MARIANNE LAVELLE, U.S. News & World Report, December 18, 2007
The idea of harnessing energy from ocean waves to produce electricity for U.S. homes and businesses takes a giant leap forward today as the nation’s largest utility, Pacific Gas & Electric, announces the first commercial agreement to purchase power generated with this cutting-edge technology.
PG&E signed the deal, the terms of which were not disclosed, with the Canadian firm Finavera Renewables, a company that has had more than its share of jostles in recent weeks in the struggle to keep the hope of clean wave power afloat. The initial project would be relatively small—2 megawatts—and would be constructed about 2.5 miles off the coast of Eureka, Calif., with electricity to be delivered to customers onshore in northern and central California. A megawatt of conventional energy powers about 750 homes, but because wave power—like its renewable energy brethren, wind and solar—will be intermittent, the amount of electricity delivered is expected to be somewhat less.
But PG&E says the significance of the deal is large. “If you think about what this means to the energy security, this is monumental, because we are now going to have an example of the type of project that will be developed,” says PG&E spokesman Keely Wachs. The first step to making wave energy a reality is to prove it can work, especially to potential financial backers.
Finavera’s technology involves floating clusters of patented devices it calls AquaBuOYs several kilometers offshore, where ocean waves are strong. The wave energy is captured by two-stroke hose pumps underneath each buoy; pressurized seawater turns turbines that drive an electrical generator, and the power is transmitted ashore by an undersea transmission line. Finavera has an animation demonstrating its technology here.
However, the company suffered a setback in late October when a bilge pump failed in an AquaBuOY test off the coast of Oregon and the device sank to the ocean floor only a day before it was to be retrieved. Finavera, which trades on the TSX Venture exchange, earlier this month announced that although “there were a number of positive outcomes from the testing,” it had decided to take a $5.8 million write-off due to the AquaBuOY loss. The company said it had a $4.1 million deficit.
A few days later, Finavera announced that it had received commitments from a group of founders and significant shareholders for a private placement of $1.1 million to $2 million—not covering the shortfall. But chief executive Jason Bak said it allowed the company “to move forward without unnecessarily diluting shareholders at current prices.” Finavera is trading at about 15 cents per share after reaching a high of 90 cents earlier in the year.
With the PG&E announcement, Bak said in a statement, “There’s now a visible light at the end of the tunnel for offshore wave energy.”
Wachs of PG&E says the utility is “cautiously optimistic” about wave energy’s potential and, in fact, is also seeking to develop its own wave energy projects in addition to the power purchase agreement with Finavera. “We know there is huge potential from pure energy calculations, yet converting that will require us to do our due diligence and make investments to develop the technologies before we fully capture that potential,” he said.
California’s northern coastline is considered to have great potential because of its proximity to the powerful ocean-swelling storms that originate in the Aleutian Islands to the north. The California Energy Commission calls ocean wave energy “one of the most concentrated and widely available forms of renewable energy in coastal areas.”
But some in the fishing industry and coastal communities have raised questions about the impact of creating “wave parks,” or clusters of buoys offshore. Finavera says its arrays would be “no more noticeable than a small fleet of fishing boats.” But in Oregon, Gov. Ted Kulongoski, a huge booster of the technology, recently was forced to defuse tensions that have risen over potential projects by announcing he intends to ask the Federal Energy Regulatory Commission to limit the number of sites available for wave energy parks to between five and seven. Finavera has demonstration projects proposed in Oregon, Washington State, Canada, and Portugal, but the PG&E deal is the first commitment from a utility to purchase wave power.
One factor driving PG&E’s interest in wave as well as wind, solar, and other forms of renewable energy is California’s state law—one of the most aggressive in the nation—requiring that utilities generate 20 percent of their energy from renewables by 2010. PG&E currently has a 12 percent renewables mix, and the company says it is on track to exceed 20 percent (either under contract or delivered) in two years as required.