Britain's marine energy ambition faces head winds
* Britain awards 20 mln stg to two marine projects
* Investor confidence grows but financing still challenging
LONDON, Feb 27 (Reuters) - Britain's big first step in developing wave and tide power will be harder to follow through with full-scale commercialisation, speakers at a marine energy conference said on Wednesday.
A harsh economic climate and overseas competition, particularly from Asia, will make progress tougher.
Britain has 12 large-scale prototype devices with a capacity of 9 megawatts (MW) generating clean electricity, more than the rest of the world combined. It is also the first country to lease sea beds for almost 2 gigawatts of capacity.
Marine energy is still in its infancy compared to other sources of renewable energy like wind or solar power, with no large-scale commercial wave or tidal facility in operation.
Britain is betting on its potential, aiming for 100 to 200 MW of wave and tidal energy installed by 2020, but making the leap from prototype to full-scale array is a challenge.
"The UK is now the leader in marine energy but I am under no illusion that this will be an easy win," said UK Energy and Climate Change Minister Greg Barker.
"We are developing the sector in a tough economic climate and securing new funding is challenging. We must ensure we remain in the lead. There is interest in Asia in this (sector) and they are very clear they would like to knock us off the pedestal," he added.
As a sign of its ambitions for marine energy, government subsidies for wave and tidal projects will more than double from April 1.
In addition on Wednesday, the government awarded 10 million pounds ($15 million) each to two UK marine projects. One is a 10 MW array in Wales being developed by Siemens-owned Marine Current Turbines, which should operate commercially by 2015.
The other is the MeyGen tidal stream project in Scotland, which aims to generate enough electricity to power 40,000 homes by 2020.
However, it is now up to industry to "step up to the plate," so technologies get off the ground, Barker told reporters.
So far, the high development costs and immaturity of the sector have been too risky for some private investors, but there are signs that confidence is growing as engineering firms like Siemens and Alstom have taken controlling stakes in number of UK manufacturers over the past year.
Financing the first arrays is still not straightforward and there will be a period of company consolidation and more test facilities for the industry before any full-scale arrays can emerge, said Rob Hastings, director of energy and infrastructure at the Crown Estate, which invests in renewables projects.
UK-based Pelamis Wave Power, which has sold two of its wave energy converters to utilities, has so far relied on venture capital funding but is now also seeking strategic investment and partnerships to get ahead.
Richard Yemm, the firm's founder and commercial director, believes the UK government cannot wash its hands of the sector and still has to continue subsidising it after support mechanisms expire in 2017.
"The next phase (after 2020) will be commercial operation so we need a stable support mechanism comparable to (the current one) in place until the end of the decade," he said.
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