Shares in US-based Ocean Power Technologies surged on Wednesday after the company announced it would bring in US defence contracting giant Lockheed Martin in a “teaming agreement” on its proposed, but much delayed 19MW wave energy project near Portland in Victoria.
Lockheed Martin effectively replaces Australian company Leighton Holdings as the major contractor on the $230 million project, which was awarded a $66.5 million grant in 2009 under the Federal Government’s Renewable Energy Development Program, but like some other projects in that program, has made little progress to date. However, the company says it now intends to begin construction and development in 2013, will deliver the first electricity to the grid in 2014, but the installation of all 28 of its PowerBuoy units will not be complete until 2017.
Still, OPT’s shares jumped 72 per cent on the news – albeit from record lows of around $US2 to a five month high of $US3.79, and a close of $US3.55 – as investors reacted to the involvement of Lockheed, which is an industrial and defence giant with $46 billion in annual sales.
OPT has been working with Lockheed for nearly 8 years, mostly on wave energy projects for the US Navy, and last October OPT said Lockheed would provide design, manufacturing, system integration and supply chain management expertise for a proposed 1.5W wave energy project in Reedsport, Oregon.
The latest announcement says that Lockheed Martin will assist with the design of OPT’s PowerBuoy technology, lead the production and system integration of the wave-energy converters and support overall program management of the project in Victoria.
OPT’s partnership with Leighton was only officially wound down in June, and OPT’s Australian subsidiary (which is nearly 12 per cent owned by Woodside Petroleum), has bought out Leighton’s interest in the project owners, Victorian Wave Partners.
OPT Founder and executive chairman, the Australian born George Taylor, blamed “internal issues” at Leighton for the delays in the project. “Leighton had its own issues, and therefor no progress could be made until that was finalized,” Taylor told RenewEconomy in an interview. “We weren’t able to move forward. We are now proceeding quickly to catch up with lost time.”
OPT says the involvement of Lockheed martin would “provide momentum” to the project and the partners are assessing financing opportunities for the project and pursuing power purchase agreements with local industry and utilities. Taylor says the company is talking to half a dozen potential buyers of a power purchase agreement, at least for the first stage of the project, which will involve just three of its 150kW PowerBuoys. The second and third stages will involve 7 and then 18 of its next generation 500kW powerBuoys.
Taylor said the company has a deadline to bring financial close to the first stage of the project by the end of 2013.
The OPT project is the largest wave energy project announced in Australia, and one of the largest in the world. However, several smaller installations involving Australian-based technology are likely to be built before this. The federal Government, under its newly launched Emerging Renewables Program, has announced nearly $20 million in funding for three separate demonstration plants in WA, South Australia and Victoria in recent weeks, including a 2MW grid-connected project by Carnegie Wave Energy, a 1MW project by Oceanlinx and a 500kW project by BioPower Systems. Carnegie’s project should be operational in 2013.
All three Australian wave energy producers believe that wave energy technology costs will fall to around $100/MWh by the end of the decade, if not earlier, and will be competitive in many countries before that.
OPT and Lockheed said there was enormous potential for wave energy in Australia and around the world. Taylor said the World Energy Council had identified the potential of wave energy to provide 10 per cent of the world’s energy needs. “Australia has very attractive wave resources and this percentage could be significantly higher,” he said.