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Can Tidal Energy be the New Wind?


Energy markets have been evolving over the last decade and the next big growth area appears to be Tidal Energy.  The US market recently commissioned the first commercial tidal power project to deliver power from water into the grid.  The project off the coast of Eastport, Maine has taken the first step in proving that the technology of harnessing energy from water is now a reality.  I reflect how when wind turbines first started to appear on our horizon, they too broke the mould on traditional energy forms and have become a large portion of our energy mix around the globe.  So what can the tidal energy companies learn from the journey that the wind power companies took?

Wind Power companies were pioneers in changing the energy markets where they first started to appear.  They took a disruptive technology and a new challenge to traditional energy generation and made it work.  These companies have led the way in terms of technical revolution whereby they strive to develop bigger, more efficient and cost effective ways of harnessing power from the wind.  Significantly, they also pioneered a business model whereby they educated the banks and the financial institutions into how to fund these large, capital intensive projects.  They showed the way to not only make Renewable Energy good for the environment, but also good for the investors!  This is the challenge now facing the emerging tidal energy companies – how can they make their businesses investible?  Early stakeholders are carrying the risk and are basically investing in the technology – hoping to see it commercialised and viable – this is the highest risk level and therefore does not make a compelling opportunity for a bank or investment company to support the venture.  It is too risky!

So when will Tidal be able to bring the same level of investment and a similar profile of investment partners that the wind companies can attract?  I am basically asking – when will harnessing power from water become mainstream?  To become truly mainstream, I believe these pioneers need to not only innovate with disruptive technology but also focus on innovating the business model and bring an international, standards based approach to how they develop their sites and prove that tidal energy has a prosperous future.

So under the surface, maybe Tidal Energy is not so different a business.

 

Posted: November 28, 2012

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