This paper presents an international assessment of the absolute and relative ocean energy innovation performance of countries worldwide. It finds that in absolute terms the countries with the largest public ocean energy RD&D budgets (i.e. innovation input) typically rank highest in terms of the number of ocean energy patent filings and amount of installed capacity (i.e. innovation output), with the notable exception of the US in relation to installed capacity. However, if we examine performance in relative terms (i.e. innovation outputs per $ of RD&D) we find a very different story with those countries with the largest RD&D budget performing worst and vice versa. The best performing countries in relative terms are Austria, Italy and Germany in terms of patents per $ of RD&D and the Netherlands, Ireland, France, Korea and Germany in terms of MW per $ of RD&D. One potential explanation for countries with the highest public RD&D budgets performing the worst is knowledge depreciation, where much of the knowledge gained via major RD&D funding from countries like the US and UK prior to a decade long hiatus in the 1990s is likely to have been lost as RD&D activities came almost to a standstill. Another is knowledge leakage where much of the knowledge generated by the use of capital intensive ocean energy test facilities within one country is ultimately lost to another as the company returns home. Other potential explanations include the poor design of innovation policy or the diseconomies of scale relating to large, unwieldy RD&D schemes. Recommendations for further work include broadening out the indicator framework used to offer a more complete picture of innovation performance. Additional input indicators include such as private energy RD&D and the number of ocean energy RD&D personnel, as well as output indicators such as MWh or the levelised cost of electricity (LCOE) of different countries’ devices. This work, alongside qualitative research (e.g. case studies, interviews), will help test to the hypotheses presented to explain the relative performance of different countries’ ocean energy innovation systems, as well as to identify best-practice ocean energy innovation policy design from the best performing nations identified earlier.

1. An International Assessment of
Ocean Energy Innovation Performance
Matthew J. Hannon and Renée van Diemen
Presenter:
Matthew Hannon
Hunter Centre for Entrepreneurship
Strathclyde Business School
University of Strathclyde
9 - 13 October 2016
Istanbul - Turkey

2. 2
STRUCTURE
• What is ocean energy and
why is it important?
• Research questions
• Methodology
• Absolute and relative
innovation performance
• Discussion
• Conclusions and next steps
Source: Atlantis
Source: Seabased

3. What is ocean energy?
Tidal range Tidal stream Wave energy OTEC Salinity gradient
Artificial height
differential between two
bodies of ocean water
and converts the
gravitational potential
energy into electricity via
a turbine
Converts kinetic energy of
free flowing tidal stream
into electricity.
Convert kinetic and
gravitational energy of
ocean waves into
electricity.
Takes advantage of the
temperature differential
between warm surface
waters and cooler deep
waters to generate
electricity via either a
closed or open-cycle
system.
Difference in salt
concentration between
two fluids (fresh vs. salt
water) captured either via
pressure retarded
osmosis or reversed
electro dialysis
Source: OTEC Source: MEL

4. Why is ocean energy important?
KEY TECHNOLOGIES TO REDUCE POWER SECTOR CO2 EMISSIONS
BETWEEN 6DS AND 2DS
Source: (IEA ETP 2015)
• Ocean energy (plus other ren
techs), could deliver 2% of GHG
emissions reduction needed to
limit temperature rise to 2oC by
2050
• Assumes that by 2040: 62GW
and 0.4% of global generation
(IEA ETP)
• BUT today only 2.2GW built or
under construction. 99% of this
tidal range (WER)
• Not commercial despite
supporting ocean energy RD&D
since early 1970s

5. Research objectives
• Significant gap to be bridged over next 25 years
• Innovation key to reducing very high costs
• Need to identify best practice for ocean energy innovation support.
Aim – To examine which countries have delivered the greatest ocean
energy innovation output (i.e. patents, MW) per unit of input (i.e. $ RD&D)
Research Questions
• Which countries have committed the most public ocean energy
RD&D support (i.e. input)?
• Which countries have delivered the greatest innovation output in
absolute and relative terms?
Scope - Exclude tidal range as a relatively mature technology

6. 6
Methodology
Input Output
Public ocean energy RD&D budget Ocean energy patents Ocean energy installed capacity
• 1974-2013
• 29 countries
• Basic/applied research,
experimental development and
demonstration NOT deployment
• Tidal energy (range, stream and
dynamic tidal power), wave
energy, salinity gradient power,
other ocean energy (OTEC, ocean
current power) and ‘cross-cutting’
Issues?
• Budget not spend
• Excludes private
• 1979-2011 (filing ‘priority date’)
• 180 countries
• Patent filings - EPO 2015 PATSTAT
• Nationality = inventor’s ‘country of
residence’. Fractional count used
for multiple investors
• Y02E patent classifications for
ocean energy (10/28, 32, 34, 36,
38)
Issues?
• Small bias towards Europe vs. PCT
but more complete and greater
nationality info
• 2007-2016
• 25 countries (as of 2016)
• Installed, under construction or
planned for deployment by 2016
• Nationality as:
o developer’s country of origin;
o developer’s majority owner;
host of installation.
• Primary data source: IEA’s Ocean
Energy Systems GIS database and
Annual Reports 2007-2015
Issues?
• Reliant on accuracy of reports
• Installations can come on and
offline

7. Input - Public ocean energy RD&D [1]
(IEA)
Phase 1 –
1974-1991
$879m
Phase 2 –
1992-2005
$96m
Phase 3 –
2006-13
$602m
1980 – High of $159m
1995 – Low of $2.8m
Total of $1.6bn budgeted
between 1974-2013

8. Input - Public ocean energy RD&D [2]
Rank Country
Public ocean
energy RD&D
1974-2013
Share
1 US 721.5 45.8%
2 UK 304.2 19.3%
3 CA 114.7 7.3%
4 NO 93.9 6.0%
5 JP 69.4 4.4%
6 FR 38.3 2.4%
7 SE 34.4 2.2%
8 AU 34.1 2.2%
9 DK 33.8 2.1%
10 KR 32.0 2.0%
• US leads - $722m between
1974-2013; 46% of global
budget
• 1st vs. 2nd phase - US, UK,
Canada, Norway and Japan
responsible for 95% of RD&D
between 1974-1996 but only
responsible for 66% of funding
between 1997-2013.
• Host of other countries entering
market such as Australia, France,
Korea and Sweden.
Top 10 countries – Public ocean energy RD&D 1974 -2013

9. 9
Rank
Total Ocean
Country
Patent
filings
%
1 US 242 18%
2 UK 228 17%
3 DE 154 11%
4 FR 79 6%
5 NO 78 6%
6 IE 52 4%
7 JP 50 4%
8 SE 49 4%
9 AU 47 3%
10 IT 45 3%
Global 1368 -
Output - Patents Top 10 international ocean energy
patent filings by technology 1979-2011
Source: EPO
• US leads with 18% of all patents during this
period, with the UK a close second (17%) and
Germany third (11%).
0
20
40
60
80
100
120
140
160
180
200
19791981198319851987198919911993199519971999200120032005200720092011
FractionalCountofmarineenergypatent
applicationstotheEPO
Salinity gradient
OTEC
Tidal stream
Wave energy

10. 10
Nationality as origin of developer
Output – Installed Capacity
Nationality as owner of developer Nationality as host of project
• Between 2007-2016 74.5MW of installed
capacity was delivered (not tidal range)
o 64% for tidal stream
o 34% for wave
o 2% for OTEC
o negligible salinity gradient
• UK leads across all 3 dimensions

11. 11
Public ocean energy RD&D per ocean energy patent filing (Source: IEA and EPO)
$m RD&D per patent
18th 17th 15th 4th 2nd 5th 1st 3rd
83% of total ocean energy RD&D budget
NOTE: Switzerland, China, Finland, Israel and Singapore excluded because no RD&d data
Global average = $0.98m/patent

12. $m RD&D per MW installed capacity
Rank Nation (origin) RD&D $m/MW Nation (owner) RD&D $m/MW Nation (host) RD&D $m/ MW
1 IE1 2.2 AT 0.1 PT 4.1
2 AU 5.6 FR 4.1 NL 5.6
3 NL 5.6 NL 5.6 KR2 6.1
4 KR2 6.3 DE3 6.1 FR 6.6
5 DE3 8.2 IE1 6.1 ES 7.9
6 ES 9.0 KR2 6.3 UK4 10.1
7 NO 9.1 ES 9.0 AU 10.1
8 DK 16.1 AU 10.1 CA 15.9
9 SE 19.1 DK 16.1 DK 16.4
10 UK4 20.5 UK4 18.9 SE 27.8
11 CA 47.9 SE 19.1 NO 38.2
12 US 335.7 NO 19.3 US 471.9
13 CA 47.9
14 US 329.6
Average5 (n=18) 23.9 (n=19) 23.9 (n=18) 22.5
.
NOTE: Countries delivering less than 1MW of capacity are filtered out to avoid output per unit of input results being skewed towards countries delivering negligible installed capacity
1 Missing value for 2013; 2 Missing values for 2012-2013; 3 Missing values for 2010-2013; 4 Missing value for 2008; 5 Relates to average of all the countries for which both installed capacity and public energy
RD&D budget data were available for with “n” relating to the number of these

13. 13
Innovation performance
• Countries with highest RD&D budgets (input) deliver
highest patents and installed capacity (output)
• BUT top spenders come in the bottom half of the class in
terms of relative performance (i.e. output per input)
• Methods may explain some effect
o Mainly private RD&D funding
o Focus on tidal range RD&D
o Demonstration projects from 1st phase no longer operational
BUT what other factors explain this phenomenon?

14. 14
Knowledge depreciation
• Hypothesis 1 - Countries who committed
major funding prior to ‘fallow period’ in
1990s did not fully benefit due to
knowledge depreciation
• Knowledge lost due to personnel turnover,
retirement, technological obsolescence,
‘stop-go’ production schedules etc.
• Poorest performing countries committed
most support in 1st phase of support
(1970s-80s) prior to fallow period in 1990s.
MW per $ RD&D - Bottom 5 performers (US, UK, Canada, Sweden and Denmark) committed 87%
($782m) of global RD&D budget between 1974-1995 vs. 59% ($401m) between 1996-2013.
Patents per $ RD&D - Bottom 5 performers (Japan, Portugal, Korea, US and Canada) committed 73%
($657m) of global budget between 1974-1995 vs. 43% ($293m) between 1996-2013.
1974: The first duck. UK’s Stephen Salter and David Jeffrey
of the Edinburgh ‘s Wave Energy group (EWPG)
1985: Kvaerner Brug OWC
power plant at Toftesallen,
Norway (WPL)
1976: Japanese wave energy converter Kaimei (Falcão 2014)

15. 15
Knowledge leakage
• Hypothesis 2 – Low RD&D spender have benefitted
from investments made by big spenders via
knowledge leakage
• Knowledge flows across national boundaries meaning
benefits do not always stay within investor country.
1. Mergers & acquisitions – movement of personnel
2. Test infrastructure - Top 3 RD&D spenders invested
heavily but facilities used by international companies.
a) Not an issue for domestic market growth if foreign
companies pay a higher fee.
b) Also benefits may accrue from clustering
Between 2007 and 2016 43% of the projects at the UK’s EMEC were by non-UK companies (e.g.
Atlantis Resources Limited, Wello Oy, Voith Hydro, OpenHydro, Andritz Hydro Hammerfest).
EMEC presents standard testing charges for both UK and overseas developers
Voith Hydro (GE) at EMEC (UK)
Open Hydro (FR/IE) at FORCE (CA)

16. 16
Poor policy design & diseconomies of scale
• Hypothesis 3 – Poorly designed innovation policy led to
underspent budgets and/or ineffective expenditure
• Hypothesis 4 – Ocean energy RD&D programmes have
suffered from diseconomies of scale, becoming unwieldy
to manage and suffering from diminishing returns.
UK case study
• £50m Marine Renewables Deployment Fund launched in
2006 went almost entirely unspent due to its premature
focus on commercialization versus early stage RD&D
• Pelamis and Aquamarine received 10% of all marine energy
demonstration funding between 2000-2015 but neither
now exist meaning no ongoing innovation outputs.
• Duplication of expenditure e.g. EMEC and WaveHub
Source: neildavidson.org
Source: ETI

17. 17
Conclusions
• Global ocean energy RD&D support falls into two distinct pulses (70s/80s
and 2000s) with some new countries entering market.
• Absolute performance – Countries with largest public ocean energy RD&D
budgets ranked highest in terms of innovation outputs (i.e. patents, MW),
apart from US and installed capacity.
• Relative performance - Countries with highest public ocean energy RD&D
budgets ranked lowest in terms of outputs (patents & MW) delivered per $
of RD&D support.
• Potential reasons - knowledge depreciation, knowledge leakage, poorly
designed ocean energy innovation policy and diseconomies of scale.
• Next steps?
o Need to test hypotheses with further qualitative and quantitative research
o Additional input and output indicators (esp. private $ and LCOE)

18. 18
Email: matthew.hannon@strath.ac.uk
Twitter: @hannon_matthew
Research Gate: https://www.researchgate.net/profile/Matthew_Hannon2