Canadian investment firm Inerjys plans to pump CAD $100 million (USD $76 million) into tidal stream energy over the coming decade as the sector struggles toward commercialization.
Montreal-based Inerjys said its investments in tidal will equal around 10 percent of a CAD $1 billion fund it is raising from governments, strategic investors, multinational corporations, banks, sovereign wealth funds, angel investors and other wealthy investors.
CEO Stephan Ouaknine told GTM: “We aren’t at [CAD] $1 billion yet. We are still in the process of meeting that goal. But we already have deployable capital for cleantech generally and tidal in particular.”
Inerjys invests in climate-change-mitigating technologies and projects across sectors such as energy storage, microgrids, solar, wind, water and food sustainability. In the tidal space, the company has backed developer Sustainable Marine Energy, which merged last year with the tidal business of Germany-based group Schottel.
Inerjys is aiming to become one of the world’s leading tidal stream industry players, Ouaknine said. The company’s planned investment in tidal is a vote of confidence for a sector littered with business failures.
The latest of these was Dutch developer Tocardo Tidal Power, declared bankrupt last month. Tocardo had been attempting to develop tidal arrays based on a relatively small turbine, the 250-kilowatt T2, that could be attached to the seabed or suspended on a floating platform.
Tocardo's demise adds to uncertainty over the best technology approach for the tidal stream sector, which aims to capture energy from high-flow areas using underwater turbines.
Early concepts, including long-abandoned designs backed by industrial giants such as Alstom and Siemens, focused on attaching very large machines to the seabed. But so far only one developer, Simec Atlantis Energy, has been able to make this approach work, with its MeyGen project completed in 2016 in Scotland.
MeyGen is still the world's largest tidal stream array, using four 1.5-megawatt turbines. As of June 2019, the project had exported 17 gigawatt-hours of energy to the Scottish grid.
The failure of other monolithic bottom-anchored designs, such as that touted by the high-profile player OpenHydro, has led some insiders to speculate that massive seabed turbines are unusually hard to commercialize because of the high cost of raising the machines for repairs and maintenance.
“I believe bottom-founded tidal concepts will always be too expensive,” said Chris Golightly, an independent offshore wind and tidal industry consultant who worked on the Atlantis MeyGen project.
This has caused recent market entrants such as Magallanes Renovables and Orbital Marine Power to investigate hanging turbines under barges, making the machines easier to access for servicing and repairs.
But that was also the case with Tocardo’s turbine design — and it didn’t stop the company from going broke.
Inerjys, founded by Ouaknine with early help from Generate Capital president Jigar Shah, is backing a tidal company that, like Tocardo, uses small turbines that can be installed on a barge or anchored to the seabed.
In Sustainable Marine Energy’s case, the turbines, developed by Schottel Hydro, are just 70 kilowatts apiece. Ouaknine said this could be key to the company's success.
“A lot of small turbines stacked up in a modular way on a platform would not only be really cost-effective from a capex standpoint but also highly flexible,” he said.
He also noted that the industry would benefit from ongoing consolidation, since supply chains would be able to focus on fewer but more standardized turbine designs.
Sustainable Marine Energy, for one, already appears to have benefited from Tocardo’s demise. Tocardo had been listed as the technology and hardware supplier for Canadian project development partnership Minas Tidal in the province of Nova Scotia.
But in September, Minas Tidal announced a partnership with Sustainable Marine Energy to develop a 1.26-megawatt array in Canada beginning next year that would ultimately sell energy to Nova Scotia Power. The first phase of the project is being financed by Reconcept Group of Hamburg, Germany.
Ouaknine said tidal stream’s increasing focus on lower-cost designs might help pull in more backers. “I think that other investors are going to start taking notice,” he said.
And Tocardo’s fate notwithstanding, other tidal stream players are also seeing modest success with non-monolithic designs.
One such player is Minesto, a Swedish company touting a novel underwater kite design, which in October raised SEK 60 million (almost $6.2 million) from an unnamed institutional investor and a technology investment fund.
Minesto and Orbital Marine, the latter of which is hoping to overcome the challenges associated with maintaining a 2-megawatt turbine by suspending it from a barge, were both named in October as partners in what is described as a “game-changing” tidal stream project in European waters.
The Tidal Stream Industry Energiser Project will see €46.8 million ($52 million) going into an 8-megawatt array in the English Channel.
“The total theoretical tidal energy capacity in the Channel region is nearly 4 gigawatts, enough to power up to 3 million homes,” said the U.K.’s Offshore Renewable Energy Catapult, a technology innovation and research center leading the project, in a press release.
It’s this potential that keeps attracting investors to a sector which stubbornly refuses to scale. “The capacity for energy from oceans will rival wind and solar,” predicted Ouaknine. “The resource is massive, and it seems to be fairly untapped.”