Atlantis turns tide for Scots sea power

Atlantis turns tide for Scots sea power

By Danny Fortson at the Sunday Times

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Tidal turbines are being put in the Pentland Firth but the electricity they produce will cost six times the normal price

 

As a younger man, Tim Cornelius would spend his days at the bottom of the North Sea.

 

When the treacherous currents mangled oil platform cables and pipes, companies would send the strapping Australian into the murky depths to sort them out.

 

The commercial diver swapped his wet suit for a pin-stripe about a decade ago. The decision may pay off — finally. Atlantis Resources, the company he runs, is closing in on a deal that will pave the way for the world’s first commercial tidal power array.

 

Work to sink the turbines in the Pentland Firth, the strait between Orkney and the north tip of Scotland, with one of the world’s strongest tidal currents, will start in months.

 

First minister Alex Salmond long ago declared Scotland the “Saudi Arabia of tidal power”. The reality is that it is more akin to the kingdom before it found oil. Aside from a few prototypes, Scotland produces no electricity from the tides.

 

Cornelius, 37, claims this is about to change. He said: “It sounds a bit dramatic, but this is the birth of an industry.”

 

Atlantis hopes to raise up to £50m from debt and equity investors in the coming months to fund the first phase of the MeyGen project, which has planning permission for a clump of turbines capable of powering 400,000 homes.

 

Atlantis, which listed its shares on the London Stock Exchange in February, will start small. The new financing will pay for the installation of the first four turbines. Dozens more will be added in the coming years.

 

If Cornelius pulls this off, MeyGen will stand as a rare victory for the government’s controversial energy policy, which has been riddled with policy flip-flops, company bashing and an investment freeze by the big six utilities.

 

It certainly won’t be cheap: the government will pay Atlantis a whopping six times the wholesale power price.

 

That is more than twice the subsidies handed to developers of offshore wind power, the most expensive form of electricity on the planet. The mushrooming of offshore developments around Britain is part of the reason household bills are going up.

 

Cornelius claims the government has learnt its lesson. Yes, it has guaranteed that tidal generators will earn £305 per megawatt hour on new projects — compared with the wholesale price of about £50 — but it has laid out a plan under which the support will gradually fall over the coming years to about £170 per MWh.

 

He also pledged to source more than 50% of the work from British suppliers — another difference from the offshore wind industry, where much of the equipment is built abroad.

 

Cornelius said: “We are where wind and solar were 10 or 15 years ago. The best sites have been spoken for, the technology is maturing, and we will be able to push through a faster reduction in costs than offshore wind has.”

 

Atlantis’s underwater dream has been a long time in the making.

 

When Cornelius first took the job in 2006 Atlantis was, like the rest of the industry, trying to figure out what type of machine would be best suited to capturing power from the rushing tides. Companies experimented with an array of designs, some of them downright barmy.

 

The debate appears to have settled on a couple of fairly simple designs. Atlantis has opted for one that looks much like a wind turbine: three blades, a nacelle and a body fixed to the sea bed.

 

The first ones to be installed in the Pentland Firth are from Atlantis itself and Andritz of Austria. They will be set on tripods, each leg weighed down by a 200-ton block of cement.

 

Tidal flows in the Pentland Firth, with the Atlantic on one side and the North Sea on the other, can reach five metres per second.

 

National Grid is already laying the connection to the power network, another first for a tidal developer. Underwater cables will be held down by enormous bags of rock.

 

As the technology has matured, big industrial players have dived in. Since 2012, Rolls-Royce, Siemens and ABB have all snapped up small developers or invested in joint ventures to roll out new turbines.

 

Last year DCNS, the defence giant owned by the French state, paid $173m to take control of Ireland’s OpenHydro.

 

Atlantis has its own handful of deep-pocketed backers. Lockheed Martin, America’s biggest defence company, recently signed a $10m joint venture to design the next generation of turbines. Statkraft, Norway’s state-owned renewable energy giant, is one of Atlantis’s biggest investors.

 

Cornelius also credits Morgan Stanley, another big shareholder, for deciding several years back to go through the rigmarole of getting approval for a connection to the national electricity network. “That connection is now probably our biggest asset,” he said.

 

Indeed, when The Sunday Times last wrote about the company four years ago, it planned to eschew the grid connection process. Instead, Atlantis was going to build a giant data centre in this remote corner of Scotland.

 

That notion, like many other ideas in this nascent industry, died a death.

 

“We had a business plan seven years ago that saw us delivering the project in three to four years at a cost of $50m-$60m,” said Cornelius. “It’s taken seven to eight years and the best part of $100m, but half a year from now we should be providing power from the world’s first commercial scale tidal array.”