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Tell me about MeyGen and its plans for the Inner Sound?

MeyGen Ltd. is a Scottish-registered company and the project name adopted by its shareholders for the proposed tidal energy development in the Inner Sound, the body of water between the Scottish mainland at Caithness and the island of Stroma.

The objective of MeyGen is to become one of the world’s first and largest commercially operating tidal energy projects by 2020

The Inner Sound is one of the best sites for the deployment of tidal turbines globally and is widely known as the ‘crown jewel’ of the Pentland Firth. MeyGen is believed to be the largest planned marine energy development in the world.

What does MeyGen mean?

“Mey” named after the village of Mey which is adjacent to our proposed site in Caithness and “Gen” from the renewable power generated from the Inner Sound site.

Who is involved in MeyGen?

MeyGen Limited is a standalone company, wholly owned by Atlantis Resources Ltd.

You were awarded an Agreement for Lease by The Crown Estate in 2010, what have you achieved since then?

Quite a lot. The team is dedicated to one project and given that it is multifaceted we realised early on we would have to approach it in gated way. We completed the Front End Engineering Design in November 2011, secured grid capacity up to 253MW in Q1 this year, completed and submitted project consent documentation to government authorities very recently and have submitted applications for capital funding to government. We are currently working through the procurement strategy for the project and hope to have this finalised by the end of the year.

Why is the Inner Sound considered as the “Crown Jewel” of the Pentland Firth?

The Inner Sound’s potential for tidal stream power generation is widely acknowledged. This is due to the quality of its tidal resource, its proximity to the mainland and the ability to connect to the National Grid.

What happens when your lease runs out in 25 years?

We aim to have all turbines deployed by 2020. This is the goal we are focused on. All Crown Estate leases are for 25 years. Should the lease run out without renewal, we would be legally obliged to decommission the project in its entirety.

You state that the project could yield 398MW. Is this realistic to be able to achieve before the early 2020s?

We believe that the project could yield 398MW but this may not be the optimal number of MW from a commercial standpoint as total rated power should not be used as an automatic “yard stick”. Bigger does not necessarily mean better. We are investing a great deal of time and money in understanding the inter-turbine array effects specific to our site but until we deploy the first phase turbines it will be difficult to know for sure as to whether 398MW is optimal. Moreover, if we are unable to cost effective grid capacity above the 253MW already secured, this could dictate the maximum level that we will be able to generate.

I recall in the past, you were looking to develop a data centre in Caithness in order for it to use the electricity generated. Is this still planned?

The datacentre plans remain with Atlantis and is not a MeyGen consideration as we have arranged adequate export capacity on the local distribution network which should suffice for the initial array. We do not believe that the datacentre plans are being actively pursued by Atlantis at this time.

I understand getting connected to the grid in a remote area such as Caithness and the Pentland Firth is problematic. What is your view?

MeyGen have successfully completed another key milestone in its development by entering into agreements with Scottish Hydro Electricity Distribution Ltd (SHEPD) and National Grid Transmission securing grid capacity for 253MW to be fully delivered (in phases) from 2014 through to 2019. This achievement represents close to one year of detailed discussions with both parties and we are naturally delighted to have achieved what many developers would consider one of the more challenging milestones in this region of the country. We believe that National Grid are making good progress to liberalise the grid further however, time and investment is short. Moreover, the user system charging mechanisms, for island areas such as the Orkney Islands is prohibitive and will require amendments.

You claim to be “The Tide of Change in Caithness”. Why does Caithness need to change?

The major employer in the Caithness area is the Dounreay nuclear power station, but this is currently undergoing decommissioning resulting in the loss of many skilled jobs in Caithness. Scotland is blessed with some of the best renewable energy resource in the world, including marine power. Naturally, the Scottish authorities are hopeful that the development of projects to harness this resource will create jobs and significantly boost the local economy, in a way similar to North Sea gasification in the 1980s. We have worked and continue to work with agencies such as HIE and the Caithness Chamber of Commerce in order to formulate ways in which Caithness and the Highlands Region can contribute and develop a sustainable industry. The recent announcement by the UK and Scottish government to create a Marine Energy park in the area is testament to this desire.

What do local people say about the project?

Since MeyGen’s creation, we have been pro-active in communicating our project plans at a local level. This has culminated in many open days and one-to-one meetings with interested parties such as local residents, industry bodies and local supply chain. Without exception, these meetings have been well attended and discussions have been overwhelmingly positive.

The people of Caithness and Orkney recognise that the development of marine power projects on this scale will bring significant benefits to the region. The project is seen by many as fundamental to the responsible development of the region’s tidal energy industry.

What benefits will the project bring to the Caithness region?

The project will be of huge benefit to both the Caithness and Orkney regions and the Scottish economy more generally. In conjunction with offshore-wind, the wider tidal industry will create jobs in manufacturing, construction and operation, it will bring significant investment and it will be at the forefront of Scotland’s ambition to be a world leader in renewable energy generation.

To date, we have spent over £600K within 1.5 years in the highlands and islands region on consultancy and services required for environmental research as well as engineering for the Front End Engineering Design.

As part of our Environmental Statement and Environmental Impact Assessment, socio economic factors are a major consideration and the potential for the local region to benefit. This can be found on our website and is free to download.

You say that local stakeholder engagement is a priority. How has this gone?

We recognise that this project will only be successfully realised in partnership with the local community and have committed to continued open dialogue with all interested parties. The consortium partners have spent the past 4 years discussing its plans with a wide variety of stakeholders. We have participated in The Crown Estate/Marine Scotland’s public Pentland Firth exhibitions in Caithness and Orkney during November 2010 and plan to carry out further project focussed exhibitions in the coming summer months of 2011.

How many people does MeyGen employ and how many jobs will it create?

MeyGen currently employs 9 people and has a wide consultancy base. We expect the team to remain stable over the planning stage; however, over the medium term as this and other projects reach the construction and operational phases we expect an increasing number of new jobs to be created by the tidal industry.

What turbine technology will you use on the site?

We are in commercial discussions with technology developers concerning the correct specification of turbine for the Inner Sound site. We are in active discussions with ARC and AHH concerning the technical and commercial configurations for the supply of turbines at the site. In order to maintain flexibility with the consenting process, we have defined a broad envelop of dimensions and operating parameters that could accommodate different turbine designs should for whatever reason the aforementioned manufacturers cannot supply.

Do you have an exclusive arrangement to use Atlantis’s turbines?

We have a conditional agreement with Atlantis for the supply of turbines.

What’s the latest news on the Atlantis turbine prototype?

The 1 MW AR1000 tidal turbine nacelle was retrieved from its test berth at the European Marine Energy Centre (EMEC) in Orkney in late November 2011, following open ocean testing.

It will be transported to Blyth for preparation ahead of the spring opening of Narec’s 3 MW capacity turbine drive train testing facility. The independent onshore facility has been developed to de-risk in-field activities, conducting reliability and performance appraisals of new devices and system components through accelerated lifetime testing.

Atlantis expects to undertake planned modifications on the tidal turbine, followed by testing on the new Narec test facility.

The programme is being designed to yield data on nacelle efficiency, control system validation and thermal analysis of major nacelle components, as well as testing the system integrity of the modifications to the tidal turbine.

Upon completion, the tidal turbine is scheduled to return to Orkney, where Atlantis holds a berth until 2015.

Will you manufacture turbines and other project related equipment locally?

We will not be manufacturing any turbines as this is the responsibility of the suppliers who we will contract with. We are keen to see as much local content that is possible in all equipment that is supplied to us but the decision as to where they will perform such activities remain with them.

When do you hope to deploy the first turbines and generate electricity?

It is our desire to deploy the initial array of turbines and generate electricity in 2014/15.

Saltire prize

Why did you not apply for the Saltire Prize before now?

Until we had achieved certain development milestones, including submitting our environmental consents; we were unwilling to apply due to the project’s nascent stage.

How do you fancy your chances against the competition?

The Inner Sound site has a high resource and we believe that our design solution is a robust one. All competitors have a good chance but we will do what we can to meet the challenge set.

Is the Saltire Prize achievable?

As the title suggests, it is a challenge and it will be difficult. This said, we relish the opportunity to compete and hopefully we will be successful.

General industry and political questions

Why are your Shareholders interested in this sector?

All shareholders share a common interest in being part of the growing renewable energy industry within the power sector. All shareholders have been actively involved in the tidal energy for the past 4-5 year (and more) as it is seen as a key growth area that, if done correctly could costs reduced and economies of scale accomplished this could be replicated in any number of sites in the UK and around the world.

Government renewable energy roadmap – Do the aspirations of government go far enough?

The roadmap takes a view from now until 2020 and provides the industry with a strong foundation such that post 2020 the industry will fully establish itself as one that can commercially compete and hopefully export to other markets. The key is to maintain flexibility in the plan for if we do find technology/technologies that work reliably over the next few years, the growth curve that DECC have plotted (200 – 300MW by 2020) may need to be revised (Offshore wind in 2001 in the UK = 0MW – Offshore wind in 2011 = 1.2GW).

Political Leadership – Is the Coalition government and Scottish Government meeting its mantra of greenest government ever?

The debate of implementing austerity measures vs having a route to medium – long term growth but requiring subsidies to do so is a strong one and it is evident that this debate continues between government departments. Given the times we are in this can only be expected. The Secretary of State for Energy’s speech at the RenewableUK conference last week was clear and very encouraging for the renewable energy sector as a whole. The key element to the debate is job creation and although the UK has been slow to generate jobs in this sector compared to its European counterparts, the heritage that the UK has in offshore engineering and deployment in Oil and Gas can only strengthen the case that the UK can build and grow a world leading industry. As long as the coalition government continues to act on the messages it is communicating to the market, this will be achieved.

Fiscal leadership shown by UK government to date?

It is an area that we think has been overlooked to date but given the ambitions of government for a green economy, we think that fiscal debate would be best served in the encouragement of supply chain and clustering of relevant companies. We understand that clearer definition of how Marine Energy Parks will be established in March next year, and therefore believe that fiscal stimulus to encourage inward investment geographically be seriously considered then.

MEAD – What is our view? Is it enough?

In March 2011 the marine energy industry estimated and published that £130m would be the required amount for supporting demonstrator arrays. The industry received £20m. Although this is a substantial quantum, it will only be able to assist a limited number of projects in order to make a difference. We are encouraged by the ongoing discussions with DECC on the administration of these funds and I think that on the basis that access to funding is efficient and well managed, confidence across all levels will increase.

Should the £20M capital funding support from DECC be funded on arrays or technology developers?

Arrays. Although we understand that there is still a requirement for R&D in this sector in order to increase reliability and reduce Cost of Energy, OEMs and developers alike need to be able to see a route to market/profitability. Focussing this money on array development will accomplish this quicker.Moreover, turbine technology (from a tidal perspective) is estimated at 35% of the total project costs and therefore, funding to assist developers on the residual 65% BOP is key.

The position of the UK in the global landscape – Does the UK have a real lead, which other nations are the real players in this area?

Yes. I think all market observers would agree with this. We must heed however, that countries such as Canada, India, USA, South Korea, China and our European counterparts, (France, Spain, Portugal and Ireland) are looking seriously into how they might be able to step into this sector. By continuing with positive market signals and attracting companies to Marine Energy Parks with fiscal incentives, combined with the excellent resource that we have; we should be able to capitalise on the first mover advantage.

Do you have any comment on ROC banding? What are your feelings towards it?

We share the view of the rest of the industry that we fully appreciate the consideration that the industry should receive 5 ROCs across the board. The definition of 30MW capped projects is required but we understand that attention is being applied to this [also revert to EMR key message]. We will respond to the consultation in due course.

Supply Chain – what needs to happen for UK industry to benefit. What export opportunities are there?

In the tidal sector alone it is estimated that there is approximately 50GW of commercially extractable resource globally. The export opportunities for equipment and the expertise in this sector for the UK is substantial given the lead that we have taken in the past on Oil and Gas and Offshore Wind. Strong, positive market signals for today and the future are key. OEMs will continue to invest and institutional investors from around the world wanting to back a developing renewable energy sector, will follow.

Environmental impacts – Is there a difference across devolved administrations towards how consents are achieved?

The Section 36 process is fairly uniform across the UK and devolved administrations (Scotland has full devolved powers). Stakeholders do vary however, but on the basis that policy from government is clear, developers will work closely with the stakeholders such that projects are delivered safely and compliant with all of the conditions placed upon them.

What do we currently understand about this? How engaged are the relevant decision making bodies? How can government assist in this area to ensure the UK become best in class for delivery in this sector?

Scottish government have become very pro-active in this area and we welcome the Energy Minister’s initiative to set up a “Short Life Task Force” in order to work with stakeholders such that the planning process north of the border is streamlined to acceptable levels. A top down approach is the only way that a government can help this new sector.