The Edinburgh-based company, which has a concession with part-owner Scottish and Southern Energy (SSE) to develop a 200MW wave farm at Brough Head in the Pentland Firth south of Orkney, is seeking the funding for its Oyster 2 device over the next few months in a bid to get it into the water by next summer.
The 26-metre, 300-tonne device, which will attach to the seabed in depths of around 12m, will produce energy by pushing water down pipes to hydroelectric turbines on the shore. Oyster 2 will be three times as powerful as its predecessor, Oyster 1, which has been operating in the Pentland Firth since last November.
Aquamarine chief executive Martin McAdam said that the latest £6m funding has come from SSE, Sigma Capital, Scottish Enterprise and Norwegian investors. The investment takes the company’s funding to over £30m to date, all from the same investors, except for a £5.1m injection from the UK Government through the Carbon Trust earlier this year. SSE, Sigma and the Norwegians also own the majority of the company.
Given that there will need to be another funding round for a final Oyster 3 prototype further down the line, it illustrates the massive costs involved in realising the Scottish Government’s long-term vision of extracting 20GW of power from tidal and wave farms around the northern coasts. To make it palatable to investors, the Government has introduced a world-leading subsidy scheme, funded by consumers paying six times the standard price for the fraction of their power which will be marine-generated.
McAdam said: “A big chunk of the £17m will be used to finance Oyster 2. We also need money to progress site development in parallel at Orkney but also in Ireland and Oregon.
“The last 18 months has been very tough for funding, especially from venture capitalists, who suffered heavily in the financial crisis and still need to fund their existing portfolios.
“I hope that the market is improving but we see an investor such as a large industrial or a utility as more important to us. We want someone with a strategic view of the industry rather than a short term cash in, cash out, investor.”
Neil Kermode, managing director of Orkney’s European Marine Energy Centre (EMEC), agreed that the investment climate was “hard” but that “companies that have succeeded so far would be attractive” to investors.
“By getting Oyster 1 into the water and operating it since last year, what Aquamarine has done has been absolutely remarkable. It has shown that you can get marine energy out of that particular stretch of water with a very simple system. The next stage is to commercialise it,” he said.
While Oyster 1 is running at a capacity of 315kW, the new device will be able to produce 850kW. If the fundraising goes according to plan, the company hopes to get the first Oyster 2 in the water next summer and then follow up with two more the following year.
McAdam said that the design would then be further streamlined by Oyster 3, which it hopes to launch in 2013/14. A year after that it hopes it will be able to build its devices at a comparable cost to offshore wind development. Aquamarine calculates that Oyster 2 will cost £9m per MW, a third of the cost with the current prototype, but still over double the cost of building the shallow-water offshore machines that are being installed off the coast of England as part of the Crown Estate’s “Round Two” concessions.
Aquamarine’s SSE tie-up aims to eventually see the two companies building over 1GW of wave power in Scotland. They won the Brough Head concession from the Crown Estate in March as part of a series of 50/50 wave and tidal allocations totalling 1.2GW. Other winners included Scottish Power, E.ON, and turbine developers Pelamis (wave) and OpenHydro and Marine Current Turbines (both tidal).
