Let's make waves

Currently Speaking gets barrelled.

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Now, back to the show…

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Nazare, Portgual is home to possibly the biggest on shore surf break in the world. The huge waves arise due to some perfect underwater geography. A long deep underwater canyon channels an incredible amount of energy toward the Portugese coast which, combines with slower moving waves in shallower water to form into massive waves as the canyon reaches the cliffs. When combined with big North Atlantic winter time storms, you get the break at Praia De Norte (the North Beach) at Nazare, which has produced five of the top six biggest waves ever surfed.

The long canyon snaking toward the cliffs at Nazare.

Nazare itself is a small fishing village. For centuries, locals have been well aware of the potential for massive waves and the risks this posed for those fishing. Despite this knowledge, surfing took a long time to get to Nazare.

Big wave hunting started in the 40s and 50s in Hawaii. In the early 90s, surfing pioneers Buzzy Kerbox, Laird Hamilton¹ and Darrick Doerner introduced tow-in surfing — using jetskis and tow-in ropes to build up the speed needed to surf even bigger waves. This pushed the search for big waves around the world. In 2011, Garrett McNamara captured the attention of surfers around the world by riding a 78ft behemoth at Nazare. Since then, Nazare has been the centre of big wave surfing surfing.

Garrett McNamara’s wave in 2011.

Now forget all of that. As seasoned investors in renewable generation,² when we look at Nazare, we see opportunity. What would happen if you put a wave generator in there?

Ocean energy - what’s the size of the pie?

Ocean waves propagate energy. This energy predominately comes from winds blowing across the ocean surface. This energy builds up in water creating waves, which normally become observable when the ocean depth becomes shallower - this results in the speed of the wave decreasing and amplitude increasing.

Something to note — wave energy is different to tidal energy. Tidal energy focussed on capturing energy in ocean tides, which are caused by the gravitational pull of the moon.

The general formula for the energy in ocean waves is:³

\(P = \frac{\rho \cdot g^2}{64\cdot \pi} H^2_{m0}T_e \approx 0.5\cdot \frac {kW} {m^3 \cdot s} H^2_{m0}T_e\)

where P the wave energy flux per unit of wave-crest length, H refers to wave height and Te is the wave period.⁴

When Nazare is really pumping (25m waves, 20 second wave period, and guestimating that the wavefront is about 100m wide), that equates to 1,250MW of instantaneous power.⁵ Great news, now we just have to harness it...

What type of wave energy converter should we go for?

There are a range of technologies for capturing the energy in ocean waves. The different converters are designed for the variations in the method, location and type of swell. The most common types are:

• Point absorber buoys, where a device floats on the surface and connected to the seabed with cables. It generates power by rising and falling with the swell.

• Surface attenuators, which sit on the surface of the ocean and roll with swell.

• Oscillating water columns, where the ocean swell rises, compressing air inside a chamber. This compressed air is forced through a turbine, spinning it and producing electricity.

• Overtopping devices where the tops of waves are captured and the potential energy is stored in a reservoir. The water is then released, flowing through a turbine back down to sea level.

However, none of these options seemed to gel with the chaos of the waves crashing into the cliffs at Nazare. So, we’re going to go with our gut and use an oscillating wave surge converter.⁶

The oscillating wave surge converter is fixed to the seabed, and swings back and forth as waves roll over it. Perfect.

All that’s missing is a Currently Speaking logo…

So how much energy can we actually capture?

This is a function of a lot of different variables. This includes the depth of the ocean, the width of the flap, the width of the wave and much more. Having struggled through some studies⁷ looking at the power capture of surge converters, (and going to widest possible flap, sorry surfers), I think we can hope for an efficiency between 30 - 60%. That equates to 90 - 180MW per big wave.

C.R.E.A.M

Okay, I know what you’re thinking - enough of these numbers nerd, how much ca$h are we talking about? Well, first we need to make some quick assumptions (a.k.a, more numbers):

• Portuguese long term energy prices of €75/MWh. Peak output of our generator over winter months, lower output in summer when waves are smaller. This means a slightly better price capture than the average as European spot prices become winter peaking. So we’ll assume the price captured by our generator is €85/MWh.

• A capacity factor of 8% - the best recorded capacity factor for an Oyster wave surge oscillator is 20%, and likely in much more ideal conditions.

• An efficiency of 30%, taking the lower end of the scale and noting that this also probably massively overestimating the real world result.

Throw all this in the pot, and you get:

90MW * 8760 hours/year * 0.08 * €85/MWh = 

€5.36M/year

Do we break even?

There isn’t widespread deployment of wave energy generators so it’s difficult to estimate the costs and the uncertainties of trying to install one in Nazare. However, there are published estimates of the levelised cost of wave energy, ranging around $0.7USD/kWh. For our project, this equates to $44.2M USD. Using today’s exchange rate, that’s €41.4M.

Assuming we discount our revenues at 7%, the NPV of our generation is €61.6M. So, not only are we breaking even - we’re gonna make €20M in NPV.

Is this the real deal?

Building a wave generator at Nazare? Absolutely not. It’s clearly more valuable as a surfing hot spot, and it would be a nightmare trying to install something there that lasts through big swell.

Wave energy in general though? Well it’s a mixed bag.

The potential is tantalizing - the potential energy off the coast of the US alone is 2,640TWh⁸ (10 times the total energy generated in Australia in 2020-21). This has resulted in a persistent attempt to find ways to capture wave energy. As highlighted above, there are a range of technologies being developed and tested. As a renewable energy source, wave energy has advantages too. Waves are more steady than wind, which means you could get a smoother generation profile. While they are difficult to get approvals for, if the industry was established and regulations set up, you could imagine it might be easier to find a location for a wave generator compared to negotiating with landowners for access.

However, the challenges are significant and obvious. Firstly, building a wave generator is going to create environmental challenges. It will involve developing assets close to the shoreline, which will have implications for marine life as well as coastal communities. Secondly, developing generators that can operate with high reliability in salt water is challenging. Worse, if reliability is poor, maintenance is needed more frequently — performing maintenance on a wave generator is tricky. The forces in the ocean can push on a generator from all directions, meaning the generator needs to be robust. This culminates in a generator type that is expensive and unproven.

Wave energy is about three decades behind wind energy. While it does have development wins here and there, it seems highly unlikely that it will be ubiquitous in the same way as wind and solar is. Even if it does end up as a widely deployed energy source, it will probably take about 30 years to get to that point. Of course, in 30 years we should have either worked out this energy transition thing — if we haven’t, I won’t be writing about energy, you’ll find me taking my turn trying to surf Nazare.

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Things happen

• Gas giants continue to apply pressure to the Australian government on its intervention into the gas market. Good guys Shell are worried it would reward manufacturers for “careless procurement”.

• Rooftop solar exceeds 20GW in Australia. Even as installations slow following a boom during COVID, rooftop PV system sizes are getting bigger. When Liddell Power Station (coal-fired generator in NSW) closes in April, there will be more rooftop PV capacity in Australia than coal. Truly incredible.

• As businesses look to clean up their public image, the Australian Competitor & Consumer Commission has been pursuing instances of ‘greenwashing’ i.e., using false or misleading environmental or sustainability claims. The corporate regulator Australian Securities & Investments Commission has launched its first court action against greenwashing, alleging Mercer Superannuation made misleading statements about its sustainable investment options. However, its sustainable investments included companies like AGL, BHP and Glencore — not exactly sustainability leaders…

1. Laird is a true legend of big wave surfing, known for surfing the heaviest wave of all time and for surfing the opening scenes of James Bond movie Die Another Day.

2. We famously provided a $1 angel investment in the Gordonator.

3. This assumes the water depth is larger than half the wavelength. Using some very rough guesstimates, this assumption might hold for our planned generator.

4. I apologise for the maths.

5. This is roughly the same output as a medium sized coal fired power station. Okay, that so seems like a lot. But let’s just go with it.

6. So what if we chose it because it has “surge” in the name? Investing is an art as much as it is a science.

7. T Whittaker & M Folley, Nearshore oscillating wave surge converters and the development of the Oyster.

8. At least according to US EIA.