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Financing ocean energy farms

© SIMEC Atlantis Energy

Many ocean energy technologies have reached a critical moment in their development: the demonstration phase, where pilot farms/plants are put in the water. This phase requires higher investments than RD&I prototypes, while retaining a number of uncertainties linked to their innovative and first-of-a-kind nature. Access to finance is therefore more challenging and the cost of finance is high – sometimes as much as the device and its installation together.

To bridge the “Valley of Death” of financing and avoid funding banks rather than technologies, public intervention is required. A few instruments already exist, and several are being discussed, created and adapted.

OEE channels the requirements of the sector to European and national institutions, to make sure these instruments are fit-for-purpose and cater to the specificities of ocean energy technologies.

Accessing existing funds

Developing project finance

Accessing existing funds

© Minesto © Minesto

InnovFin EDP

InnovFin Energy Demo Projects (EDP) provides loans or loan guarantees between EUR 7.5m and 75m to first-of-a-kind commercial-scale demonstration projects in the fields of renewable energy, hydrogen and fuel cells, helping to bridge the gap from demonstration to commercialisation.

 

OEE has been promoting the scheme to the industry since its inception. As a result more ocean energy applications were received than for any other renewable technology. The first ever project financed by InnovFin EDP is that of AW Energy in Portugal.

 

More information on the EIB website, or in the OEE Members Area.

© SIMEC Atlantis Energy © SIMEC Atlantis Energy

NER300

NER300 was launched in 2010 and provided finance for innovative renewable energy demonstration projects. “NER 300” is so called because it is funded from the sale of 300 million emission allowances from the “New Entrants’ Reserve” set up under the EU Emissions Trading System (ETS).

 

5 ocean energy projects were awarded funding under the scheme over 2 calls.

 

OEE has also been supporting the Commission on a €436m leftover budget to be made available for existing and new projects, in a way that helps them reach a financial decision. In May 2017 EU governments agreed to amend the NER300 to allow this.

 

 

NER300 Factsheet: SWELL

NER300 Factsheet: Stroma Tidal Turbine Array

NER300 Factsheet: NEMO

 

For more info on the future of NER300, visit the OEE Members Area.

Developing project finance

© Laminaria © Laminaria

Innovation Fund

The Innovation Fund will be the successor fund to NER300. It draws its funding from the same source: the EU ETS, and will have similar targets: post-prototype demonstration technology – usually TRL 6-9.

 

The Innovation Fund requires negotiations on the new ETS Directive to be complete – by end 2017. Design and details of the Fund will then be laid down in legislation before calls are launched – 2019 to 2021.

 

OEE has engaged with EU Institutions very early on, to make sure the fund is designed to support ocean energy technology. For more information on the state of the negotiations and the criteria and targets considered, please contact us directly.

 

Principles for an effective Innovation Fund

© Sabella © Sabella

Insurance Fund

Innovative technologies always bear a higher risk than established ones – but the reward is also much higher. The Ocean Energy Strategic Roadmap identified a system to help project developers and device manufacturers bridge the gap on uncovered risk: an insurance and guarantee fund. This fund could cover a range of ocean energy projects, thus spreading risk.

 

OEE has been pushing this idea which is now considered as a potential part of the future Innovation Fund. The Renewable Energy Directive also provides the potential to develop such an instrument: it calls for innovative ideas that could help reach the target of 27% renewable energy by 2030.

© Wello Oy © Wello Oy

Investment Platform

Under the Europe Fund for Strategic Investments (EFSI), stakeholders and institutions have the possibility to setup “investment platforms”. These are vessels – such as a Special Purpose Vehicle – gathering a portfolio of projects into one investable fund, thus spreading risks. Part of the financing can then be provided by the European Investment Bank (EIB) and guaranteed by the EU budget, thus removing some of the risk. This would enable the EIB to invest in more innovative technologies that it has been able to so far.

 

OEE is evaluating with the European Commission and EIB the pertinence of and possibility to setup such a platform for ocean energy. A first step was to put together a vision of the existing pipeline of ocean energy project.

 

To find out more about the Investment Platform, contact the OEE secretariat.