Atlantis

UncleEbenezer
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Atlantis

Postby UncleEbenezer » December 17th, 2016, 12:02 pm

In the absence of a Clean Energy board, this seems the least inappropriate place to post.

Atlantis's (ARL) share price has collapsed of late - despite MeyGen advancing seemingly very smoothly. Is this just market fickleness (that perhaps drove it up too fast 3-4 months ago), or has something changed? I'm wondering if there are reasons to fear a material change of attitude in the Scottish government, for instance?

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dspp
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Re: Atlantis

Postby dspp » December 19th, 2016, 9:53 am

UncleEbenezer,

I'm not sure of a specific reason why the share price has headed down. It is possible it is lack of newsflow, or that there is news that we don't know.

More generally it could be that the very fast decreases in offshore wind pricing, which is of course already at scale, are simply competing this technology pathway out of the race. See for example the Shell consortium bidding 5.45c/kWh on the last Dutch auction (http://www.offshorewind.biz/2016/12/12/ ... ind-farms/). Given that the time-series generation profile of offshore wind is positively aligned with the grid demand, more so than tidal, and given the relatively limited amounts of storage required to accept wind/solar (nothing to 40% penetration, limited to 80% penetration) there is a 'why bother' element to tidal - it is technically interesting but economically risky. Arguably if one wishes to try for marine energy the wave approach (e.g. Carnegie as pack leader) is better - it is more widely applicable, cheaper, and has a better time-series generation profile.

regards, dspp

Hallucigenia
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Re: Atlantis

Postby Hallucigenia » December 19th, 2016, 11:09 pm

Of course the big potential advantage of tidal is that if you have two sites that have tides three hours apart, like the Pentland Firth and off Nairnshire, then all the variations cancel out as two sine waves superpose and you have guaranteed baseload power without messing about with storage. Atlantis are a way away from that though...

The picture has become clearer in the last few weeks - the first of three Andritz turbines is in the water, commissioned and generating "at full power", although they studiously avoided saying generating 1.5MW, which is what full power would be if it was in the design speed of water of 3.0m/s.

However, everything's gone a bit quiet on Atlantis' own turbine built in conjunction with Lockheed that was meant to be joining the Andritz ones. The next phase will be using the MCT SeaGen design that they acquired from Siemens last year. It was heralded as being cheaper and more lightweight and more suitable for lower flow areas, it's a derivative of the one that's been in Strangford Lough for years.

It's not clear what the status of the Lockheed turbine is - is there a terminal problem, is it delayed, or are they just going all-out for cost control for the next phase given the pressures dspp mentions?

Some people have got all excited about a change in foundations from big lumps of concrete to steel, but there was always a mild preference for steel, the concrete was more of a sop to the politicians as it generates local employment whereas steel can be done in China and transported. It also means they don't need the heavy lift ship.

The other big change is the corporate structure, they're doing the next phase through a new company rather than the existing one that has Scottish Power and DEME as investors. It would be interesting to know whether that's because the big friends walked or Atlantis think they can do it on their own - I'd suspect the former but don't know.

Obviously the pricing environment has changed, although 5.45c/kWh (=£47.75/MWh ex connection costs) for Borssele 3&4 is just stunning, particularly when you compare with Dong's 7.27c/kWh for Borssele 1&2 next door 5 months ago which was in itself a record low at the time. I wonder how "real" that is and how much of it is Shell doing cute tradeoffs with the cloggies behind the scenes - I know there's been some slightly questionable loan guarantees which have nationalised some of the risk and hence reduced borrowing costs. Mind you, Vattenfall bid 4.99c/kWh for Kriegers Flak last month. They are all seriously big projects - 700MW+ so one can't compare with the state of tidal at the moment, but they are impressive numbers. There are some caveats though - Kriegers Flak is effectively subsidised by the fact it will be used as an interconnector between Denmark and Germany, and they're shallower than most of the British projects.

Globally BNEF reckon offshore wind at US$0.126/kWh (£101.70) LCOE down 28% yoy https://cleantechnica.com/2016/11/01/of ... 6mwh-bnef/ but UK will be on the high side of that due to depth etc. That compares with $0.068/kWh (£54.88/MWh) for onshore wind and $0.10 (£80.72/MWh) for crystalline-silicon PV.

For comparison the last UK auction was £82/MWh for established renewables and £117/MWh for offshore wind etc. Off the top of my head Atlantis were talking about £130-ish for this current trial project, £100-ish by 2020 and £50/MWh by 2030. IF they can stick to that then they have a chance, particularly if they can get into the baseload market, but it's less certain than it was. I'd be more worried for the tidal lagoons which have less scope for technical advances and manufacturing scale, even the big ones are forecast at around £90/MWh.

dspp
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Re: Atlantis

Postby dspp » December 20th, 2016, 10:45 am

H,

Thanks for the update.

You make the fair point that a pair of sites can deliver near-baseload continuity thereby increasing utility. However how many such perfectly spaced tidal pairs exist around the world ?? as this will naturally restrict sales, and the size of the tidal industry will be key to its long-term viability vs the competition (typically wind + solar + either gas or storage).

To put the storage sums in perspective I have pulled out my personal UK grid pathway study, which uses older/higher offshore wind costs, and at 35% renewables penetration I have no battery storage. To go to 40% renewables penetration requires storage of only 12GWh which in practice can probably be delivered by the existing fast generation response and pump storage hydro. To get to almost 80% renewables penetration requires 400-500GWh storage which obviously sounds like a lot (it is !). However the installed cost in that scenario - which is likely a sub-optimal pathway - is £102bn wind; £180bn solar; £48bn storage (battery). So the storage required to get to 80% renewables penetration is only 15% of the total generation investment. When you put it like that it doesn't sound so much - and the key to the 80% penetration was that could be achieved at price parity to the new nuclear (EPWR) fleet. The implication is that for almost all of the world it will be possible to deliver deep renewables penetration from just wind+solar+(battery) storage without resorting to tidal or wave.

I know full well from personal experience that any new renewable technology must not only compete with conventional, but also with other renewables. Given this I am failing to see the market for sufficiently large scale adoption of tidal technologies that it is viable as an industry. I can perhaps envisage it for wave, but I am failing to see it for tidal. I think that the UK proponents of this are coming up against an equivalent analysis in DECC/BEIS/Treasury/ScotGov hence the cooling off in those circles. By the way I think that is also why Siemens exited.

regards, dspp

Hallucigenia
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Re: Atlantis

Postby Hallucigenia » December 20th, 2016, 10:04 pm

Paired "great" sites are certainly possible - Atlantis has two top-10-in-the-UK sites that are 3 hours apart in the Pentland Firth and Mull of Galloway, although the latter won't be able to match anything like all the potential production from PF and is at a much earlier stage of development. The way I see it you'll get the "great" sites being developed singly and then as technology develops in time they'll be able to add less-good sites 3h away using kit better suited to lower energy densities in the same way that you develop Ghawar before shale. But the potential for guaranteed baseloadiness (barring equipment failure) without storage or the risk of not enough wind to fill up storage is definitely a plus point. And even if they're not paired, a sufficient number of different sites will naturally smooth out, even within the Pentland Firth there's actually quite a variation in a relatively short distance.

In the meantime, single-tidal may be variable but at least it's stone-cold predictable - one use it may be particularly suited to is charging commuter EVs - whereas a full charge might take all night a commuter car might just take an hour's charging to top it up, and you could charge at 1am one night, 2am the next and so on depending on when the tides were.

I must admit I raised my eyebrow at your 40% figure, which seems rather higher than a lot of others I've seen. Are you including a lot of demand response in that? I'd also point out that existing fast response storage can't be spared for this kind of medium-term use, it's needed for its current job of feeding the kettles in the Corrie ad break. In fact you're probably going to need more fast-response as net-zero buildings will be working the grid much harder and unpredictably (eg exporting PV electricity one moment, then wanting inwards electricity as soon as the sun goes in, not allowing for local storage of course).

I think it's notable that Siemens swapped MCT for a stake in Atlantis (not a full exit, note) a week before the general election with the writing on the wall for Ed Davey in particular, obviously things have been chillier in Westminster for a while now. Holyrood is still fighting the corner of tidal though. I think in principle anything with the potential to get to £50/MWh is of interest - sure it relies on scale and it's a lot less certain that they will reach that scale in time, but there is a roadmap of sorts. Also Siemens realised they were a bit stuffed because they'd missed out on the land grab, it made sense to gain access to the Pentland Firth, conversely it made sense for Scottish Power to dispose of their site to someone with technology and grid connections in place. I'm not saying there wasn't a whole lot of cold feet as well, but there is some logic to it.

Out of interest, what LCOE are Carnegie saying these days?

As an aside, I was talking to someone in the green finance world recently, he's already moved on from batteries, they've signed off on their last battery project for now and are on to the Next Big Idea. He wasn't giving any hints away but I've a few ideas what it could have been!

dspp
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Re: Atlantis

Postby dspp » December 20th, 2016, 10:31 pm

My 40% number comes from simulation of resource variability & demand variability. It happens to arrive at the same number that National Grid came up with. I guess we are either both right or both wrong. Actually if you start to think about demand variability and load shed events it starts to make sense that one ought to be able to get towards 40% in many grids.

I don't know what LCOE Carnegie are at, but I do see that they will have attractiveness to a suite of purchasers who cannot use tidal, and who may be land mass constrained. I'm not sufficiently attracted to be running the numbers on them, just keeping an eye on them. Do you ?

I agree that Holyrood is keener on this than Westminster - but that doesn't make Holyrood right.

Re batteries many of the people doing the interesting stuff at scale don't need finance ...... yet.

regards, dspp

Hallucigenia
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Re: Atlantis

Postby Hallucigenia » December 20th, 2016, 11:15 pm

Oh, the last NG numbers I'd seen were lower than that - link?

Used to pay close attention to CETO, not for a while though.

ARL don't need Holyrood to be right, merely to offer disproportionate support until certain big contracts get signed... :-)

The way this guy was telling it, the money that will make the real money has already been invested. I guess it's a bit like LNG, the first people to ship are the ones that get the highest differentials. Later on the market may be much bigger but the margins are much smaller as they've been eroded by the presence of the early birds.

dspp
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Re: Atlantis

Postby dspp » December 21st, 2016, 9:54 am

Try looking for "UK Future Energy Scenarios - National Grid". In the 'gone green' scenario they get to 40% penetration by 2020 without any battery storage and they don't appear to be planning for any more than OCGT for balancing purposes in that scenario.

For info Germany looks to be at 32% in 2016 but they have more interconnection than UK does (at present) :
http://www.offshorewind.biz/2016/12/20/ ... 21&uid=718

regards, dspp

Hallucigenia
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Re: Atlantis

Postby Hallucigenia » December 21st, 2016, 11:10 pm

I've not looked at the latest FES, memory says that they weren't explicit about batteries but were relying on fairly heroic amounts of interconnector imports so using France as a battery, lots of rolling batteries (ie EVs), also on a lot of demand-shifting in response to time-of-use tariffs. Certainly a few years ago they were talking about 20% variable (not the same as all renewables) as being the most they could easily handle, can imagine that's crept up a bit.

Yep, Germany relies on Norwegian fjords to manage its network, they'd be stuffed without interconnectors and responsive generation in neighbouring countries.

dspp
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Re: Atlantis

Postby dspp » December 22nd, 2016, 9:26 am

Actually I picked up the 40% without storage number from an NG bod on the radio in the last year. When I later came up with the same number myself I though a ha. Yesterday I looked and it is implicit in the FES numbers.

When RE is penetrating a system for the first time it gets a free-rider effect as the idled conventional generation can either decommission, or be used as standby generation. It really is quite easy to go to 40% in the UK under these circumstances - basically the owners of the idled generation have spare plant that either earns something (and pushes out decommissioning costs) or earns nothing.

regards, dspp

StepOne
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Re: Atlantis

Postby StepOne » January 11th, 2017, 3:37 pm

So Atlantis perks up 15% or so on the announcement of a new 'division' to run 'wet renewables' projects. Anyone want to explain that?

http://www.investegate.co.uk/atlantis-r ... 00098491T/

dspp
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Re: Atlantis

Postby dspp » January 11th, 2017, 5:57 pm

At a guess looks like they haven't enough work to keep their team together in the short term so this is a way to try and do so and maybe make some money as well.
regards, dspp

UncleEbenezer
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Re: Atlantis

Postby UncleEbenezer » January 11th, 2017, 6:47 pm

StepOne wrote:So Atlantis perks up 15% or so on the announcement of a new 'division' to run 'wet renewables' projects. Anyone want to explain that?

http://www.investegate.co.uk/atlantis-r ... 00098491T/

The positive sentiment started on Monday with the 20 million Euros from the EU.

I can think of a few possible lines of speculation about the origin of the new division. A relaunch of the technologists responsible for their turbine, in the light of Meygen experience? An umbrella for projects in the pipeline building on their strategic assets (sites). When Cornelius presented at Mello a while back, the most interesting wildcard about the company seemed to be the unconventional real estate portfolio. 8-)

Hallucigenia
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Re: Atlantis

Postby Hallucigenia » January 15th, 2017, 10:10 pm

The uptick can be explained by the 20m bung from Brussels, it took its time to percolate through to analysts. Also worth noting that that announcement forecasts this project "will set tidal on a path to cost parity with offshore wind by 2020" - because frankly if they don't tidal has no future in the UK.

As for the reasoning for the new division - I suspect it's mostly opportunitistic, they see opportunities and they have some credibility having actually delivered tidal power to land. Plus the apparent problems with their own turbine in favour of the MCT one has reminded them of the advantages of diversification. But they've always had a consulting division and I guess that financial partners like Equitix will have been asking them about other offshore technologies, so they might as well see if they can make a few quid out of them.


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