Annual Report 2018
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UNITED STATES OF AMERICA

David Hume and Ann Dallman U.S. Department of Energy

 

SUPPORTING POLICIES FOR OCEAN ENERGY
 

NATIONAL STRATEGY

The National Science and Technology Policy, Organization, and Priorities Act of 1976 established the Office of Science and Technology Policy (OSTP) to provide the President and others within the Executive Office of the President with advice on the scientific, engineering, and technological aspects of the economy, national security, homeland security, health, foreign relations, the environment, and the technological recovery and use of resources, among other topics. OSTP leads interagency science and technology policy coordination efforts, assists the Office of Management and Budget with an annual review and analysis of Federal research and development in budgets, and serves as a source of scientific and technological analysis and judgment for the President with respect to major policies, plans, and programs of the Federal Government. 

Within the OSTP exists the Subcommittee on Ocean Science and Technology (SOST), whose purpose is to advise and assist on national issues of ocean science and technology. In November 2018, the SOST released the second iteration of a decadal report titled Science and Technology for America’s Oceans: A Decadal Vision. The SOST advises and assists on national issues of ocean science and technology, and the report identifies five goals to advance U.S. interests in the coming decade, including promoting new energy sources and developing resilient coastal communities. This document provides guidance to many agencies working on ocean science and technology, including ocean energy, and helps them coordinate efforts.  

The U.S. Department of Energy's (DOE’s) Water Power Technologies Office (WPTO) aligns itself with the goals outlined in the SOST Decadal Vision, but more generally serves to advance cutting-edge technology to modernize the U.S. hydropower fleet and drive leadership in new ocean and river energy, with the goal of delivering low-cost power and resiliency to the nation’s power grids. WPTO and a handful of other agencies, including the National Science Foundation and the U.S. Navy’s Office of Naval Research, are the primary groups assisting with funding for research of ocean energy technologies.

Because marine renewable energy is an early stage market with limited incentives for investment, WPTO has a clear role in expediting the development of innovative marine renewable energy technologies. WPTO makes investments that support key technology innovations, mitigate risks, and assist the private sector in creating a robust U.S. marine renewable industry by providing funding and technical assistance. The Office has been working to solicit comments and refine a publicly available long-term strategy for its research and development (R&D) priorities (https://www.energy.gov/eere/water/articles/wpto-releases-updated-draft-mhk-strategy).  

WPTO funds research in four main topic areas: (1) foundational and crosscutting R&D, (2) technology-specific system design and validation, (3) reducing barriers to testing, and (4) data sharing and analysis. Work in each topic area provides the industry with fundamental tools, research, and innovations that tackle specific challenges hindering development.  

Federal funding for WPTO has maintained an upward trend since fiscal year (FY) 2013. WPTO’s FY 2018 and 2019 annual budgets were each funded at $105 million—a 25% increase from FY 2017 and its highest level ever. More information on WPTO can be found at: water.energy.gov

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U.S. Department of the Navy
The Naval Facilities Engineering and Expeditionary Warfare Center (NAVFAC EXWC) continues to actively support R&D of various renewable energy conversion technologies. NAVFAC EXWC's funding efforts focus on advancing technology development to harness marine energy resources to ensure energy security and for powering U.S. Navy and Marine Corps assets both on- and off-shore. NAVFAC is funding and actively managing the Navy's Wave Energy Test Site (WETS) in Hawaii, including the University of Hawaii's Hawaii Natural Energy Institute's on-site monitoring and support of the test site, and marine renewable energy development efforts at the University of Washington, Applied Physics Laboratory.

In FY 2018, the Defense appropriations bill passed by Congress provided $35 million for the U.S. Navy to support Alternative and Renewable Energy research and development. The FY 2019 Defense Appropriations bill saw a $7 million increase specifically for marine and hydrokinetic (MHK) energy research. Separately, the FY 2019 National Defense Authorization Act included $20 million for the Navy to conduct research on maritime robotics technology, which could also support marine energy.

 

NATIONAL LEGISLATION
In October 2018, the Water Resources Development Act of 2018, included as title I of the America’s Water Infrastructure Act of 2018 (S. 3021), was signed into law. The new law provides investment in ports, channels, locks, dams, and other infrastructure that supports the maritime and waterways transportation system and provides flood protection for homes and businesses. This represents Congress’ continued interest in locally driven, but nationally important, federal investments in water resources infrastructure.

 

In June 2018, President Trump signed Executive Order 13840 Regarding the Ocean Policy to Advance the Economic, Security, and Environmental Interests of the United States. This Executive Order replaces the previous one from 2010 and places an emphasis on economic growth and national security, as well as establishing a new federal interagency Ocean Policy Committee.

 

MARKET INCENTIVES
Also available as a market incentive for marine renewable energy developers are Clean Renewable Energy Bonds (CREBs). CREBs are tax credit bonds, the proceeds of which are used for capital expenditures incurred by governmental bodies (including states and municipalities), public power providers, or cooperative electric companies for a qualified renewable energy facility, marine renewables included. The bondholder receives federal tax credits in lieu of a portion of the traditional bond interest, resulting in a lower effective interest rate for the borrower. The issuer remains responsible for repaying the principal on the bond.

At the state level, Qualified Energy Conservation Bonds (QECBs) are another incentive program that may be used by state, local, and tribal governments to finance certain types of energy projects. QECBs are similar to CREBS, but are not subject to a U.S. Department of Treasury application and approval process. With QECBs, the borrower who issues the bond pays back only the principal of the bond, and the bondholder receives federal tax credits in lieu of the traditional bond interest. The tax credit may be taken quarterly to offset the tax liability of the bondholder.

Marine renewable energy technologies are an eligible energy resource under numerous states’ Renewable Portfolio Standards (RPS) and voluntary renewable energy goals. This market-based mechanism requires utilities to source a percentage of their electricity from renewable resources. As of this writing, 29 states have RPS in place and 8 states have voluntary renewable energy goals or targets.  

Many states also have Public Benefit Funds (PBF), which are a state-level market support mechanism designed to provide continued support for renewable energy resources, energy efficiency initiatives, and low-income energy programs. The incentives for each PBF vary by state. MHK technologies can also benefit from funding opportunities through non-profits and public-private partnerships, such as the Oregon Wave Energy Trust.



PUBLIC FUNDING PROGRAMS
 

  • Department of Energy Water Power Technologies Office Marine and Hydrokinetic Program
    Since 2008, WPTO funding has been split roughly equally among private companies, universities, and the national labs. The bulk of WPTO funding to-date for marine renewable energy has been allocated toward wave energy research, followed by cross-cutting R&D that supports multiple resource types, and then current technologies (see charts).

 

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Developers can seek DOE WPTO funding through several different competitive funding mechanisms. Funding Opportunity Announcements (FOAs) are competitive grants for industry, academia, or national laboratories to form partnerships in conducting research and testing. Some FOAs are available to international applicants. Small Business Vouchers (SBV) provide clean energy small businesses access to the state-of-the-art facilities and experts at participating DOE national laboratories (see Research & Development Section). Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs are methods through which federal agencies with large R&D budgets set aside a fraction of their funding for competitions among small businesses to pursue early stage research. Small businesses that win awards in these programs keep the rights to any technology developed and are encouraged to commercialize the technology. Lastly, DOE’s Technology Commercialization Fund (TCF) leverages R&D funding in the applied energy programs, paired with private partners, to mature promising energy technologies with high impact potential.

WPTO identifies and funds qualified projects within specific topic areas that support program objectives, depending on available funds. In evaluating all proposals for new energy developments or new adaptations of existing technology, WPTO assesses whether individual applications clearly meet the goals of the topic area and their potential to advance the industry. More information on available funding opportunities can be found at:
https://energy.gov/eere/water/water-power-funding-opportunities 

A recent FOA example is WTPO’s April 2018 announcement of up to $23 million to support marine energy technologies that aim to reduce capital costs and shorten deployment timelines. Funded research will further the development of technologies and result in cost reduction by (1) advancing early stage research and evaluation of next generation wave and tidal/current systems; (2) supporting early stage design of power take-off and control systems; and (3) developing tools and methodologies that capture recent advances in the scientific understanding of environmental impacts of marine renewable energy. To see other examples of WPTO funded projects, visit the online project database map at: https://www.energy.gov/eere/water/water-power-technologies-office-projects-map