COST OF THE ENERGY
34. The principal reason for the abandonment of the
earlier UK Wave Energy programme was the perceived poor economic
prospects for wave energy, compared with other renewable technologies.
It became the conventional wisdom that wave, and by association
tidal, energy would produce electricity at too high a price to
be commercially viable. The evidence we have received contradicts
this view. ETSU's Report, "A Brief Review of Wave Energy",
estimated the price of electricity generated from wave energy
devices at that time to be around 4 - 8 p/kWh. Our evidence supports
this view (for example Wavegen is contracted to supply energy
at 5.95 p/kWh under the Scottish Renewables Obligation),
and would indicate that tidal energy schemes could operate at
a similar price.
35. At a cost of 4- 8 p/kWh, wave and tidal energy
is significantly more costly than electricity from an average
fossil fuel power station (about 2 - 3 p/kWh). But it must be
recalled that wave and tidal energy are both at an 'immature'
stage of their development, and that a true picture of the cost
of electricity from wave and tidal energy will only be available
after large-scale devices have been operating for some time. Already,
the cost of wave and tidal energy has fallen over the past 10
to15 years and is competitive in niche markets, such as remote
As the technology develops, with more full-size demonstrators
and economies of scale beginning to have an impact, it would be
reasonable to expect the price to fall even lower. Wind energy,
which is now considered to be a viable, near-market energy source,
was even more expensive when it was first actively supported by
Witnesses pointed out that wave and tidal energy had achieved
similar reductions in cost without the large amount of subsidies
- £10 billion, Thomas Thorpe estimated
- that wind had received.
Fossil fuel, and nuclear, electricity generation also started
off with what would now be seen as unacceptably high costs.
36. We also note the comment made by the Engineering
Business Ltd. company, that cost "will depend on the economic
framework of the energy sector and the political importance given
to power production diversity and the desire to generate more
power from renewable sources.".
Dr Martin similarly suggested that the success criterion should
be "pounds per tonne of carbon dioxide avoided" rather
than the raw electricity generation price.
As we begin to contemplate the enormous cost of climate change,
the 'external' costs of electricity generation can no longer be