The Government expects to spend more than $100 million on the process of selling down its stakes in state-owed energy businesses.

Contrast that with the amount it invests in one of the country's largest untapped resources, marine renewables.

It's next to nothing. Since 2007 it has awarded a net $3.8 million in grants to five wave or tidal power projects.

That does not include the first grant of $1.85 million to Crest Energy which was withdrawn last year when the Todd Energy subsidiary was unable to meet deadlines associated with its plans for a tidal project in the Kaipara.


Todd's Tim Cosgrove says the project is in the "technology evaluation" phase: "Turbine development is being monitored but has not yet reached the point where it is considered technically viable."

EECA, which administers the contestable Marine Energy Deployment Fund, says it does not plan to run any further allocation rounds.

Similarly piffling amounts have been allocated for R&D in this area by the Foundation for Science Research and Technology, now part of Steven Joyce's super ministry.

It is piffling in light of the potential.

A 2008 report by Dr John Huckerby commissioned by the Electricity Commission and EECA estimated the potential capacity at more than 8000MW, mainly from wave power.

To calibrate the scale: the electricity industry's existing generating capacity from all sources is just under 10,000MW.

The International Energy Agency has estimated that by mid-century 350,000MW of wave and tidal capacity will be on line around the world.

Such estimates have to be treated with caution. The technology is still in its infancy so the economics are uncertain.


Dr Craig Stevens of Niwa (National Institute of Water and Atmospheric Research) says the theoretical size of the energy resource is very big. Every 10km of coastline has about a wind farm's worth of energy reaching it.

Not only the capital costs but the environmental impacts of harnessing that resource are uncertain, however. Niwa has been researching the latter.

There may be opportunity costs too.

The high cost of transmission cables to the mainland are an incentive for wave power arrays to be near the shore and they could compete with fishing interests.

What is clear is that the potential is large enough to warrant some outlay of public money exploring it. The British, among others, evidently think so.

Paul O'Brien of Scottish Development International, an arm of the Scottish Government, was in Wellington this week to talk to the sector here - it doesn't take long.

Scotland is a major, if not the major, centre of development for wave power in particular. It is home to the European Marine Energy Centre (EMEC) in Orkney, where devices can be tested in challenging conditions.

About £30 million ($59.4 million) of taxpayer money has been invested in EMEC, which is only part of the public support available along the R&D chain.

"If you go back a few years the companies were focused on one thing, survivability," O'Brien said.

"A lot of them have passed that stage. They have proven the device will survive," he said."What they are doing now is fine-tuning the output, to get the efficiency of the machines up.

"The cost of energy is now the important thing."

Associated with that is a change in the size and engineering heft of the companies investing in the sector.

"Marine energy has been pioneered by small companies which have started with an idea which has spun out of a university, or an inventor.

"They have developed it and worked on it with pretty low budgets, and then had to go out and raise venture capital to take them to the stage where they can actually deploy something," O'Brien said.

"Now we are seeing industrial giants with deep pockets step into this. They are looking at a global market."

He is talking about power utilities such as Germany's E-On, Sweden's Vattenfall, Austria's Andritz and ScottishPower, and about such engineering majors as Alstom, Rolls- Royce, Siemens and ABB.

Japan's interest in the sector has stepped up a gear, too, as it looks to replace nuclear power post-Fukushima.

"We have now got companies of scale, with manufacturing capability and experience of engineering costs down. We are on the cusp of a complete change." O'Brien expects to see the first arrays of 10MW or so of wave power devices deployed within two or three years.

Does this mean New Zealand has already missed the bus?

No, says Huckerby. It is still far from clear what the winning technology will be, both in wave and tidal current generation.

His own company, Power Projects, is involved in developing one, in a joint venture with the Crown research institute IRL.

"The particular type of device we are developing is called a point absorber. There are about 60 other point absorber devices under development and that is one of four different kinds of wave devices.

"The [United States] Department of Energy lists over 200 wave and tidal devices under development."

It is reminiscent of the state of the car industry around 1900.

Most of what activity there is in New Zealand, however, is not so much about developing generating technology as learning how, and where, to deploy it in local conditions - seeing what works.

The broader context is this.

One of New Zealand's areas of comparative advantage is a generous endowment per capita of renewable energy resources. That should become more valuable as the century progresses and the world is compelled to confront climate change.

Demand for electricity could grow rapidly if electric vehicles cross the line into commercial viability.

But tapping onshore renewable resources tends to run into nimby (not in my back yard) and Resource Management Act difficulties, as the fates of Meridian's Project Aqua and Project Hayes illustrate.

Offshore developments will not be immune from that either. All the more reason to invest in the necessary science so that decisions can be based on facts, not emotion.

The economics of marine renewables will be dominated by capital costs, the fuel is free.

All the more reason to develop some exportable technology and expertise of our own in this area, so that the impact on the balance of payments is not all one way.

Unfortunately the Government is myopic on this stuff, to judge by the Energy Strategy it produced last year.

The average earthworm has more vision than that document displayed.

Will partially privatised power companies take a more strategic view? It remains to be seen.