Marine Energy - Green Chip Review

Marine Energy Investments

Has the tide gone out on marine energy?

The Pelamis wave energy converter project in Portugal was scuttled in March due to technical setbacks. . .

But even with that 21 MW project coming offline, the learning curve for offshore hydropower is getting shorter and shorter. So, we're getting closer and closer to harnessing the 2-3 million MW of coastal wave energy resources around the world.

Even when they're located near seaside cities, ocean energy facilities face many of the same challenges as offshore wind power. Both resources must, of course, be tied back to land with efficient and robust transmission systems.

And as the stiff maritime breezes can generate millions of megawatts, they can also destroy millions of dollars in engineering if extreme weather hits.

For disaster repairs and regular maintenance alike, marine energy devices have to be readily accessible from the ocean surface.

Pelamis aimed too high by shooting for a "hands-free" operation with no maintenance at the offshore site and "no offshore intervention."

Would we expect a coal-fired power plant to run without maintenance? How about a hydroelectric dam, for water-to-water comparison?

The answer is no. . . This was clean-fuel folly, plain and simple.

Of course, there are other companies besides Pelamis in many other resource-rich coastal regions besides western Europe. . .

Stake Your Claim in the Stimulus Goldmine

With $787 billion in pork now sloshing around Washington D.C., one industry in particular stands to grab the lion's share.

And for the investors that get there first, this moneymaking opportunity is one that may just turn out to be the mother lode.

To learn more about the Stimulus Goldmine that could easily double when all of that pork gets spent click here.

Beyond Pelamis

In Japan, which imports nearly all of its energy, they've tried a different wave energy conversion technique, channeling tidal water into narrow aqua-corrals along the coastline. Known as Tapchan, this technology has the benefit of being based onshore.

Tropical regions may be able to make use of Ocean Thermal Energy Conversion (OTEC), which operates on many of the same heat vapor conversion principles as geothermal energy.

Here in the U.S., Rhode Island's Ocean Wave Energy Company is developing a system of movable floats anchored to a base plate below. That contrasts with Pelamis, whose floats were more or less strung together end to end with hinged joints.

Pelamis's machines may also be an example of overreaching size for wave energy devices—each cylinder is 180 meters, or nearly two football fields in length. Maybe less is more when it comes to marine energy?

Above all the trial and error we're seeing when it comes to ocean energy modules, if the electricity can't get to shore, then it ain't worth a thing.

That's why the best play on offshore renewable energy, bar none, is European engineering giant ABB (NYSE:ABB).

ABB: the Missing Link for Marine Energy

ABB pioneered high-voltage direct current (HVDC) technology specific to the maritime fossil fuel industry, and those same applications can be used for renewables.

ABB has already delivered undersea grid linkups like the one between Finland's Nordpool grid and Estonia's Baltic grid to the south, running under the Baltic Sea.

HVDC Light, developed by ABB in the 1990s to link oil rig platforms to electricity grids, other platforms, and even nearby wind turbines, is the best bet for bringing marine energy to market. HVDC Light has an economical transmission range extending from just over 30 MW all the way up to 1,200 MW.

Pelamis, with mammoth machines intended to power 15,000 coastal homes with 21 MW output, didn't even hit the lower bound of ABB's HVDC Light capacity.

That's the state of marine energy today in a nutshell: too much and too little at the same time.

Without a doubt, we'll keep you up to date as marine energy changes to meet its challenges.

Regards,

Sam Hopkins

International Editor

P.S. — Once wave energy companies get their prototypes together and operational, there's still the matter of securing financing in today's lock-box credit environment. I'm heading to the Renewable Energy Finance Forum in Rio April 27-28, to find out which clean energy technologies are making the grade and getting funding, and which companies are in the forefront and bringing it all back to shore, so to speak. Green Chip International subscribers just closed a double-digit global energy gain yesterday, and they'll also have exclusive multimedia access to my reports from Brazil in just a couple weeks. To learn more about GCI, click here.

These Profits Come in Waves

According to the Atlantic Oceanographic and Meteorological Laboratory, a fully developed hurricane can release heat energy at a rate of 5 to 20x1013 watts and converts less than 10% of the heat into the mechanical energy of the wind. The heat release is equivalent to a 10-megaton nuclear bomb exploding every 20 minutes!

Can you imagine how quickly we'd be able to solve the world's energy problems if there was a safe, economical and efficient way to harness this energy?

Don't get me wrong. I'm not trying to trivialize the devastation that the good people of Louisiana, Alabama and Mississippi have endured.

In fact, I only recently started to entertain this thought after reading about how many people affected by the hurricane were still without power. And really, I'm sure those people without power right now are more concerned about harnessing electricity than sympathy.

So that being said...

Imagine if we were able to harness all that heat energy produced by Hurricane Katrina and convert it into electricity; if anything, just so that people who are lucky enough to still have homes in that part of the country, could turn on their lights and run their refrigerators.

It would be nothing short of spectacular. (At least to an energy-geek like me, anyway)

Well, despite my good intentions, there's probably not going to be an influx of hurricane thermal energy power conversion systems any time soon.

However, there is currently a less-extreme, but very efficient alternative energy technology called Ocean Thermal Energy Conversion (OTEC), which does allow for the conversion of thermal energy from the ocean to electricity - often while producing desalinated water.

You see, an immense amount of thermal energy (heat) is stored in the world's oceans. Each day, the oceans absorb enough heat from the sun to equal the thermal energy contained in 250 billion barrels of oil.

Harnessing Heat

Currently, there are three OTEC systems that can be used to generate electricity:

Closed-Cycle - whereby a working fluid is circulated in a closed system, heated with warm seawater and flashed into vapor. The vapor is then routed through a turbine and condensed with cold seawater.

Open-Cycle - whereby warm seawater is flashed to steam, at which point the steam is routed through a turbine.

Hybrid - whereby warm seawater is flashed to steam, and that steam is used to vaporize a working fluid in a closed system.

Although OTEC has been around since the 1800's... only in the last twenty years or so have we seen any real attempts at the commercialization of the technology.

And now that the demand for clean, economical alternative energy is at an all-time high, new markets for OTEC development are rapidly being identified by local and state governments, research groups and private and publicly-traded companies.

In fact, some analysts have estimated that because of high oil costs, the demand for desalinated water and the social benefits of clean energy technology, over the next five to ten years, OTEC plants could become highly-competitive in four specific markets:

Small island nations in the South Pacific
1 MWe (megawatt electric), land-based open-cycle OTEC plants coupled with second-stage desalinated water production
American territories, Guam and American Samoa
10 MWe, land-based open-cycle OTEC plants coupled with second-stage desalinated water production.
Hawaii
50 MWe land-based, closed-cycle OTEC plants producing electricity with second-stage desalinated water production.
Puerto Rico, the Gulf of Mexico and the Pacific, Atlantic and Indian Oceans
40 MWe or larger, floating, closed-cycle OTEC plants that house a factory or transmit electricity to shore via a submarine power cable.

While OTEC commercial development is still in its infant stages, the potential for rapid growth in this sector has never looked more promising. Especially in the island states and territories of the South Pacific.

And that's one of the reasons I'm telling you about it today.

The other reason is that OTEC is actually one of three sources of renewable energy that is produced on a massive scale from the world's oceans and rivers.

There's no question that there's real potential, both financially and environmentally, in OTEC.

But these other two renewable energy sectors are providing profitable, publicly-traded companies that are ripe for the picking - right NOW.

They are:

Tidal Energy
Wave Energy

Tidal Energy

Harnessing tidal energy generally involves erecting a dam across the opening to a tidal basin. The dam includes a sluice (An artificial channel for water, with a gate to regulate the flow) that is opened to allow the tide to flow into the basin. The sluice is then closed, and as the sea level drops, traditional hydropower technologies can be used to generate electricity from the elevated water in the basin.

Back in 1966, the world's first industrial-sized tidal power station went on-line. It produces 240 MW of power; enough to supply 90 percent of the electricity for the French town of Brittany.

Wave Energy

Waves get their energy from the wind. Wind comes from solar energy. Waves gather, store and transmit this energy for thousands of miles with little loss. Essentially, as long as the sun in shining, wave energy will never be depleted. And while it does vary in intensity, it's available 24 hours a day.

Now the total power of waves breaking on the world's coastlines is estimated at 2 to 3 million megawatts. And in some locations, wave energy density can average 65 megawatts per mile of coastline.

Harnessing wave energy generally involves one of three processes:

Floats - devices that generate electricity from the bobbing action of a floating object. These objects can be mounted to a floating raft or to a device fixed on the ocean floor.
Oscillating Water Columns (OWC) - devices that generate electricity from the wave-driven rise and fall of water in a cylindrical shaft. The rising and falling water column drives air into and out of the top of the shaft, powering an air-driven turbine.
Wave Surge Devices - shoreline devices (also known as tapered channel systems) rely on a shore-mounted structure to channel and concentrate the waves, driving them into an elevated reservoir. Water flow of this reservoir is used to generate electricity, using standard hydropower technology.

Tidal and Wave Energy systems have been utilized all over the world for years. But only recently have we seen a demand significant enough to validate any real profit potential for Green Chip investors.

So join me next week when I'll tell you about the two biggest markets for tidal and wave energy - and the companies that are in line for the most lucrative contracts this particular industry has ever seen.

Until then,

Jeff Siegel
Editor, Green Chip Stocks