**1. Introduction**

As it is detailed in the Offshore Renewable Energy Strategy released by the European Commission in November 2020 [1], the European Union (EU) is raising its climate targets for 2030 and is committed to becoming climate-neutral by 2050. To achieve this, the EU is setting ambitious targets, including the generation of more energy at sea and from the sea. The goals for 2030 include an EU offshore wind energy capacity of 60 GW and an ocean energy capacity (including wave and tidal energy) of 1 GW. The targets are even more ambitious for 2050, where the aim is at installing 300 GW of offshore wind and 40 GW of wave and tidal energy.

The European strategic energy technology plan (SET-Plan) declaration of intent for ocean energy [2] has also set ambitious economic targets for wave and tidal energy technologies. Wave energy technologies are expected to reach a levelised cost of energy (LCoE) of 200 EUR/MWh in 2025, of 150 EUR/MWh in 2030 and of 100 EUR/MWh in 2035 (export infrastructure costs or the costs for delivering the electricity to onshore substations are taken into account within the LCoE). These numbers show that the economic and market potential of wave energy in Europe is large and reaching the SET-Plan target numbers is an ambitious goal.

**Citation:** Têtu, A.; Fernandez Chozas, J. A Proposed Guidance for the Economic Assessment of Wave Energy Converters at Early Development Stages. *Energies* **2021**, *14*, 4699. https://doi.org/10.3390/ en14154699

Academic Editor: Eugen Rusu

Received: 27 May 2021 Accepted: 21 July 2021 Published: 3 August 2021

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**Copyright:** © 2021 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/).

When a new type of wave energy converter starts its development path (the point in time when the initial idea or its working principle is conceived), it is a challenge to estimate its potential economic value when reaching the commercialisation stage. It is also commonly agreed that the primary metric for judging the economic potential of energy technologies is the LCoE. However, it is also commonly agreed that estimates of the LCoE for wave energy technologies are affected by the lack of a dominating technology as well as uncertainties caused by unproven technologies in terms of electricity generation [3–6]. In an attempt to answer these limitations, other metrics have been introduced to compare technologies at low Technology Readiness Levels (TRL) [7–9]. For example, the ACE metric, which is the ratio of the average climate capture width to the Characteristic Capital Expenditure (ACE), was introduced in [8] to assess the economic capabilities of wave energy concepts at early stages of technology development. In [10], the ACE is calculated as an optional cost metric for assessing technologies at early stages when not sufficient or reliable data for calculating the LCoE is available. Together with the Hydrodynamic Quality Factor (HQF), the ACE can be useful to compare different WEC concepts. This method is convenient when comparing concepts at low TRLs. However, when setting up the development pathway for a wave energy project, the target market indicator is the LCoE. When looking solely at one technology throughout its development lifetime, choosing a single metric, such as the LCoE, can therefore facilitate tracking the economic performances of the technology so that it follows the preferred pathway for development [11].

Assessing the LCoE of a technology at the early stages of technology development is associated with some uncertainties. Instead of a bottom-up approach, a top-down approach can be used, where the LCoE of a technology is defined by the entry LCoE value for the target market. There will still be some uncertainties in the costs found using this approach, but it will give a range of target costs for a technology to reach in order to achieve the end goal of commercialisation in the specific market.

In this context, guidance for the economic assessment of a wave energy technology at an early development stage or TRL (TRL1 to TRL4) [12] is proposed in this work with a focus on a target market while considering the uncertainties associated with the calculations. A methodology that can be applied to any project deployed at any location around the globe is presented in the following section, and this methodology is afterwards applied to a specific wave energy technology at an early stage of development. Limitations of the methodology and uncertainties on the calculations are also discussed. The methodology can eventually enable the identification of possible improvements for the particular concept studied.

#### **2. Proposed Methodology**

The proposed methodology to assess the economic potential of a wave energy converter at early development stages is presented in this section. The first step is to define the target market for the commercialisation of a specific technology. Afterwards, all assumptions and relevant relations are introduced to enable the reverse calculation of costs associated with a particular project. Then, a detailed breakdown of costs is presented, which can enable identifying bottlenecks and possibilities for the improvement of the technology. Finally, a review of estimates for economic indicators, such as Capital Expenditures (CAPEX), Operational Expenditures (OPEX), capacity factors (*Cf*) and availability, is presented in order to aid the economic evaluation.
