*2.4. Estimates for CAPEX, OPEX and Other Relevant Economic Indicators*

It is very pertinent to provide different references that may assist in the application of the proposed guidance to a particular WEC. The purpose of this subsection is to present estimated relations between the CAPEX and OPEX as well as targeted values of the CAPEX, OPEX, capacity factors, availability and interest rates provided by different technology developers in the wave energy sector. The references have been selected according to their relevance. All of them aim to take into account the views and state of the art of several wave energy developments.

Ocean Energy System [4] reviewed current and projected costs (CAPEX, OPEX and LCoE) for wave energy converters at a TRL 6 and above by engaging with a large number of international stakeholders globally involved in wave energy developments. Three different development stages were considered: i) first array deployed, ii) second array deployed and iii) first commercial-scale project (first project that is constructed with a view to generate commercial return without the need for capital or public sector support outside of an authorised feed-in-tariff). The costs of a generic WEC were derived by considering the different TRLs of the concepts being consulted and the uncertainty behind the data. A summary of the main findings is provided in Table 2, and the reader is referred to [4] for the detailed methodology employed.

**Table 2.** An example of estimated CAPEX and OPEX values for different deployment stages [4]. The maximum value is either that from the responses of consulted developers or from any of the reference studies analysed. This is particularly true for the OPEX, where developers were presenting costs significantly more optimistic than past studies have suggested. An exchange rate of USD 1.11 to EUR has been applied. Data adapted from [4].


In 2018–2019, a second study [51] had the main goal of updating the previous findings. With the aim of targeting a higher number of respondents, all active wave energy developers around the world were invited to participate in the study. Based on the respondents, the typical features and costs of a generic, utility-scale floating wave energy farm were obtained and are provided in Table 3. These costs represent only the start of the learning curve, and the values are expected to decrease as more farms are deployed.


**Table 3.** Typical features and costs of a generic, utility-scale floating wave energy farm gathered from a survey sent to many developers around the world [51]. Data adapted from [51].

To complement the previous figures, the estimates of future costs for wave power included in the Technology Catalogue of Denmark [15] are shown in Table 4. The costs presented aim to provide an estimate for what capital and operational costs of wave power converters might be in the future assuming most of the research and development challenges have been overcome, economics of scale have been realised and efficiencies in production and operation due to the learning curve effect have been achieved.

**Table 4.** Wave power data sheet from the Technology Data Catalogue [15]. Data adapted from [15].


#### **3. Example and Discussion**

The methodology presented in the previous section is applied in this section to the LiftWEC concept. The LiftWEC project [52] aims to develop a new type of wave energy converter (the LiftWEC concept) that couples with the waves through lift forces generated by one or more hydrofoils that rotate in a single direction. LiftWEC is currently at TRL 2, and it is expected to reach TRL 4 [52] by the end of the project (late 2022). The concept is ultimately designed to work in wave energy farms and supply electricity at grid-scale. Unlike other projects, the concept is yet to be defined during the LiftWEC project. No developer is involved, and the resulting concept will be the fruit of the unique development process detailed in [52].

The target deployment location for the LiftWEC concept is off the North Atlantic coast of France, close to Quimper, where the water depth at the deployment location is 50 m and the wave resource is estimated at 40 kW/m. The targeted rated power is still an unknown for the final concept but it should be in the range [0.75, 2] MW, while the lifetime of the project is set at 25 years.

The project has set two reasonable economic goals to its technology development. The first goal is to prove an LCoE of 200 EUR/MWh by mid-project, coinciding with TRL 2. The second goal is proving an LCoE of 120 EUR/MWh by project end, i.e., when reaching TRL 4. The latter LCoE is aligned with target values to be achieved for a utility-scale project, and both target values will be used in the following section to perform the reverse calculation and obtain ranges for the CAPEX and OPEX for the concept using the technology agnostic breakdown of costs presented in Section 2.3.

#### *3.1. LCoE Calculation*

The goal behind the LCoE calculation is to get an indication of the values that would allow achieving the LiftWEC project mid-term target (TRL 2) LCoE of 200 EUR/MWh and end-of-project (TRL 4) target LCoE of 120 EUR/MWh. In Section 2.2, the assumptions and equations leading to the calculation of the LCoE were introduced. The values for the parameters affecting the LCoE calculation, i.e., the capacity factor, the discount rate, the project lifetime and the availability, are presented in the top four rows of Table 5.

From the discount rate and the lifetime, according to Equation (1), the annualisation factor becomes *Af*(25, 0.05) = 0.0696 for both cases. The normalised annual energy production is then obtained from Equation (2), providing the value of NAEP = 2.50 MWh/kW/year for the mid-term target and NAEP = 2.98 MWh/kW/year for the end-of-project target.

As also presented in Section 2, a relation can be established between the CAPEX and OPEX. An estimate of the OPEX accounting for 5% the CAPEX seems reasonable for the mid-term project (TRL 2), where no O&M optimisation has been done. For the end-ofproject (TRL 4), where O&M optimisation techniques shall be considered, a reduction of the OPEX is expected, and hence, it seems reasonable to estimate an OPEX value of about 2.5% CAPEX.

Isolating the CAPEX and OPEX in Equation (3) and considering the OPEX as *x*% of the CAPEX gives:

$$\text{CAPEX} = \frac{\text{LCoE} \cdot \text{NAEP}}{A\_f + \text{x}} \tag{4}$$

resulting in a CAPEX value of 4181 EUR/kW for the mid-term project, assuming the OPEX accounts for 5% the CAPEX; and a CAPEX value of 3780 EUR/kW for the end-project, assuming the OPEX accounts for 2.5% the CAPEX. For clarity purposes, the two estimates of the CAPEX are rounded to 4200 EUR/kW and 3800 EUR/kW, respectively. OPEX values are consecutively calculated and obtained at 210 EUR/kW/year and 95 EUR/kW/year, respectively, providing the two target LCoEs to be achieved by mid-project and end-ofproject of 200 EUR/MWh and 120 EUR/MWh, respectively.

Table 5 summarises the values for the different parameters and the results to be achieved in order to reach the two target LCoEs of 200 EUR/MWh and 120 EUR/Mwh.



By comparing the numbers shown in Table 2 to the estimates presented in this work, it can be seen that the present estimates of CAPEX (4200 EUR/kW and 3800 EUR/kW) and OPEX (210 EUR/kW/year and 95 EUR/kW/year) are in the same order of magnitude that the minimum values expected in the three deployment stages addressed by the OES study (first array, second array and first-commercial scale project). From this, we could argue that the calculations and targets presented in this paper—and also worked throughout the LiftWEC project—are aligned to the sector's targets. However, it is also important to notice that there are still considerable R&D efforts to go from the LCoE of 200 EUR/MWh to the 120 EUR/MWh, especially in terms of increasing the ability of the LiftWEC concept to capture more energy (and hence, increasing the AEP without compromising costs) and to lower the OPEX by applying innovative O&M techniques. Two aspects that have proven to

be of the utmost importance to the sector [53]. It is also important to note that the presented values (i.e., LCoE, CAPEX, OPEX, capacity factors and availability) are estimates with a relevant degree of uncertainty (the LifWTEC Concept is currently in TRL 2), as indicated in Section 3.3.
