wave technology developers with full-­‐scale devices deployed to convert wave energy into electricity (source: Emerging Energy Research, 2009) Page 64 •
•
•
•
•
Simplicity: The Oceanlinx unit has only one principle moving part, which is located above water. All the technical equipment operates above the water, thereby improving reliability and providing easy access for maintenance and repair. Product diversity: The Oceanlinx unit is capable of producing either clean energy or potable desalinated water, driven by the Denniss-­‐Auld turbine. Generic components: The power generation and desalination units are simple and cost-­‐
effective, with the majority of the electrical and mechanical parts being “off the shelf” items. Proven design: The technology has been successfully constructed and tested since 2005 with the first full scale Oceanlinx wave plant installed at Port Kembla in NSW, Australia Robust: The latest Mk3 design is to deliver 25 years continuous operation and to withstand 1 in 100 year storms, yet can be fabricated in most local workshop facilities. Appendix B: Oregon EPRI Sites119 119
Roger Bedard and Mirko Previsic. E2I EPRI Survey and Characterization of Potential Offshore Wave Energy Sites in Oregon. Page 65 Astoria, in Clatsop County, which is located in the northwest corner of Oregon and is bordered by the Columbia River in the north, Columbia County in the east, and Tillamook County in the south. The Port of Astoria is a municipal corporation embracing all of Clatsop County, and on the Columbia River extends from the river entrance to Westport, about 38 miles upstream. The port owns a substantial part of the waterfront at Smith Point, and operates a well-­‐equipped modern terminal with three piers. Water, telephone, and electrical shore power connections are available at most of the berths. Garibaldi is in Tillamook County where is comprised of 1,125 square miles situated on the east shore of Tillamook Bay. The bay itself has a tidal area of about 13 square miles, most of , which is exposed as a succession of sand and mud flats at low tide. There is no commercial vessel traffic in the bay except for fishing boats and pleasure craft. Garibaldi has a boat basin for commercial and sport fishing vessels. Berths for about 200 craft, electricity gasoline, diesel fuel, water, ice, a launching ramp, and marine supplies are available at the basin. A drydock in the basin can handle craft to 100 tons, 68 feet long, or up to 9 feet in draft. Newport The Port of Newport operates a commercial moorage on the north shore about 0.7 mile above the highway bridge. This moorage area is protected from the main channel by a detached breakwater parallel to the shore, marked by a light at each end. Berths, electricity, gasoline, and diesel fuel are available. Marine supplies can be obtained in Newport. There are several marine repair facilities on the river above Newport, including a full-­‐service facility at Page 66 Oneatta Point, 3.8 miles above the entrance to the bay, which has two travel lifts (one 15-­‐ton and one 70-­‐ton) and two 60-­‐ton cranes. The capacity of Electricity that Newport sites can provide from wave energy is 100-­‐180 megawatts base on the information from Newport OPT Wave Park and Lincoln County Wave Energy Project. Cushman is in Lane County-­‐Florence, which is located on the central coastline of Oregon. About 50 berths with electricity, water, and a launching ramp are available here. Wet and dry winter storage is also available at this facility. A large marine supply firm is at Cushman. Reedsport is located on the southwest bank of the Umpqua River, 10 miles upstream of the jettied river entrance, and is a station on the railroad and the principal town on the river. Reedsport has a swing span with a clearance of 36 feet. The railroad bridge, 500 yards above the highway bridge, has a swing span with a clearance of 16 feet. Gasoline, diesel fuel, water, and fuel oil for launches may be obtained at Reedsport. There is a machine shop at Reedsport, with a marine railway that can handle craft to 150 feet. This firm also operates a tidal graving dock across the river, 260 feet long and 60 feet wide. The capacity of Electricity that Newport sites can provide from wave energy is 50-­‐100 megawatts base on the information from Reedsport OPT Wave Park. Coos Bay is about 54 miles north of Brookings and is one of the most important harbors between San Francisco and the Columbia River. It is considered to be a “principal port” on the U.S. West Coast and is one of the largest forest products ports in the world. Most marine supplies and services are available at Coos Bay. Fuel oil is available at two fuel piers; however, most bunkering is done at the vessel's berth by tanker truck. Diesel oil and water are available. Above-­‐the-­‐waterline repairs can be made at several machine shops on the waterfront. A drydock at Coos Bay can handle vessels to 1,000 tons, 220 feet long, and 45 feet wide. The largest marine railway can handle vessels to 400 tons, 120 feet long, 32 feet wide, and 12 feet in draft. The capacity of Electricity that Coos Bay sites can provide from wave energy is 100 megawatts base on the information from Coos Bay OPT Wave Park Project. Brookings is located just inside the jettied entrance to the Chetco River about 4 miles north of the California-­‐Oregon border and about 16 miles north of Point St. George, CA. Upper and lower small-­‐craft basins adjacent to the turning basin are used primarily by commercial fishing boats and pleasure craft. The upper basin has over 500 berths, most with electricity; gasoline, diesel fuel, water, ice, marine supplies, and a launching ramp are available. Berths with electricity and water are reported to be available in the lower basin. A 60-­‐ton lift and wet and dry winter storage also are available. Interviews Appendices Page 67 Appendix C: Gerry Langeler Interview Gerry Langeler •
•
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Gerry Langeler Interview Notes September 11, 2009 Managing Director Oregon Venture Partners (OVP) Investments in Digital Technology, Software, Imaging and Digital Biology 550 SW Macadam, Suite 300, Portland OR 97239 [email protected] Attendance •
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Casey Cleary Caitlin Goold Birrdy Vanithbuncha Zhuan Ai Bill Jones Meeting Purpose •
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To understand what Venture Capitalists look for in clean technology To understand the general VC process To understand where M3 needs to be in order to propose a business plan to a VC Synopsis •
What VC’s look for: Market People Product o People: “World Class” unique individuals with ability to execute ideas that “win” o Market:  Size (big enough to matter)  Competition (Solid analysis of direct and indirect competitors) o Product: There are no unique ideas… it must be needed • General VC Process Overall Funding Stages R&D Stage Development Stage Commercialization Stage Grants VC or Corporate $ Revenue VC Funding Stages $0 5 million 10 million Page 68 Business Plan Working Prototype Sales and Business Plan The Investment Horizon: Up to 10 years; gain market share w/in first 5 years; ROI starting to generate around year 7. • What M3 Needs to have to get VC funding 1. Business Plan 2. Working Prototype 3. Economics (should be close) -­‐ cost/kwh, construction (revenue forecast not as important) 4. Begin navigating regulations and permits 5. Create a selective Buzz (publish papers, speak at conferences, influence the influencers) 6. Timing: Must have a market need 7. “Miles of Patent Protection” Appendix D: Dee Outama Interview Page 69 Dee Outama (Portland General Electric) Meeting 9/29/09 Notes Darrington “Dee” Outama •
Portland General Electric (PGE) •
Origination & Structuring – Power Supply •
PGE: 121 SW Salmon St., Portland, OR. 97204 •
Office: 503-­‐464-­‐7765; Cell: 503-­‐709-­‐3404; fax: 503-­‐464-­‐2605 •
Email: [email protected] Attendance •
Birddy Vanithbuncha •
Zhuan Ai •
Bill Jones Meeting Purpose •
Provide utility perspective on the evaluation & investment in clean energy •
How utility evaluates clean energy generation & technology •
Utility perspective & position on ocean energy harvesting Synopsis •
Clean energy in Oregon is not competitive with traditional energy generation (hydro & fossil based) •
Oregon does not have Feed-­‐In Tariff, but does use another method that requires mandatory use of clean energy -­‐-­‐ RPS •
To encourage investment in qualified clean energy Oregon -­‐-­‐ RPS (Renewable Portfolio Standard) and a mandatory requirement to purchase all qualified clean energy generated in Oregon: o Oregon, as well as 27 states, requires certain electricity providers to provide a % of total electrical load from qualified clean energy sources, measured in RECs on an annual average basis o Qualified Clean Energy Technologies: biomass, geothermal, Land-­‐fill generation, small hydro, PV solar, small or low impact hydro, ocean o At this time PGE, Pacific Corp & EWEB (Eugene Water & Electricity Board). [SEE DEFINITIONS] •
RPS based on RECs (Renewable Energy Credits): 1 REC = 1 MW (Mega Watt) electrical power Page 70 •
Example: if PGE has a load of 100 MW/year & the RPS is 10%. PGE must provide 10MW that are generated by qualified Clean Energy technologies •
REC cost is the same for each qualified technology except for Solar o Solar lobby has successfully influenced the PUC cost decision. Instead of 1 REC = 1 MW electricity, Solar is 2 RECs=1MW electricity o Therefore solar power REC purchases to meet the RPS would be double •
See a summary of Oregon RPS at www.oregon-­‐
rps.org/ENERGY/RENEW/docs/Oregon_RPS_Summary_Oct2007.pdf. Table 1 lists requirements for Oregon electricity providers by year. It currently requires the largest Utilities (PGE, Pacific Corp, and EWEB) to comply & eventually all others by 2025. [EWEB to comply with RPS is different than what Dee indicated] •
Read the history of Oregon RPS at www.oregon.gov/ENERGY/RENEW/RPS_home.shtml •
Definitions: o IOU = Investor Owned Utility – largest in state (e.g., PGE, Pacific Corp) o PUD = Public Utility Dist. (e.g., Puget Sound, small public utilities, and other utilities that have an elected board) o City owned utility (e.g., EWEB) •
How PGE meets REC requirements. Two Methods o Source to Sink: means from the point of generation to point it is delivered to customer o PPA: Purchase Power Agreement – utility only contracts to purchase the clean energy produced by the generator. Set price/REC, set period, set amount. Usually set up PPA if it is a more risky or less reliable generation technology. Utility is only liable for the contract on the equipment, etc. o Equity Owned: utility takes an owner position through investment in clean energy. Usually this happens if utility understands & believes reliability of technology as a profit making investment •
Ocean energy harvesting is way down the list of technologies that utilities would consider a commercially viable generator •
Ways for Utilities to encourage Clean Energy Technologies: 2 methods •
Only applies to commercially available technologies (not Ocean harvesting) o PTC: Production Tax Credit o Is only for known & reliable technologies (e.g., wind generation) that is already commercial o PTC investment: Utility would use the PTC to offset the higher purchase cost of the clean energy generation o Grant: discounted cash investment in known technology Page 71 •
When would Utility consider purchase of new clean energy tech? o When it is vetted o Reliable & commercially scaled up o Proforma: showing cash flow & generation projects o Very costly to bring new technologies to market because of the permitting, evaluation, environmental etc. local, regional, state, federal requirements •
Ocean harvesting is unknown regarding the above issues at this time •
BETC: Business Energy Tax Credit o 35% tax credit over 5 yrs. for eligible EE measures o For projects that are <$20mill. (Wind & ocean will be too high value) •
MMS & FERC (Minerals Management Service/Federal Energy Regulatory Commission) o They have signed an MOU to outline the steps to take to permit ocean energy harvesting. o NEEDS RESEARCH •
Pacific Gas & Electric (PG&E) RFP o Have selected site off of Modesto, Ca. to test ocean energy harvesting technologies. o PG&E willing to absorb all permitting & infrastructure costs (cabling on-­‐shore facilities, etc.) for selected technologies to be used in their water park. o 3 year commitment. o Investing $250mill. o PG&E keeps data, selected firms keep their equipment Appendix E: Bob Pasch Interview Page 72 Dr. Robert Paasch Meeting 8/2009 Notes
Dr. Robert “Bob” Paasch •
Director, Northwest National Marine Renewable Energy Center •
Oregon State University •
Rogers 414 •
Corvallis Oregon •
Tel: 541-­‐737-­‐7019 Fax: 541-­‐737-­‐2600 [email protected] Attendance •
Caitlin Goold •
Casey Cleary Meeting Purpose •
To provide perspective on the current state of the wave technology industry •
To provide information on how far OSU has advanced with wave technology Synopsis •
OSU currently has two prototypes – the second has worked well so far •
Looking at commercialization of wave technology o Scotland is 5 years ahead of us with the Polamis in Edinburgh o There are three second product run machines off Portugal o None of these machines are commercial •
OPT has a 40 kw buoy in Hawaii under testing and a 50 kw buoy in Scotland. They are building a 150 kw buoy in Oregon but it is not in the water yet. •
CPT is hoping to test its prototype in Oregon in 2011 •
Islay Island off Scotland has been operating a small scale machine generating power from waves for 8 years •
Wave power breakwater machine: o Wavegen developed a machine that generates power through onshore wave movement has established a contract in Spain – the machines will be put inside concrete breakwaters generating power when waves crash into the breakwater Page 73 o Wavegen is negotiating a contract with Douglass County to put these machines inside the counties new breakwaters. This will be the first application of this machine in the US o Wavegen has connected to the grid in Scotland •
Organizations to consider and speak with when developing potential sites: o Department of State Lands o Minerals and Management Systems Fields o Fish and Wildlife o FERC •
FERC: Companies attempting to connect to the grid must deal with FERC. This organization regulates companies connecting to the grid. •
Challenges with wave technology in Alaska o The electricity co-­‐op in Dillingham Alaska is interested in wave and tidal power. However, there are significant natural barriers. 
They are far enough inland that covering the costs to establish the infrastructure from the ocean to Dillingham would be a massive expense. 
The river that leads to the ocean is frozen for a significant portion of the year. o Anchorage also has ice issues o The Aleutians lack a large enough population to make wave technology affordable and in many places there are no people where wave power would be most effective o The trouble with wave power generation in Alaska is finding the right area •
#1 Challenge of wave power = Electricity cost o The EU is combating this with feed in tariffs •
Incentives to wave technology are key government subsidies o This will help to make wave technology more efficient and reduce the cost •
Costs: o Undersea cables are $1 million per mile approximately 
Therefore a near shore devise will lower the cost o Stakeholder engagement 
Key is to work with stakeholders (fishermen etc) to find the right spot. Page 74 •
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Go where fishermen don’t fish as long as it is viable Partnering with OPT is not a good idea because they are too far out. This would be to far for the DMP to harness energy Regulations Appendices Page 75 Appendix F: US and Oregon Alphabet Soup and Regulation Definitions Definitions •
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3rd Party Contractor (3PC): The person or organization who conducts an EA or EIS Army Corps of Engineers (ACOE): The Federal Agency responsible for maintaining the nation’s water and environmental resources. This agency also conducts environmental research and is the main overseeing body for all hydroelectric non-­‐grid connected projects. Biological Assessment: Evaluates the possible effects of a wave energy project on ocean animals, and critical habitat. Clean Water Act Section 401: Ensures that no federal agency provides a permit to an applicant that whose actions result in “activity that would violate the state water quality standards or become a future source of pollution”120. Clean Water Act Section 404: Regulates dredging and fill expulsions into the US waters. Coastal Zone Management Act (CZMA): CZMA was established by congress and attempts to ensure the effective use and development of coastal zones. Each coastal state is required to designate a governing body that works to ensure the effective fulfillment of the CZMA121. Conditioned License: Issued by FERC, this license “authorizes construction and operation of a project only after the licensee obtains any outstanding federal, state or tribal approvals”122 Endangered Species Act (ESA): provides a list of endangered or threatened species and includes provisions for their protection including the protection of plant species and ecosystems. Environmental Assessment (EA): A document created by a 3PC in order to ensure compliance with NEPA. An EA is prepared when the project is unlikely to have significant environmental effects. Typically preparing an EA takes two to six months. However, this can vary and timeframes are usually set by the governing agency. Environmental Impact Statement (EIS): A document created by a 3PC as an alternative to an EA. An EIS is prepared when the project is more complicated than an EA, having more environmental impact. Typically preparing an EIS can take up to a year. Essential Fish Habitat (EFH): “EFH encompasses those habitats necessary to ensure healthy fisheries now and in the future”123. This is administered by the NMFS. Federal Energy Regulatory Commission (FERC): An independent commission that regulates the licensing of hydropower and other energy projects. 120
(Pacific Wave Energy Ventures, 2009, p. 12) See Appendix G for text on CZMA Section 307 122
(Stoel Rives Ocean Energy Team, 2009, p. Ch. 3 pg. 5) 123
(Pacific Wave Energy Ventures, 2009, p. 23) 121
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FERC License: “authorizes the construction and operation of a hydropower project, [is] issued for a term up to 50 years, includes measures to protect the environment, requires that licensee has or obtains ownership or easement on project lands and waters”124 Fish and Wildlife Coordination Act: Prevents the loss of fish and wildlife resources due to construction, maintenance, and operations125. Incidental Harassment Authorization (IHA): Issued under the MMPA, authorizes the annoyance, injury and disturbance, of marine animals. This authorization lasts for one year. Letter of Authorization (LOA): Issued under the MMPA, authorizes the harassment, injury and mortality of marine animals. This authorization lasts for five years. Marine Mammal Protection Act (MMPA): “makes it illegal to harass, injure, or kill marine mammals, and includes penalties of $10,000 to $20,000 per violation and up to one year in jail”126. Memorandum of Understanding (MOU): A document which helps to streamline the licensing process between a state and the federal government in regards to procedures and timeframes. It is similar to a letter of intent. National Environmental Policy Act: Signed into law in 1970127, this act establishes a national policy on the environment with the goal of protecting land and resources. Before granting licenses all pertinent federal agencies must ensure they are adhering to NEPA through the use of an EA or EIS. National Historic Preservation Act Section 106 Consultation: National Historic Preservation Act (NHPA) section 106 requires that federal agencies examine the affects licensing specific projects will have on the nation’s historic resources. “The NHPA also requires federal action agencies (e.g., FERC, ACOE) to afford the Advisory Council on Historic Preservation (ACHP) a reasonable opportunity to comment on the proposed action”128. National Marine Fisheries Service (NMFS): Protects marine habitat to ensure the recovery of endangered species and the promotion of strong ecosystems in US waters. Ocean Energy Facility Lease: Allows the company to use the submersed land, with the potential for commercial development. This lease is administered by the DSL. Ocean Shore Alteration Permit: This permit allows the company to cut through the shoreline to install transmission cables and is administered by the Oregon Department of Parks and Recreation. 124
(Federal Energy Regulatory Commission ) (Stoel Rives Ocean Energy Team, 2009, p. Ch.3 pg.14) 126
(Stoel Rives Ocean Energy Team, 2009, p. Ch.3 pg.13) 127
National Environmental Policy Act Basic Information www.epa.gov/compliance/basics/nepa.html 2009 128
(Pacific Wave Energy Ventures, 2009, p. 25) 125
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Oregon Coastal Management Program (OCMP): A program put in place by the state to ensure state agencies are abiding by the CZMA. Oregon Department of Environmental Quality (DEQ) Oregon Department of Land Conservation and Development (DLCD): The state body that administers the OCMP. The goal of this department is to help conserve state lands and ocean resources. This organization works in tandem with other state resource organizations to establish consistency across departments. Oregon Department of State Lands (DSL): The administrative arm of the State Land Board. Provides licenses for the Removal Fill Permit, the Temporary Use Permit and the Ocean Energy Facility Lease. “Recently enacted legislation has authorized the Oregon DSL … to adopt rules for the authorization of wave energy conversion projects and devises in the territorial sea. Project applicants will want to stay abreast of new regulatory developments as they are adopted”129 Oregon Water Resources Department (OWRD): The state body that issues the State Hydroelectric Preliminary Permit and the State Hydroelectric License. Pilot Project License: focused on allowing companies to test new technology, develop the proper ocean site, and testing for environmental effects130. FERC recognizes that its licensing process for typical hydropower devises can take a great deal of time and can jeopardize the competitiveness of hydrokinetic devices. Therefore, the commission developed the Pilot Project License with the goal of shortening the turnaround time for obtaining a license. Preliminary Permit: Issued by FERC, this permit grants the applicant primary holding of a specific site with the right to engage in environmental and viability testing of the specified area for a period of up to three years. The permit does not allow the applicant to conduct onsite building or engage in any activity that would alter the land. Should the applicant find the test site suitable, they are given first consideration when applying for future licensing with FERC. Private Aids to Navigation (PATON): Issued by the US Coast Guard, these are navigational markings informing boaters of the location of wave energy devise. Removal Fill Authorization: This permit is authorized by DSL. It allows M3 Wave to attach any machines and cables to the ocean floor. This permit is very short term, typically less than one year. Request for Proposals (RFP): Used to solicit 3PC’s in order to conduct an EA/EIS Rivers and Harbors Act Section 10 Permit: This permit ensures that the placement of wave energy conversion machines will be outside of navigation routes. 129
(Stoel Rives Ocean Energy Team, 2009, p. Ch.3 pg.10) (Federal Energy Regulatory Commission, 2008) 130
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State Hydroelectric Preliminary Permit: Issued by the Oregon Water Resources Department, this license will allow the company to operate within Oregon waters and any waters the state has jurisdiction over. It also allows the company “to construct, operate and maintain …works and structures necessary or convenient for the use of the waters in the generation and utilization of electricity”131 This license can extend up to 50 years. Temporary Use Permit: Allows the applicant to use the submerged land for the length of the Preliminary Permit. It also grants the applicant “first right to apply”132 for the Ocean Energy Facility Lease which must be applied for within thirty days of the expiration of the Temporary Use Permit. This permit does not allow the applicant install any ocean monitoring devises until they have obtained other required permits and authorizations from the DSL or the federal government, such as the Removal Fill Permit and the FERC Preliminary Permit. Verdant Order: allows the project developer to proceed with testing the product without a FERC license. In order to install and test the product without a license the product must be experimental, testing must be for a short time and has to be focused toward obtaining a license, and the technology is not allowed to hook to the grid133 Appendix G: Coastal Zone Management Act, Section 307134 Coastal Zone Management Act, Section 307 131
(Pacific Wave Energy Ventures, 2009, p. 7) (Pacific Wave Energy Ventures, 2009, p. 9) 133
(Federal Energy Regulatory Commission, 2008) 132
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Sourced From: U.S. Congress. (1972). Coastal Zone Management Act Section 307. Retrieved October 18, 2009 , from www.coastal.ca.gov: http://www.coastal.ca.gov/fedcd/czmacd.pdf Page 79 16 U.S.C. § 1456. Coordination and Cooperation (Section 307) (a) Federal agencies In carrying out his functions and responsibilities under this chapter, the Secretary shall consult with, cooperate with, and, to the maximum extent practicable, coordinate his activities with other interested Federal agencies. (b) Adequate consideration of views of Federal agencies The Secretary shall not approve the management program submitted by a state pursuant to section 1455 of this title unless the views of Federal agencies principally affected by such program have been adequately considered. (c) Consistency of Federal activities with State management programs; Presidential exemption; certification (1) (A) Each Federal agency activity within or outside the coastal zone that affects any land or water use or natural resource of the coastal zone shall be carried out in a manner which is consistent to the maximum extent practicable with the enforceable policies of approved State management programs. A Federal agency activity shall be subject to this paragraph unless it is subject to paragraph (2) or (3). (B) After any final judgment, decree, or order of any Federal court that is appealable under section 1291 or 1292 of Title 28, or under any other applicable provision of Federal law, that a specific Federal agency activity is not in compliance with subparagraph (A), and certification by the Secretary that mediation under subsection (h) of this section is not likely to result in such compliance, the President may, upon written request from the Secretary, exempt from compliance those elements of the Federal agency activity that are found by the Federal court to be inconsistent with an approved State program, if the President determines that the activity is in the paramount interest of the United States. No such exemption shall be granted on the basis of a lack of appropriations unless the President has specifically requested such appropriations as part of the budgetary process, and the Congress has failed to make available the requested appropriations. (C) Each Federal agency carrying out an activity subject to paragraph (1) shall provide a consistency determination to the relevant State agency designated under section 1455(d)(6) of this title at the earliest practicable time, but in no case later than 90 days before final approval of the Federal activity unless both the Federal agency and the State agency agree to a different schedule. Page 80 (2) Any Federal agency which shall undertake any development project in the coastal zone of a state shall insure that the project is, to the maximum extent practicable, consistent with the enforceable policies of approved State management programs. (3) (A) After final approval by the Secretary of a state's management program, any applicant for a required Federal license or permit to conduct an activity, in or outside of the coastal zone, affecting any land or water use or natural resource of the coastal zone of that state shall provide in the application to the licensing or permitting agency a certification that the proposed activity complies with the enforceable policies of the state's approved program and that such activity will be conducted in a manner consistent with the program. At the same time, the applicant shall furnish to the state or its designated agency a copy of the certification, with all necessary information and data. Each coastal state shall establish procedures for public notice in the case of all such certifications and, to the extent it deems appropriate, procedures for public hearings in connection therewith. At the earliest practicable time, the state or its designated agency shall notify the Federal agency concerned that the state concurs with or objects to the applicant's certification. If the state or its designated agency fails to furnish the required notification within six months after receipt of its copy of the applicant's certification, the state's concurrence with the certification shall be conclusively presumed. No license or permit shall be granted by the Federal agency until the state or its designated agency has concurred with the applicant's certification or until, by the state's failure to act, the concurrence is conclusively presumed, unless the Secretary, on his own initiative or upon appeal by the applicant, finds, after providing a reasonable opportunity for detailed comments from the Federal agency involved and from the state, that the activity is consistent with the objectives of this chapter or is otherwise necessary in the interest of national security. (B) After the management program of any coastal state has been approved by the Secretary under section 1455 of this title, any person who submits to the Secretary of the Interior any plan for the exploration or development of, or production from, any area which has been leased under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) and regulations under such Act shall, with respect to any exploration, development, or production described in such plan and affecting any land or water use or natural resource of the coastal zone of such state, attach to such plan a certification that each activity which is described in detail in such plan complies with the enforceable policies of such state's approved management program and will be carried out in a manner consistent with such program. No Federal official or agency shall grant such person any license or permit for any activity described in detail in such plan until such state or its designated agency receives a copy of such certification and plan, together with any other necessary data and information, and until-­‐-­‐ (i) such state or its designated agency, in accordance with the procedures required to be established by such state pursuant to subparagraph (A), concurs with such person's certification Page 81 and notifies the Secretary and the Secretary of the Interior of such concurrence; (ii) concurrence by such state with such certification is conclusively presumed as provided for in subparagraph (A), except if such state fails to concur with or object to such certification within three months after receipt of its copy of such certification and supporting information, such state shall provide the Secretary, the appropriate federal agency, and such person with a written statement describing the status of review and the basis for further delay in issuing a final decision, and if such statement is not so provided, concurrence by such state with such certification shall be conclusively presumed; or (iii) the Secretary finds, pursuant to subparagraph (A), that each activity which is described in detail in such plan is consistent with the objectives of this chapter or is otherwise necessary in the interest of national security. If a state concurs or is conclusively presumed to concur, or if the Secretary makes such a finding, the provisions of subparagraph (A) are not applicable with respect to such person, such state, and any Federal license or permit which is required to conduct any activity affecting land uses or water uses in the coastal zone of such state which is described in detail in the plan to which such concurrence or finding applies. If such state objects to such certification and if the Secretary fails to make a finding under clause (iii) with respect to such certification, or if such person fails substantially to comply with such plan as submitted, such person shall submit an amendment to such plan, or a new plan, to the Secretary of the Interior. With respect to any amendment or new plan submitted to the Secretary of the Interior pursuant to the preceding sentence, the applicable time period for purposes of concurrence by conclusive presumption under subparagraph (A) is 3 months. (d) Application of local governments for Federal assistance; relationship of activities with approved management programs State and local governments submitting applications for Federal assistance under other Federal programs, in or outside of the coastal zone, affecting any land or water use of natural resource of the coastal zone shall indicate the views of the appropriate state or local agency as to the relationship of such activities to the approved management program for the coastal zone. Such applications shall be submitted and coordinated in accordance with the provisions of section 6506 of Title 31. Federal agencies shall not approve proposed projects that are inconsistent with the enforceable policies of a coastal state's management program, except upon a finding by the Secretary that such project is consistent with the purposes of this chapter or necessary in the interest of national security. (e) Construction with other laws Nothing in this chapter shall be construed-­‐-­‐ (1) to diminish either Federal or state jurisdiction, responsibility, or rights in the field of planning, development, or control of water resources, submerged lands, or navigable waters; nor to displace, supersede, limit, or modify any interstate compact or the jurisdiction or responsibility of any legally established joint or common agency of two or more states or of two Page 82 or more states and the Federal Government; nor to limit the authority of Congress to authorize and fund projects; (2) as superseding, modifying, or repealing existing laws applicable to the various Federal agencies; nor to affect the jurisdiction, powers, or prerogatives of the International Joint Commission, United States and Canada, the Permanent Engineering Board, and the United States operating entity or entities established pursuant to the Columbia River Basin Treaty, signed at Washington, January 17, 1961, or the International Boundary and Water Commission, United States and Mexico. (f) Construction with existing requirements of water and air pollution programs Notwithstanding any other provision of this chapter, nothing in this chapter shall in any way affect any requirement (1) established by the Federal Water Pollution Control Act, as amended, or the Clean Air Act, as amended, or (2) established by the Federal Government or by any state or local government pursuant to such Acts. Such requirements shall be incorporated in any program developed pursuant to this chapter and shall be the water pollution control and air pollution control requirements applicable to such program. (g) Concurrence with programs which affect inland areas When any state's coastal zone management program, submitted for approval or proposed for modification pursuant to section 1455 of this title, includes requirements as to shorelands which also would be subject to any Federally supported national land use program which may be hereafter enacted, the Secretary, prior to approving such program, shall obtain the concurrence of the Secretary of the Interior, or such other Federal official as may be designated to administer the national land use program, with respect to that portion of the coastal zone management program affecting such inland areas. (h) Mediation of disagreements In case of serious disagreement between any Federal agency and a coastal state-­‐-­‐ (1) in the development or the initial implementation of a management program under section 1454 of this title; or (2) in the administration of a management program approved under section 1455 of this title; the Secretary, with the cooperation of the Executive Office of the President, shall seek to mediate the differences involved in such disagreement. The process of such mediation shall, with respect to any disagreement described in paragraph (2), include public hearings which shall be conducted in the local area concerned. (i) Application fee for appeals (1) With respect to appeals under subsections (c)(3) and (d) of this section which are submitted after November 5, 1990, the Secretary shall collect an application fee of not less than $200 for minor appeals and not less than $500 for major appeals, unless the Secretary, upon Page 83 consideration of an applicant's request for a fee waiver, determines that the applicant is unable to pay the fee. (2) (A) The Secretary shall collect such other fees as are necessary to recover the full costs of administering and processing such appeals under subsection (c) of this section. (B) If the Secretary waives the application fee under paragraph (1) for an applicant, the Secretary shall waive all other fees under this subsection for the applicant. (3) Fees collected under this subsection shall be deposited into the Coastal Zone Management Fund established under section 1456a of this title. Appendix H: U.S. and Oregon Stakeholders135 List of Key Stakeholders: 135
Sourced From: Stoel Rives Ocean Energy Team. (2009). The Law of Ocean and Tidal Energy, Second Edition. Ch.3 pg 1-­‐2 Page 84 FERC US Army Corps of Engineers US Coast Guard National Marine Fisheries Service US Fish and Wildlife Service Federal land owner agencies Affected Tribes State Agency Administering Coastal Zone Management Act (CZMA) – Department of Land Conservation and Development • State Agency administering Clean Water Act (CWA) section 401 water quality certification – Department of Environmental Quality and the Army Corps of Engineers • State lands managers • State fish and wildlife agencies • State water resources managers • State and Tribal historic preservation offices • State energy facility citing councils • County commissions • Local governments • Ports • Fishing and Crabbing commissions • Non-­‐governmental interest groups (environmental, fishin, recreational) • Public utility districts and Invester-­‐owned utilities • Private land owners • Cable committee •
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Page 85 Appendix I: State of Oregon/FERC MOU136
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Sourced From: Federal Energy Regulatory Commission and the State of Oregon. (2008, March 26). Memorandum of Understanding Between the Federal Energy Regulatory Commission and the State of Oregon. Retrieved September 20, 2009, from www.ferc.gov: http://www.ferc.gov/legal/maj-­‐ord-­‐reg/mou/mou-­‐or-­‐final.pdf Page 86 Page 87 Page 88 Page 89 Appendix J: Oregon Statewide Planning Goal 19137 Oregon’s Statewide Planning Goals & Guidelines GOAL 19: OCEAN RESOURCES OAR 660-­‐015-­‐0010(4) To conserve marine resources and ecological functions for the purpose of providing long-­‐term ecological, economic, and social value and benefits to future generations. To carry out this goal, all actions by local, state, and federal agencies that are likely to affect the ocean resources and uses of Oregon’s territorial sea shall be developed and conducted to conserve marine resources and ecological functions for the purpose of providing long-­‐term ecological, economic, and social values and benefits and to give higher priority to the protection of renewable marine resources—i.e., living marine organisms—than to the development of non-­‐renewable ocean resources. OCEAN STEWARDSHIP AREA The State of Oregon has interests in the conservation of ocean resources in an Ocean Stewardship Area, an ocean area where natural phenomena and human uses can affect uses and resources of Oregon’s territorial sea. The Ocean Stewardship Area includes the state’s territorial sea, the continental margin seaward to the toe of the continental slope, and adjacent ocean areas. Within the Ocean Stewardship Area, the State of Oregon will: • Use all applicable state and federal laws to promote its interests in management and conservation of ocean resources; • Encourage scientific research on marine ecosystems, ocean resources and uses, and oceanographic conditions to acquire information needed to make ocean and coastal-­‐
management decisions; • Seek co-­‐management arrangements with federal agencies when appropriate to ensure that ocean resources are managed and protected consistent with the policies of Statewide Planning Goal 19, Ocean Resources, and the Territorial Sea Plan; and • Cooperate with other states and governmental entities directly and through regional mechanisms to manage and protect ocean resources and uses. The Ocean Stewardship Area is not intended to change the seaward boundary of the State of Oregon, extend the seaward boundaries of the state’s federally approved coastal zone under the federal Coastal Zone Management Act, affect the jurisdiction of adjacent coastal states, alter the authority of federal agencies to manage the resources of the United States Exclusive Economic Zone, or limit or otherwise change federal agency responsibilities to comply with the consistency requirements of the federal Coastal Zone Management Act. 137
Sourced From: State of Oregon. (n.d.). Oregon's Statewide Planning Goals and Guidelines Goal 19: Ocean Resources OAR 660-­‐015-­‐0010(4). Retrieved August 8, 2009, from www.oregon.gov: http://www.oregon.gov/LCD/docs/goals/goal19.pdf Page 90 INFORMATION AND EFFECTS ASSESSMENT REQUIRED Prior to taking an action that is likely to affect ocean resources or uses of Oregon’s territorial sea, state and federal agencies shall assess the reasonably foreseeable adverse effects of the action as required in the Oregon Territorial Sea Plan. The effects assessment shall also address reasonably foreseeable adverse effects on Oregon’s estuaries and shorelands as required by Statewide Planning Goal 16, Estuarine Resources; Goal 17, Coastal Shorelands; and Goal 18, Beaches and Dunes. IMPLEMENTATION REQUIREMENTS 1. Uses of Ocean Resources State and federal agencies shall carry out actions that are reasonably likely to affect ocean resources and uses of the Oregon territorial sea in such a manner as to: a. maintain and, where appropriate, restore the long-­‐term benefits derived from renewable marine resources; b. protect: 1. renewable marine resources— i.e., living marine organisms—from adverse effects of development of nonrenewable resources, uses of the ocean floor, or other actions; 2. the biological diversity of marine life and the functional integrity of the marine ecosystem; 3. important marine habitat, including estuarine habitat, which are areas and associated biologic communities that are: a) important to the biological viability of commercially or recreationally caught species or that support important food or prey species for commercially or recreationally caught species; or b) needed to assure the survival of threatened or endangered species; or c) ecologically significant to maintaining ecosystem structure, biological productivity, and biological diversity; or d) essential to the life-­‐history or behaviors of marine organisms; or e) especially vulnerable because of size, composition, or location in relation to chemical or other pollutants, noise, physical disturbance, alteration, or harvest; or f) unique or of limited range within the state; and 4. areas important to fisheries, which are: a) areas of high catch (e.g., high total pounds landed and high value of landed catch); or b) areas where highly valued fish are caught even if in low abundance or by few fishers; or c) areas that are important on a seasonal basis; or d) areas important to commercial or recreational fishing activities, including those of individual ports or particular fleets; or e) habitat areas that support food or prey species important to commercially and recreationally caught fish and shellfish species. c. Agencies, through programs, approvals, and other actions, shall Page 91 1. protect and encourage the beneficial uses of ocean resources— such as navigation, food production, recreation, aesthetic enjoyment, and uses of the seafloor—provided that such activities do not adversely affect the resources protected in subsection 1., above; avoid, to the extent possible, adverse effects on or operational conflicts with other ocean uses and activities; and 2. comply with applicable requirements of the Oregon Territorial Sea Plan. 2. Management Measures Management measures for ocean resources and uses shall be appropriate to the circumstances and provide flexibility for future actions. Such management measures may include: a. Adaptive Management: to adapt management programs to account for variable conditions in the marine environment, the changeable status of resources, and individual or cumulative effects of uses; b. Condition Approvals or Actions: to place conditions or limit actions to protect or shield other uses and resources; c. Special Management Area Plans: to develop management plans for certain marine areas to address the unique management needs for resource protection, resource utilization, and interagency cooperation in the areas; d. Intergovernmental Coordination and Cooperation: to coordinate, integrate, and co-­‐manage programs and activities with all levels of government, including Indian tribal governments; e. Regional Cooperation and Governance: to cooperate with other coastal states, countries, organizations, and federal agencies within the larger marine region to address common or shared ocean resource management issues; f. Public Involvement: to involve the public and affected groups in the process of protecting ocean resource, especially through public awareness, education, and interpretive programs; g. Precautionary Approach: to take a precautionary approach to decisions about marine resources and uses when information is limited. 3. Contingency Plans: State and federal agencies, when approving or taking an action that could, under unforeseen circumstances, result in significant risks to ocean resources and uses, shall, in coordination with any permittee, establish appropriate contingency plans and emergency procedures to be followed in the event that the approved activity results in conditions that threaten to damage the marine or estuarine environment, resources, or uses. Page 92 Appendix K: State and Federal Permits and Licenses138 138
Sourced From: Pacific Wave Energy Ventures. (2009, July). Licensing and Permitting. Retrieved July 7, 2009, from Oregon Wave Energy Trust: http://www.oregonwave.org/templates/owet/documents/owet%20-­‐
%20licensing%20%20permitting%20report.pdf Page 93 Page 94 Appendix L: Preliminary Permit Process139 Title 18: Conservation of Power and Water Resources PART 4—LICENSES, PERMITS, EXEMPTIONS, AND DETERMINATION OF PROJECT COSTS Subpart D—Application for Preliminary Permit, License or Exemption: General Provisions § 4.32 Acceptance for filing or rejection; information to be made available to the public; requests for additional studies. (a) Each application must: (1) For a preliminary permit or license, identify every person, citizen, association of citizens, domestic corporation, municipality, or state that has or intends to obtain and will maintain any proprietary right necessary to construct, operate, or maintain the project; (2) For a preliminary permit or a license, identify (providing names and mailing addresses): (i) Every county in which any part of the project, and any Federal facilities that would be used by the project, would be located; (ii) Every city, town, or similar local political subdivision: (A) In which any part of the project, and any Federal facilities that would be used by the project, would be located; or (B) That has a population of 5,000 or more people and is located within 15 miles of the project dam; (iii) Every irrigation district, drainage district, or similar special purpose political subdivision: (A) In which any part of the project, and any Federal facilities that would be used by the project, would be located; or (B) That owns, operates, maintains, or uses any project facilities or any Federal facilities that would be used by the project; 139
The information is directly from the Electronic Code of FERC Regulations and can be accessed on their website at http://ecfr.gpoaccess.gov/cgi/t/text/text-­‐
idx?c=ecfr;sid=18596bbabcb5000bbbb6d9eeb409c16b;rgn=div8;view=text;node=18:1.0.1.2.9.4.20.3;idno=18;cc=e
cfr Page 95 (iv) Every other political subdivision in the general area of the project that there is reason to believe would likely be interested in, or affected by, the application; and (v) All Indian tribes that may be affected by the project. (3)(i) For a license (other than a license under section 15 of the Federal Power Act) state that the applicant has made, either at the time of or before filing the application, a good faith effort to give notification by certified mail of the filing of the application to: (A) Every property owner of record of any interest in the property within the bounds of the project, or in the case of the project without a specific boundary, each such owner of property which would underlie or be adjacent to any project works including any impoundments; and (B) The entities identified in paragraph (a)(2) of this section, as well as any other Federal, state, municipal or other local government agencies that there is reason to believe would likely be interested in or affected by such application. (ii) Such notification must contain the name, business address, and telephone number of the applicant and a copy of the Exhibit G contained in the application, and must state that a license application is being filed with the Commission. (4)(i) As to any facts alleged in the application or other materials filed, be subscribed and verified under oath in the form set forth in paragraph (a) (3)(ii) of this section by the person filing, an officer thereof, or other person having knowledge of the matters sent forth. If the subscription and verification is by anyone other than the person filing or an officer thereof, it shall include a statement of the reasons therefor. (ii) This (application, etc.) is executed in the State County of____________________ of____________________ by:__________ (Name)______________________________ (Address)____________________ being duly sworn, depose(s) and say(s) that the contents of this (application, etc.) are true to the best of (his or her) knowledge or belief. The undersigned applicant(s) has (have) signed the (application, etc.) this ______ day of _______, 19__. Page 96 ____________________ (Applicant(s)) By:____________________ Subscribed and sworn to before me, a [Notary Public, or title of other official authorized by the state to notarize documents, as appropriate] of the State of ________ this day of _______, 19__. /SEAL/ [if any] ____________________ (Notary Public, or other authorized official) (5) Contain the information and documents prescribed in the following sections of this chapter, according to the type of application: (i) Preliminary permit: §4.81; (ii) License for a minor water power project and a major water power project 5 MW or less: §4.61; (iii) License for a major unconstructed project and a major modified project: §4.41; (iv) License for a major project—existing dam: §4.51; (v) License for a transmission line only: §4.71; (vi) Nonpower license for a licensed project: §16.11; (vii) Exemption of a small conduit hydroelectric facility: §4.92; (viii) Case-­‐specific exemption of a small hydroelectric power project: §4.107; or (ix) License or exemption for a project located at a new dam or diversion where the applicant seeks PURPA benefits: §292.208. (b) (1) Each applicant for a preliminary permit, license, and transfer or surrender of license and each petitioner for surrender of an exemption must submit to the Commission's Secretary for Page 97 filing an original and eight copies of the application or petition. The applicant or petitioner must serve one copy of the application or petition on the Director of the Commission's Regional Office for the appropriate region and on each resource agency, Indian tribe, and member of the public consulted pursuant to §4.38 or §16.8 of this chapter or part 5 of this chapter. In the case of an application for a preliminary permit, the applicant must, if the Commission so directs, serve copies of the application on the U.S. Department of the Interior and the U.S. Army Corps of Engineers. The application may include reduced prints of maps and drawings conforming to §4.39(d). The originals (microfilm) of maps and drawings are not to be filed initially, but will be required pursuant to paragraph (d) of this section. The Commission may also ask for the filing of full-­‐sized prints in appropriate cases. (2) Each applicant for exemption must submit to the Commission's Secretary for filing an original and eight copies of the application. An applicant must serve one copy of the application on the Director of the Commission's Regional Office for the appropriate region and on each resource agency consulted pursuant to §4.38. For each application filed following October 23, 2003, maps and drawings must conform to the requirements of §4.39. The originals (microfilm) of maps and drawing are not to be filed initially, but will be requested pursuant to paragraph (d) of this section. (3)(i) An applicant must make information regarding its proposed project reasonably available to the public for inspection and reproduction, from the date on which the applicant files its application for a license or exemption until the licensing or exemption proceeding for the project is terminated by the Commission. This information includes a copy of the complete application for license or exemption, together with all exhibits, appendices and any amendments, and any comments, pleadings, supplementary or additional information, or correspondence filed by the applicant with the Commission in connection with the application. (ii) An applicant must delete from any information made available to the public under this section, specific site or property locations the disclosure of which would create a risk of harm, theft, or destruction of archeological or Native American cultural resources or to the site at which the sources are located, or would violate any federal law, including the Archaeological Resources Protection Act of l979, 16 U.S.C. 470w–3, and the National Historic Preservation Act of 1966, 16 U.S.C. 470hh. (4)(i) An applicant must make available the information specified in paragraph (b)(3) of this section in a form that is readily accessible, reviewable, and reproducible, at the same time as the information is filed with the Commission or required by regulation to be made available. Page 98 (ii) An applicant must make the information specified in paragraph (b)(3) of this section available to the public for inspection: (A) At its principal place of business or at any other location that is more accessible to the public, provided that all the information is available in at least one location; (B) During regular business hours; and (C) In a form that is readily accessible, reviewable and reproducible. (iii) The applicant must provide a copy of the complete application (as amended) to a public library or other convenient public office located in each county in which the proposed project is located. (iv) An applicant must make requested copies of the information specified in paragraph (b)(3) of this section available either: (A) At its principal place of business or at any other location that is more accessible to the public, after obtaining reimbursement for reasonable costs of reproduction; or (B) Through the mail, after obtaining reimbursement for postage fees and reasonable costs of reproduction. (5) Anyone may file a petition with the Commission requesting access to the information specified in paragraph (b)(3) of this section if it believes that an applicant is not making the information reasonably available for public inspection or reproduction. The petition must describe in detail the basis for the petitioner's belief. (6) An applicant must publish notice twice of the filing of its application, no later than 14 days after the filing date, in a daily or weekly newspaper of general circulation in each county in which the project is located. The notice must disclose the filing date of the application and briefly summarize it, including the applicant's name and address, the type of facility applied for, its proposed location, the places where the information specified in paragraph (b)(3) of this section is available for inspection and reproduction, and the date by which any requests for additional scientific studies are due under paragraph (b)(7) of this section, and must state that the Commission will publish subsequent notices soliciting public participation if the application is found acceptable for filing. The applicant must promptly provide the Commission with proof of the publications of this notice. Page 99 (7) If any resource agency, Indian tribe, or person believes that an additional scientific study should be conducted in order to form an adequate factual basis for a complete analysis of the application on its merits, the resource agency, Indian tribe, or person must file a request for the study with the Commission not later than 60 days after the application is filed and serve a copy of the request on the applicant. The Commission will issue public notice of the tendering for filing of each application for hydropower license or exemption; each such applicant must submit a draft of this notice to the Commission with its application. For any such additional study request, the requester must describe the recommended study and the basis for the request in detail, including who should conduct and participate in the study, its methodology and objectives, whether the recommended study methods are generally accepted in the Scientific community, how the study and information sought will be useful in furthering the resource goals that are affected by the proposed facilities, and approximately how long the study will take to complete, and must explain why the study objectives cannot be achieved using the data already available. In addition, in the case of a study request by a resource agency or Indian tribe that had failed to request the study during the pre-­‐filing consultation process under §4.38 of this part or §16.8 of this chapter, the agency or Indian tribe must explain why this request was not made during the pre-­‐filing consultation process and show good cause why its request for the study should be considered by the Commission. (8) An applicant may file a response to any such study request within 30 days of its filing, serving a copy of the response on the requester. (9) The requirements of paragraphs (b)(3) to (b)(8) of this section only apply to an application for license or exemption filed on or after May 20, 1991. Paragraphs (b)(3) and (b)(4) of this section do not apply to applications subject to the requirements of §16.7 of this chapter. (c)(1) Every application for a licensee or exemption for a project with a capacity of 80 megawatts or less must include in its application copies of the statements made under §4.38(b)(1)(vi). (2) If an applicant reverses a statement of intent not to seek PURPA benefits: (i) Prior to the Commission issuing a license or exemption, the reversal of intent will be treated as an amendment of the application under §4.35 and the applicant must: (A) Repeat the pre-­‐filing consultation process under §4.38; and (B) Satisfy all the requirements in §292.208 of this chapter; or Page 100 (ii) After the Commission issues a license or exemption for the project, the applicant is prohibited from obtaining PURPA benefits. (d) When any application is found to conform to the requirements of paragraphs (a), (b) and (c) of this section, the Commission or its delegate will: (1) Notify the applicant that the application has been accepted for filing, specifying the project number assigned and the date upon which the application was accepted for filing, and, for a license or exemption application, direct the filing of the originals (microfilm) of required maps and drawings; (2)(i) For an application for a preliminary permit or a license, issue public notice of the application as required in the Federal Power Act; (ii) For an application for exemption from licensing, publish notice once in a daily or weekly newspaper of general circulation in each county in which the project is or will be located; and (3) If the project affects lands of the United States, notify the appropriate Federal office of the application and the specific lands affected, pursuant to section 24 of the Federal Power Act. (4) For an application for a license seeking benefits under section 210 of the Public Utility Regulatory Policies Act of 1978, as amended, for a project that would be located at a new dam or diversion, serve the public notice issued for the application under paragraph (d)(2)(i) of this section to interested agencies at the time the applicant is notified that the application is accepted for filing. (e) In order for an application to conform adequately to the requirements of paragraphs (a), (b) and (c) of this section and of §4.38, an application must be completed fully. No blanks should be left in the application. No material or information required in the application should be omitted. If an applicant believes that its application conforms adequately without containing certain required material or information, it must explain in detail why the material or information is not being submitted and what steps were taken by the applicant to provide the material or information. If the Commission finds that an application does not adequately conform to the requirements of paragraphs (a), (b) and (c) of this section and of §4.38, the Commission or its designee will consider the application either deficient or patently deficient. (1) Deficient applications. (i) An application that in the judgment of the Director of the Office of Energy Projects does not conform to the requirements of paragraphs (a), (b) and (c) of this section and of §4.38, may be considered deficient. An applicant having a deficient application Page 101 will be afforded additional time to correct deficiencies, not to exceed 45 days from the date of notification in the case of an application for a preliminary permit or exemption from licensing or 90 days from the date of notification in the case of an application for license. Notification will be by letter or, in the case of minor deficiencies, by telephone. Any notification will specify the deficiencies to be corrected. Deficiencies must be corrected by submitting an original and the number of copies specified in paragraph (b) of this section of the specified materials or information to the Secretary within the time specified in the notification of deficiency. (ii) Upon submission of a conforming application, action will be taken in accordance with paragraph (d) of this section. (iii) If the revised application is found not to conform to the requirements of paragraphs (a), (b) and (c) of this section and of §4.38, or if the revisions are not timely submitted, the revised application will be rejected. Procedures for rejected applications are specified in paragraph (e)(2)(iii). (2) Patently deficient applications. (i) If, within 90 days of its filing date, the Director of the Office of Energy Projects determines that an application patently fails to substantially comply with the requirements of paragraph (a), (b), and (c) of this section and of §4.38 of this part or §16.8 of this chapter, or is for a project that is precluded by law, the application will be rejected as patently deficient with the specification of the deficiencies that render the application patently deficient. (ii) If, after 90 days of its filing date, the Director of the Office of Energy Projects determines that an application patently fails to substantially comply with the requirements of paragraphs (a), (b), and (c) of this section and of §4.38 of this part or §16.8 of this chapter, or is for a project that is precluded by law: (A) The application will be rejected by order of the Commission, if the Commission determines it is patently deficient; or (B) The application will be considered deficient under paragraph (e)(1) of this section, if the Commission determines it is not patently deficient. (iii) Any application that is rejected may be resubmitted if the deficiencies are corrected and if, in the case of a competing application, the resubmittal is timely. The date the rejected application is resubmitted will be considered the new filing date for purposes of determining its timeliness under §4.36 and the disposition of competing applications under §4.37. Page 102 (f) Any application will be considered accepted for filing as of the application filing date if the Secretary receives all of the information and documents necessary to conform to the requirements of paragraphs (a), (b) and (c) of this section and of §4.38 within the time prescribed by the Commission or its delegate under paragraph (e) of this section. (g) An applicant may be required to submit any additional information or documents that the Commission or its designee considers relevant for an informed decision on the application. The information or documents must take the form, and must be submitted within the time, that the Commission or its designee prescribes. An applicant may also be required to provide within a specified time additional copies of the complete application, or any of the additional information or documents that are filed, to the Commission or to any person, agency, or other entity that the Commission or its designee specifies. If an applicant fails to provide timely additional information, documents, or copies of submitted materials as required, the Commission or its designee may dismiss the application, hold it in abeyance, or take other appropriate action under this chapter or the Federal Power Act. (h) A prospective applicant, prior to submitting its application for filing, may seek advice from the Commission staff regarding the sufficiency of the application. For this purpose, five copies of the draft application should be submitted to the Director of the Division of Hydropower Licensing. An applicant or prospective applicant may confer with the Commission staff at any time regarding deficiencies or other matters related to its application. All conferences are subject to the requirements of §385.2201 of this chapter governing ex parte communications. The opinions or advice of the staff will not bind the Commission or any person delegated authority to act on its behalf. (i) Intervention in any preliminary permit proceeding will not constitute intervention in any subsequent licensing or exemption proceeding. (j) Any application, the effectiveness of which is conditioned upon the future occurrence of any event or circumstance, will be rejected. (k) Critical Energy Infrastructure Information. (1) If this section requires an applicant to reveal Critical Energy Infrastructure Information (CEII), as defined in §388.113(c) of this chapter, to any person, the applicant shall omit the CEII from the information made available and insert the following in its place: (i) A statement that CEII is being withheld; (ii) A brief description of the omitted information that does not reveal any CEII; and Page 103 (iii) This statement: “Procedures for obtaining access to Critical Energy Infrastructure Information (CEII) may be found at 18 CFR 388.113. Requests for access to CEII should be made to the Commission's CEII Coordinator.” (2) The applicant, in determining whether information constitutes CEII, shall treat the information in a manner consistent with any filings that applicant has made with the Commission and shall to the extent practicable adhere to any previous determinations by the Commission or the CEII Coordinator involving the same or like information. (3) The procedures contained in §§388.112 and 388.113 of this chapter regarding designation of, and access to, CEII, shall apply in the event of a challenge to a CEII designation or a request for access to CEII. If it is determined that information is not CEII or that a requester should be granted access to CEII, the applicant will be directed to make the information available to the requester. (4) Nothing in this section shall be construed to prohibit any persons from voluntarily reaching arrangements or agreements calling for the disclosure of CEII. [Order 413, 50 FR 11678, Mar. 25, 1985] Page 104 Appendix M: Issued Hydrokinetic Preliminary Permits Map140 140
Sourced From: Federal Energy Regulatory Commission Issued HydroKinetic Projects Preliminary Permits Map October 2009 Retrieved October 2009 from www.ferc.com: http://www.ferc.gov/industries/hydropower/indus-­‐
act/hydrokinetics/issued-­‐hydrokinetic-­‐permits-­‐map.pdf Page 105 Appendix N: NEPA Process Concept Map141 141
Sourced From: Marx, J. (2009). www.scribd.com. Retrieved October 16, 2009, from Joshua Marx NEPA Process Chart: http://www.scribd.com/doc/18238603/NEPA-­‐Process-­‐Chart Page 106 Appendix O: Hydrokinetic Pilot Project Licensing Procedures142 Appendix P: Biological Assessments143 142
Sourced From: Federal Energy Regulatory Commission Hydrokinetic Pilot Project Licensing Procedures Retrieved September 2009 from www.ferc.com: http://www.ferc.gov/help/processes/flow/hydrokinetic-­‐pre-­‐print.asp
143
Sourced From: FWS, Interior/NOAA, Commerce. (n.d.). § 402.12 Biological Assessments. Retrieved October 18, 2009, from www.fs.fed.us: http://www.fs.fed.us/r9/wildlife/tes/docs/esa_references/402_12.pdf Page 107 § 402.12 Biological Assessments (a) Purpose. A biological assessment shall evaluate the potential effects of the action on listed and proposed species and designated and proposed critical habitat and determine whether any such species or habitat are likely to be adversely affected by the action and is used in determining whether formal consultation or a conference is necessary. (b) Preparation requirement. (1) The procedures of this section are required for Federal actions that are ‘‘major construction activities’’; provided that a contract for construction was not entered into or actual construction was not begun on or before November 10, 1978. Any person, including those who may wish to apply for an exemption from section 7(a)(2) of the Act, may prepare a biological assessment under the supervision of the Federal agency and in cooperation with the Service consistent with the procedures and requirements of this section. An exemption from the requirements of section 7(a)(2) is not permanent unless a biological assessment has been prepared. (2) The biological assessment shall be completed before any contract for construction is entered into and before construction is begun. (c) Request for information. The Federal agency or the designated non-­‐Federal representative shall convey to the Director either (1) a written request for a list of any listed or proposed species or designated or proposed critical habitat that may be present in the action area; or (2) a written notification of the species and critical habitat that are being included in the biological assessment. (d) Director’s response. Within 30 days of receipt of the notification of, or the request for, a species list, the Director shall either concur with or revise the list or, in those cases where no list has been provided, advise the Federal agency or the designated non-­‐Federal representative in writing whether, based on the best scientific and commercial data available, any listed or proposed species or designated or proposed critical habitat may be present in the action area. In addition to listed and proposed species, the Director will provide a list of candidate species that may be present in the action area. Candidate species refers to any species being considered by the Service for listing as endangered or threatened species but not yet the subject of a proposed rule. Although candidate species have no legal status and are accorded no protection under the Act, their inclusion will alert the Federal agency of potential proposals or listings. (1) If the Director advises that no listed species or critical habitat may be present, the Federal agency need not prepare a biological assessment and further consultation is not required. If only proposed species or proposed critical habitat may be present in the action area, then the Federal agency must confer with the Service if required under § 402.10, but preparation of a biological assessment is not required unless the proposed listing and/ or designation becomes final. Page 108 (2) If a listed species or critical habitat may be present in the action area, the Director will provide a species list or concur with the species list provided. The Director also will provide available information (or references thereto) regarding these species and critical habitat, and may recommend discretionary studies or surveys that may provide a better information base for the preparation of an assessment. Any recommendation for studies or surveys is not to be construed as the Service’s opinion that the Federal agency has failed to satisfy the information standard of section 7(a)(2) of the Act. (e) Verification of current accuracy of species list. If the Federal agency or the designated non-­‐
Federal representative does not begin preparation of the biological assessment within 90 days of receipt of (or concurrence with) the species list, the Federal agency or the designated non-­‐
Federal representative must verify (formally or informally)with the Service the current accuracy of the species list at the time the preparation of the assessment is begun. (f) Contents. The contents of a biological assessment are at the discretion of the Federal agency and will depend on the nature of the Federal action. The following may be considered for inclusion: (1) The results of an on-­‐site inspection of the area affected by the action to determine if listed or proposed species are present or occur seasonally. (2) The views of recognized experts on the species at issue. (3) A review of the literature and other information. (4) An analysis of the effects of the action on the species and habitat, including consideration of cumulative effects, and the results of any related studies. (5) An analysis of alternate actions considered by the Federal agency for the proposed action. (g) Incorporation by reference. If a proposed action requiring the preparation of a biological assessment is identical, or very similar, to a previous action for which a biological assessment was prepared, the Federal agency may fulfill the biological assessment requirement for the proposed action by incorporating by reference the earlier biological assessment, plus any supporting data from other documents that are pertinent to the consultation, into a written certification that: (1) The proposed action involves similar impacts to the same species in the same geographic area; (2) No new species have been listed or proposed or no new critical habitat designated or proposed for the action area; and (3) The biological assessment has been supplemented with any relevant changes in information. (h) Permit requirements. If conducting a biological assessment will involve the taking of a listed species, a permit under section 10 of the Act (16 U.S.C. 1539) and part 17 of this title (with respect to species under the jurisdiction of the FWS) or parts 220, 222, and 227 of this title (with respect to species under the jurisdiction of the NMFS) is required. Page 109 (i) Completion time. The Federal agency or the designated non-­‐ Federal representative shall complete the biological assessment within 180 days after its initiation (receipt of or concurrence with the species list) unless a different period of time is agreed to by the Director and the Federal agency. If a permit or license applicant is involved, the 180-­‐day period may not be extended unless the agency provides the applicant, before the close of the 180-­‐day period, with a written statement setting forth the estimated length of the proposed extension and the reasons why such an extension is necessary. (j) Submission of biological assessment. The Federal agency shall submit the completed biological assessment to the Director for review. The Director will respond in writing within 30 days as to whether or not he concurs with the findings of the biological assessment. At the option of the Federal agency, formal consultation may be initiated under § 402.14(c) concurrently with the submission of the assessment. (k) Use of the biological assessment. (1)The Federal agency shall use the biological assessment in determining whether formal consultation or a conference is required under § 402.14 or § 402.10, respectively. If the biological assessment indicates that there are not listed species or critical habitat present that are likely to be adversely affected by the action and the Director concurs as specified in paragraph (j) of this section, then formal consultation is not required. If the biological assessment indicates that the action is not likely to jeopardize the continued existence of proposed species or result in the destruction or adverse modification of proposed critical habitat, and the Director concurs, then a conference is not required. (2) The Director may use the results of the biological assessment in (i) determining whether to request the Federal agency to initiate formal consultation or a conference, (ii) formulating a biological opinion, or (iii) formulating a preliminary biological opinion. Appendix Q: PATON144 PATON (Private Aids to Navigation) Definitions: 144
Sourced From: US Coast Guard. (2006, 7 17). PATON (Private Aids to Navigation). Retrieved September 2009, from www.uscg.mil: http://www.uscg.mil/d13/dpw/docs/PATONGuide12Jul06.pdf Page 110 PATON is any marine aid to navigation installed and maintained by anyone other than the U.S. Coast Guard. (i.e.: Federal, State, county, city, town government agency, private individual or company.) Note: Federally installed and maintained marine Aids to Navigation (ATON) are the responsibility of the U.S. Coast Guard. • A Marine Aid to Navigation is anything that is intended to assist boater with the safe navigation of a waterway. •
PATON is managed by the U.S. Coast Guard via an application for permit process. Permission to install Private Aids to Navigation can be obtained by submitting a Private Aids to Navigation application (CG-­‐ 2554) to the local U.S. Coast Guard District Commander. The following are other agencies in their order of precedence that would be involved in permitting the placement of PATON: 1. Army Corp of Engineers (ACOE) 2. State Department of a. Washington Department of Natural Recourses b. Idaho Lands and Waterways c. Oregon Marine Board d. Montana Fish, Wildlife and Parks 3. County a. Shore Management 4. City/Town a. Shore Management 5. U.S. Coast Guard Permission must be obtained from at the least the ACOE and the State in which a PATON is to be placed BEFORE the U.S. Coast Guard will grant permission for the placement of said PATON. The U.S. Coast Guards involvement in the PATON process is more of a safety matter. The ACOE and State will approve the placement of a structure/object/hazard. The U.S. Coast Guards is the approving authority for the placement of PATON intended to mark a structure/object/hazard and ensure the safety of the boating public. Title 33 Code of Federal Regulations – Part 62: • This section covers the standardized marking system used within the United States for marking the waterways within the United States. (i.e.: “Red Right Returning!”) o Red (lateral) o Green (lateral) o Yellow (non-­‐lateral) o Orange and White (non-­‐lateral/informational – regulatory) Page 111 Title 33 Code of Federal Regulations – Part 66: • This section covers the U.S. Coast Guard, Private Aids to Navigation application (CG-­‐
2554) for permit process. Note: Bridge marking standards are contained in the Code of Federal Regulations under a different section. For guidance on how to properly mark a bridge contact the local U.S. Coast Guard District Commander. To place a PATON within the 13th Coast Guard District (Oregon, Washington, Idaho or Montana) please complete the following steps: 1. Contact the U.S. Army Corp of Engineers. a. Seattle b. Portland c. Walla Walla 2. Contact the appropriate state department. a. Oregon b. Washington c. Idaho d. Montana 3. Contact the appropriate county department. a. Shoreline Management 4. Contact the appropriate city/town department. a. Shoreline Management 5. Contact the “13th Coast Guard District Private Aids to Navigation Manager” at (206) 220-­‐
7285 or d13-­‐pf-­‐[email protected]. “Boating safety, It’s everyone’s responsibility!” Appendix R: Hydrokinetic Pilot Project Application Checklist145 HYDROKINETIC PILOT PROJECT CRITERIA
AND DRAFT APPLICATION CHECKLIST
PURSUANT TO 18 CFR § 5.18
145
Sourced From: Federal Energy Regulatory Commission. (n.d.). Hydrokinetic Pilot Project Criteria and Draft Application Checklist Pursuant to 18 CFR § 5.18. Retrieved October 7, 2009, from www.ferc.gov: http://www.oregon.gov/LCD/docs/goals/goal19.pdf Page 112 *Guidelines from Commission staff’s white paper on the hydrokinetic pilot project licensing process (found at www.ferc.gov) are indicated by asterisks. Page 113 Page 114 Page 115 Page 116 Appendix S: Matrix Comparing Three Licensing Processes146 Integrated Licensing
Process (ILP)
Traditional
Alternative
Licensing Process Licensing Process
(TLP)
(ALP)
Consultation
w/ Resource
Agencies and
Indian Tribes
Integrated
Paper driven
Collaborative
FERC Staff
Involvement
- Pre-filing; beginning at filing of
NOI- Early and sustained throughout
process
- Post Application filing
- Pre-filing
- Defined deadlines for all
participants throughout the process,
including FERC
- Pre-filing - some
deadlines for participants
Deadlines
- Early involvement on
requested basis
- Post-filing - defined
deadlines for participants
Study Plan
Development
- Developed through study plan
meetings
- Plan approved by FERC
- Pre-filing - deadlines
defined by collaborative
group
- Post-filing - defined
deadlines for participants
- Developed by applicant
- Developed by
based on early agency and collaborative group
tribal recommendations
- FERC staff assist as
146
Sourced From: Federal Energy Regulatory Commission Matrix Comparing Three Processes March 13, 2006 Retrieved September 2009 from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐
info/licensing/matrix.asp Page 117 Study Dispute
Resolution
- Informal dispute resolution
available to all participants
- Formal dispute resolution available
to agencies w/ mandatory
conditioning authority. Threemember panel technical
recommendation on study dispute
- No FERC involvement
resources allow
- FERC study dispute
resolution available upon
request
- FERC study dispute
resolution available upon
request
- OEP Director issues
advisory opinion
- OEP Director issues
advisory opinion
- OEP Director opinion binding on
applicant
Application
- Preliminary licensing proposal or
draft application and final application
include Exhibit E that has form and
contents of an EA
- Draft and final
application include Exhibit
E
- Draft and final
application with applicant
prepared EA or third-party
EIS
Additional
Information
Requests
- Available to participants before
filing of application
- Available to participants
after filing of Application
- Available to participants
primarily before filing of
application
- No additional info requests after
application filed
Timing of
Resource
Agency
Terms and
Conditions
- Preliminary terms and conditions
filed 30 to 60 days after REA notice
- Modified terms and conditions 60
days after comments on draft NEPA
document
- Post-filing requests
available but should be
limited due to
collaborative approach
- Preliminary terms and
conditions filed 60 days
after REA notice
- Schedule for final terms
and conditions
- Preliminary terms and
conditions filed 60 days
after REA notice
- Schedule for final terms
and conditions
Appendix T: Guidance on Environmental Measures in License Applications147
The Federal Energy Regulatory Commission (Commission) staff has undertaken a number of initiatives to foster the development of license applications in an efficient and timely manner. One important component of license applications is the description of proposed measures and plans to protect, mitigate, or enhance environmental resources (PM&E Measures). Proposed PM&E measures could include modifications to project facilities and operations; construction, operation, and maintenance of new facilities; or protection or mitigation measures for addressing project-­‐related effects. These could be individual measures, or a series of related measures (e.g., construction and maintenance of two boat docks, a picnic area, and a trail) which may be packaged into one plan (e.g., a Recreation Plan). How (and if) these proposed measures are packaged is not as important as the information that should be provided. Applicants have requested that Commission staff provide guidance on the level of detail that should be provided and at what point in the licensing process these measures are needed. We offer the following guidance in developing any proposed environmental measures. GOAL Commission staff must have an application with sufficient detail to complete the environmental analysis required under the National Environmental Policy Act of 1969 as amended (NEPA), and 147
Sourced from: Federal Energy Regulatory Commission Guidance on Environmental Measures in License Applications, Retrieved September, 20 2009 from http://www.ferc.gov/industries/hydropower/gen-­‐
info/licensing/guidance.pdf Page 118 to weigh the benefits of any proposed measures along with their costs (economic, generation, and other competing uses) and any alternative proposed measures, as required under sections 4(e) and 10(a) of the Federal Power Act. While Commission staff understand that the level of detail on PM&E measures may vary, the goal is to have sufficient information on measures to be able to recommend to the Commission implementation of those measures that are best adapted to a comprehensive plan for improving or developing the waterway in any license issued. INFORMATION REQUIREMENTS To achieve this goal, applicants, agencies, tribes, and non-­‐governmental organizations should provide specific measures that permit staff to describe what is going to be done, where, when, how, and why. That information should include at a minimum: (a) a description of the specific measures to be implemented, including conceptual drawings, depictions, or similar graphic information for any facilities proposed to be constructed; (b) a clear description of where any proposed measures are likely or intended to be implemented, whether these are related to operation (e.g., the release points for minimum flows and where the flow would be measured), facilities, or protective or mitigative measures for addressing project-­‐related effects, including reference to the project boundary; (c) a preliminary description of any steps necessary to implement measures and the preliminary schedules for implementing the measures referenced to the license issuance date; (d) a description of the purpose of the measures and the benefits that they would provide; (e) the consultation record leading to the measures; (f) an estimated cost for the implementation of each measure; and (g) as applicable, an applicant's explanations as to why it is not adopting any comments or recommendations made by stakeholders. Final details may not always be possible. However, what is provided should be sufficient to answer the above questions. WHEN SHOULD THIS INFORMATION BE PROVIDED To promote constructive feedback, proposed measures should be provided as soon as possible in the pre-­‐filing portion of the licensing process. Proposed PM&Es at Culmination of Study Phase: Some measures are developed at the culmination of the study phase and included in study reports filed with the Commission. If any are developed at this phase, they should be incorporated by reference in an applicant’s draft license application/preliminary licensing proposal (DLA/PLP). PM&Es in the Preliminary Licensing Proposal or Draft Application: To promote constructive feedback, preliminary proposals for measures and plans to protect, mitigate, or enhance environmental resources should be described and evaluated to the extent possible in an applicant’s DLA/PLP documents (18 C.F.R. §§ 5.16(b)(1) and (2)). At a minimum, the draft license application/PLP should include preliminary proposed measures, operations and maintenance plans, and a draft environmental analysis associated with them. PM&Es in the License Application: By the time the final license application is filed, all of an applicant's proposed PM&E measures must be provided (18 C.F.R. § 5.18(b)(5)(ii)(C)), including the information identified in (a) through (g) above. Measures that contain sensitive information (e.g., location of an archaeological site) should be submitted separately and marked "Not for Public Disclosure” (18 C.F.R. § 388.107 (c)). Page 119 Appendix U: Alternative and Integrated Licensing Process Flow Charts148 148
Sourced From: Federal Energy Regulatory Commission Processes for Hydropower Licenses Alternative Licensing Process Retrieved September 2009 from www.ferc.gov: http://www.ferc.gov/help/processes/flow/hydro-­‐4.asp Page 120 Page 121 Sourced from: Federal Energy Regulatory Commission Integrated Licensing Process Retrieved September 2009 from www.ferc.gov: http://www.ferc.gov/industries/hydropower/gen-­‐info/licensing/ilp/flowchart.pdf Appendix V: European Regulations including Scotland, Portugal and Spain Page 122 While there are no specific European regulations for wave energy devices, an environmental impact assessment (EIA) and Strategic Environment Assessment (SEA) do have to be completed before construction permits can be issued under the EU Environmental Impact Assessment Directive and the related Habitats and Wild Birds Directives. (Table 1, 2,3 and 4) • Directive 85/337/EEC • Directive 97/11/EC and Directive 2003/35/EC • Directive 2001/42/EC Each individual country will have their own rules regarding the EIA and SEA. However, stakeholder/public engagement is a required part of the drafting process no matter where the assessments are done. Table 1: European legislation to be considered for environmental impact assessment of wave and tidal energy schemes. * All areas that are protected under the Birds and Habitats Directives form an ecological network known as NATURA 2000. Directive Content 85/337/EEC Requirement of an environmental impact assessment before building EIA Directive permission. Does not mention specifically marine energy technologies. 92/043/EEC Requirement on the conservation of natural habitats and of wild Habitats Directive* fauna and flora; establishes the creation of Special Areas of Conservation (SACs are protected sites assigned under this Directive; the habitat types and species concerned are listed in the Annexes I and II; the list concerns habitat types and species that are considered to be most in need of conservation at the European level). 79/409/EEC Requirement on the conservation of wild birds; establishes the Wild Birds Directive* creation of Special Protected Areas (SPAs are high level protected sites classified in agreement with this Directive; the species which are involved are listed in Annex I as well as additional regularly occurring migratory species). 2001/42/EC The main objective is to help integrate the environment into the SEA Directive preparation and adoption of plans and programs liable to have significant effects on the environment, by subjecting them to a prior environmental assessment at the planning stage. It aims to extend the principles of the environmental impact assessment, carried out at the individual project level, to the decision making at strategic level. It is intended that at this level the alternative Page 123 approaches and their implications for the environment can more easily and appropriately be considered. Table 2: EIA Directive (85/337/EEC). What is included in an Environmental Impact Assessment. {Text of Annex III, with respect to the selection criteria referred in article 4(3).} Topics 1. Characteristics of projects The characteristics of projects must be considered having regard, in particular, to: 2. Location of projects The environmental sensitivity of geographical areas likely to be affected by projects must be considered, having regard, in particular, to: 3. Characteristics of the potential impact The potential significant effects of projects must be considered in relation to criteria set out 1 and Criteria • The size of the project • The accumulation with other projects • The use of natural resources • The production of waste • Pollution and nuisances • The risk of accidents, having regard in particular to substances or technologies used • The existing land use • The relative abundance, quality and regenerative capacity of natural resources in the area • The absorption capacity of the natural environment, paying particular attention to the following areas: (a) Wetlands (b) Coastal zones (c) Mountain and forest areas (d) Nature reserves and parks (e) Areas classified or protected under Member States’s legislation; special protection areas designated by Member States pursuant to Directive 79/409/EEC and 92/43/EEC (f) Areas in which the environment quality standards laid down in community legislation have already been exceeded; (g) Densely populated areas; (h) Landscapes of historical, cultural or archaeological significance. •
•
The extent of the impact (geographical area and size of the affected) The transformative nature of the Page 124 2 above, and having regard in particular to: •
•
impact The probability of the impact The duration, frequency and reversibility of the impact Table: 3 EIA Directive (85/337/EEC). What developers need to include in an EIA report. {Text of the Annex IV, with respect to the selection criteria referred in article 5(1).} Topics Information to be supplied by the developer 1.Description of the project including: • A description of the physical characteristics of the whole project and the land-­‐use requirements during the construction and operational phases • A description of the main characteristics of the main production processes, for instance, nature and quantity of the materials used, • An estimate by type and quantity, of expected residues and emissions (water, air and soil pollution, noise, vibration, light, heat, radiation,etc) resulting from the operation of the proposed project. 2. An outline of the main alternatives studied by the developer and an indication of the main reasons for this choice, taking into account the environmental effects 3. A description of the aspects of the Population likely to be significantly affected by the environment proposed project, including in particular: • Fauna • Flora • Soil • Water • Air • Climatic factors • Material assets including the architectural and archaeological heritage • Landscape • Inter-­‐relationship between the above factors 4.A description of the likely significant • The existence of the project effects of the proposed project on the • The use of natural resources Page 125 environment resulting from: •
•
•
•
The emission of pollutants The creation of nuisances The elimination of waste and The description by the developer of the forecasting methods used to assess the effects on the environment 5.A description of the measures envisaged to prevent, reduce and where possible offset any significant adverse effects on the environment 6.A non-­‐technical summary of the information provided under the above headings When creating the SEA report, you have to include the significant effects of the proposed plan or program, reasonable alternatives, as well as other information listed in the Annex II of the Directive (Table 4). The SEA content and level of detail will be decided after consultation with the environmental authority of the individual state. Both the environment authority and the public must be informed early to effectively comment on the draft plan or program and accompanying report. Table 4 SEA Directive (2001/42/EC) What is included in an SEA {Criteria for determining likely significance of the effects referred to in Annex II.} Topics Characteristics 1. The characteristics of plans • The degree to which the plan or program sets a and programs, having regard, in framework for projects and other activities, either particular, to: with regard to the location, nature, size and operating conditions or by allocating resources; • The degree to which the plan or program influences other plans and programs including those in a hierarchy • The relevance of the plan or program for the integration of environmental considerations particular with a view to promoting sustainable development; • Environmental problems relevant to the plan or program; • The relevance of the plan or program for the implementation of Community Legislation on the environment (e.g. plans and programs linked to waste-­‐management or water protection). 2. Characteristics of the effects • The probability, duration, frequency and reversibility Page 126 and of the area likely to be affected, having regard, in particular, to of the effects; The cumulative nature of the effects; The transboundary nature of the effects; The risks to human health or the environment (e.g. due to accidents); • The magnitude and spatial extent of the effects (geographical area and size of the population Characteristics of the effects and of the likely to be affected); • The value and vulnerability of the area likely to be affected due to: a. Special natural characteristics or cultural heritage; b. Exceeded environmental quality standards or limit values; c. Intensive land-­‐use; • The effects on areas or landscapes which have a recognized national, Community or international protection status. •
•
•
II. Portugal The legislation requirements for the implementation of ocean energy projects were initially regulated by the Decree law (DL) 254/99, which established the requirements for the installation of equipment or infrastructures within the territorial sea and the Exclusive Economic Zone. The installation of such equipment and infrastructures also required approval from several Ministries: Defense and Sea Issues, Environment, Spatial planning and Regional Development, Economy and Innovation, Agriculture and Fisheries, and Ministry of Public Works, Transport and Communications. Due to the complexity of ministry approval, this legislation was updated and is currently written in the Despacho Conjunto (DC) 51/2004 (Table 5) which establishes the administrative license process for renewable energy projects, including wave energy. Currently, the Portuguese regional development authorities who are involved in wave energy regulation and permitting are: • CCDR; Comissão Coordenadora do Desenvolvimento Regional), the Nature Conservation and Biodiversity Institute • ICNB; Instituto da Conservação da Naturaza e Biodiversidade) • Ministry of Cities, Planning and Environment. • REN: Rede Eléctrica Nacional • Wavec: Wave Energy Center The DC 51/2004 (Table 5) also establishes the obligation for an Environmental Incidence Study (66/2005) with wave energy projects. The Environmental Incidence Study is a less demanding Page 127 task than the EU Environmental Impact Assessment making the first step of permitting in Portugal comparatively attractive. Table 5 Main Portuguese legislation on Wave Energy. Legislation DC 51/2004 Joint decision 66/2005 DL 5/2008 Description / Observations Regulates the license process of electricity production from renewable energy sources including wave energy. Establishes the components to be described and evaluated in the Environmental Incidence Study for wave power projects. The components are: • Gas emissions: that are going to be avoided with the electricity production from wave energyconverters during the life of the project; this calculation should be based on the National Programfor Climate change and on the EU Directiove 96/62/CE; • Seascape: evaluation of the visual impact of the project; • Geology and geomorphology: Identification of the elements that should be protected; • Natural values (flora, fauna and habitats): identification of and cartography of the areas of protected species and habitats in the context of the Birds (79/409/CEE) and Habitats (92/43/CEEE) Directives; if it is the case propose mitigation measures and a monitoring plan e a post-­‐
evaluation phase; • Patrimony: characterization and cartography of the archaeological, architectonical and ethnographical values and where applicable propose mitigation measures; • Noise: this analysis is dispensable when the projects are located far from 100m from houses; • Soils: evaluation, identification and cartography of the soil occupation; • Territorial classification: spatial classification of the project according to the classes in thenational territorial management instruments and considering licences for other uses such as navigation, military and commercial; • Population: the analysis should focus on public acceptance of the project particularly the most affected social groups. Establishes the legal framework for the utilization of the public Page 128 DL 5/2008 Establishes the legal framework for the utilization of the public natural marine resources including the wave exploitation for electricity production. Establishes the geographical limits of the Portuguese Pilot Zone (along S. Pedro de Muel) and the creation of a management entity as well as the licence process of the project within the Pilot Zone. DL 238/2008 Attributes to the National Electrical Grid (REN: Rede Eléctrica Nacional) the management of the Pilot Zone and establishes the obligation for the creation of a regulation document on its use. A. Portuguese Pilot zone The Pilot Zone was created by the DL 5/2008. In the same year the DL 238/2008 made the REN: Rede Eléctrica Nacional the management entity for the pilot zone (Table 5). According to this legal framework the REN has to conduct a geophysical and environmental characterization of the Zone in collaboration with local public entities affected by the zone. In particular, REN is required to approach the pilot zone project on a commercial basis, i.e. the investments on the grid connection from the shoreline to the nearby substation are likely to flow into later rental agreements with developers. These will therefore have to support the investments made into the transmission grids. Partly it may be expected that the ‘market pull’ will compensate for this situation, but in particular in the beginning, major interventions and financial involvement of the public administration will be necessary to attract developers. Although the access of WEC developers to the pilot zone has to be regulated by REN, developers also have to submit an Environmental Incidence Study as part of the license process. B. Examples of permitting procedures on the Portuguese coast Examples of consents procedures on the coast of Portugal which were accompanied by some kind of Environmental concern are: • Pico OWC pilot plant in Azores The European OWC pilot plant on the Island of Pico, Azores was completed in 1998. The license process at this time was new to the authorities of Azores Autonomous Region who demonstrated serious environmental concern. This proved to be a difficult hurtle to overcome. The project was allowed to continue but due to the short operational periods of the plant, there were no systematic observations of environmental issues. The project was delayed for several years due to technical, political and funding issues. It is supposed to start up again in Summer of 2010. • AWS pilot plant in the wave energy park of Aguçadoura (Póvoa do Varzim); The AWS was regulated under the original Decree Law (DL 254/99, referred above) so the offshore operation license had to be undersigned by 5 ministers. Luckily, the process was relatively fast since the project was considered positively by the government. An Page 129 EIA was not required at that time. However, observations on environmental issues were sporadic during the test period. Dolphins were observed in the direct vicinity of the plant during the tests. Despite their scarceness, the observations indicate that at least for this technology not only negative impacts should be considered for park-­‐scale deployment since limited areas with no access for net-­‐fishing may function as habitat protection. The AWS pilot plant is still intermittently sending energy to the grid. • Pelamis in the wave park of Aguçadora (Póvoa do Varzim) The permitting process for the deployment of a small park of 3 Pelamis devices in the same area as the AWS pilot plant was concluded in 2006. The process followed the same approach as AWS pilot plant and, although not explicitly demanded at that time, an EIA was done for the small park. The devices were pulled out of the water in 2007 due to some leakage issues then the Australian firm, Babbock and Brown, who owned the majority of the project went bankrupt. Currently the project is on hold. • Waveroller on the coast of Peniche (central coast of the country); The Waveroller technology is predicted to be operating in Peniche as a farm, producing between 50 and 100 MW, by the end of 2009. The first device was installed in April 2007 and the environmental impacts of the array of devices have been analyzed in an Environmental Incidence Study in 2007, as established in the current legislation. C. Other Portuguese Regulation Incentives 1. FIT (a 15-­‐years-­‐long 76-­‐260 €/MWh for Wave). In particular, the Decree-­‐law 225/2007 introduced new tariffs for emerging technologies, such as wave energy and concentrated Solar Power providing the legal basis for government use of public maritime areas for producing electricity from sea-­‐wave power. • Direct subsidy payments and tax incentives • Tax exemption and quota obligation for biofuels • Fiscal and financial incentives • Beginning in 2005, a tendering/concession process has also been established. Portugal was the first country to introduce a FIT for wave energy (2001, abolished 2005 and re-­‐
introduced 2007 as Decree Law 225/2007), and does presently set the highest generic feed-­‐In tariff in the world. It depends on the market price but in a simulation was found that it ranges from 0.26-­‐0.07 €/kWh, depending on the type of project (demo, pre-­‐commercial, commercial). Portugal along with Ireland (0.22 €/kWh) and France (0.15 €/kWh) are the only countries that have an attractive enough FIT to boost the first phase of wave energy development. In Germany, although the resource is low a tariff that ranges from 0.07-­‐0.10 €/kWh was established. III. Spain Page 130 In Spain, ocean energy projects are not listed as projects that should be subject to an EIA. However, the Environment Ministry can ask for an assessment at any time. Currently, wave projects that are looking at location of the coast in Basque country are preparing EIA’s. Efforts have been made by public and private authorities in order to develop guidelines for EIA in the marine environment. A report developed should be published within the next year describing the EIA procedure in Spain and the information and best methodologies to be used in each stage of the EIA development. A. Spain Incentives: • Feed in Tariff for electricity generation • Special obligation for Solar Thermal • Investment subsidies for heating and cooling • Fiscal incentives and quota obligation for biofuels • FIT (fixed and premium) explicitly set for Ocean and Tide (65-­‐69 €/MWh, 30-­‐38 premium) A fixed tariff and participation in the electricity market (selling the electricity and getting a bonus): (i) The fixed tariff for ocean power installations is 0.0689 €/kWh (for the first 20 years) and 0.0651 €/kWh (for the next 20 years), (ii) a bonus for market participation, 0,038 €/kWh (for the first 20 years) and 0.003 €/kWh (Royal decree 661/2007). However it is speculated that both fixed and premium tariffs for ocean power installations are not attractive enough to stimulate the ocean energy market. B. In Spain, the government has financed the strategic PSE-­‐MAR project (25M€) and the regional government from the Basque Country has financed the development of the BIMEP pilot Zone (15 M€). C. Only one region in Spain, the Basque Country, has considered targets in its energy strategy: 5MW of installed wave power by 2010. For that purpose, the Basque Government has allocated an investment of 15 millions Euro. This investment includes a test infrastructure on the Basque Coast of about 20MW. The general tariff for ocean power is 6.86c€/kWh for the first 20 years IV. United Kingdom The UK requires a complete EIA for commercial deployments. For ocean energy projects there are a number of required licenses under legislation presented in Table 6. UK already began (2007) a consultation exercise on the application of the EIA specifically to marine energy devices which revises the existing range of applicable legislation with a view to streamline the licensing process. This should be available in 2010. Table 6 United Kingdom legislation on Ocean Energy permitting. Legislation Description / Observations Page 131 Food and Environmental Protection Act, FEPA (1989) Electricity Act (Section 36; 1989) Coast Protection Act, CPA (Section 34; 1949) European Protected Species EPS Lease from the Crown state License relating to the proposed deposits on the seabed Governs marine energy converters generating over 1 MW Concerns safety and navigation issues as well as environmental issues License may be required if deemed necessary by the environmental regulator Within territorial waters the ownership of the seabed and, with the exception of coal, oil and gas, the UK’s rights to explore and exploit the Continental Shelf are vested in the Crown Estate To connect to the electrical grid Planning Authority permissions A. European Marine Energy Centre The EMEC is the first built test site for wave and tidal energy converters. Since EMEC is a test facility site in the UK, the scenario of permitting consents is slightly different than it for UK in general. Developers do not have to conduct full EIAs but they need to apply for the licenses described in Table 6. EMEC has developed an advisory role with regard to the developers’ consents which promote early communication with regulatory authorities in order to reduce efforts and improve approach consistency to possible risks. EMEC developed a document on the Environmental Impact Assessment, which intends to guide the developers, interested in testing their devices at EMEC, on legislative and consent requirements as well as on the content of the Environmental Statement that should be carried out by the developer. (The developer has to pay consultation fees to EMEC for this) B. Wave Hub Consents and Permitting Wave Hub is a groundbreaking renewable energy project in the South West of England that aims to create the UK's first offshore facility for the demonstration and proving of the operation of arrays of wave energy generation devices. This project is being promoted by the South West of England Regional Development Agency (SWRDA). The consent for the Wave Hub installation involved an application to the Department of Trade & Industry (DTI) (under the Electricity Act in 1989, which incorporates deemed planning permission under the Town & Country Planning Act 1990), together with an application to the Department of the Environment, Food and Rural Page 132 Affairs (DEFRA) under the Coast Protection Act (1949) and a license under the Food & Environment Protection Act 1985 (Table 8). An Environmental Statement was also required on the potential impacts of the project on various aspects of the natural and human environment and was finalized in 2006. The consent for Wave Hub was granted in September 2007. At present, an application for the establishment of a safety zone for the operational phase of the Wave Hub site has been submitted to the Department of Energy and Climate Change (January 2009). An EIA will be required for any Section 36 (Electricity act) application, and this will need to describe the WEC’s to be installed with sufficient precision to enable their environmental impacts to be assessed. The types of WECs to be installed in the Wave Hub are: oscillating water column, articulated tubular floats (Pelamis), floating platform with multiple point absorbers and buoy-­‐mounted single point absorbers. C. Examples of Consent Procedures on the UK Coast A demonstration site for Wave Dragon Technology was selected on the coast of Wales (Pembrokeshire) according to the good wind and wave exposure, the relative proximity to the land (for economic and operational purposes), the relative distance from commercial shipping interests, the exclusion from military exercise ranges and the proximity to potential grid connection locations. The permission applications for Wave Dragon in Wales included the submission of three offshore consents to DTI and DEFRA. A full EIA was also conducted since the site is located within a “Special Area of Conservation” (SAC). The environmental Statement was completed in April 2007 and work was developed with the Crown Estates and Pembrokeshire Coastal National Parks Authority towards a Lease and Planning Permission respectively. Technology deployment is expected during the summer of 2009 and environmental monitoring is going to be carried out until 2012 (the year for the end of the project demonstration phase). D. Renewable obligation (RO). The RO places an obligation on electricity suppliers to source an increasing share of their power sales from renewable sources. In case they should not meet this obligation, they have to pay a penalty. For each megawatt hour of renewable energy generated, irrespective of the technology used, a tradable certificate called a Renewables Obligation Certificate (ROC) is issued. • A £50 million (EUR 72.5 million) fund is available for the development of wave and tidal power, the Marine Renewables Deployment Fund. • The Government intends to allow “guaranteed headroom” between the current level of RES-­‐E and the target to try to ensure price stability for the green certificates (Renewable Obligation Certificates, ROCs). Separate ROCs are issued to generators in Scotland (SROCs) and Northern Ireland (NIROCs), but the three types of certificate are fully tradable and all can be used by any UK electricity supplier for compliance with the RO. Page 133 2 ROCs per kWh in UK and 5 ROCs per kWh in Scotland will be granted for wave energy (value pence 4.5 per ROC).The Scottish Government published proposals to provide greatersupport for wave and tidal-­‐stream technologies. The proposed initial phase of support is for up to 75MW giving support levels of £175/MWh for wave and £105/MWh for tidal-­‐stream. The new legislation came into force in Scotland in April 2007. The Scottish Executive Marine Energy Fund -­‐ a total of around £13m was made available to developers to provide up to 40% capital costs and additional revenue support up to 100 % eligible costs, for projects deploying devices at the European Marine Energy Centre in Orkney R&D support for wave and tidal energy is also proposed through the newly established Energy http://www.energytechnologies.co.uk/ -­‐ which announced in December 2007 a call for expressions of interest to develop a small number of major new development and demonstration projects in marine energy – each to be funded at a level of £5million to £10million Marine Renewable Deployment Fund (MRDF) provides funding to multi-­‐device, early stage commercial generation facilities that have completed R&D and are ready to move into the commercial environment. The total budget is £50m, of which £42m is available for project support, £2m is for impact monitoring with the remainder earmarked for industry development. Carbon Trust Marine Energy Accelerator (open to any UK organisation). Total budget is £3.5m. Key European Stakeholders Appendices Appendix W: Key Scottish Wave Energy Stakeholders Regulation and Permitting Bodies • Forum for Renewable Energy Development in Scotland (FREDS): The governments advisory body Page 134 •
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The Crown Estate : Licensing body The Government’s Marine Energy Group: The industry lead advisory body Marine Energy Spatial Planning Group (MESPG): Marine spatial planning body Scottish Environmental Protection Agency The comhairle nan Eilean Siar (Outer Hebrides Council) and Highland and Island Enterprise (HEI): Looking to establish a Marine Energy Zone (MEZ) along the west coast Scottish Development International Non Governmental Bodies • European Marine Energy Centre (EMEC) o Offers device developers 11kv subsea grid connections, hydro-­‐graphic and current surveys along with the ability to piggy back on EMEC’s Power Purchase Agreement. • Wave Hub • New and Renewable Energy Centre (NaREC): Onshore scale testing center • The Carbon Trust • Orkeny Island Council • Scottish Environmental Protection Agency Grants • Regional Selective Assistance (RSA): Specifically for foreign companies in certain areas UK • Scottish Government’s Marine Support Fund • Scottish Government’s Smart Grant Award • Scottish Executive’s Marine Support Fund R&D Investors • SMART: Scotland • R&D Plus • Proof of Concept Programme • Enterprise Fellowships • Small Company Innovation Support • The Business Growth Fund • Scottish Venture Fund • The Scottish Co-­‐Investment Fund Commercialization Investors Page 135 •
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Scottish Power/Hammerfest Strom Joint Venture Company: Subsidiary of Scottish Power Renewable Technology Ventures: Subsidiary of Scottish & Southern Shell Technology Ventures Fund (STV) Total: French oil company Fred Olsen Renewables Rolls Royce: Investor of Tidal Generation Limited (TGL) Morgan Stanley Statkraft: A Norwegian Utility CLP Holdings: Hong Kong Wave Energy Purchasers • EMEC Power Purchase Agreement o Income from Renewable Obligation Certificates (ROC) approx £45/kwh in Jan 2009 • Scottish & Southern Energy: Utility • E.ON UK: UK's leading integrated power and gas company • Scottish Power Academia • Institute of Energy Systems at the University of Edinburgh • Queen’s University Belfast: Partner of Wavegen • Marine Energy Coastal Defense: University of Edinburgh • The University of Exeter • Hydraulic and Marine Research Center (ROI) Consultants • AEA Energy & Environment • Black & Veatch • Entec UK Ltd • The Engineering Business • The Met Office • Newage AvK • Scottish Natural Heritage • Teamwork Technologies Other Important Resources and Information • Global Energy Group Page 136 •
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Marine Renewable Energy Development in Scotland (MREDS) Research Programme European Cross Boarder Project Renewable Obligation Scotland (ROS) Supergen Marine Work Packages Scottish Government’s Marine Bill Saltire Prize Financial Appendices Appendix X: Estimate of Future Cost149 When we estimate the financial condition of a wave energy company in future and dig into the capital and operational & maintenance costs, which has not been accomplished to date, there is a high level of uncertainty. Currently, all of the financial data is based on some assumptions, which may not be 149
Mirko Previsic, Omar siddiqui and Roger Bedard, EPRI Global E2I Guideline, Economic Assessment Methodology for Offshore Wave Power Plants, (November, 2004), P 14, Retrieved October 2009, from http://oceanenergy.epri.com/attachments/wave/reports/002_Rev_4_Econ_Methodology_RB_12-­‐18-­‐
04.pdf Page 137 entirely accurate in some points. In an attempt to make the assumptions as simple and also as reasonable as possible, we need to make certain that the cost accuracy is within an acceptable and reasonable range. The ability to view and understand the general scope of the financial process is the key to success for M3. Table 1: Accuracy Range for Cost Data 150 Cost Estimate A. Conceptual B. Pilot C. Demonstration D. Commercial E. Mature Rating A. Actual -­‐ -­‐ -­‐ -­‐ 0 B. Detailed -­‐ -­‐ -­‐15 ~ +20 -­‐10 ~ +10 -­‐5 ~ +5 C. Preliminary -­‐30 ~ +50 -­‐25 ~ +30 -­‐20 ~ +20 -­‐15 ~ +15 -­‐10 ~ +10 D. Simplified -­‐30 ~ +80 -­‐30 ~ +30 -­‐25 ~ +30 -­‐20 ~ +20 -­‐15 ~ +15 E. Goal -­‐30 ~ +200 -­‐30 ~ +100 -­‐30 ~ +80 -­‐30 ~ +70 -­‐ A. Actual: Data on detailed process and mechanical designs with historical data from existing units B. Detailed: Detailed process and mechanical design and cost estimate but no historical data C. Preliminary: Preliminary process and mechanical design D. Simplified: Simplified process and mechanical design E. Goal: Technical design/ cost goal or cost estimate developed from literature data The second consideration of the accuracy is inflation rates, since the wave energy power plant is likely to have a long term life (e.g. 30 years). In comparing the data from different years, we need to consider the inflation rates as an important role to influence the accuracy of the comparison year by year. Figure 1: Inflation Rates of Unites States from 1999 to 2009 In the figure above we can see that the inflation rates are ranged around 3.0, except this year, 2009. For this reason we have picked the inflation rates as 3.0 each year from 2009 till to 2030. 150
EPRI Global E2I Guideline, Economic Assessment Methodology for Offshore Wave Power Plants, (November, 2004), Retrieved October 2009, p.22, source : http://oceanenergy.epri.com/attachments/wave/reports/002_Rev_4_Econ_Methodology_RB_12-­‐18-­‐04.pdf Page 138 Appendix Y Exhibit 1 Cost centers and cost drivers 151 Cost centers Main drivers Example measures and variables Capital cost 1. Structure cost 2. Mechanical and electrical costs 3. Moorings Material cost Extreme loads and rating of the machine(installed capacity) Water depth Tidal range Tidal flow Storm conditions Compliance Cost per ton; ton of material Peak power output; mean power output Vessel rates Vessel day rates 151
Cost estimation methodogy(May,2006), Carbontrust. Retrieved September 2009, from http://www.carbontrust.co.uk/NR/rdonlyres/B4410309-­‐9EDB-­‐4579-­‐B0AB-­‐
D081B168D2BC/0/MECcostestimationmethodologyreport.pdf Page 139 4. Installation 6. Grid connection 7. Project management Operating cost 1. Planned maintenance 2. Unplanned maintenance Type and availability of vessels required Distance to port Time taken for installation Time waiting on weather Power transmission level Distance to shore Project management Insurance Permissions Cost of replacement parts Component design duty and known service intervals Time to complete service Distance to port Time waiting on weather Cost of replacement parts Cost of spares Time to complete service Time waiting on weather Cost of personnel and materiel standby Cost per kilometer Proportion of the total capital cost $$$$$ Appendix Z: NUG Income Statement and Cash Flow Statement 152 a. NUG Income Statement REVENUES Year 2 …… Year N Total 152
EPRI Global E2I Guideline, Economic Assessment Methodology for Offshore Wave Power Plants, (November, 2004), Retrieved October 2009, source : http://oceanenergy.epri.com/attachments/wave/reports/002_Rev_4_Econ_Methodology_RB_12-­‐18-­‐04.pdf Page 140 Capacity Payments Energy Payments Federal Production Tax Credit TOTAL REVENUES Average Electricity Revenues(cents/kWh) VARIABLE OPEARTING EXPENSES Supplies and Consumables Unscheduled Operation and Maintenance TOTAL FIXED OPERATING EXPENSES Scheduled Operation and Maintenance Scheduled Overhual/Replacement Insurance TOTAL TOTAL OPERATING EXPENSES EBIDTA INCOME TAX Tax Depreciation EARNINGS BEFORE INCOME/TAXES Interest paid Total Interest Received(5% per year) NET OPERATING INCOME(LOSS) TAXABLE EARNINGS State Tax Federal Tax TOTAL TAX OBLIGATION NET EARNINGS AFTER TAXES b. NUG Cash Flow Statement EBITDA Taxes Paid CASH FLOW FROM OPERATIONS Year 2 …… Year N Total Page 141 Debt Service Interest Received Contribution to Reserves Disbursement of Reserves ADDITIONS TO WORKING CAPITAL Accounts Receivable Spare Parts CAPITALIZED REFURBISHMENTS CONTRIBUTED CAPITAL NET CASH FLOW BEFORE TAX CUM NET CASH FLOW BEFORE TAX NET CASH FLOW AFTER TAX CUM NET CASH FLOW AFTER TAX CUM IRR ON AFTER TAX NET CASH FLOW Page 142