Tidal Energy Market (Global, 2023)
Introduction
The tidal energy market is becoming a major player in the broader field of renewable energy, driven by the growing demand for sustainable and reliable sources of energy. With the world’s awareness of climate change growing, the exploitation of natural resources is gaining momentum, with the tidal energy industry, which uses the gravitational forces of the sun and moon, having made significant advances. This market is characterised by a large number of different players, from technology companies to energy companies to government agencies, and all of them are navigating the complexities of the tidal energy industry’s regulatory framework, the technological development and the investment opportunities. And the integration of tidal energy into the grid is a challenge and an opportunity, as countries seek to diversify their energy portfolios and reduce their reliance on fossil fuels. The ongoing research and development efforts are expected to increase the efficiency and cost-effectiveness of tidal energy systems, making them an important contributor to the transition towards a more sustainable energy future.
PESTLE Analysis
- Political
- In 2023, the tidal energy market will be strongly influenced by the political climate, mainly by the government's efforts to encourage the use of alternative energy sources. For example, the UK government has allocated £20 million to tidal energy research and development as part of its strategy to achieve zero carbon emissions by 2050. Also, several countries have implemented subsidies and incentives to encourage the use of tidal energy, such as France, which in its budget for 2024 allocated 15 million euros for tidal energy.
- Economic
- The main economic factors affecting the market for tidal energy are the rising cost of fossil fuels and the falling cost of renewable energy. In 2023, the average cost of electricity from tidal energy is estimated at around £100 per megawatt-hour, which is competitive compared with fossil fuels. In addition, the tidal energy industry is expected to create up to 5,000 jobs in the United Kingdom by 2025, reflecting the growing investment in this form of renewable energy and its potential to boost the local economy.
- Social
- Tidal power is being increasingly accepted, as people become more aware of the advantages of sustainable energy. The British public supports the exploitation of tidal power, and believes it will help reduce carbon emissions and create jobs. In addition, awareness-raising programmes and community involvement initiatives have been launched, and in 2023 more than 200 local workshops will have taken place to inform people about the advantages of tidal power and to respond to concerns about its impact on the environment.
- Technological
- The development of tidal energy depends on the technological development of the industry. In 2023, a number of new tidal power plants were developed, with the most recent models achieving efficiencies of up to 45 per cent. This technology was supported by a ten-million-pound investment from the European Union to promote research into tidal energy. And the integration of smart grid technology will make it possible to manage tidal energy resources more effectively, and to store and distribute energy more efficiently.
- Legal
- Legal regulations are being changed to make the development of tidal energy easier. In 2023 the British government shortened the permitting procedure for tidal energy projects from an average of 18 months to 12 months. In the meantime the environment regulations are becoming more and more demanding, and the Marine Management Organization requires detailed studies for all projects with a budget of more than £ 5 million.
- Environmental
- The environment is a very important concern for the tidal industry, where energy production must be balanced with the conservation of the environment. It is estimated that tidal energy could, by 2023, help to reduce by about a million tons the annual emissions of carbon dioxide in Great Britain. However, it is necessary to carry out an environmental impact study for each new project. By 2023, thirty such studies had already been carried out, to study the effects on marine fauna and on the environment, so as to ensure that tidal energy development is sustainable and responsible.
Porter's Five Forces
- Threat of New Entrants
- The tidal energy market is subject to considerable barriers to entry, such as high capital costs, the need for technical know-how and the regulatory framework. However, as technology develops and the demand for renewable energy increases, new entrants may find opportunities to develop the market and enter it.
- Bargaining Power of Suppliers
- The suppliers in the market for tidal energy, mainly manufacturers of the machines and associated equipment, have a limited negotiating position because of the specialised nature of their products. There are many suppliers in the field, which weakens their negotiating position.
- Bargaining Power of Buyers
- “Middlin’ — The buyers in the market for tidal energy, notably the public utility companies and government agencies, have some negotiating power because of the growing number of alternative sources of energy. However, the uniqueness of many tidal energy projects and the length of the contracts that are often involved can limit the buyer’s power.
- Threat of Substitutes
- The threat of substitutes in the tidal energy market is high, since there are various other renewable energy sources such as wind, solar and hydropower. These substitutes are often more quickly and cheaply established, which makes them an attractive alternative for electricity consumers.
- Competitive Rivalry
- Competition is moderate in the tidal energy market, with a few key players dominating the field. However, as the market grows and more companies enter the market, competition is likely to increase, leading to price wars and innovations.
SWOT Analysis
Strengths
- Renewable and sustainable energy source with minimal environmental impact.
- High energy density compared to other renewable sources like wind and solar.
- Predictable energy generation due to tidal patterns, enhancing grid stability.
Weaknesses
- High initial capital investment and installation costs.
- Limited suitable locations for tidal energy projects.
- Technological challenges related to underwater infrastructure and maintenance.
Opportunities
- Growing global demand for clean energy solutions and reduction of carbon emissions.
- Advancements in technology could lower costs and improve efficiency.
- Potential for government incentives and funding for renewable energy projects.
Threats
- Competition from other renewable energy sources, such as solar and wind.
- Regulatory challenges and potential environmental concerns regarding marine ecosystems.
- Economic fluctuations that could impact investment in renewable energy projects.
Summary
The Tidal Energy Market of 2023 is characterized by a unique combination of strengths and opportunities, notably its dependable and predictable nature, which can contribute to energy security. There are also threats, such as competition from other sources of energy and the regulatory environment. However, the market is faced with considerable weaknesses, such as high costs and limited availability of sites. Strategic investment in technology and infrastructural development, together with supportive policies, could help to overcome these weaknesses and take advantage of the growing demand for sustainable energy.