Ocean Energy Europe ‘disappointed’ at OpenHydro liquidation

International network Ocean Energy Europe has expressed disappointment at the liquidation of Irish tidal energy company OpenHydro by its French parent, Naval Energies.

Describing it as a “setback”, the network of ocean energy professionals predicated that tidal stream projects in Europe would “march on”.

French company Naval Energies announced the cessation of its investments in tidal stream on Thursday, forcing the liquidation of its tidal stream subsidiary, OpenHydro.

Naval Energies blamed a “deterioration in the market” and a “lack of commercial prospects in the long term” for its decision.

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The decision came as a shock to OpenHydro’s 100 staff, according to industry sources. The company has a technical centre in Carlingford, Co Louth, offices in Dublin and a Canadian branch in Halifax, Nova Scotia.

It had connected a tidal turbine to the grid in Canada this week, and opened a facility in Cherbourg, France, in June.

Provisional liquidators were appointed by the High Court on Thursday to two related companies – Dublin-based OpenHydro Group and its subsidiary, OpenHydro Technologies – after hearing both are “seriously insolvent”, with debts of approximately €280 million.

Ms Justice Caroline Costello said she was satisfied to appoint Michael McAteer and Stephen Tennant of Grant Thornton as joint provisional liquidators to the companies.

The court agreed to the appointments after being told Naval Energies, OpenHydro’s French parent, which had invested €260 million in the firms, was no longer prepared to support the enterprises because they were loss-making.

Ocean Energy Europe (OEE) chief executive Rémi Gruet said that although the liquidation was “disappointing news”, closures are “part of pioneering and innovating in a brand new industrial sector, on the road to commercialisation”.

“Today, numerous tidal stream projects are consistently producing power around Europe,” Mr Gruet said.

“Costs are coming down fast with every new project, and the EU has set targets for tidal to reach 10€c/kWh by 2030, well below offshore wind costs only five years ago,” he said.

“The industrial opportunity presented by tidal stream is significant, and governments should seize it by providing a clear signal of intent to the market. France still has that opportunity to show support for tidal energy projects in its forthcoming “Programmation pluriannuelle de l’énergie,” he said.

“The question has never been ‘if’ tidal stream will become an industry, but rather ‘when’ and ‘where’. Europe still has a significant technological advantage, but its competitors are gaining ground,” he said.

The Marine Renewables Industry Association (MRIA) said it was "deeply disappointed to hear of the closure of tidal energy pioneer Open Hydro", and said it was "a great blow to the global ocean energy industry".

Naval Energies acquired OpenHydro in 2013 from its founders, who established it in 2006. Rossa Fanning SC for Naval Energies said, on top of what the parent had already invested in the Irish group, it was projected OpenHydro would make further losses of €128 million between now and 2026.

Counsel said 2017 had been a particularly challenging year for the Irish group. During that period, the group, with operations in Ireland, Scotland, Canada and Japan, sustained about €160 million in losses.

The group of companies needed €1 million a week to survive and, given the predictions about future income and expenditure, the parent firm was not prepared to advance any more money that would allow it continue to operate, counsel said it was appropriate, given the complex structure of the group, that liquidators be appointed to secure assets worth in excess of €80 million, Mr Fanning said.

Another factor supporting the application was that his client has received a communication from the group’s senior management which indicated there had been a breakdown in relations between them and the board of directors, he said.

The group was not opposing the application to be wound up, he added. Ms Justice Costello, after appointing Mr Tennant and Mr McAteer, adjourned the matter to next month.