By Mark Powney, Managing Director, Business News Wales
As the new UK Government settles in and introduces its legislative agenda there is an opportunity to accelerate the progress of an industry at the heart of the green energy revolution – the promising field of tidal stream technology.
To realise the potential of this niche sector it is very clear that several key steps need to be taken, with a particular focus on enhancing the Contract for Difference (CfD) framework and ensuring robust support mechanisms are in place.
The immediate priority for the UK Government should be to ensure that the CfD pots are appropriately sized to accelerate development. The CfD scheme has been the cornerstone of renewable energy deployment in the UK, providing a stable revenue stream for investors and developers. However, the current level of support for tidal stream projects, while helpful, is insufficient for the industry's ambitious growth targets.
Tidal stream technology, unlike well-established sectors such as solar and onshore wind, is still in its developmental stages. It requires more substantial and targeted support to overcome technical and financial barriers. Presently, the ring-fenced support for tidal stream projects stands at £10 million but to truly drive the industry forward, this needs to be increased to at least £30 million. This level of funding would provide the necessary impetus for more projects to reach commercial viability and scale up operations.
In tandem with enhancing CfD support, there must be a concerted effort to expand leasing opportunities through the Crown Estate. The leasing process is fundamental to unlocking marine space for development. By rolling out more leases around the Welsh coastline, we can ensure that developers have the necessary access to suitable sites for their projects.
Furthermore, the frequency and size of CfD auctions need to be calibrated to match the unique requirements of tidal stream technology. While the introduction of annual auctions is a positive step, it is imperative that these auctions are of adequate size to support the industry’s growth. This approach will help build confidence among investors and stimulate more significant interest and participation in the sector.
One of the most critical elements for fostering a thriving tidal stream industry is providing long-term visibility of the CfD pipelines. Clear, predictable pipelines would offer developers and investors the certainty needed to commit to long-term projects. This strategic clarity would facilitate better planning, investment, and ultimately, project execution.
The new Government's proposed bills, as outlined in the recent King’s Speech, present an opportunity to embed support for the marine energy sector within broader legislative frameworks.
The development of Great British Energy could be a game-changer, potentially offering targeted support for tidal and floating offshore wind projects as they move towards commercialisation.
Additionally, the potential new investment powers for the National Wealth Fund and the Crown Estate could provide crucial financial backing. These measures, if implemented effectively, could significantly bolster the industry's capacity to innovate and expand.
As the new Government shapes its policy agenda, it is imperative that these priorities are at the forefront, ensuring that Wales can lead the way in marine renewable energy.
