The UK established its first large-scale wave energy innovation programme in 1976 in a bid to develop an alternative domestic supply of energy in light of the oil crisis. As such wave energy became the principal focus for renewable energy public RD&D funding during the late 1970s. However, funding rapidly declined during the 1980s after the programme was discontinued due to a perceived lack of progress and a shift in political support towards nuclear energy. It wasn’t until the early 2000s that wave energy support enjoyed a renaissance with government believing it could play a central role in meeting its climate change and energy security targets, whilst also stimulating economic growth. Whilst approximately £75m of public and £525m of private sector funds were subsequently invested in ocean energy RD&D between 2000 and 2012 this ultimately failed to deliver a commercially viable wave energy device. This slow progress can in part be attributed to the complexity of the engineering challenge this research explores whether the level and type of support on offer may have been a contributing factor. Drawing upon both qualitative and quantitative analysis this research examines the effectiveness of the UK’s wave energy innovation system and the lessons that have been learnt to help accelerate wave energy technology innovation in the future. In terms of the level of funding the research finds that ocean energy has at a national and international level received less funding than other renewable energy technologies that have reached commercialisation. In terms of the effectiveness of the funding that was committed the research finds that the innovation support system put in place has exhibited a number of critical weaknesses. These include a pressure to go ‘too big too soon’, poor levels of developer collaboration, intermittent government support and a poorly coordinated funding landscape. Despite these failures significant ‘policy learning’ has taken place in the UK, triggering a major reconfiguration of its ocean energy innovation system that is considered to have created a stronger innovation system. Positive developments include a refocusing on component vs. device development, treating wave and tidal energy innovation separately and a greater degree of innovation body coordination. Even so a number of recommendations are presented to strengthen the system further still, not least greater coordination between UK and Scottish governments and stronger links between universities and device developers.

1. Lost at sea?
Charting wave energy’s difficult journey
towards commercialisation in the UK
Dr. Matthew Hannon – Imperial College London
SPRU Energy Seminar Series, University of Sussex, 1st December 2015

2. Structure
• Wave energy - the prize
• The current state of the technology
• A brief history of UK wave energy innovation
• The scale of support
• The type of support
• The effectiveness of support
• Lessons for innovation studies
• Recommendations
• Conclusions
• Limitations

3. Wave energy - the prize
• UK could practically and
economically extract 32-42
TWh/yr of wave energy.
Assumptions are that cost of
energy is 2-3 times > the
cheapest sites, plus planning
and environmental
constraints (e.g. fishing,
shipping)
• Wave energy could account
for approx. 11% of UK
electricity supply (2013)
• BUT technology has yet to
become commercially viable

4. Wave energy - the innovation challenge
• High levelised cost of energy (LCOE) of
wave energy blamed, a function of
numerous challenges still facing
technology: affordability, reliability,
predictability, survivability, (remote)
operability, installability and
manufacturability
• Still big scope for innovation to deliver cost
reductions across the design, construction,
installation and O&M of both the device
and array.
• <4MW capacity installed in UK (mostly
demo)
Potential cost savings from innovation by subarea (LCICG 2012)
Sub-area Innovation impact reduction in
levelised cost 2020-2050
Structure and prime mover 40-70%
Power take off 35-65%
Foundations and moorings 50-85%
Connection 15-30%
Installation 45-75%
O&M 50-85%
Total cost reduction 40-70%
LCOE for alternative and conventional energy
technologies (Magagna 2015; ETRI 2014)

5. Multitude of heterogeneous devices signals immaturity
Onshore
Nearshore
Offshore
POINT ABSORBER
ATTENUATOR
OSCILLATING WAVE SURGE
CONVERTER
OSCILLATING WATER
COLUMN
OVERTOPPING/TERMINATOR
DEVICE
SUBMERGED PRESSURE
DIFFERENTIAL
BULGE WAVE ROTATING MASS

6. Rich history of wave energy innovation (pre 2000)
• 1973 – Oil crisis hits and Salter begins work on his Salter Duck
• 1975 – UK commences 7 year long £51m (£ 2014) programme for wave energy
• 1982 - Energy Technology Support Unit (ETSU) report on cost of renewable energy techs
for DoE finds wave unlikely to fall below 8p/kWh so ACORD closes programme.
• 1980s – Other techs enjoy funding instead (e.g. wind, nuclear).
• 1990s – Some piecemeal funding via EU to continue wave energy research in the UK.
Initiation of international energy conferences
• Late 90s – numerous reports call for new wave energy support. New & Renewable Energy
Programme committed £43m (3 years) and Scottish Renewables Order 3
• 2000 – Limpet on Islay = 1st commercial wave energy generator
• 2003 - DTI’s Our Energy Future recognises marine as priority area. £2.6 m Marine
SuperGen established
• 2004 - European Marine Energy Centre (EMEC) established. Pelamis first offshore wave-
power device to generate electricity into a grid system.
• 2008 - 1st wave energy array with 3 Pelamis devices (2.25MW) installed in Portugal
• 2011 – Banding of Renewable Obligation - 5 ROCs per Megawatt hour
• 2013 - Offshore Renewable Catapult established
• 2014/5 – Pelamis and aquamarine enter administration. Wave Energy Scotland established

7. Research questions and methodology
• Despite a rich history of wave energy innovation support the UK has failed
to deliver a commercially viable wave energy device.
• Whilst this can in part be attributed to the complexity of the engineering
challenge this research explores whether the innovation support
system on offer is perceived to have contributed to its slow progress
1. What scale of support has been provided for wave energy technology
innovation in the UK
2. How does this compare to other countries’ support for wave energy
innovation and other renewable energy technologies?
3. What form has this support taken and who has governed it?
4. To what extent have weaknesses in the support system contributed to
the technology’s slow progress?
5. To what extent have these weaknesses been remedied?
• Methods - analysis of IEA data and 32 semi-structured interviews (March –
Oct 2015) with representatives from device developers, researchers,
innovation bodies and government. Thematically coded via Nvivo.

8. SCALE OF SUPPORT

9. Scale of support versus otherleading countries
• Internationally
o Support split into 2 phases
o Leading spenders changed in 2nd phase
• Between 1974-2011 UK had 2nd highest :
o Public ocean energy RD&D budget
($269m)
o Average public ocean energy RD&D
budget per GDP ($3.7 per million GDP)

10. Scale of support versus other renewable energies
• Intermittent – Major ocean funding in 70s/80s vs. zero funding in late 90s
• Less support vs. ‘success stories’ e.g. solar PV, wind but not by much
• Above average support for ocean energy vs. EU (approx. 5x more), in part
explained by UK’s ocean energy resource
Renewable energy
Total budget 1974-2012 ($2012 PPP)
UK ($m) EU ($bn)
Wind energy 513 (28%) 3.3 (18%)
Biofuels (incl. liquids, solids and biogases) 422 (23%) 4.7 (26%)
Solar energy 315 (17%) 8.2 (45%)
Ocean energy 278 (15%) 0.5 (3%)
Geothermal energy 210 (11%) 1.1 (6%)
Unallocated renewable energy sources 93 (5%) 0.4 (2%)
Other renewable energy sources 15 (1%) 0.2 (1%)
Hydroelectricity 4 (0%) 0.2 (1%)
Total 1851 18.2

11. TYPE OF SUPPORT

12. Fast changing and complex funding landscape
• Funding predominantly ‘supply push’ and test infrastructure support.
• Demand pull offered little. RO - £45k to wave since 2003 vs £1.25m for tidal
• Major variety between schemes, need to become familiar with each one
• 2000s seen continued support but schemes undergone constant change

13. • Complex - 11 bodies coordinating support with different agendas
• Led to overlapping schemes e.g. MRCF and MEAD; EMEC and WaveHub
• Recent efforts to improve coordination both at UK and international level
Multiple funding bodies with different objectives
UK wide
EU and
international
Our vision is to make the
Highlands and Islands a
highly successful and
competitive region where
increasing numbers of people
choose to live, work, study
and invest.
Our role is to act as a conduit
between academia, industry
and the government to
accelerate the development of
affordable, secure and
sustainable technologies

14. EFFECTIVENESS OF SUPPORT

15. UK world leader in marine energy publications…
Corsatea (2014)

16. AND in marine energy technology patents
Corsatea (2014)

17. Attributed to strengths of innovation support system
• World-leading basic research expertise (e.g. Uni of
Edinburgh) with excellent track record of spin-out
companies (e.g. Pelamis, Artemis Power) and
students working in sector via CDTs (e.g. IDCORE)
• World-leading test infrastructure with clear
standardisation. Led to a clustering effect and the
development of supply chains (e.g. EMEC)
• Demand pull policies (e.g. ROC, CfD) and roadmaps
have offered investors a ‘route to market’, plus
‘match funding’ requirement in supply push grants
mean large sums of private funding have been
leveraged
o RenewableUK suggest £70m public funding
leveraged £578m private investment - 1:8
gearing (1:7 if just £ spent in UK)

18. Inherent challenges of wave energy technology innovation
• Testing at sea is extremely difficult due
to hostile environment and remoteness
• Wave energy devices extremely large
and heavy in order to capture energy
and withstand hostile environment,
making them very costly.
• Wave resource not typically near
centres of energy demand. Requires
significant integration
• Distinct engineering challenge
representing relatively few
opportunities for cross-sector
fertilisation unlike tidal from wind.
• Huge degree of innovation required
just to develop test infrastructure!
Source: Atlantis
Source: neildavidson.org
Source: ETI
Source: FlowaveTT

19. Innovation support system weaknesses – high level
• Unrealistic expectation that wave could be ‘fast-tracked’ due
to poor understanding of challenge and industry optimism
• Too big too soon – This led to private/public sector focused
on swift deployment. Developers overpromised to secure
funds and under-delivered, thus eroding trust
• Poorly coordinated energy innovation system – Function of
decentralised innovation system and devolution
• No long-term vision for sector, leading to boom-or-bust
funding and skills leakage. Function of little strategic focus,
as well as budgetary and election cycles.
• Too inward looking – Domestic funding required little/no
collaboration with international wave experts
• Bundling wave and tidal into the same schemes despite
different challenges and levels of maturity. Tidal capturing
x2 ‘supply push’ grant support
• Time lag between policy announcement and funding can
see major landscape changes that undermine the policy’s
design (e.g. financial crisis, energy prices)
“So it’s taken longer and cost
more than we thought. That
focus on deployment probably
wasn’t the right thing to
do…but you only learn these
things through testing them”
– Government policymaker
“It’s been people like
me…guilty of thinking that
we could get this to kick-
start, like wind energy, off
the back of a couple of
prototypes on a small farm
being demonstrated” –
Consultant
“There's been a history of
wave and tidal of over
promising and under
delivering…in part because
the money funds you to do
one thing and it's not actually
where you need to be going”
– Test facility CEO

20. Innovation support system weaknesses– specific
• Private sector match funding required despite
technology still posing investment risk, especially during
retrenchment
• Low levels of collaboration
o B2B – private sector investment and value of IP in
pre-commercial sector breeds secrecy. Public
funding centred on devices not components
o B2U – R&D funding written explicitly for
companies, plus mismatch of objectives and
timeframes
• Ineffective stage-gating
o inexperienced peer-reviewers due to conflicts of
interest
o subjectivity amongst peer-reviewers and funders
o budgetary cycles create discrete schemes
• Complex and crowded innovation support landscape
• Costly access to test infrastructure – Expensive and
funds to use them difficult to secure
“There were a number of different
streams that were all coming out
with different sources of funding
to try and tackle the same
problem” – Developer CEO
“The bad model is that a private
investor comes along and puts
£1m into a company that's
already had £10m worth of
government funding…The price of
that £1m investment is, you don't
talk to anybody else“ – Uni
researcher
“It will cost you £300,000 I think
to get a mooring…unless we make
it possible for people to rapidly
conceive, test it, break it and then
go back to the drawing board,
then we slow the development
cycle down” – Consultant

21. Support system has been reconfigured after learning
General consensus that wave energy innovation support system was not working and
major efforts have been made to improve its effectiveness. Mostly a product of Wave
Energy Scotland, established in 2014 following Wave Industry Programme Board:
• Capturing know-how from failures of 2nd phase – e.g. Quoceant
• Refocusing efforts at sub-component level versus device
• Requirement for consortia promotes collaboration
• EU State Aid rules mean it is open internationally (but £ spent in Scotland)
• Procurement offers 100% funding, avoiding need for private sector match funding
• Stage-gating where a technology receives more funding should it meet criteria
• Test facilities now cover most aspects of innovation chain – from lab to sea
Basic research Applied R&D Real world demonstration

22. Still not perfect. Some policy recommendations…
• UK-wide programme that broadens out Wave Energy
Scotland following some critical analysis of the policy’s
success. Whilst centralised model welcomed concerns
that the critical mass of funding is not there –
‘Fraunhofer light’
• Strengthen links between developers and researchers,
e.g. joint-body and medium-term funding
• Cultivate niche markets to increase market penetration
e.g. aquaculture, islands etc.
• Broaden focus of cross-sector fertilisation beyond
offshore energy e.g. ship building, manufacturing
• Greater international collaboration – UK not the only
player. EU funding and WES procurement model
helping
• Share risk across multiple actors e.g. MeyGen, SPV
funded by 5 parties via private finance and equity
• Scotland’s REIF helped tidal reach commercialisation.
GIB could follow suit at UK level by offering finance to
lower level TRLs like wave.
One of the things that's critically
missing…some kind of innovation
voucher scheme that allows
developers to come and test, in
university facilities, at very low
cost to them – Uni researcher
Source: World Fishing
“Getting the investors to part with
their cash to provide the capital
has been quite a challenge…One
way that that could improve may
be to get the Green Investment
Bank to invest in lower TRL
projects or to guarantee some of
the investor loans” – Funder

23. Wider lessons for innovation studies
• Devolution and innovation – Tiered governance structure can
lead to duplication of efforts or contrasting innovation
strategies but can maximize potential of a specific region
• The journey to commercialisation shaped by the technology’s
characteristics – no one size fits all
• Knowledge appreciated/depreciation not just restricted to
technology innovation but also policy - institutional memory.
Also ability to transfer this from idea to action
• Collaboration and knowledge exchange essential to derisk
technology before private sector engage and compete
against one another.
• Gestation period varies for energy technologies but study
supports idea that decades of continuous support essential.
Also different innovation ‘starting points’ - wave energy
neither military nor user inspired. See Hanna et al.
• Test infrastructure critical to innovation journey. Also locus of
innovation clustering and supply chain development.
Implications for strategic niche management and transitions
theory?
Source: IIASA

24. Conclusions
• UK leader of wave energy technology innovation inputs and outputs
• Failure to reach commercialisation in part due to scale of the specific
innovation challenge but also major weaknesses of innovation support
system over the past 15 years
• Level of support - less than other renewables, especially outside UK.
Not commensurate with wave energy’s relatively short gestation period.
• Type of support - pressure to commercialise too soon, intermittent
support, poor coordination between innovation bodies, reliance on
private sector funding and complexity of funding landscape
• BUT UK has learnt from these mistakes and reconfigured its innovation
support system dramatically over past 2-3 years. Initial response is that
it is now ‘fit for purpose’ but too early to tell
• Case study raises interesting questions for innovation studies such as
the impact of institutional learning, devolution, test infrastructure and a
technology’s characteristics on a technology’s innovation journey.

25. Next steps…
• Situate findings within an analytical framework
to help organise and synthesise results.
Preference Grubler & Wilson’s Energy
Technology Innovation System framework
• Quantitative data collection
o Patent analysis using EPO’s Patstat
database to understand level of
innovation output by country, company
etc. Also key collaborations
o IEA public RD&D data – doesn’t split
wave and ocean; incomplete data series.
To complete construction of public and
private funding database using individual
records and Bloomberg database

26. Thank you!
Email: m.hannon@imperial.ac.uk
Twitter: @hannon_matthew