Q&A: SIMEC Atlantis CEO Tim Cornelius on pioneering tidal and coal-conversion

SIMEC Atlantis is a something of a lone wolf on the UK renewables scene. Not only is the company hoping to galvanise the nascent UK tidal market with its flagship Meygen project, but it's also pioneering the use of waste derived pellets at the first-of-its-kind Uskmouth coal conversion project in Wales

Outside of the UK, SIMEC Atlantis is forging links with deep pockets in Asia - with the likes of Mitsubishi and China Three Gorges, no less - and hopes to break into France with a tidal demo off the coast of Normandy too. 

inspiratia recently caught up with the company's CEO Tim Cornelius to talk about where the group is headed next, how Covid-19 is affecting its pipeline, and how the tides could change for tidal. 

The plan at the Uskmouth Power Plant is to convert two of the three old coal units to combust waste derived fuel pellets rather than coal. Equitix acquired a 25% stake in the 220 MW energy-from-waste project in 2018; what is the next big milestone for the project?

We are currently undertaking a pre-application public consultation on the project, so once that is completed the next step [will be] obtaining planning consent and permitting.

Another big announcement will be the results of the "burns tests" which will validate that the fuel works on an industrial scale. The trials are being conducted at the Mitsubishi headquarters in Nagasaki and will prove that it is possible to produce alternative fuels in a relatively traditional combustion system.

The implications of that will be really significant. If you think about the fact that pretty much every government in the world is legislating on retiring coal at the moment – which will result in a significant loss of baseload power – a lot of countries will therefore need to think about this.

This technology can be used in many different coal-fired power plants and will address the issue of non-recyclable waste in a very sustainable way. A lot of big utilities, governments and assets owners will therefore be looking to these results.  

After the results of the burns trials are in and the planning permission is secured, we will be able to finalise the structure of the EPC contract and then organise the financial structure of the project.

We are not in final terms yet but conversations [with equity and debt] are ongoing.

How has Covid-19 impacted the project so far, and how do you think it has affected renewable debt and equity markets?

Wales has a moratorium on construction sites at the moment, so that's been the main delay. As for debt and equity markets, after the shock of the first week or two, our experience has been that markets have not closed; in fact, productivity seems to have increased.

Ultimately, there is a lot of dry fire powder in the market and a lot of money flooding into ESG, and not a lot of pure play renewables projects outside offshore wind to dedicate balance sheet to. We have found that having more time under Covid-19 has allowed us to speak to a wider universe of investors than we normally would have.

MeyGen is the largest consented tidal stream project in the world, what is the next step?

The Scottish government has recently made some grant funding available for us to deploy to a subsea hub which is an important precursor to the next phase of development.

This is a really important, because the subsea hub represents a significant cost reduction. It will enable us to link multiple turbines to one export cable, allowing us to deliver power at a cost that would be attractive to a corporate customer, such as a data centre operator for example.

Scotland needs more fibre optic connectivity and data centre capacity, so it's about coupling that demand with an ability to enter into a corporate power purchase agreement private wire arrangement – and this is where a lot renewable projects are going now.

If you can find corporate customers who, like data centres, are very large but also very stable industrial users of electricity, that makes for an interesting project.  

We are currently assessing a 30-acre campus in Caithness which could house a data centre with a capacity of up to 80MW.

The other interesting angle is for us is the potential for alterations to the contracts-for-difference (CFD) programme, specifically changes that would open up access for tidal technologies to compete [on a fairer basis].

BEIS is currently consulting on restructuring the technology pots in the CfD auction and if it decides to move offshore wind out of the pot 2 for emerging technologies, then MeyGen would be one of the largest consented projects in that bracket at the next auction in 2021. We could therefore bid for a CfD at a price point that we could deliver.

I think there is a general acceptance in the marine energy sector that the next big stage of Meygen will help to pull through the rest of the sector.

In Japan you are supplying Kyuden Mirai Energy for a pilot project off Naru Island and you have worked with The China Shipbuilding Industry Corporation and China Three Gorges to build a 500kW tidal stream turbine. What will you gain form these partnerships?  

The Asian markets are opening up. Japan was our biggest ever contract so we are working to build a new turbine which is going to be installed in September this year.

Not many people appreciate that Nagasaki the archipelago has some of the highest number of islands in the world - and is comparable to Indonesia in that sense – so successful trials will trigger further funding of projects.

At the same time, we took a concept to China Three Gorges (CTG) and they were able to take that through, build and install a turbine in 18 months, which is absolutely remarkable.

When you get large utilities like CTG involved you would expect that – predicated on successful trials of that turbine, which are ongoing – they will proliferate. They have access to size, scale and a balance sheet beyond our wildest ambitions.

It also works very well for the Scottish Government because they want to see more exports, so we have our home market in Scotland and we are exporting intellectual property, designs, and know-how to China and Japan, and also obviously France.

You are also developing project a project in Normandy, how does this fit into the broader strategy?  

In Normandy we are looking to commence FEED as soon as we are able to start travelling again. The project involves an 8MW to 12MW project on the Normandy side with power exported to Alderney and we are expecting to hear back on development consent for this project imminently.

The project also works as a Brexit hedge strategy for us, given it can access EIB and EC funding, which are both big supporters of marine energy.

It will be the first time you are taking an island completely off diesel and replacing it with tidal power, but in the territorial waters of Alderney there is up to 3GW of exploitable resource there.

We are hoping in due course that turns into a very large project, and the 80MW at Meygen will hopefully by then validate the construction cycle at large-scale. The proposed changes in the CfD auction could really unlock all of this.