Market Challenges And Opportunities

Wave Energy Converter Market Drivers:

Increasing focus on clean energy transition: The increasing focus on renewable and clean sources of energy globally is a major driver for the growth of the wave energy converter market. There is a rising acknowledgement of the role of human activities like greenhouse gas emissions in bringing about climate change and global warming. This has led to efforts by governments and international bodies to transition away from fossil fuels to renewable sources of energy that do not pollute the environment. Many countries have now pledged to reduce their carbon footprint and dependence on coal and oil by adopting ambitious renewable energy targets for the future.

Transitioning to clean energy has also become more necessary given the environment and health impacts of continued reliance on fossil fuels. Burning of coal, oil and natural gas releases harmful pollutants into the air like nitrogen oxides, sulfur dioxide and fine particulate matter. This leads to increased air pollution which affects public health and also harms ecosystems. The costs of health issues caused by air pollution have been rising rapidly. Moreover, dependence on imported fossil fuels also affects energy security for many countries. This has incentivized research and development of various renewable technologies that can replace coal and gas based power plants over time. For instance, the US Department of Energy selected four advanced wave energy technologies to receive around US$ 8 million under its testing and validation program in 2022.

Advancements in wave energy technologies: Significant advancements are being made in wave energy conversion technologies which is another key driver for the market growth. Wave energy is still at a relatively nascent commercial stage compared to other renewable sources. However, extensive research efforts by universities and private firms have led to development of new and innovative wave energy devices with improved performance characteristics over the past decade. Earlier devices mainly relied on simple oscillating water columns and buoy based designs. Now various second and third generation technologies are emerging that can more efficiently capture energy from ocean waves.

Some examples include point absorber devices, oscillating wave surge converters, attenuators and overtopping devices. Different designs optimize aspects like wave absorption, electrical power output, survivability in harsh marine environments and ease of operation & maintenance. Materials research has also enabled creation of lighter and more durable components. Tech giants are actively working on integrating advanced sensing, The Internet of Things IoT, data analytics, and autonomous functionalities into wave energy plants to remotely monitor equipment performance. Recent advancements in power electronic converters and offshore grid integration have further expanded the potential for deploying large, utility-scale wave farms.

For instance, the International Renewable Energy Agency (IRENA), in 2020, nations spent over $30 Bn on renewable energy research, development, and demonstration (RD) globally.

Wave Energy Converter Market Opportunities

Developing cost effective solutions: Developing cost effective solutions could be a great opportunity in the wave energy converter market. Wave energy converter technology is still at a nascent stage and commercial viability has been a major challenge so far. The levelized cost of energy from wave energy converters is still significantly higher compared to other renewable sources like solar and wind. However, with continuous research and development, the costs have been coming down gradually. Focusing on modular designs, use of advanced materials, simplified power take off systems, and innovative mooring solutions can help boost efficiency and reduce capital expenditure drastically in the coming years. For instance, as per the Ministry of Environment report 2021, the project demonstrated good energy yields with the advanced buoys and was able to supply clean energy to the national grid at a cost of around US$0.15/kWh which marks a significant reduction compared to earlier wave park projects.
Collaborations between research institutions and industrial players: Collaborations between research institutions and industrial players provide a great opportunity for growth in the wave energy converter market. When academic researchers and private companies work together, it allows for innovative technologies to progress more rapidly towards commercialization. Each party brings crucial but different skills and resources to push technical and engineering advances further. Universities and national labs can focus on applying fundamental science and exploratory research, while industrial firms excel at product development, manufacturing, project deployment and financing. Bringing these complementary strengths together in partnerships maximizes the chances of successful technology demonstration and validation.

Wave Energy Converter Market Restraints

High initial investment costs: High initial capital investment costs required for establishing wave energy converter infrastructure have been a major barrier impeding the development and scaling of the wave energy converter market. Setting up commercial scale wave energy converter farms involves huge upfront costs for procurement and installation of specialized equipment needed to harness energy from ocean waves. This includes costly devices like buoys, attenuators, point absorbers, etc. that are moored to the seabed and connected via undersea cables to transmit generated power back to onshore grids. Additionally, investing in specialized vessels, deployment machinery and ocean engineering services also drives initial project capitalization higher. For instance, as per a 2021 report by the US Department of Energy, out of 28 wave energy projects supported during 2010-2015 under the agency's funding program, as many as 15 projects could not secure follow-on private funding or slipped into delays due to financing issues related to high capital costs .
Counter balance: Teaming up with other industry players, such as manufacturers, energy companies, or research institutions, can help distribute the cost burden. Joint ventures can also lead to shared technology development, reducing overall R&D expenses.
Intermittency in wave energy resource availability: Intermittency in the availability of wave energy resource poses a significant challenge for the growth of the wave energy converter market. Waves are formed due to the wind blowing over the ocean surface and the strength and periodicity of waves depends a lot on weather conditions such as wind speed and direction. Unlike solar and wind energy which have some predictability, wave conditions are quite variable and intermittent in nature. The waves could be strong in one part of the day and almost non-existent during other parts depending on shifts in weather fronts. This makes the power output from wave energy converters also variable and non-dispatchable to match the demand. Addressing the intermittency issue requires developing cost-effective large-scale energy storage solutions or having other flexible generation sources to compensate for the variability in wave power generation. Both these options increase the overall cost of wave energy, making it less competitive vis-a-vis other renewable sources at the moment. For instance, as per the International Renewable Energy Agency (IRENA) report published in 2022, the total recoverable wave power potential of just the top 10 wave power dense coastal states is estimated to be over 726 TWh/year, which is equivalent to the annual electricity demand of countries like Mexico.
Counter balance: Pair wave energy converters with other renewable energy sources such as wind or solar power to create a hybrid system. The complementary nature of different renewable resources can provide a more continuous energy supply.