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Operational expenditure costs for wave energy projects and impacts on financial returns

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  • O'Connor, M.
  • Lewis, T.
  • Dalton, G.

Abstract

This paper examines 'availability' and the input metrics of operational expenditure (OPEX) for wave energy projects and reports on a case study which assesses the impact of these inputs on project profit returns. Case study simulations modelled a 75 MW wave energy project at two locations; the west coast of Ireland and the north coast of Portugal. Access and availability with respect to weather windows at both locations are discussed and their impact on energy output and wave farm operations is quantified. The input metrics used to calculate OPEX of wave energy projects are defined as well as the impact of OPEX on project net present value (NPV) and internal rate of return (IRR). Results indicate that access and resultant availability factors have a significant impact on case study results by reducing energy output and correspondingly financial returns. Furthermore, the technology maturity level designated for a project also impacts on availability factors and consequently energy output and NPV. Case study profits proved to be very sensitive to annual OPEX, especially if overhaul and replacement costs were accounted for. As a result of the impact of 'availability' on project profit returns, Feed-in tariffs will need to be tailored to the location in question as well as the device technology maturity level, with case study simulations indicating that high FIT will be required to support early stage WEC projects.

Suggested Citation

  • O'Connor, M. & Lewis, T. & Dalton, G., 2013. "Operational expenditure costs for wave energy projects and impacts on financial returns," Renewable Energy, Elsevier, vol. 50(C), pages 1119-1131.
    • Handle: RePEc:eee:renene:v:50:y:2013:i:c:p:1119-1131
    DOI: 10.1016/j.renene.2012.08.059
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    References listed on IDEAS

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    1. Dalton, G. & Ó Gallachóir, B.P., 2010. "Building a wave energy policy focusing on innovation, manufacturing and deployment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(8), pages 2339-2358, October.
    2. Dalton, G.J. & Alcorn, R. & Lewis, T., 2010. "Case study feasibility analysis of the Pelamis wave energy convertor in Ireland, Portugal and North America," Renewable Energy, Elsevier, vol. 35(2), pages 443-455.
    3. Dunnett, David & Wallace, James S., 2009. "Electricity generation from wave power in Canada," Renewable Energy, Elsevier, vol. 34(1), pages 179-195.
    4. Dale, Lewis & Milborrow, David & Slark, Richard & Strbac, Goran, 2004. "Total cost estimates for large-scale wind scenarios in UK," Energy Policy, Elsevier, vol. 32(17), pages 1949-1956, November.
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