Europe's wave and tidal power technology is likely to disappoint EU expectations for 2020 and take over a decade to contribute to energy supply in a significant way, even though it is chalking up rapid growth and drawing in big industrial investors.
The nascent industry has attracted a flurry of investor activity over the past year, securing a few hundred million euros from companies such as Siemens and Vattenfal.
It is making fast progress from prototype devices toward full-scale sea trials and promises to be more reliable than many types of renewable power that depend on the weather.
But those numbers are far less than European Union expectations for €8.5 billion of investment and generation capacity of 3.6 gigawatts installed by 2020.
The technology, like other renewables, needs government financing help to reach commercial scale and then subsidies after that as it grows to more cost efficient.
Its timing as a latecomer behind more established renewables such as solar and wind is unfortunate, as governments struggle through the debt crisis. Furthermore, its development costs are still far higher than for other renewables, including offshore wind power.
"Any talk of gigawatts by 2020 is optimistic. We are more on course for hundreds of megawatts," said Charlie Blair, technology acceleration manager for marine at the Carbon Trust.
Funds hard to come
Siemens, which increased its stake in UK developer Marine Current Turbines last month, sees double-digit annual growth rates for marine current renewables to 2020 from virtually zero now and expects it ultimately to meet 3 to 4 percent of global energy demand.
"The big industrial players getting involved is what is needed to move this sector forward. Utilities are looking at these kind of projects, which will be on a similar scale to wind energy or conventional power plants," said Frank Wright, renewables manager at UK consultancy Douglas Westwood.
Most experts expect the first large-scale commercial projects of 1 MW or more to emerge by 2016 or 2017 and ocean energy to start contributing to the EU power mix between 2025 and 2030.
A big tidal device probably has a 1 MW capacity, but the next challenge is to get to five-to-10 MW arrays and then move to hundreds of megawatts by 2020 or beyond.
"We still need to prove a 10 MW array can function on a commercial basis and pay for itself by selling electricity," Blair said.
Not only are there technical challenges in installing multiple devices and in developing the grid infrastructure and control systems, but developers also must reduce the huge costs of arrays.
Current estimates for the levelised cost, or the constant price per unit of energy for an investment to break even, are 0.38-0.48 pounds/KWh for wave energy and 0.29-0.33 pounds/KWh for tidal, compared with 0.09-0.10 pounds/KWh for nuclear and offshore wind, according to the UK's Carbon Trust.
Funding constraints threaten to impede the push towards commercial deployment. Although government funding is available for research, there is less available for large-scale demonstration projects.
Concerns on EU power grid
There is also a concern that the EU power grid will not be able to keep up with the added capacity as more projects near full-scale sea trials and supply electricity to the grid.
Grid-connected capacity from wave and tidal in the UK, though still modest at 5.6 MW, has risen 90% since March 2011. RenewableUK expects this to rise to 11 MW this year with the connection of at least seven new devices.
Some utilities depend on significant investment in expansion of grid capacity before they will increase their marine plans. Vattenfall has said it plans to buy a UK wave power device later this year on the expectation that an interconnector is laid between the Shetland islands and the Scottish mainland.
"Offshore wave projects need to be connected to the grid onshore and then transported," said Alina Bakhareva, research manager of renewable energy at Frost and Sullivan.
"Unless you have government subsidies for building super grids or high-voltage grids, it is not feasible for (marine) developers to take this additional cost on their balance sheets."