Submerged Power Generation - A Large Rotor
New submersible tidal and estuary power technology is approaching a level where it can be considered economically viable. The technology has been talked about for decades but now many systems are in the second generation of sea trials and are technically approaching viability both in terms of survivability and power generated.
First its necessary to emphasize from, in spite of what the overly optimistic Eco Aware might say. From the point of view of the entrepreneurs, technologists and venture capitalist and bankers financing its development it i s considered bleeding edge technology, thats to say not cutting edge, not leading edge but one step in front of that. The advent of much more powerful submersible units opens up the potential for submerged 'hydro' generation in compliance with
Clean Development Mechanism (CDM) program guidelines.
Good Candidate Currents
In spite of the fact that SPG's tap into the the Earths Circulatory system it is likely to be an interim stop-gap technology with some very specific uses. That is to say though it is somewhat fringe it will have some very specific niches where it is viable certainly now thanks to the spectre of $400 a barrel oil on the visible horizon it does not make sense to waste a and easily exploitable energy source thats there for the taking. That power potential is vast enough to excite the interests of governments and their defense departments for certain applications.
On the more localized level for VC's the tech development cycle at present is too expensive and too long and the payback is not yet high enough to merit much investment or interest in spite of recent articles in the FT & The Economist.
Unlike the atmosphere where much of the movement of air is vertical in the water its is generally horizontal although there is the potential to exploit the temperature differential between warm surface and cold deep water, most current systems systems use lateral momentum and movement.
Atmocean one of several different Types
Most of these start-up companies are financed by family, friends and true believers which sometimes doesn't go far enough to cut it in the expensive to get into energy sector where its a lot easier to find $100 million to build a new coal or gas fired power plant than $20 million for a proven technology with good underwater testbedding time.
'You have to put something in the water to show you are real, it takes 40 months of ocean testing to get started....' Heard from one project developer at the Marine Power Generation Conference.
In the US where the regulatory regime treats even the smallest testbed project the same as a major dam, with concommittant expense, getting it out of the tank and into the ocean is hard.
The regulatory regime and investment cycle forces potential energy sector investors to look elsewhere because the build up cycle for this technology is often 5-10 years. Also the amount of engineering needed to make an SPG, submerged power generation unit work and get it out of the tank and into the water is considerable and costly and survivability is a major issue.
Because the wear, tear and destruction on the first models due to shear and debris was considerable with the general trend in the industry being toward ducted rotors or impellers and toroidial transmissions as opposed to exposed rotor systems (like in wind generation) on early SPG models like those from
Verdant Power in New York City's East River which according the
Army Corps of Engineers regional administration have 'considerable downtime due to design problems and debris.' However it should be remembered this is a test bed project.
Non-Ducted Rotor System
Most banks funds and other sources have finanancial advisors who advise in general against investing in this kind of stuff. VC's aren't interested so you need essentially a different finance paradigm for this by definition an international business. They want 30% + equity, double digit returns of 10-15% per year which isn't going to happen. Investors need to scale or aggregate these projects for a bigger upside for expansion.
By and large though this industry is at the stage of where solar or wind was about 20 years.
So for financiers and alternative investment strategy is needed which takes into account the technological risk.
Sarbanes Oxley rules make compliance much more onerous and expensive in the US than elsewhere with compliance costs a minimum of 2-3 million plus the additional expense of environmental impact studies for even the smallest projects.
Current to Current's Ducted Rotor SPG
Canada on the other hands sees the power potential of its vast thawing arctic waterways.
The government there has embarked on a pump priming program to help get startups through the various 'Valley of Deaths' on the road to commercializailization. Something similar is going on in Portugal.
Goverments in Europe do the lion's share of the permitting for you, according to an internationally recognized standard for wave and tidal. In the US you have to do & pay for it yourself, and this doesnt include the referenced SEC compliance under Sarbanes Oxley.
It seems as though you almost need an angel investor like a sovereign wealth fund or a national government to get a marine power generation project off the ground. This may be exactly what has happened in Venezuela where President Hugo Chavez is in the process of negotiating for the installation of SPG's worth as much as $1.7billion with the N. American manufacturer Current to Current. A Massachusetts based manufacturer of SPG's. If the deal which was announced in Venezuela goes through this would make it the largest ocean power scheme yet implemented. The timetable is over the next 2-4 years.
An RPG or River Power Generation Unit
Marine power generation systems on this scale also hold the potential to be large generators of CDM carbon offset credits. A commodity that is going to be very much in demand over the next 5 years once mandated markets kick in. Any development program should be something which fits under existing program types (CDM for example) to be incorporated into one of the carbon offset program development to generate Carbon Credits. A partial finance program could include an upfront auction for 2012 or 2015 delivery of SPG or RPG generated offset credits at $30 tonne with 33% off face value premium for getting the money up front to bootstrap projects. In a tight market for mandated carbon offsets thats going to be a nice potential project bonus.
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