UNITED STATES OF AMERICA
SUPPORTING POLICIES FOR OCEAN ENERGY
NATIONAL STRATEGY
In 2016, the U.S. Department of Energy (DOE) Water Power Technologies Office’s MHK Program made significant efforts to gather stakeholder feedback and draft a National Strategy for Marine and Hydrokinetics. The draft strategy offers a vision, mission statement and strategic goals, which outline the MHK Program’s role in helping to realize the vision. Each component is shared below.
Draft MHK Program Vision: A U.S. Marine and Hydrokinetic industry that expands and diversifies the nation’s renewable energy portfolio by responsibly delivering energy from ocean and river resources Draft MHK Program Mission: Support the development of safe, reliable, and cost-competitive MHK technologies and reduce deployment barriers
Draft Strategic Goals:
- Reduce the levelized cost of energy (LCOE) by 80% compared to the 2015 baseline LCOE values for wave (0.84 $/kW-h) and current (0.58 $/kW) technologies by 2030
- Enable the industry to rapidly increase MHK technology deployments by supporting research and stakeholder outreach activities to reduce deployment barriers and to accelerate project permitting processes
Key challenges in realizing these goals were identified, as well as approaches the Program can take to address those challenges. Broadly, the challenges and their respective approaches fall into three categories, as outlined below:
An overview of draft MHK Program research, development, and demonstration (RD&D) phases to address challenges to meet the strategic goals follows. Note: These proposed RD&D phases are intended to summarize major objectives, and they do not represent all activities that would be planned/undertaken in these phases:
- Phase I (~2009-~2015) [Complete]: Complete critical foundational work to determine existing technology costs and performance, R&D needs, resource opportunities and deployment barriers
- Phase II (~2015-~2020) [Ongoing]: Aggressive technology innovation and demonstration of marine and hydrokinetic systems for multiple resource and market applications
- Phase III (~2020-~2025): Implement array-scale innovations and technologies with pilot-scale array demonstration projects
- Phase IV (~2025-~2030): Prove the commercial viability of marine and hydrokinetic technologies by supporting longterm utility-scale array demonstrations
A full description of all the challenges and targeted, phased approaches are available in a draft of the strategy that is currently open to public comment. The document can be accessed at go.usa.gov/x9eSC. Public comments will be accepted through February 28, 2017.
To facilitate work realizing this vision, the Program supports a strong RD&D project portfolio. The Program also leverages capabilities at DOE national laboratories to spur innovation in promising research areas, identify cost-reduction pathways, and build coordinated partnerships with other government agencies, including the military, that are breaking new ground for the industry.
Possible progression through planned RD&D phases
MARKET INCENTIVES
The MHK incentives offered in the United States are the Federal Production Tax Credit (PTC) and the Business Energy Investment Tax Credit (ITC). The section 45 PTC provides a tax credit of 1.2 cents per kilowatt-hour for MHK technologies. The credit was extended through December 31, 2016, for projects that are at least 150 kW in nameplate capacity.
MHK facilities that began construction prior to January 1, 2017, can elect to take the section 48 ITC in lieu of the PTC. The ITC lets MHK projects opt for a tax credit equal to 30% of capital expenditures in lieu of the PTC. No new projects will be eligible for federal tax incentives unless Congress adopts a tax credit extension in 2017.
At the state level, MHK technologies are an eligible energy resource under numerous states’ renewable portfolio standards and voluntary renewable energy goals. MHK technologies also benefit from state funding opportunities, such as the Alaska Energy Authority’s Emerging Technology Fund and Renewable Energy Fund and the Oregon Wave Energy Trust.
PUBLIC FUNDING PROGRAMMES
Department of Energy Water Power Technologies Office Marine and Hydrokinetic Program:
Because MHK energy is an early stage market with limited incentives for investment, the Program has a clear role in expediting the development and demonstration of innovative MHK technologies. The Program makes investments that support key technology innovations, mitigate risks, and assist the private sector in creating a robust U.S. MHK industry by providing funding and technical assistance. Specifically, the Program focuses on supporting RD&D to reduce the cost of MHK technology and reduce deployment barriers:
- Reducing cost: Help develop and demonstrate MHK systems for early adopter markets (i.e. high cost, remote, or non-electric) to prove technologies and gain operational experience. Simultaneously, support the development of innovative technologies to achieve cost reductions that are necessary to enter the utility scale electricity markets (i.e. lower cost markets)
- Reducing deployment barriers: Support RD&D projects that proactively address important deployment barriers for the first generation of MHK projects, and over time increasingly focus on addressing barriers for utility-scale electricity markets
Given the high costs for early stage MHK technologies today, the Program intends to devote the majority of its effort toward supporting technology cost-reduction activities from now until 2030. Activities to identify and address deployment barriers (related to manufacturing supply-chain, port and shipping infrastructure, workforce, and siting/permitting issues) are also a critical secondary priority, and efforts focusing on these issues will increase as cost-reduction goals are achieved and deployment rates increase.
The Program’s Fiscal Year (FY) 2016 annual budget for MHK RD&D was funded at $44.3 million—a 7% increase from FY 2015. Most of the funding in FY 2016 was directed toward technology advancement and demonstration.
Through competitive funding solicitations, or Funding Opportunity Announcements (FOAs), the Program identifies and funds qualified projects within specific topic areas and subtopics that support program objectives, depending on available funds. In evaluating all proposals for new energy developments or new adaptations of existing technology, the
Program rigorously assesses whether individual applications clearly demonstrate that the proposed advances can reasonably lead to a reduction in the total cost of energy produced when compared to other energy technologies.
In FY 2016, the Program allocated $27.3 million of the $44.3 million to new FOAs for MHK research, development, and demonstration (RD&D) projects addressing key technical and market barriers to commercial deployment in the United States. Together, these projects will increase the power production and reliability of MHK devices and help gather valuable data on how deployed devices interact with the surrounding environment. The Program made the following awards to a variety of recipient types, including private industry and universities:
- MHK Energy Conversion and Environmental Monitoring Technology Advancement: In August 2016, 10 organizations were selected to receive more than $20 million for new research, development, and demonstration projects that advance and monitor MHK energy systems. Three demonstration projects will integrate next-generation MHK hardware and software technologies into system designs. Their effectiveness will be tested during full-scale, open-water deployments over one year. The projects selected that focused on environment will help reduce the time and cost associated with required environmental monitoring.
- Wave Energy Test Facility: In December 2016, up to $40 million, subject to appropriations, was awarded to design, permit, and construct an open-water, grid-connected national wave energy testing facility. The facility will be developed in Newport, Oregon, by the Northwest National Marine Renewable Energy Center at Oregon State University.
Other FY 2016 funding supported National Laboratory R&D (see research and development section below), Small Business Innovation Research Grants, Small Business Vouchers, and other Program operations.
Department of the Navy
The Naval Facilities Engineering and Expeditionary Warfare Center (NAVFAC EXWC) continues to actively support the research and development of various renewable energy conversion technologies. NAVFAC EXWC’s present funding efforts focus on advancing technology development to harness MHK resources to ensure energy security and for powering U.S. Navy and Marine Corps assets both on- and off-shore. With FY16 funding of $12 million, ongoing support for wave, tidal, and current energy converter device development and testing will serve to meet the power capture needs of naval facilities in areas characterized by a full range of wave and current resource availability. System reliability, serviceability, and energy capture level improvements may bolster the availability of as-yet-untapped MHK energy that may either act as a supplement to more conventional fuel sources or serve to solely power particular systems. Funds were allocated for the Navy’s Wave Energy Test Site in Hawaii and the University of Hawaii’s Hawaii Natural Energy Institute and MHK development efforts at the University of Washington, Applied Physics Laboratory.
