Australia: Carnegie Wave Energy’s Chairman Addresses Shareholders

Carnegie Wave Energy Limited Chairman, Grant J Mooney, releases the following statement for the shareholders:

Since we last met in 2011, Carnegie has continued to progress towards development of the Perth Wave Energy Project off Garden Island, here in Western Australia.

In an era when global financial markets are reluctant to support investments in emerging technologies yet to prove their contribution to bottom line profits, Carnegie has continued to move CETO forward towards commercialisation. And during this era, we have witnessed other technologies in the wave energy sector struggle to maintain development momentum while progress in other sectors, such as geothermal, have slowed considerably.

But that’s the negative aspect of the world in which we now operate. There are also many positives for wave energy and the Carnegie’s role in the sector.

It is very apparent that the world is slowly realising an energy transformation. This is being driven by two very interesting developments in world energy supply metrics: The first is best seen through the lens of the North American shale gas industry and the massive increase in domestic gas production in the US resulting from the adoption of horizontal directional drilling and rock fracturing technologies. The glut of cheap gas along with the pollution restrictions are likely to signal the end to thoughts of any new coal-fired power stations being built in the US as gas becomes a cheaper source of fossil fuel power generation than coal.

The second catalyst is the dramatic drop in the cost of renewables. Over the past 5 years we have seen the cost of solar photovoltaic drop an incredible 80% resulting in grid parity in a significant number of markets globally and the removal or reduction in feed-in tariffs. Even expert groups that have been criticised in the past for outdated or overly conservative views on the take up of renewable energy are changing their forecasts.

Recent government forecasts show that both solar and wind will be cheaper than either gas or coal before 2030. This forecast, whilst likely to still be conservative, has profound implications for Australia’s domestic electricity market not to mention the risk to Australia’s economy due to its projected reliance on thermal coal exports.

Here in Australia where power prices remain relatively low by global comparison with the rest of the western world, it is often difficult to visualise the need and demand for alternative sources of energy until you see the growing demand renewable energy in places like Europe and the potential for wave to play a role in these markets.

The last 12 months has seen France auction off the first 3GW of a planned 6GW of ocean based, otherwise referred to as offshore wind power generation due for installation by 2020. By way of example, 6 GW would be sufficient domestic supply for the entire state of Western Australia.

Offshore wind, once considered a frontier for the wind industry, is now a burgeoning arena for large operators such as Siemens, Vestas and our own joint venture partner EDF.

To give you an idea of scale, offshore wind farms such as the London Array which is currently under construction, will cover up to 90 square kilometres and will ultimately generate 1GW at completion equal to supplying more than 750,000 homes, equivalent to a quarter of greater London.

Less than 10 years ago, offshore wind power generation was frontier, facing challenges not dissimilar to some of the challenges faced by the wave sector operating in the ocean. Now these issues are resolved and the sector is expanding rapidly. We see wave energy power generation moving down the same path.

In other countries, Japan has introduced the most attractive incentives for renewables globally and China has increased its 2015 solar target from 5GW to 20GW.

It is in the context of this dramatic take up in wind and solar power that wave energy has increasing potential to play a serious role in the world’s future energy mix.

And it’s also worth noting that increased electricity production from intermittent solar and wind increases the value of more predictable and consistent forms of renewables like wave energy. Furthermore, the non-visual offshore footprint associated with CETO is a major advantage in comparison to these traditional renewables.

These are but a few reasons why there is a place in the market reserved for wave energy.

[mappress]

Press release, November 2, 2012; Image: Carnegie Wave Energy