Washington tidal energy project cancelled

Thursday, October 2, 2014

A tidal energy project proposed off the Washington coast will be scrapped due to cost overruns, according to the project developer.

Public Utility District No. 1 of Snohomish County's proposed Admiralty Inlet Pilot Tidal Project was envisioned as a temporary, experimental project to evaluate the commercial viability of tidal energy development in Puget Sound.  The 600-kilowatt hydrokinetic project would have generated electricity from the force of water moving through turbines mounted in tidal currents.  Earlier this year, the project won a pilot license from the Federal Energy Regulatory Commission, making it among the first tidal projects to qualify for the Commission's pilot licensure program.

But the estimated costs of the project were significant relative to its projected energy output.  Since it was first proposed in 2006, the Public Utility District estimated that the project would cost $20 million to build.  Based on these numbers, the Commission estimated that the levelized annual cost of operating the project would be about $1,848,294.  Dividing this by the project's expected production of energy, the power could cost $7,574.98 per megawatt-hour of energy generated -- an amount over 250 times higher than the estimated $30/MWh cost of alternative power.

Nevertheless, the PUD had designed the project's finances to avoid the need for ratepayer financing.  Rather, the project relied on funding from federal grants and in-kind contributions from project partners, as well as some money from the sale of excess renewable energy credits from the District's wind power projects.  To date, the District has invested about $3.5 million in the effort, over the past 8 years.

With the FERC license in hand, the District moved forward to solicit bids for project engineering and construction.  When those bids came in, the District realized the project would likely cost closer to $37 million, or $17 million more than previously expected.  According to a September 30 announcement by the Public Utility District, the District tried to seek more funding for the project from the U.S. Department of Energy and other project partners, but did not succeed.  As a result, the District has announced that it will not move forward with the project.

While the District is no longer actively pursuing the Admiralty Inlet Pilot Tidal Project, some other developer may try to pick up where the District left off.  Indeed, the District's announcement notes that the project "remains worthwhile to pursue on behalf of the nation to further the potential development of marine renewable energy."  Will another developer seek to advance the Admiralty Inlet Pilot Tidal Project?  Will other tidal current and marine hydrokinetic projects be developed given the challenges of ocean energy project economics?

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