UNITED STATES OF AMERICA

Marine and Hydrokinetic Technologies (MHK) capture the energy of waves and currents (e.g., tides, ocean currents, or in-stream river flows). With more than 50% of the U.S. population living within 50 miles of U.S. coastlines, MHK technologies hold significant potential to supply renewable electricity to these consumers, particularly in areas with high costs of electricity. U.S. MHK resource assessments identify a technical resource potential of up to 1,285-1,846 terawatt-hours (TWh) of generation per year. For context, approximately 90,000 homes can be powered by 1 TWh of electricity generation each year. A cost-effective MHK industry could provide a substantial amount of electricity for the United States due in large part to its unique advantages as a source of energy, including its vast resource potential, its close proximity to major coastal load centers and its predictability.

OCEAN ENERGY POLICY

NATIONAL STRATEGY AND TARGETS
The mission of the U.S. Department of Energy’s (DOE) Water Power Program is to research, test, evaluate, develop and demonstrate innovative technologies capable of generating renewable, environmentally responsible and costeffective electricity from water resources. The Program has established a national MHK cost goal of 12-15 cents per kilowatt hour (kWh) by 2030. To accomplish this goal, the Program has a strategic focus on the following four major focus areas:

1. Technology Advancement and Demonstration
2. Testing Infrastructure and Instrumentation Development
3. Resource Characterization
4. Market Acceleration and Deployment

To facilitate this work, the Water Power Program supports a strong research, development and demonstration (RD&D) project portfolio. The Program also leverages capabilities at the U.S. Department of Energy’s national laboratories to spur innovation in promising research areas and identify cost reduction pathways, and has built coordinated partnerships with other government agencies that are breaking new ground for the industry.

LEGISLATION AND REGULATORY ISSUES
Several key pieces of U.S. federal legislation that would benefit the advancement of the MHK industry are currently under consideration:

• The Marine and Hydrokinetic Renewable Energy Act of 2013 (S. 1419) was introduced in August 2013 and has been recommended by the Senate Energy and Natural Resources Committee for full consideration by the Senate. Sponsored by Senator Ron Wyden and co-sponsored by Senators Lisa Murkowski and Angus King, this bill would promote research, development, and demonstration of MHK renewable energy technologies.
   
• The Renewable Electricity Standard Act of 2013 (S.1595) and the American Renewable Energy and Efficiency Act (S.1627), both pending in the Senate Energy and Natural Resources Committee, would each create a renewable electricity standard that would apply to all renewable energy sources.
   
• The Climate Protection Act of 2013 (S. 332) would enable the Environmental Protection Agency to establish a ‘Sustainable Technologies Finance Program’ that would alleviate cost burdens for ocean, tidal, or hydropower energy projects through loans, credit instruments, and loan guarantees. This bill is sponsored by Senator Bernie Sanders and is under consideration by the Committee on Environment and Public Works.
   
• The Prioritizing Energy Efficient Renewables Act of 2013 (H.R. 2539), would permanently extend the Renewable Energy Production Tax Credit for wind, geothermal, hydro and marine power. It would also eliminate the tax credit for intangible drilling costs, the domestic manufacturing tax credit for oil and gas, as well as the percentage depletion credit for oil and gas wells. Sponsored by Representative Jan Schakowsky and 22 other cosponsors, this bill is currently under consideration by the House Committee on Ways and Means.
   
• The Advancing Offshore Wind Production Act (H.R.1398), sponsored by Representative Rob Wittman, would set a 30-day timeline for the Secretary of the Interior to act on permits for all weather testing and monitoring projects in the U.S. Outer Continental Shelf. This bill includes a provision that would apply this timeline to tidal and ocean current energy projects. This bill has been referred to the House Natural Resources Committee.

While significant progress has been made to expedite the permitting process for MHK technologies in the United States, especially for pilot scale and research projects, the amount of time, finances and other resources required to navigate the permitting process remains a challenge for many MHK projects. To help ensure that the regulatory community has access to the most recent, amalgamated information regarding MHK systems and environmental research, the Water Power Program sponsored a MHK regulator training workshop in September 2014. A second workshop will be held in the spring of 2015. In addition to the Water Power Program’s work, the National Ocean Council continues to promote regional ocean planning efforts in the United States, notably with a group of regional planning bodies that coordinate ocean activities and develop marine spatial plans for their regions. Similarly, the Bureau of Ocean Energy Management has established a series of state task forces to lead planning efforts for marine renewable energy in a number of states with MHK resources, including Oregon and Hawaii.

MARKET INCENTIVES
Currently, there are limited federal market incentives to support the development of MHK. The Federal Production Tax Credit of 1.1 cents per kWh for a number of renewable energy technologies, including MHK technologies, has now expired. Even when it was in place, it served a limited number of MHK projects due to a provision that required projects to have at least 150 kW in capacity under construction by December 31, 2013. In addition to the Production Tax Credit, tidal projects are eligible for a tax credit equal to 10% of expenditures under the Investment Tax Credit. There is no Investment Tax Credit for MHK technologies other than tidal. 

At the state level, MHK technologies are an eligible energy resource under 20 states’ renewable portfolio standards and voluntary renewable energy goals. MHK technologies also benefit from state funding opportunities, such as the Alaska Energy Authority’s Emerging Technology Fund and Renewable Energy Fund.

PUBLIC FUNDING PROGRAMS
Because MHK energy is an early stage market and there are currently limited incentives for investment, the Water Power Program has a clear role in expediting the development and deployment of innovative MHK technologies. The Water Power Program focuses on investing in technologies with a credible potential for lowering the levelized cost of energy (LCOE) below the local hurdle price at which MHK can compete with other regional generation sources. The Program makes investments that mitigate risks, support key technology innovations, and assist the private sector in creating a robust U.S. MHK industry by providing funding and technical assistance. The completion of national assessments of U.S. wave, tidal, ocean current, river in-stream, and ocean thermal energy resources has resulted in an emphasis in technology development efforts of the abundant national wave energy resource.

The Water Power Program’s annual budget for MHK RD&D climbed from $31.6 million in 2013 to $41.3 million in 2014. In late 2014, the fiscal year 2015 budget was announced, and the funding for MHK RD&D will be maintained at $41.3 million. Most of the funding in 2014 was directed toward Focus Area 1: Technology Advancement and Demonstration.

FUNDING OPPORTUNITY ANNOUNCEMENTS
Through competitive award funding solicitations, or Funding Opportunity Announcements (FOAs), the Water Power Program identifies and funds qualified projects within specific topic areas and subtopics that support program objectives, depending on available funds. In evaluating all proposals for new energy developments or new adaptations of existing technology, the Program rigorously assesses whether individual applications clearly demonstrate that the proposed advances can reasonably lead to a reduction in the total cost of energy produced when compared to other technologies.

In fiscal year 2014, the Water Power Program allocated $23.7 million of the $41.3 million to new FOAs for MHK RD&D projects that aim to address key technical and market barriers to deployment in the United States. Together, these projects will increase the power production and reliability of MHK devices and help gather valuable data on how deployed devices interact with the surrounding environment. Of this total amount, the Water Power Program made the following awards to a variety of recipient types, including private industry, and universities:

• $3.2 million to aid in the development of advanced instrumentation for environmental monitoring and data collection (five projects), and wave resource characterization (one project).
   
• $4 million to three universities that will work together to accelerate the development of cost-effective MHK technologies.
   
• $6.5 million for the development and execution of a Wave Energy Prize competition.
   
• $10 million for two projects that will test innovative wave energy conversion (WEC) devices for one year in new deep water test berths at the Navy’s Wave Energy Test Site off the waters of the Kaneohe Marine Corps Base Hawaii.

Wave Energy Prize: The Wave Energy Prize is designed to help reduce the cost of WEC devices, generate enthusiasm and interest from new developers, and leverage the best ideas to promote a clean energy future. Scheduled to be launched in 2015, the Prize is an 18 month design-build-test competition in which participants will develop new and next generation WEC devices. Since comparing the performance of WEC devices can be difficult, the Wave Energy Prize will use the world-class wave-making capabilities of the Naval Surface Warfare Center’s Carderock Division’s  MASK Basin, which will generate consistent waves to test each device. Since October 2014, the Prize Administration Team, consisting of Ricardo Inc., JZ Consulting and Polaris Strategic Communications, have been developing prize rules, testing timelines, and evaluation metrics that will ensure exciting Wave Energy Prize outcomes. The wave states to be tested and the technical criteria for winning the prize are being set by Ricardo with the assistance of experts at DOE’s Sandia National Laboratories and the National Renewable Energy Laboratory. Once the Prize is launched in Spring 2015, the Prize Administration Team will be reviewing what the Water Power Program hopes will be dozens of novel WEC device concepts for official entry into the competition.

Demonstrations at the Navy’s Wave Energy Test Site (WETS): Ocean Energy USA and Northwest Energy Innovations will conduct in-water tests to collect important performance, reliability and cost data from innovative WEC devices that are in the late stages of technology development. As the nation’s only grid-connected open-water test site, testing at the Navy’s WETS is a critical step to gathering data that will accelerate the commercialization and deployment of MHK technologies. Ocean Energy USA will leverage lessons learned from previous quarter-scale test deployments that have led to design improvements for a full-scale deployment of their Ocean Energy Buoy at WETS.

Research objectives include validating the mooring design and device durability in the open ocean environment, measuring power output at full scale, and evaluating the device’s LCOE. Northwest Energy Innovations will build and test a full-scale model of its Azura WEC device. Azura extracts power from both the vertical and horizontal motions of waves to maximize energy capture. NWEI is incorporating lessons learned from their half-scale prototype testing in 2012 to modify and improve the full-scale device design.

Under DOE’s Small Business Innovation Research (SBIR) and Technology Transfer (STTR) programs, $150,000 in funding will help small businesses develop prognostic and health monitoring systems for MHK devices. Commercialscale MHK energy converters are large, often highly complex devices operating in a harsh marine environment, and servicing these devices at sea is a difficult and costly operation. Advanced prognostic and health monitoring systems promise to anticipate and identify relevant changes to device health, minimizing the maintenance and failure frequency of these devices, and potentially reducing MHK’s LCOE. The SBIR/STTR program is a U.S. government program in which federal agencies set aside a small fraction of their funding for competitions only open to small businesses. These programs help emerging MHK technologies advance along DOE’s Technology Readiness Level chain. Small businesses that win awards in these programs keep the rights to any technology developed and are encouraged to commercialize the technology.

Additional funding was available from state-level non-profit organizations in 2014. For example, the Oregon Wave Energy Trust committed a total of $535,500 to assist companies testing MHK devices along the west coast of the United States.

SEA TEST SITES
Testing infrastructure represents one of the four major focus areas for the Water Power Program. Test facilities are intended to offer a wide range of testing services that address both technical and nontechnical barriers of MHK systems. Prototype testing is essential to maturing existing wave technologies, validating performance against analytic models, and demonstrating compliance with applicable design standards. Testing mitigates the technical and financial risk of developing and deploying mass-produced wave energy devices, plants, technologies, and related products. By spearheading the development of a testing infrastructure, the Program ensures that many more prototypes from a diverse set of technology developers can be tested than if each had to carry the cost of developing, permitting and installing their own test facility. As a result, superior technologies that could have failed due to insufficient funds have a chance to succeed.

Navy’s Wave Energy Test Site: The U.S. Naval Facilities Engineering Command (NAVFAC) operates an open ocean wave energy test site facility located at Marine Corps Base Hawaii. The existing facility consists of infrastructure to support offshore testing of a point absorber or oscillating water column device with up to a three-point mooring configuration. In addition, the facility includes a subsea power cable from an onshore data collection facility to a mooring assembly located at a 30 meter (98 feet) depth test site, 1.2 kilometers (3,900 feet) offshore. The Navy has completed the permitting process and has begun construction of two additional grid-connected test berths at the Kaneohe Bay site at 80 meter and 60 meter depths for 100 to 1,000 kW WEC devices.

Pacific Marine Energy Center - South Energy Test Site (PMEC-SETS) and the California Wave Energy Test Center (CalWave) – Wave and Tidal Test Facilities under development: In early 2014, with $1.5 million in funding from the Water Power Program, NNMREC and California Polytechnic State University began developing preliminary designs and cost estimates for full-scale, open-ocean, gridconnected wave energy test facilities, PMEC-SETS and CalWave. The Water Power Program will use the results of these projects for planning and budgeting of a domestic wave energy test facility. PMEC-SETS is located off the coast of Oregon. Researchers at OSU are conducting site characterization and a cable routing study is in process. Following construction, PMEC-SETS will serve as the utilityscale, grid-connected wave energy test facility for evaluating WEC device performance, environmental interactions, and survivability. CalWave has investigated and characterized two wave energy sites five miles off the coast of California (Santa Barbara County and Humboldt Bay). The site in Santa Barbara County near Vandenberg Air Force Base has been selected by the project team and has advanced to the preliminary design and cost estimate phase.

National Marine Renewable Energy Centers (NMRECs): In 2014, the Water Power Program continued to support the NMRECs, which provide domestic expertise in MHK device testing and the evaluation of environmental performance data, ultimately providing the necessary level of confidence to enable the private financing of commercial generation plants:

• Pacific Marine Energy Center (PMEC) – Wave, and River Test Facility: Pacific Marine Energy Center or PMEC is the marine energy converter testing facilities arm of the Northwest National Marine Renewable Energy Center (NNMREC). Just as the European Marine Energy Center has a variety of sites based on scale and technology, PMEC will encompass the range of test facilities available to the marine energy industry. For wave energy testing, PMEC supports two operational test sites, the North Energy Test Site (NETS) and Lake Washington. The north test site has a mobile Ocean Sentinel test buoy that facilitates open-ocean, stand-alone testing of WEC devices with average power outputs up to 100 kW. The Lake Washington site is operated by the University of Washington in Seattle, and tested Oscilla Power’s wave energy technology in 2013. In 2014, NNMREC was joined by University of Alaska Fairbanks and PMEC now includes the Tanana River Hydrokinetic Test Site. An ocean energy company tested their turbine technology at the Tanana River site in 2014.
   
• Southeast National Marine Renewable Energy Center (SNMREC) – Ocean Current Test Facility: SNMREC is working to advance research in openocean current systems by building the capability, infrastructure, and strategic partnerships necessary to support technology developers on the path to commercialization. In 2014, SNMREC signed a fiveyear lease agreement with the U.S. Department of the Interior’s Bureau of Ocean Energy Management, and will continue to develop a test site for small-scale ocean current turbines.
   
• Hawaii National Marine Renewable Energy Center (HINMREC) – Wave and Ocean Thermal Energy Conversion (OTEC) Test Facility: HINMREC’s mission is to facilitate the development and commercialization of WEC devices and to assist the private sector with moving ocean thermal energy conversion systems beyond proof-of-concept to pre-commercialization. Beginning in 2015, HINMREC plans to support the Navy in testing WEC devices at the Navy’s two new test berths at its WETS at Kaneohe Bay, Hawaii. HINMREC will assess the power performance of WEC devices, including but not limited to Ocean Energy USA’s and Northwest Energy Innovations’ FOA R&D projects. HINMREC will also determine acoustic and electromagnetic field outputs at the WETS, which will contribute to the environmental impact assessment of WEC devices and other MHK technologies.