United Kingdom – The design of a brand new European insurance fund for the ocean energy sector is underway.
The fund is aimed to slash the costs of the first commercial projects and accelerate the roll-out of this new industry.
Ocean Energy Europe (OEE) has appointed risk and insurance consultancy, Renewable Risk Advisers, to carry out the work as part of the EU-funded OceanSET project.
The insurance fund will mitigate the early risks of innovative ocean energy projects, for which investors typically demand returns of 10-12%. Access to project finance is a significant obstacle for wave and tidal developers, looking to leverage equity and crack a €53 billion per annum global market.
Renewable Risk have consulted with the ocean energy industry, and are now discussing with insurers, lenders and equity investors. The final report, detailing the fund’s design, is due in Spring 2021. OEE and Renewable Risk will then work with financial stakeholders and funders to make the fund a reality.
Wave and tidal energy sector set for growth
The wave and tidal energy sector is set for a significant jump in installed capacity. The European Commission will coordinate with national governments to fund 100MW of ocean energy by 2025, and 1GW by 2030.
In the UK, the government has signaled a strong interest in ring-fencing 100MW exclusively for ocean energy, in its forthcoming ‘Contracts for Difference’ auctions.
European developers continue to build out new projects in Canada, Indonesia, Japan and elsewhere.