Yesterday’s new high for the Dow overshadows something of a comeback for alternative energy stocks. A case in point is Ocean Power Technologies, who - currently trading at 782.5 - have risen from just below 600 in August. Today’s news that OPT has received additional funding of 1.9 mln usd for its ongoing contract with the US Navy to install the group’s PowerBuoy systems off the Hawaiian island of Oahu is of course, an additional fillip.

Incidentally, I keep thinking about how important the US Military is to alternative energy research - especially the not commercially viable kind. Fuel cells are the obvious candidate. And as we see here with OPT, the US Navy takes an interest too. There’s a reason for this; the US Military is a very high consumer of energy - see this piece here which explores this in some detail. Ideally, they would like to have a much smaller fuel footprint, because all the supply lines of soft-skinned vehicles, refuelling planes and tankers can be quite vulnerable to a determined yet only semi-sophisticated enemy.

Finavera Renewables, has cannily produced a video for Youtube about their AquaBuOY - so here it is.

You can see quickly how it all works and the voiceover is slightly camp - a bit like Hal from 2001. But joking apart, how far are we really away from the mass deployment of wavepower?

Certainly, some people are very optimistic, forecasting a fall in cost similar to the trajectory of wind power. Yet the reason wind power fell so fast was much less to do with economies of scale and much more to do with (much like the aircraft industry) a technological shift from wood to metal to carbon composites in the turbine blades, which meant they were strong enough to be built much, much, bigger, hugely reducing the installed cost per kilowatt. There are now commercially available 5 mw machines. 20 years ago, the largest was only strong enough to generate approx. 40 kw.

That’s why I don’t buy into the mass production story for wavepower. There is no similar shift/technological breakthrough in materials deployed around the corner. Sure, it will grow fast from a very low base. But in the years to come, I don’t see it being anywhere near as cheap as windpower, in spite of some of its innate advantages - a more predictable load factor, modular scaleability and lower planning hurdles. At an estimated $6000 per installed kilowatt, it still costs too much.

I am most grateful to an Australian reader to alerting me to Carnegie Corp - a company which has a joint stake with Renewable Energy Holdings in the CETO wave technology. Carnegie also has some proprietary clean coal technology - a category incidentally I’m in 2 minds whether to include on AEI.

But the CETO could be the first wave technology deployed in scale anywhere in the world.

The experimental CETO seen here is waiting to be deployed as it would typically be hidden below the surface in an array exploiting the kinetic energy of the sea current. Just like windfarms, you’d want to locate these generators where the energy is greatest and looking at this map, you can see the appeal for Australia.

It clearly has political support in Australia - see this video clip here - with the Australian Federal Minister for Industry maybe overstating the case and calling it the Holy Grail. You may also want to check out the Ceto home website as this has a bit more information than either href=”http://altenergyinvestor.advfn.com/carnegie.html”>Carnegie Corp - or Renewable Energy Holdings do.I also recommend watching this video clip from the CETO site.

Australia can pretty much lay claim to the cheapest energy in the world - coal and it seems that scaled-up CETO farms of hundreds of megawatts are still a few years off. Carnegie though along with REH should be both be companies to watch for their exposure to this technology.

As our solitary listed wave stock, Ocean Power Technologies is well overdue some attention.

When you look at their list of projects in Hawaii, New Jersey and Spain, it’s clear that this is anything but a highly deployed power technology. One PowerBuoy produces 40kw and only in Hawaii and Spain will these wave “farms” will reach over 1 megawatt - this for a technology that is supposedly scaleable to hundreds of megawatts. In the year to Jan 31st, they showed a net loss of $5.5m, roughly the same as the year before. Nonetheless, this year, they are showing an order backlog of $5m compared to $2.6m a year earlier.

What I like about the technology is that it is modular - need more power, add another one. Wave power is also more predicatable than other intermittant renewable technologies based on wind or solar. In terms of costs, what we have to go on is that it is more expensive than wind but that the CEO believes with economies of scale, within 3-5 years they expect to equal and even be cheaper than wind.

Let’s see about that last point - there have been no end of alternative energy technologies who claim that with a big enough production run, costs will fall and they will make their breakthrough - which somehow doesn’t happen.

Here’s a post that touches on the crunch issue for many alternative energy companies;
Do you want jam today or jam tomorrow?

The posting talks briefly about Renewable Energy Holdings.

So here’s my take on the jam - viewed as what is cost effective and able to generate profits free of government intervention.

Jam today technologies - now until 2010

Waste (landfill) gas
Onshore wind
Solar thermal
Geothermal

Jam tomorrow technologies - post 2010

Biodiesel
Bioethanol
Biogas
Energy storage
Offshore wind

Jam the day after tomorrow technologies - post 2025

Fuel cells
Solar PV
Wave

London AIM listed Ocean Power Technologies , earlier this week announced much reduced annual losses. Net losses for the year to 30 April came in at $429,000 against $2.85m a year ago on revenue up 14% to $5.4m.

The company’s technology incorporate a "Powerbuoy" that captures wave energy from the rising and falling of the waves to drive an electrical generator.

Many view wavepower as having a much more popular future than windpower as it can be located out of sight, yet relatively near population centres and above all, provides predicatable power.

The flipside is that this is not quite off the shelf technology. It is more like where the wind industry was in the 1970s and costs are invitably higher. Right now it looks experimental - more like the fuel cells sector.

Renewable Energy Holdings Plc yesterday announced that provided certain conditions are met, it will buy 2 wind farm projects in Germany. The cost of the projects to REH is expected to be GBP33 million, with 80% funded through debt financing and the remaining GBP6.6 million supplied through REH’s existing cash reserves.

Today the shares are trading up by over 3.5% to 55p. It is still way off its April peak though of 75.5p. Since going public last year, the plan was that 85% per cent of the money raised was earmarked for investment in proven renewable technologies such as windfarms.

Fine. But it’s the CETO wave device that I’m really interested in. This is currently being tested but no date has yet been give for its commercial release.

Testing in this sort of technology has happened for at least 3 decades. And it’s still really hard to buy tidal/ocean power devices off the shelf from anywhere.

Let’s see if REH can crack it.