If one is looking for a long term investment in the energy industry consider tidal power. Although at present, this form of energy is not widely used there is great potential for future electrical generation. The advantages for this type of energy is in addition to being renewable, it is predictable source of power and generally quite reliable.
Recent technological developments and modifications of design indicate that tidal power has a much brighter future then once thought. Economic and environmental costs are coming down and in a number of countries subsidies have now made this source of power affordable.
The idea to generate power from tidal wave action is an old one that goes back to ancient times. However, the modern version begins with the world’s first large tidal plant which is located in France. The Rance Tidal Power Station came on line in 1966. It was built over 6 years and generates 240 MW
(Megawatts) The largest power plant in the world that generates electricity from tidal power can be found in South Korea. Completed in 2011 it generates 254 MW.
Tidal Power can generate electricity three different ways. Tidal stream generators (TSGs) are based on capturing kinetic energy as water moves over turbines. These devices can be installed on existing structures such as bridges without any major difficulty. Any geographic location where the land constrictions increases the height and velocity of the moving water, is a possible site for a TSG. They can be built in various forms to best match the movement of the water.
Tidal barrages are designed to make use of potential energy in the difference in height between high and low tides. Power is generated by the accurate placing of specialized dams. Barrages are built like dams across a tidal estuary. The high tide water that has been channeled behind the dam is then released as the tide recedes. Electricity is generated through large turbines that move as the water escapes the estuary. This is the process known as mechanical energy.
Dynamic tidal power (DTP) is the technology that allows energy to be extracted by taking advantage of the interactions between kinetic and potential energies in tidal flows. Not fully utilized at present, it calls for the construction of very long dams many miles in length out to sea. The dams do not enclose a specific area. Tidal phased differences are introduced across the dam leading to water level differentials in the fordable water areas. Regions of the world that show the most promise for this method of power generation include the shallow coastal seas of China, Korea and the United Kingdom. This is the result of the strong cyclic tidal currents that move parallel to the coast.
A newer development in design has been the construction of tidal lagoons. It calls for a series of retaining walls that are built in a circular pattern thus creating a lagoon. These reservoirs are like tidal barrages except the lagoons are created artificially.
In the United Kingdom for example, this source of energy alone, is deemed to be able to provide 20% of the electrical needs of the country in the future. At present 8 geographic areas have been identified as being ideal for the generation of tidal power in the country. It is important to note that only around 20 such sites have been known to exist around the globe.
The lack of appropriate areas for this type of energy production thus seems to necessitate the building of additional tidal lagoons, if tidal energy is to be employed on a global scale.
Although it is a renewable and reliable source of energy one can only expect the generation of power for about 10 hours a day. This is the time required for the tides to be moving in or out of the designated area. The rest of the time electricity would need to come from other sources.
An investor in tidal energy can easily understand the advantages of this type of electrical generation. The tides themselves are totally predictable. You can count on the energy to be provided on a daily basis year round. The turbines and dams once constructed are easy and relatively inexpensive to maintain. One needs to be aware that there is some damage that is the result of saltwater corrosion of the turbines. Also storms along the coast can at times batter the turbines. However, there is absolutely no need of any other type of fuel. Another advantage is there is no waste generated of any kind. The most important asset though is once the site is developed, the energy that is reclaimed is basically free.
In today’s economic climate it is important to note that vertical axis and offshore turbines are not prohibitively expensive nor are they particularly damaging to the environment.
The disadvantages are few but they can be daunting. Without the construction of tidal lagoons as explained earlier, there are few places around the world that are ideal for this type of energy production. Tidal barrages therefore have limited utilization without modification of the existing coastal area.
As mentioned previously, power generation is for less than 50% of any given 24 hour period, so it can only be a part of the energy needs of an electrical grid system.
The main disadvantage remains the cost of the barrages that must be built across an estuary. To be effectively employed it does indeed alter the environment of the area, by affecting the water flow for miles up and down the estuary. This in turn impacts the local bird and fish populations. Such effects can be mitigated, like using fish ladders for example, but this does add to the costs of any particular project.
The most important consideration of course, is the cost associated with the development of a site. Nations that are at the forefront of this type of energy in addition to the United Kingdom, France, China and South Korea would include, Canada, Russia, India and the United States.
Most of the power generated by tides in the world today comes from barrages built across estuaries. Future growth on a global scale will be more dependent on new technologies that have recently been moved to the forefront. One scheme calls for the installation of turbines on the seafloor. It would in reality, create an underwater power plant. The best example of this can be found in Scotland in the Pentland Firth area. This year the Atlantic Resources company is moving to install turbines on the seabed at this location. The company plans to install up to 260 turbines from now until 2020. Full utilization of this one site could possibly provide Scotland with more than 1/3 of its energy needs.
Atlantic Resources is also involved in a major tidal energy project in the Indian state of Gujarat.
Another big project is the one that can be found in Wales at Swansea Bay. Here investors are financing a 6 mile ( 9.6 kilometers ) long lagoon that will create the aforementioned artificial lagoon. Construction is expected in 2015 and take up to 3 years to build. The projection is that it will provide enough electricity to power 120,000 homes. Five additional lagoons are planned by the company known as Tidal Lagoon Power. If these are approved and built as part of the company plan by 2023, it could provide the United Kingdom up to 10% of it’s electrical needs.
Although at present the United Kingdom is a leader in the industry worldwide investment is expected to increase by tens of billions of dollars USD (United States Dollars) in the years ahead.
The major drawback at present is the huge initial cost in the development of specific projects. The project at Pentland Firth for example, will cost 40 million British pounds ($68 billion USD) for the construction and installation of the first 4 turbines. The price of the electricity generated from these turbines will be 6 times more expensive then can be generated from conventional sources. The project in Wales will cost investors 850 million British pounds ($1.4 Billion USD) for the lagoon at Swansea.
Such high initial costs make government subsidies almost necessary at this point. It is important to note that almost all alternative energy development has received some regime support in the early stages. Many of these industries still receive large government support. Germany for example, provides large sums to the solar and wind power industries. Since the country has made the political decision to abandon nuclear power after the 2011 accident in Japan, it is felt these subsidies are likely to continue.
The most important cost factor in the industry will be the size of the individual projects, and how many plans for future development are made. As with every other industry, with more turbines being built and installed, in more projects across the globe, the price for the power generated will necessarily decline.
As more companies continue to invest in the development of the technology, further interest will spread across many additional countries.
Ocean Renewable Power Corporation is the first to deliver power on a commercial basis in the United States. This project based in the state of Maine, came on line in 2012.
Verdant Power also based in the United States, has tentatively made plans to install up to 30 tidal turbines in the East River of New York City by 2015.
Daewoo and the Jindo Uldolmok Tidal Power Plant are among the 2 companies that are leading the future effort at development of tidal energy in South Korea.
These and other companies will continue to move forward as the price and supply of fossil fuels remain an issue in future energy development. The need for more electrical energy cannot be debated. The question will be how much and how soon? This will of course, depend on the economic growth rates in individual countries. It will also count on the types of industries being developed or encouraged. Heavy industry for example, has a much greater need for power than other types of manufacturing.
An investment in the industry therefore must be made only after careful consideration, in the individual plans and business models of number of companies in the industry. Excitement generated by major moves being made in the industry at present, may help propel the stock of individual companies. An investor will need to determine whether their investment will be for potential growth in the industry where one can recoup profits in the short term. The other alternative is to invest with a mind for long term growth where actual profits of these companies will determine the future value of the stock.