Rémi Gruet
Rémi is the CEO of Ocean Energy Europe (OEE), the industry body for ocean renewable energy in Europe. He is a leading EU authority on renewable energy and climate policy and has authored several reports on wind and ocean energy. He has spent a decade working in Brussels – initially as a Political Advisor at the European Parliament, then as Senior Advisor on Climate and Environment at the European Wind Energy Association (Wind Europe). Prior to this, he worked in business development in the private sector for 6 years. He has a BA in Economics and a Master’s Degree in Environmental Management.
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The core objective of Ocean Energy Europe is to promote the development of ocean energy in Europe on behalf of your members. What are the main actions that you undertake in support of this objective?
With ocean energy, Europe has the opportunity to create a new, large scale industry, including jobs in the supply-chain and services industry as well as significant export opportunities. The ocean energy industry must work in partnership with the public sector to realise this vision, and Ocean Energy Europe (OEE) is the vehicle it uses to do that.
For example, we have been working with the EC, industry, Member States and regions on the Ocean Energy Forum’s Strategic Roadmap which was discussed on 27 February by Commissioners Vella and Cañete at the Council of Energy Ministers.
Our aim is to help ensure public support has the maximum desired impact by aligning the needs of the industry with support from research calls, financial instruments, and regulatory frameworks designed by the European institutions. OEE also does this through initiatives like ETIP Ocean – the Technology & Innovation Platform for Ocean Energy – and the Ocean Energy Roadmap.
On the business side, OEE also organises a number of events putting members in the same room to network and create business opportunities.
In the recent Ocean Energy Roadmap, you highlight a number financing challenges that need to be overcome for ocean energy Rémi Gruet CEO of Ocean Energy Europe (OEE), TALKS TO SETIS technologies to reach their full potential. What, in your view, are the main challenges facing the sector?
The big one is risk. All energy projects bear investment risks – market, technological and regulatory risks – all of which have a direct impact on project revenue. The greater the risk is, the greater the cost of financing the project or insuring the risk.
Ocean energy technologies are innovative, and at early stage of development. The data required to assess, measure, and ultimately prevent, cover or insure risks is still lacking and will only be gathered progressively, as more devices are put in the water.
Additionally, these technologies, unlike their fossil fuel counterparts, are inherently CAPEX-intensive: once you’ve built and installed the machine, you have paid the large share of your cost. This means that capital is needed upfront, rather than when kilowatts are being generated.
Combining this upfront CAPEX requirement, the unknowns linked to innovation, and today’s difficult investment climate, means access to finance is challenging.
But great are the rewards: we estimate that the sector could install 100GW in Europe, accounting for around 10 % of electricity consumption, and producing off-sync with other sources of renewable energies. This will help stabilise the grid and make the system more predictable.
Are there phases of development at which the need for financing is more critically felt? Why is this and what can be done to rectify the situation?
The pilot farm stage is the most critical – after successful testing of full-sale prototypes – known as the “valley of death” of financing.
The larger investments needed at this stage stretch R&D budgets to the limit, and other financing instruments are required. Risks are still yet not fully understood at this stage, leaving a return gap for the level of risk.
Public support is essential to get past this stage and bring the technology to market. It requires specific support schemes which address this particular stage of development. Those should include both upfront investment support to meet ocean energy’s high CAPEX requirements, as well as a medium-term revenue support to encourage device efficiency and provide market visibility.
NER 300 and InnovFin EDP are the EU’s only schemes so far to target the pilot farm stage, though some design elements made them more complex to use than necessary. The NER 300 level of award though was in the right ballpark, ranging from EUR 20 million to EUR 78 million for successful ocean energy projects.
The recommended actions in the Ocean Energy Roadmap include a call to set up an Insurance and Guarantee Fund and Investment Support Fund. Can you tell us a little about what this will involve and what the objectives of the funds are?
The objectives of both funds are clear: reduce financial risk for project developers and improve access to finance.
An insurance and guarantee fund would help bridge the current gap between risks that turbine manufacturers are willing to take – e.g. a successful installation – and risks that financiers are happy to support.
The investment fund aims to provide more flexible finance and fits the financing needs of project developers. This means possibly providing access to different forms of finance – equity, debt, repayable grants. It will also mean being able to cater for the different financial requirements that projects might have.
Both of these funds are currently being discussed with the Commission and Member States to see if, how and when they can be implemented.
Has funding of ocean energy technology in Europe been sufficient to ensure European leadership in this area, or does more need to be done?
The private sector invested an estimated EUR 1 billion to bring the first machines to full scale development. At the same time, strong support for ocean energy research has helped make these companies global technology leaders. EU support has been instrumental in getting some of these concepts out of the labs and into the sea.
The real prize however is not technology leadership, but capturing a large share of the global market as it emerges – a market estimated to reach EUR 53 billion annually by 2050, according to the Carbon Trust. While Europe is the leader today, other countries such as China, the US and Canada are starting to invest as well, recognising the economic opportunity and the energy benefits.
The EU must therefore continue to invest in ocean energy if it is to translate today’s leadership into export market success. Taking our foot off the accelerator now that we have functioning machines and the first farms in the water in the UK, France, Canada – the latter with 100 % EU technology – would only open the door to EU intellectual property and knowledge for Chinese companies.
As in rugby – a sport dear to most ocean energy nations – we have scored the innovation try, now we need to make sure we get the commercial conversion!