This report, Deliverable 3.3 GVA Study (‘A study into the potential economic value offered to Europe from the development and deployment of wave and tidal energy to 2050’), presents results, analysis, and high-level policy recommendations concluding from the study quantifying the potential economic benefit, in terms of Gross Value Added (GVA), to the European economy of the development of ocean energy electricity generation technologies in Europe and their deployment globally to 2050. Furthermore, this study investigates the impact on the economic benefit of the overall domestic (European) supply chain strength for European and international deployments.
This GVA benefit has been calculated for three deployment scenarios based on and beyond the achievement of the Strategic Energy Technology Ocean Energy Implementation Plan (SET Plan) targets of €100/MWh for tidal and €150/MWh for wave by 2030. The three scenarios are described below and the comparative deployment is illustrated in Figure i. More detail on these scenarios can be found in Section 6.6 of this report.
- Scenario 1 – Achievement of the SET Plan
This scenario is based solely on the achievements of the SET Plan targets for LCOE in Europe and globally, reaching net zero in Europe by 2050 and globally by 2070. 61GW of ocean energy is deployed in Europe by 2050 and 192GW globally. The tidal stream/wave energy proportional split is based on modelling from the EC Joint Research Council for Europe, and assumed to be 40%/60% for the rest of the world. The European supply chain is assumed to be strong, with Europe as a market leader for ocean energy, retaining a high proportion of the economic activity required for this deployment.
- Scenario 2 – Europe follows the global market
This scenario is based on the achievements of the SET Plan targets, but reaching net zero in globally by 2050 rather than by 2070. 60GW of ocean energy is deployed in Europe by 2050 and 293GW globally, with the tidal stream/wave energy proportional split assumed to be 40%/60% in all regions for this deployed capacity. The European supply chain is assumed to be less strong, with Europe as a market follower for ocean energy, retaining a lower proportion of the economic activity required for this deployment.
- Scenario 3 – Europe leads the global market
This scenario also assumes net zero is reached globally by 2050 and has more ambitious European deployment, assuming Europe leads the global market for ocean energy in this time. 100GW of ocean energy is deployed in Europe by 2050 and 293GW globally, with the tidal stream/wave energy proportional split assumed to be 40%/60% in all regions for this deployed capacity. The European supply chain is assumed to be strong, with Europe as a market leader for ocean energy, retaining a high proportion of the economic activity required for this deployment.
These scenarios have been informed by TIMES energy system modelling from the European Commission’s Joint Research Centre (JRC) and the International Energy Agency (IEA), in which ocean energy cost inputs are based on the SET Plan targets. The JRC SET Plan scenario results in 61GW of marine energy deployed by 20502 . The IEA sustainable development scenario in the 2020 Energy Technology Perspectives results in 192GW of ocean energy globally and the IEA Further Innovation scenario results in 293GW of ocean energy globally. All scenarios have pre-2030 deployment consistent with Ocean Energy Europe’s 2030 vision.
A comprehensive GVA model built in-house at the University of Edinburgh incorporates TIMES-derived deployment data and Leontief inverse-derived economic effects to produce rigorous results, as illustrated in the flow diagram in Figure ii. More detail on the GVA calculation methodology can be found in Section 6 of this report.
The results from this study conclude that there is significant GVA benefit to be generated by supply chain activity servicing global (European and non-European) deployments of ocean energy to 2050. The total GVA benefit to the European economy these deployments has a potential range of €59bn to €140bn across the three scenarios presented here, shown in Figure iii. These GVA results are presented in detail in Section 7 of this report.
These results are presented as the proportional GVA per cost centre in Figure iv and the sensitivity of GVA results to leakage assumptions (i.e. the percentage of spend which is not retained by the European supply chain) is shown in Figure v. More detail on the sensitivity of these results to supply chain input assumptions can be found in Section 8 of this report. The analysis indicates that the strength of the domestic supply chain has a significant impact on the proportion of this economic benefit reaped by the European economy. That is to say, there is significant opportunity offered to Europe, provided policy is enacted to reduce costs to or beyond the SET Plan targets, prioritise local content for domestic deployments and exports alike, and attract deployment to European waters.
The results of this study will feed into a corresponding socioeconomic study identifying key quantitative results in terms of job losses and gains, impact on the value chain, impact on occupational distribution and impact on educational requirements as well as a qualitative discussion of the social impacts that cannot be expressed in monetary terms.
This study has produced three evidence-based deployment scenarios for ocean energy in Europe and globally up to 2050, and the economic returns resulting from these deployments in terms of Gross Value Added (GVA). The results show a significant economic opportunity to Europe if current and future policies support ocean energy development. The results from this study are intended to inform energy and economic policymaking at a member state and European Commission (EC) level. The results are also highly relevant to technology developers, research institutions, and renewable energy project developers and investors.