Best stock to invest in – Grid Connected Ocean Power | Alternative Energy Stocks

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by Debra Fiakas CFA

The U.S. Navy is laying claim to the first electric grid connected
wave power generator in the country.  A test site has been set
up near military facilities at Kaneohe Bay in the Hawaiian Islands,
where wave activity is known to be exceptional.  Yes, Hawaii is
part of the United States.  The project consists of two
wave-power generation systems or ‘power buoys’ anchored about a
half-mile off shore.  The two buoys are connected by undersea
cable to the Marine Corps base at Kaneohe and ultimately to Oahu’s
electric power grid.

The first of the two buoys is produced by Northwest Energy Innovations. 
Its Azura wave energy device was first deployed at the
Hawaii test site in June 2015.  The buoy sits atop the ocean
with about 12 feet rising above the waves and another 50 feet
extending below the surface.  The system weighs 45 tons and
uses both up and down as well as side to side motions to generate
electricity.  Northwest got help installing the Azura in Hawaii
from a contractor, Sea Engineering, which also helped with the
assembly and launch.  The Azura was developed in collaboration
with Callaghan
, a government agency of New Zealand and Energy Hydraulics Ltd., also
located in New Zealand.

It seems that ‘takes a village’ to put a wave power buoy into the
ocean.  The corrosive conditions of salt water and the dangers
presented by the unpredictable waves and currents present
significant challenges for engineers.  Device design,
materials, anchoring and grid connections each present unique

The second buoy was developed by Fred. Olsen Ltd. based in Great
Britain.  Its Lifesaver wave power system is a 50-foot wide and
3-feet thick doughnut-shaped device, which is anchored to the ocean
floor by cables.  It is the action of the cables as the ocean
moves that turns the generator.  The Lifesaver was put in place
at the Hawaii site in April 2016, with help from Healy Tibbitts Builders
and Sea Engineering, Inc. 
The smaller of the two buoys, the Lifesaver is expected to generate
about 4 kilowatts.

The Kaneohe projects is a first for the U.S., but not a first for
the world.  The first grid-connected wave power station in the
world was turned on in early 2015 of the coast of Western Australia
by the device developer Carnegie
Wave Energy Ltd
AUS or CWGYF:  OTC/QB).  There are limited ocean power
grid connections in the United Kingdom and Norway as well.  The
U.S. has remained behind developers in these areas where the
engineering community has been quicker to embrace innovation and
where public policy has been supportive of alternative energy
development.  Over the past decade the U.S. military has
invested about $300 million in hydrokinetic research and
development, well behind investments in the United Kingdom,
Australia and northern Europe.  The Hawaii project has been
made possible by financial support from the U.S. Navy, which has
interests in reducing energy costs at Hawaii military installations.

The Navy will collect performance data from the Hawaii project in
the coming months, which will be used to make adjustments to the
power buoys installation as well as to the grid connections. 
Northwest Energy Innovations also plans changes in its Azura power
buoy to increase electric output from 20 kilowatts to 500 kilowatts.

For now the companies involved in the Navy’s project in Hawaii are
all privately held and are beyond the reach of most individual
investors.  Wave power is still in the nascent stages and few
ocean power projects underway anywhere have reached the point of
generating power on a consistent basis.  Some investors might
remember solar energy in the 1980s, when solar cells had been proven
capable of generating electricity but had not consistently generated
profits for any company.  With practical knowledge of system
design, construction and operation accumulated, the early companies
were eventually able to achieve scale and then began generating
consistent income streams.

The realization of a full and complete grid connection in Hawaii
makes ocean power more certain for U.S. coastal markets.  In a
study commissioned by the U.S. Department of Energy, RE Vision Consulting
estimated that the theoretical ocean wave energy resource potential
in the U.S. could satisfy more than 50% of the country’s annual
demand.  This is a resource that cannot be ignored no matter
how challenging the engineering work.   

Debra Fiakas is the Managing Director of
Crystal Equity
, an alternative
research resource on small capitalization companies in selected

Neither the author of the Small Cap
web log,
Crystal Equity Research nor its affiliates have a beneficial
interest in the companies mentioned herein.

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