“Marine Energy: Power the Entire Globe” — Alternative Energy Speculator

By Travis Johnson, Stock Gumshoe, June 20, 2008

Here we’ve got a rerun for your Friday enyoyment — I’ll probably get to some more good stuff for weekend to keep you all Gumshoe-d up, but for now this might keep you busy, I’ve had a few dozen emails about it just in the last day so this particular ad campaign must be heating up again (the original writeup was about two months ago, I’ve added a few updates below).

This is about what they’re calling “marine energy,” which is yet another kind of renewable energy that’s getting some attention — though frankly, I heard more about these companies last year than I have recently, kind of the opposite of what you’d expect for a renewable energy technology during these times of skyrocketing oil prices. Remember when $70 a barrel seemed high? That was less than a year ago. Jeez.

But I digress. As usual.

Marine energy is essentially a way of generating power due to the action of either waves or tides. In many ways this is like geothermal energy, in that it’s essentially generating energy from a basic geological process (okay, hydrological — but you get the idea). It’s clearly nonpolluting and you can’t use it up — unless we somehow get rid of the Moon, I guess tides will remain fairly constant and predictable … and unless we get rid of wind, waves should always exist. Most of the companies that I’ve seen using this technology so far have some variation of a buoy that is tethered to the ocean floor, then buoyancy forces the buoy to move up and down against the tether and a generator turns that into electricity.

I probably don’t have to remind you that I’m just a simple Gumshoe, not an engineer, so there’s probably a better way of describing that. And indeed, some of the products are certainly more complex than others.

This particular teaser is for the Alternative Energy Speculator, from the folks who brought us Green Chip Stocks, and we’ve already looked at another offering from these folks in the relatively short life of this particular service (that was for the “Clean energy cash-outs” involving heavy truck LNG engines for California ports, in case you want to refresh your memory.

He mentions examples of a couple other similar projects — Ocean Power’s wave-generation work in Oahu and New Jersey, Verdant Power’s tidal generation projects in New York, and a couple others.

But the ad then mentions our little teaser …

“There’s also a small Canadian company that’s recently received its permit approval for a wave energy project in Oregon. Even better — the company has landed a 15- year deal with PG&E to deliver power starting in 2010.

“That’s less than two years away!

“You can find out more about this company by becoming a member of the Alternative Energy Speculator. To a new way of life, and a new generation of wealth…”

So, thanks to the careful sleuthing of reader John Sullivan, I can tell you that this one is …

Finavera Renewables (FVR on the Venture exhange up North, FNVRF on the Pink Sheets)

The CEO, Jason Bak, describes their strategy as two pronged: standard, low risk wind generation projects that generate returns now, and cutting edge projects like wave power that might launch them in the future. The wind projects are in Ireland and Canada, where subsidies are likely to be very helpful.

They describe it thusly on their website: “To balance its risk profile, Finavera Renewables strives to underpin its future investment in the development of new renewable energy technologies (wave) with assets that can generate income in the near future (wind).”

The wave projects are planned or in the very early planning stages for several areas — South Africa, Canada, Portugal, and offshore Washington State, but the big potential one so far is offshore Oregon, as teased.

They describe the technology as being buoy-based, not that different than I described above, and they would be clustered in “wave parks” that they say will be low profile but might look similar to a fleet of fishing boats. Ideally, I suppose, these would be close to large population centers where the power is needed.

John did a little digging and found a few good points to note here, as well: First, that the timeframe is a bit more extended than the teaser indicates, he said that the project looks like it’s four years out, not 2010 as indicated. Partly this might be because they had some significant problems with their initial test of one of the buoys, which was apparently destroyed by flooding (!!) and had to be written off as an asset. So that’s probably worth some consideration for you.

This is a very risky microcap that’s not making any money, of course (sometimes it seems like all the stocks we see are like that) — the shares were around 14 cents when I first wrote about this in April, down about 75% from their highs last Spring of about 60 cents — and though they’ve done well since, they’re still way off those highs of a year ago.

Ocean Power (OPTT), by the way, is certainly further along and has recently been the poster child for this kind of renewable energy, at least for individual investors — they got onto the Nasdaq a year or so ago, which got the folks who were holding the OTC shares very excited … but it’s been a rough ride since then, the shares hit $18 or so a couple times last year, most recently in November, but are now languishing near their lows below $11.

I can’t say that I’m all that excited about marine energy companies like this yet — this technology clearly still has a lot of folks concerned, whether it’s for sea traffic or interference with marine mammals or just for cost-effectiveness, and it’s going to be a while before we know whether this is a strategy that’s going to be feasible on any kind of scale that will make a difference to the world. Personally, with stocks like these that are tiny and unprofitable I’m usually more interested in waiting and watching than in investing — unless it seems like there’s a likely catalyst in the near term for the company’s development. I’m willing to miss out on some of the potential upside, since the downside seems still to be quite significant, and the upside in real income terms is likely to be many years away.

Then again, I’ve also been cautious about several of the heavily touted geothermal stocks, which made me miss out on a few nice returns and a couple stinkers, but at least geothermal generation is clearly a proven technology that’s been in use for decades, for those little geothermal companies it’s just a matter of raising capital, growing and making a profit. For the wave energy companies, the waves and tides will always be there, but the technology to turn them into power is certainly much, much more speculative than the basic technology of geothermal power … or wind power, for that matter. I do like to at least be able to see a profit at some point on the horizon before getting too involved in any companies like these, and I don’t see that yet for Finavera.

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Maybe I’m just a fraidy-cat … I certainly could be wrong.

**UPDATE** So far, I’ve been wrong — this one was around .14 when I first wrote about the teaser ad, it’s now at about .22, so that’s a nice 50% run in two months, though much of it came directly on the heels of the newsletter recommendation (no big surprise there). Ocean Power is down another 10% or so, so it’s not just enthusiasm for the sector that moved this one up. I’d still guess that if there are fortunes to be made today in wave power, there will probably be similar fortunes to be made next year, and the year after, it still seems very, very early in terms of prospects for mass use of this technology.

But again, that’s from the guy who has been wrong so far. What do you think?



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Gravity Switch
Gravity Switch
June 20, 2008 3:50 pm

Good points from both of you, Ray and Ed — certainly these are complicated devices that haven’t been proven on a large scale yet (it’s been proven that they work as far as I can tell, but not that they’ll be cost effective, or handle the environment for decades, or cope with the other concerns you’ve noted).

It does seem like this should be energy we could harness, but it’s certainly not the no-brainer that wind or hydropower is, or as advanced as solar.

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👍 7
June 23, 2008 12:22 pm

Does anyone have a lead on a good agricultural commodity ETF? I’ve been thinking about DBA. Any ideas on that or others?

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June 24, 2008 10:41 am

Highly recomend for your reading a book titled “Earth the Sequel: The race to reinvent energy and stop global warming” by Fred Krupp and Miriam Horn.

Chapter on energy from ocean waves and discusses Finavera’s project in Oregon.

June 25, 2008 10:24 pm

After looking at all of them, I decided Van Eck’s
Agribusiness (MOO) etf, was what I liked the best.

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June 26, 2008 9:41 pm

what about this?