Siemens says tidal sector too “niche”; MCT put on selling block

Just over two years since Siemens acquired Marine Current Turbines, the German industrial group is planning a sale of the UK tidal turbine and development company, it has been reported.

By K.Steiner-Dicks on Nov 26, 2014

"A dedicated tidal power industry of critical size will develop in the near future," Siemens said in a statement. "But due to the limited resources it would be a niche market for Siemens."

Not surprisingly, the decision for the large group to sell the tidal power company followed the news of MCT’s unfortunate suspension of its work on a 10MW tidal array off the coast of Wales earlier this year.

Funding gap

Tidal Today reported in September that Siemens, through its tidal company subsidiary Marine Current Turbines, that it was suspending the Skerries project, but looking to deploy its SeaGen tidal generators in other opportunities.

The 10MW £70m Skerries Tidal Stream Array, which was to be Wales’s first commercial tidal energy farm, was given planning permission from the Welsh Government in February 2013. A variation to the Marine Licence was approved by Natural Resources Wales in early 2014 to change the route of the export cable to come ashore at Cemaes Bay. Installation of the Anglesey Skerries Tidal Array was at the time planned for summer 2016.

However, the project’s reported inability to attract match funding for the site meant that construction delays were inevitable, pushing the project’s power distribution and completion past the intended 2016 deadline.

Also, prior to the suspension, the government withdrew a £10m grant because MCT had failed to find another source of funding to fit with the government's 2016 deadline.

Siemens said if it could not find a new buyer for the business then it would fully consult with all potentially affected employees. "In the event of restructuring then redeployment within Siemens will be prioritised and complete support will be offered for redeployment or outplacement," it said, according to reports.

Siemens is looking to exit marine energy, saying the development of the market and the supply chain has taken longer to grow than it expected. The divestment will likely take “several months” to complete and affect 45 employees, it was reported.

Realistic capacity targets

Bloomberg New Energy Finance, the London-based researcher, in August revised down its 2020 capacity forecast for tidal power to 148 megawatts, about 11 percent less than previously estimated. It said technologies are taking longer to develop and costing more than expected.

Since the 2012 acquisition, other larger industrial groups have set their eye on tidal power, namely Alstom SA, which purchased Rolls-Royce Holdings Plc’s tidal generation-unit. DCNS SA also bought a majority stake in Ireland’s OpenHydro Group. Atlantis has also tied up with Lockheed Martin.

Some signs of the recent decision to sell MCT could have been sussed prior to the announcement, when after 10 years’ service with Marine Current Turbines David Ainsworth joined Kite Power Solutions Ltd.

Ainsworth joined MCT in 2003 as Project Manager, and was responsible for the consenting process for SeaGen and project delivery logistics. SeaGen was installed in 2008 and is still the world’s leading technology demonstrator with over 9GWh of generation.

“I have thoroughly enjoyed my 10 years at MCT, we have a great team and a great product, I always knew it was going to be a radical and exciting job opportunity to drag me away from MCT, and KPS seems to provide the formula at the time in my life when I can take the risk,” said Ainsworth in a statement in October.

Finance seems to be the main issue with the marine power sector, excluding offshore wind. This month, Pelamis Wave Power, a wave power technologies company, expressed that it had been unable to raise the money it needed to continue development. Its relationship with EON AG ceased in 2013, according to reports.

The Show Must Go On/Op-Ed

The news of the pending sale of Marine Current Turbines is sad to say the least. Especially as you see the offshore wind industry increasing its energy footprint in the UK and northern Europe. But MCT's technology and its team have much to provide the greater tidal power industry and news of a new buyer would be welcome in all markets that MCT has influenced at home and abroad.

Perhaps the typical financing avenues cannot be ventured for MCT at this stage, but rather other avenues, such as a consortium or a group of successful energy sector linked family offices. Investors that have more time on their side to see testing and deployment through, than say a larger conglomerate who has to answer to shareholders on a short-term basis and that are not going to be attached to any one project's potential. 

The show must go on for the tidal energy sector, despite the stumbling blocks it comes against. It must go on for the sheer and vast energy capacity potential it can provide for those countries blessed with impressive tidal ranges. Its potential is so immense that it also has the potential to be exported to neighbouring nations, eliminating fears of future fuel shortages. And that to many, is priceless. It's just going to take a more diversified set of companies and investors to come on board at MCT and the wider marine energy industry to make that potential a reality. Politicians will also have to take a longer view of tidal project milestones and put in place long term inititives that do not get sidetracked or bumped by the next political administration.