MeyGen, the world’s largest tidal stream development, has today announced that it has agreed terms for a funding package to finance the construction of the first phase of its ground breaking 398MW tidal array project in the Pentland Firth, Scotland.
When fully completed, the MeyGen project will have the potential to provide clean, sustainable, predictable power for 175,000 homes in Scotland, support more than 100 jobs, reduce carbon emissions, and deliver significant, long-term supply chain benefits for UK economy.
The MeyGen project, owned by AIM-listed tidal power company Atlantis Resources, has successfully led a funding syndicate to raise approximately £50 million which will be used to finance the initial stage of the wider MeyGen project.
The initial stage (Phase 1A) will include the installation of 4 X 1.5 megawatt turbines offshore as well as the construction of all onshore infrastructure to support the project, including the onshore power conversion centre and grid connection.
When completed, the project will include up to 269 turbines submerged on the seabed, generating enough energy for 175,000 homes in Scotland. The total first phase (Phase 1) of the project alone (61 turbines / 86MW) is expected to provide enough electricity for 42,000 homes in Scotland. Construction is expected to begin later this year, with the first electricity anticipated to be delivered to the grid by 2016.
Approximately 50 direct jobs will be created during Phase 1 of the project, with a further 70 indirect roles created throughout the supply chain.
As the first large-scale tidal project of its type in the world to successfully reach a funding agreement, the MeyGen project will be a catalyst for the global tidal power market, signalling the transition of the industry from demonstration projects to commercial arrays.
The funding syndicate includes: Atlantis; the Department of Energy & Climate Change; The Crown Estate; Scottish Enterprise via the Renewable Energy Investment Fund (REIF); and Highlands and Islands Enterprise.
HSBC will be acting as the security trustee and account bank for the project, having also facilitated various guarantees to key stake holders (National Grid PLC and Scottish Hydro Electric Power Distribution PLC) to support the project.
The finance package includes a combination of equity, debt and grants, and 60 percent of the project cost will be invested in the UK supply chain. Significant project supply chain partners will include ABB, Andritz Hydro Hammerfest, Global Energy Group and James Fisher PLC.
As a result, the project has won the support of the Scottish government via Scottish Enterprise’s Renewable Energy Investment Fund, the British government, and The Crown Estate.
Commenting, Atlantis CEO and MeyGen director Tim Cornelius, said:
“Today, we are witnessing the transformation of a sector. MeyGen is one of the most exciting and innovative renewable energy developments in the world, marking the long-awaited arrival of tidal stream generation as a serious, large-scale player in global energy markets. I am proud that Atlantis will become the first company to successfully develop a project of this kind, at this size, making Atlantis the first independent power producer from a tidal array.”
The Department for Energy & Climate Change estimates that the UK alone has around 50% of Europe’s tidal energy resource and that it could meet 20% of the UK’s electricity demand. Tidal power is not only expected to play a major role in replacing the UK’s ageing coal and gas fired power plants, but its highly predictable nature means that it avoids many of the challenges associated with managing electricity generated by unpredictable, and often controversial, land-based renewable technologies such as onshore wind and solar farms.
The funding package agreed today will be used to fund the initial stage of the MeyGen project. The package is subject to conditions which are expected to be satisfied shortly. More details on the structure of the funding package are expected to be released when appropriate once these conditions have been satisfied.
The first project at commercial scale of its type, MeyGen project will use tidal stream turbines supplied by Andritz Hydro Hammerfest and a Lockheed Martin designed turbine supplied by Atlantis. Not dissimilar in appearance to wind turbines, sub-sea tidal stream turbines are installed on the seabed and generate electricity from the ebb and flow of the sea’s tides.
The UK government has provided £10 million in grant funding to the MeyGen project from its Marine Energy Array Demonstrator (MEAD) scheme, part of £185 million the UK government is investing in low-carbon technologies.
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