Waves

If you remember your physics, you know kinetic energy: the form of energy found in objects in motion. Converting it to electricity is what allows windmills and hydroelectric turbines to generate renewable energy. But we’re yet to fully harness one of the most consistent and intense sources of kinetic energy: the ocean’s tides.

Tidal energy is power produced from the movement of tides, caused by the gravitational interaction between the moon, the sun and the Earth. It’s natural, predictable and packed with energy day and night, rain or shine. Compared to wind turbines that only have an average efficiency rating of 40% in turning wind into energy, or solar panels with an even lower 15 to 22%, tidal turbines are 80% efficient in converting the tides’ energy into electricity. For those wondering about the efficiency of fossil fuels, they have a rating of only 30 to 45%.

Despite its numerous advantages, tidal power has as its main obstacle the initial costs associated with building and connecting tidal turbines to the power grid. Designing turbines capable of withstanding strong water pressure and ensuring their compatibility with the power grid requires extensive engineering and manufacturing efforts. Additionally, there are concerns about the potential impact of turbines on wildlife and the chemical composition of the water.

Fortunately, various governments and companies have been heavily investing in the development of tidal energy technology. Projects across Asia and Europe are trying to make turbines more cost-efficient and less detrimental to nearby habitats. 

Between the global pledge towards net zero emissions, the auto industry’s commitment to going electric and consumers’ rising interest in sustainable products, investors have good reasons to keep an eye on the renewable energy industry. It has indeed grown much faster than anticipated in recent years, and is expected to touch US$2t in market value by 2030.

As for the global tidal and wave energy market, which was valued at a modest US$477 million last year, it’s projected to experience a remarkable compound annual growth rate (CAGR) of 43% until 2031 to reach yearly revenues of US$10 billion. This might just lead us to a perfect storm.

Stella Ong

Markets Analyst

Stella is a markets analyst and writer with almost a decade of investing experience. With a Masters in Accounting from the University of Sydney, she specialises in financial statement analysis and financial modelling. Previously, she worked as an equity analyst at Australian finance start-up, Simply Wall St, where she took charge of the market insights newsletter sent out to over a million subscribers. At Stake, Stella has been key to producing the weekly Wrap articles and social media content.