Government Funding Ignores UK’s First Low Carbon Economic Area; Orecon Sinks

Posted on 04. Feb, 2010 by Ross in New Technologies, United Kingdom

The government has turned a blind eye to a key pledge in the world’s first Carbon Budget by allowing funds for wave power companies to be allocated almost entirely outside of the geographic area designated to see the benefits of the technology. As a result, Cornish wave power company Orecon has been forced to close, despite being at the heart of the government’s much vaunted first Low Carbon Economic Area.

The UK is entering a period where failing coal and gas power plants are combining with lethargic progress with wind and nuclear power to create the prospect of a massive energy shortage during this decade. As an island nation on the edge of the Atlantic, one resource which the UK has an almost endless supply of is wave and tidal power, but its has historically failed to invest effectively to realise the potential energy goldmine which surrounds it.

The introduction of the idea of Low Carbon Economic Areas was one of the key introductions of the UK government in order to stimulate growth and investment in green technologies. The concept was that different regions of the country would become specialists in different classes of low-carbon technology, ensuring that engineering and manufacturing jobs would be sensibly and evenly distributed around the country.

The first Low Carbon Economic Area was announced in the Carbon Budget as being the UK’s South West, and that it would be the focus for the nation’s investment into wave power technology. With massive amounts of coastline and strong exposure to Atlantic waves, the choice of the counties of Cornwall, Devon, Dorset and Somerset to be the centre of wave power innovation made perfect sense.

However, the government’s £22m funding for experimental wave power, administered by the Carbon Trust in the form of the Marine Renewables Proving Fund, was finally allocated yesterday to six companies. Only one successful applicant - Marine Current Turbines - was based in the South West (and only just!): all the others are based outside of the South-West, with four of the companies all based in Scotland.

The Marine Renewables Proving Fund had no geographic locational agenda attached to the selection process, despite the government’s commitment to regionalising the economic benefits of advances in wave power technology, therefore the Carbon Trust understandably chose recipients of the fund based on those companies they believed offered the most long-term potential, match-funding existing private financial commitments.

Voith Hydro, Pelamis Wave Power, Hammerfest Strøm UK and Aquamarine Energy are all either Scottish companies or have their UK operations based in Scotland, whilst Atlantis Resources Corporation is based in London. These companies’ system trials are also largely based in Scotland, making a mockery of the idea of other areas of the country specialising in different low-carbon technologies.

The funding news is particularly bitter for Cornwall-based wave power company Orecon. Flying the flag for the South West Low Carbon Economic Area, the company’s patented Multi-Resonant Chamber had already booked its place on Cornwall’s forthcoming Wave Hub - the centre-piece of the commitment of the government to the peninsula’s LCEA status. As well as the Cornwall wave hub, Orecon had also secured an order for three wave power devices for a Portugese shipyard prior to losing their financial backing.

However, immediately after the announcement of the Carbon Trust fund allocations, Orecon announced its closure due to lack of funds. The Carbon Trust funding was set up as a match fund, and Orecon’s venture capital funders withdrew earlier in 2009 as previous applications for government funds dragged their heels.

Whilst there is no reason why wave power projects might not be sensibly deployed in the South-West in the future, the lack of funding for wave power R&D jobs means that the short-term benefits of the Low Carbon Economic Area are at best intangible.

Once wave power solutions have proven themselves at trial level, however, the intention is to use Wave Hub to test small arrays of wave power devices, generating notable quantities of electricity in the process. Later deployments of larger scale arrays (expected from 2020 ) would be also likely to feature in the South West. With 50% of the costs of wave power projected to be maintaining installations, engineering and maintenance opportunities would finally arrive to back up the concept of a Low Carbon Economic Area, with the possibility of local manufacturing jobs as well. Existing marine support services would hopefully also see an increase in demand.