Tidal power update: new legislation clears way for three new projects, but a tidal power industry is still “decades” away

The dream of commercializing renewable energy from the world’s largest tides got a new lease on life last week. The Nova Scotia government amended a law to give three tidal developers permission to pursue the goal.

The first project to test the powerful tidal waters of the Bay of Fundy, a $20 million-plus venture between Open Hydro and Emera, ended with the abandonment of a 1,000-tonne turbine on the ocean floor in 2018. Incentives to developers under the Marine Renewable Energy Act were set to expire next December 2020. Those incentives offered berth-holders at the demonstration site near Parrsboro a rate of 53 cents per kilowatt hour (kwh) — a rate more than four times higher what Nova Scotia Power currently pays to generate electricity — over a 15-year period.

Amid pleas from tidal developers working to secure financing in the tens of millions of dollars, Energy Minister Darren Mombourquette has introduced changes to the Act that would extend those generous incentives while acknowledging it could still take “decades” for a new industry to develop.

“Through these amendments, government will issue new power purchase agreements to developers at the Fundy Ocean Research Centre for Energy (FORCE),” said Mombourquette. “FORCE is the world’s leading tidal research facility and the companies there are doing ground-breaking work. Once their projects are operational, the developers at FORCE will continue to have the ability to sell electricity to the utility for up to 15 years.”

“We have seen millions of dollars invested over the years to support the potential of the Bay of Fundy — not only investment from a private sector level but, as well, from our federal partners,” continued Mombourquette. “What this allows us to do is to continue down that path to give the companies that are in the Bay of Fundy that line of sight past the expiration of their current agreements.”

The government’s decision was “critical,” according to Jason Hayman, a naval architect and the managing director of Sustainable Marine Technologies (SME). For the past year, this company (owned by the German turbine manufacturer Schottel and a Scottish bank) has been doing environmental monitoring and testing a platform trailing four small turbines in the calmer waters of Grand Passage outside Digby. SME plans to deploy a larger version of this technology in the Minas Passage near Parrsboro by December 2020.

“Under the original terms of the legislation, we were hanging on the edge of a cliff,” said Hayman during an interview at an open house at the FORCE demo site last week. “We would have had to complete our project by December of next year, which was the in-service date six years after our (berth) lease was signed. If anything goes wrong, or there is any delay and we achieve commercial delivery after that date, we aren’t going to get paid. Financiers won’t take that risk.”

Hayman estimates it could take $10-20 million to build and deploy the next phase of SME’s tidal technology. Its main investor is the German reconcept Group, which has financed wind projects in Europe and tidal projects in British Columbia.

“What the government has done forces people to get into the race, but it doesn’t say you have to have completed delivery of the project by 2020,” explained Hayman. “For us to do an incremental, step-by-step build-out is really important because it is how we are going to learn and to keep costs down.”

Today SME generates only 280 kwh of power. The next version called Pempa’q (a Mi’kmaq word for the rise of the tide) will ramp up to 420 kwh when deployed in the Minas Passage. A third phase will involve three platforms producing 1.26 MW. So far, Hayman is the only tidal developer with a licence from the Department of Energy and a target date of December 2020 to test the next-generation prototype which is being completed by Lengkeek Vessel Engineering in Dartmouth.

During debate in the Legislature over changes to the Marine Renewable Energy Act, PC Energy critic Allan MacMaster wanted to know the impact on ratepayers if one of the three tidal projects actually succeeds in generating enough electricity to sell to Nova Scotia Power, as the government has mandated.

“What’s it going to cost Nova Scotians? Taxpayers and eventually ratepayers who will share some of the financial risk,” asked MacMaster. “My hope is that the payoff on tidal energy comes back to Nova Scotians (1) as a help to the environment, and (2) in either lower power rates or perhaps some kind of royalty that comes back to Nova Scotians.”

At least $30 million in provincial tax dollars has gone into establishing the FORCE demonstration site, the building of a substation, and research grants to the industry. Mombourquette told MacMaster the legislation “caps” the amount of tidal electricity NS Power must buy at 20MW, roughly 1% of the province’s energy requirements. The provincial Department of Energy estimates purchasing the entire 20MW could translate into a 1-2% increase in power rates.

NS Power has “no concerns” with respect to changes to the Act.

“It’s the purview of government to establish public policy to foster the development of tidal energy, and we know that government shares Nova Scotia Power’s focus on maintaining affordable power rates,” said David Rodenhiser, a senior communications spokesperson for the utility.

A second tidal developer headquartered in Ireland, DP Energy, has larger-scale ambitions but is not as far along as SME in its planning and permitting process. DP Energy Canada received a $30 million grant from the federal government this past September to assist with developing a nine MW renewable energy project. DP Energy leases two berths at the FORCE site and would like to deploy six turbines. Their blades would turn about 28 meters above the sea-bed where the turbines are mounted on three-legged bases.

Each turbine is about nine storeys high from top-to-toe and will require about 900 tonnes of ballast. The DP project is called Uisce Tapa, or “Fast Waters” in Gaelic.

“We are working with the regulators to see what Phase 1 will look like,” said Sarah Thomas, the project manager for DP Energy Canada. “We would love to be able to put all six turbines down, but we understand that may not be possible. We are working with the Department of Fisheries and Oceans to understand and manage the risk associated with the turbine deployment.”

The NDP wants to see more renewable energy developed but the party’s Energy critic MLA Susan Leblanc pointed out during debate in the Legislature that may also require changes to environmental monitoring, as well.

“If these amendments permit projects that are significantly larger in scale, number, and potential impact on marine life and on the environment than the original intent of the environmental assessment that covers the Fundy Ocean Research Center for Energy, then we will need an updated environmental assessment that takes into account the project’s impacts — not to mention thorough and adequate consultation with all stakeholders involved, including fishers, coastal communities, fisheries experts, and the Bay of Fundy Inshore Fishermen’s Association, which I was alarmed to learn, was not consulted on the original Marine Renewable-energy Act or these amendments.”

Minas Tidal LP, which leases one of the five berths from FORCE, plans to piggyback on SME’s effort and deploy the same turbine SME will build. Hayman says SME/Minas would like to find a fabricator in Atlantic Canada who can build the next platform, but many are busy with work tied to the defence contract at Irving Shipbuilding. Given the huge sums of money at stake and the spectacular flameout of Open Hydro, Hayman admits to plenty of sleepless nights.

“All of a sudden we are not in fast follower mode,” says Hayman, an energetic New Zealander based in Edinburgh. “We are at the tip of the spear with people watching us! I also feel a responsibility to show it can be done in a responsible manner, without adverse fallout, and that other stakeholders can coexist with us.”

All three developers admit more work remains to be done to improve environmental monitoring at the FORCE site where visibility is poor due to the turbid waters. Meanwhile, the province has no plans to retrieve the abandoned turbine until a new company comes along that wants to test an experimental tidal turbine badly enough it is willing to pay toward the estimated $4.5 million cost to bring up the broken one so the next developer can lease the berth. It’s a long game with bazillions of dollars invested and more in the offing in hopes of a breakthrough.

“Tidal power has great potential, especially in the Bay of Fundy, and can help answer the challenges of the climate crisis,” according to Karsten Reetz, Managing Partner of reconcept Group. “The major advantage of tidal power plants is their predictable and reliable output — this is very compelling from the investor’s point of view. We expect attractive returns for our German co-investors.”