Posted on January 4, 2022
Tapping the power of tides and waves to help power the planet is an attractive concept, but marine-energy companies have long been held back by issues ranging from the financial to the mechanical. Now the movement is finally starting to crest.
It’s a muggy July day in New York City, and Ron Smith (MBA 1979) is gazing at the East River from the eastern shore of Roosevelt Island, a narrow strip of land that lies between Manhattan and Queens.
Smith’s eyes are fixed on a patch of water demarcated by a series of white and orange Coast Guard buoys. Thirty feet below the surface, a trio of underwater turbines is generating 150 kilowatts of electricity—enough to power approximately 150 households.
The turbines are the spinning heart of the Roosevelt Island Tidal Energy (RITE) Project, an initiative undertaken by Verdant Power, the startup that Smith cofounded in 2000 to commercialize tidal energy, a clean and reliable source of electricity that depends on tidal currents just as wind farms depend on wind. Like wind and solar energy, tidal and other forms of marine power such as wave energy consume no fossil fuels and produce no carbon emissions, yet they are far more reliable than their renewable rivals.
Consider the schedule of the East River. Twice a day, this saltwater tidal estuary—river is a misnomer—reverses its direction with the regularity of a Swiss watch, sloshing back and forth between New York Bay and Long Island Sound. This precision allows Verdant’s engineers to accurately predict how much power RITE will produce over timescales not just of days and weeks but of decades—something that can’t be done with gusting winds and fickle sunshine. “We know how much power we’re going to get out of this for the next 40 years,” Smith says.
The potential market for marine energy is vast. According to the United Nations, approximately 40 percent of the world’s population lives within 60 miles of a coastline, putting wave and tidal power conveniently close to “demand loads” (aka customers). The US Department of Energy’s Water Power Technologies Office (WPTO) estimates that tidal energy could power more than 20 million American homes, while wave energy could power more than 200 million. And global capacity for ocean energy is even greater, with experts saying that marine sources could provide enough electricity to satisfy worldwide demand four times over.
Yet marine energy remains a relatively young sector whose potential has yet to be realized. A report by Ocean Energy Systems, an offshoot of the International Energy Agency, found that between 2009 and 2019, global energy production from wave and tidal sources increased from 5 to 45 gigawatt-hours, or enough to power approximately 4,500 American homes for one year. But that still represents only a tiny fraction of the thousands of terawatt-hours the WPTO predicts could be generated by tidal and wave technology in the United States, where investment in emerging marine-energy tech lags far behind that of China and Europe.
And the sector is still experiencing growing pains. RITE is the first commercially licensed tidal power project in the United States, and reaching that milestone was an odyssey: Smith reckons that the technical challenges, funding crunches, and regulatory hurdles involved in establishing a new industry set his timeline back by a decade or so.
When Verdant began deploying prototype turbines in the East River nearly 20 years ago, for instance, the company’s actions raised immediate concerns among fishermen and federal regulators. And while the startup proved that its technology posed no threat to local wildlife or maritime navigation, it will have to make that case again and again as it scales up in different environments, from offshore sites to genuine rivers. (Verdant’s turbines can be deployed in virtually any marine environment with sufficient depth and current speed.)
Nonetheless, Smith and others now see signs that marine energy is finally poised to emerge as a significant source of renewable power. The global push to decarbonize the grid is driving greater investment in the sector, and the technology is maturing, with companies across Europe, Asia, and North America gearing up to generate wave and tidal energy at commercial scale.
Verdant, for example, is currently raising funds to develop turbines twice as large for deployment off the coast of Wales, where Smith anticipates generating megawatts of electricity by 2025. And he has his eyes on an even larger prize: Once the company has proven its megawatt system abroad, it will return to the United States, where Smith envisions installing an underwater turbine farm in a larger venue such as Long Island Sound.
A deployment of that size would power not hundreds but thousands of households—the kind of impact that could preface a sea change in sustainable energy.
Verdant’s massive turbine system weighs 105 tons; installation required a barge ride from its New Jersey assembly location and a crane to lower it into the East River
(Courtesy Verdant Power)
If our laptops and lightbulbs do not yet run on marine energy, that is largely due to the engineering challenges posed by developing, manufacturing, and deploying electromechanical systems that can survive the punishment meted out by the sea—a corrosive medium a thousand times denser than air that wreaks havoc on generators, sensors, and computerized equipment. Designing devices that can efficiently harvest the kinetic energy of tides and waves without falling to pieces or costing an arm and a leg is tricky business, and many have failed in the attempt.
“Plenty of systems have ended up on the floor of the ocean,” says Rahul Shendure (MBA 2001), cofounder of Oscilla Power, a Seattle-based startup that uses specialized buoys to convert wave energy into electricity. When Shendure and his cofounder launched the company in 2009, for example, they focused on electromagnetic generator technology that had never been used for large-scale power generation.
“It scaled up great—until it didn’t,” says Shendure, who stepped down as CEO in 2016 but continues to serve as chair of the company’s board.
The Oscilla team therefore abandoned its original approach and began modifying off-the-shelf generators for use with its Triton system. The generators are packed into a surface float that is tethered to a large and relatively stationary concrete ring by flexible tendons. As the float interacts with ocean waves, the movement of the tendons drives the generators, converting mechanical energy into electricity.
Smith in the RITE control room, located in a converted shipping container
The hardware reset was successful, and Oscilla recently deployed a version of Triton off the coast of Hawaii. (Known as Triton-C, this iteration should someday be capable of powering small communities along the US Pacific coast and on remote islands.) But the delays and costs involved nearly killed the company, which survived only with support from the WPTO.
Capital expenditures for sources of marine energy are another stumbling block. The equipment that is required to capture tidal and wave energy can’t be churned out quickly or easily. Verdant’s turbines, for instance, sit on a massive steel frame that was custom-built in New Jersey; the entire assembly weighs 105 tons and had to be ferried into position on a barge before it could be lowered to the bottom of the East River by a giant crane.
“It’s not like software,” Shendure says. “You need shipyards to bend and weld steel, and that takes time.” Add it all up and you have an early-stage funding problem, with marine-energy projects proving too capital-intensive for venture capitalists and too risky for private equity.
“There are increasing numbers of angel investors and impact investors, but it’s really a struggle—especially for early-career entrepreneurs,” says Hiroko Muraki Gottlieb, a senior researcher in Business and Climate Change who co-edited a 2020 report on advancing science for sustainable ocean business that was jointly published by the UNESCO Intergovernmental Oceanographic Commission and the UN Global Compact.
None of this is news to Smith. A former US Navy aviator who worked at Bendix Aerospace and Booz Allen Hamilton before running (and eventually selling) an advertising company with his wife, he began exploring tidal energy in the late 1990s. He got as far as testing a prototype in Canada before technical problems torpedoed the project. He pursued another promising technology that had been developed in the 1980s by researchers at NYU, but money was a problem: The hedge fund that began backing Smith and his partners in 2006 collapsed during the 2008 financial crisis, and the ensuing valley in cleantech investment nearly wiped out the company.
The regulatory environment didn’t help. Supporters of tidal energy often claim that because underwater turbines are invisible from the surface, commercial deployments will not face the NIMBY opposition that has confronted some offshore wind projects. Aside from the buoys that mark the area where the RITE turbines reside, the only sign that something interesting is happening below the surface is a thick black cable that snakes onshore just yards from where Smith stands on Roosevelt Island.
“A larger system will likely look like what you can’t see right now,” quips Shane Thirkell, a Verdant engineer who remotely monitors the turbines from a nondescript cargo container packed with high-tech equipment.
But when the RITE Project was first launched, the potential consequences of installing underwater power-generating turbines in the East River were unknown, and Smith found himself negotiating not only with irate fishermen but also with local, state, and federal regulators. Satisfying them proved to be a Kafkaesque experience that entailed spending a large chunk of the startup’s capital on a hydroacoustic system to monitor the local fish population.
And that work is far from over: As Verdant and other marine-energy outfits begin to deploy larger systems, they will have to show that their technology poses no threat to local marine and coastal ecosystems and will not conflict with the interests of groups ranging from area residents to companies engaged in aquaculture or tourism. Doing so, Muraki Gottlieb contends, will require rigorous environmental impact studies based on the best available science; careful marine spatial planning (the equivalent of land-use planning for onshore energy projects); and vigorous outreach to anyone who might have skin in the game.
In the end, Verdant was saved by a combination of funding from the New York State Energy Research and Development Authority and the WPTO, which was established in 2008 with a budget of only $10 million ($1 million of which was earmarked for traditional hydroelectric projects; annual WPTO funding for wave, tidal, and other emerging hydrokinetic technologies has subsequently risen to $109 million). Con Edison eventually invested in the company, but because there is no legal mechanism for paying a provider to deliver tidal power to the grid in New York State, the utility can’t give Verdant cash in return for the electricity it generates in the East River. Instead, the energy giant credits Verdant’s Con Edison account.
“If this were a wind system, we would be getting a paycheck every month from Con Ed,” Smith notes.
Indeed, one of the principal attractions of the Wales project is that Verdant will be remunerated for any power it delivers to the local grid—a situation that underscores a fundamental difference between the United States and Europe.
In the United States, decarbonization targets are for the most part just that: targets. But in Europe, where the European Union and national governments alike tend to be far more aggressive in their pursuit of ambitious climate goals, those targets are mandates with legal teeth. This has driven significant investment into carbon-free renewables: Between 2007 and 2019, Europeans poured 3.84 billion into wave and tidal energy, most of it from the private sector.
That flood of money has made Europe the clear leader in the race to commercialize marine energy. It’s no accident, for instance, that the next step in Verdant’s path to commercial-scale power generation lies in the United Kingdom, which has led the way in developing industry standards for ocean power. Indeed, Smith anticipates working on a number of projects in the UK that will allow the company to commercialize its technology and drive down its costs before returning to the American market.
Oscilla Power’s Triton-C, which will was recently deployed off the coast of Hawaii
(Courtesy Oscilla Power)
The situation has improved considerably in recent years for Verdant and Oscilla. Both now enjoy healthy financials (Verdant has received $46 million in funding to date from private and government sources; Oscilla has received approximately $25 million), both are expanding operations, and both are on the brink of commercial-scale applications. Yet, in a sense, their journey is only beginning, for they must now gird themselves to compete not only with fossil fuels such as oil and gas, but also with wind and solar, whose costs have plummeted over the past decade.
Competing power sources are often compared using levelized cost of energy, or LCOE, which is calculated by dividing the lifetime cost of generating electricity by the total amount of electricity produced over the same period. The latest data from the US Energy Information Administration and the International Renewable Energy Agency indicate that the levelized costs of wind and solar energy already meet, or beat, that of new oil and gas generation. The LCOE for a new gas plant, for example, ranges from $0.05/kWh to more than $0.15/kWh. Solar power, meanwhile, rings in at $0.02 to $0.03/kWh in most parts of the United States and is approaching a mere $0.01/kWh elsewhere.
Wave and tidal energy producers are doing everything they can to reduce their levelized costs by maximizing the efficiency of their systems and trimming operating costs. Nonetheless, Smith estimates that the LCOE for the RITE Project is still above $0.20/kWh. Scaling up will help. Shendure, for example, predicts that a 50-plus megawatt farm of Triton wave generators off the West Coast could achieve an LCOE below $0.10/kWh. But farms comprising large numbers of megawatt turbines or wave generators are years away.
Meanwhile, says Jurgen Weiss, a senior lecturer in business administration who studies ways of decarbonizing the energy system, there is every indication that the levelized costs of wind and solar will continue to fall, thanks to ongoing improvements in their core technologies and the virtuous development cycles that flow from large-scale deployments. Consequently, by at least one measure, wave and tidal producers are most likely trapped in a race they cannot win: “They’ll always lose, based on levelized costs,” Weiss says.
Fortunately, marine energy has certain inherent advantages over wind and solar. And there is more than one pathway to viability. The most important of those advantages are greater predictability and less variability. The energy profile of waves on the open ocean may be less predictable than the clockwork tides that drive Verdant’s turbines, but it is still far more predictable than sunshine and wind. While offshore winds produce the waves that power Oscilla’s buoys, the ocean buffers them, leveling out some of the variation in energy output that would otherwise occur.
Less variability, meanwhile, reduces the need for storage, which carries its own costs. In a world where wind and solar were the only carbon-free energy options, it would take an awful lot of batteries to keep the lights on when the sun wasn’t shining and the wind wasn’t blowing. As a result, marine-energy advocates contend that the combined levelized costs of energy and storage for wave and tidal will be lower than for wind and solar, and that all these energy sources will ultimately have a place in a robust, sustainable grid.
“Building a system that doesn’t have any fossil fuels in it gets easier when you have diverse generation profiles,” says Weiss, who is working up a case study on a Moroccan energy project that blends wind and solar power. Marine energy also holds a special place within the larger “blue economy,” which encompasses almost anything related to the sustainable use of ocean resources.
Wave and tidal are uniquely suited to marine applications such as powering desalination plants and separating hydrogen from seawater—a key step in producing yet another renewable energy source. Even after Verdant decommissions the RITE Project later this year, it will continue to use Roosevelt Island as a testbed for use-cases such as hydrogen production.
And proponents argue that marine energy could offer underdeveloped island and coastal states, along with almost any place that has access to the ocean but not to a reliable electrical grid, a carbon-free alternative to dirty, expensive fossil fuels. Oscilla is currently raising money on the equity crowdfunding platform StartEngine to deploy a megawatt version of Triton off the coast of Kerala in 2022. The decision to launch its commercial-scale system in India was driven by a combination of such factors.
Consumers in India are “super hungry for electrons—particularly green electrons,” Shendure explains. And wave intensity off southwestern India is just right. The waves are big enough to generate lots of electricity but not so big that Oscilla would have to spend huge amounts of money building systems designed to withstand them. And while the company will need to achieve roughly the same levelized cost of energy that it would in the United States, manufacturing costs in India are far lower. That will make the path to local competitiveness easier while giving the company a low-cost manufacturing base from which to ship its technology around the world.
Looking out across the East River at the buoys that mark his underwater turbines, Smith is aware of the work that lies ahead for industry leaders like him and Shendure. But the momentum he sees gathering both at home and abroad has convinced him that marine energy is finally coming into its own. “In 10 or 15 years,” he says, “these projects are going to be all over the world.”
