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Summary:

Finavera Renewables (FNVRF, FVR.V), founded in 2003 and based in Vancouver, B.C., has a slew of cleantech projects under its belt and up its sleeves, including electricity generation from both wind and water. The latest of these projects, announced recently, is the AquaBuOY 2.0, which the company plans to test this week. That’s a fancy name for what amounts to an updated model of the company’s wave energy converter, a device that can convert the power generated by ocean waves into electricity.

We met up with Finavera CEO Jason Bak earlier this month to chat about the company’s wave power plans. Version 1.0 of the wave energy converter had “too many moving parts” and “too much corrosion to seawater,” according to Bak. But he seems to feel pretty confident Finavera’s newest wave power buoy will be a success.

Wave power, despite being one of the more nascent renewable energy sources, is starting to gain attention as a viable source of future energy, and investors are taking note. An
analyst with the research firm and ratings agency Standard & Poor’s
notes that wave power is attractive to investors because it’s “more predictable than wind or solar power.”

Competition in the wave energy market is stiff, though, with the likes of New Jersey-based Ocean Power Technologies (OPTT), Australia’s Oceanlinx (formerly known as EnergeTech), and Scotland’s Pelamis Wave Power (formerly known as Ocean Power Delivery).

Q: Why wave energy?

A: It’s simple, there are a minimal number of moving parts, and it’s based on engineering design with the potential to generate power for us the cheapest. According to an EPRI (Electronic Power Research Institute) report, in the Western three states, there’s enough potential wave energy sites to generate all the power equivalent to the amount currently generated by U.S. hydropower. Add Alaska and the East Coast into that, and you’re well in excess of that number.

Q: Since you’re a Canadian company, why did you decide to test your latest buoy design in Oregon?

A: America made more sense because of the regulatory regime happening here. In Oregon, as a whole, every dollar we spend we get 50 percent back in tax credit. Oregon is one of the leads in the world for wave energy. It has fantastic waves, a good grid, and a number of areas where you can connect projects to the coast.

Q: If it turns out your technology works, how do you plan on making money from the electricity you’re able to produce?

A: We want to be an owner-operator of our power plants as well as an OEM selling technology to the grid or direct to industry. As technology cost decreases, our target (price) is five cents per kilowatt-hour, equivalent to onshore wind today.

Q: If achievable, that is quite a cheap energy source. But of course getting to that point is not that easy. Besides competition, what challenges are in store for your wave energy project?

A: Cost. We’re building these devices one at a time and they’re incredibly expensive. There’s the risk that costs might not come down as quickly as we want. There could be environmental issues. What happens when you have 500 of these installed in a cluster? Some [other] wave energy technologies use hydraulic fluids. Some are anchored on the sea floor, displacing sea life. We minimize our impact by using a design that would scrape out an area half the size of a desk.

Q: It seems Finavera has a rather unique strategy. You’re developing technology across the cleantech spectrum and you decided to go public earlier this year, completely avoiding VC investment — even though you’ve yet to turn a profit. Why did you decide to do this, and when are you going to start making money?

A: We don’t like VCs. VCs are restrictive. We’re existing on shareholders equity. Using this public market toolset, we could more aggressively and quickly develop our company with a lot more freedom. We expect that we will be profitable in January next year. We diversify by having a whole bunch of projects, with near-term revenue from the wind side of the business.

Next year we’re building the first phase of the Three Hills Project, a $200 million wind project. In Germany, we’re acquiring a 20-megawatt wind farm. The type of return you see from that kind of acquisition is skinny. Every year, we deliver ‘x’ number of megawatts to the grid. Investors like that model because it de-risks, but also gives investors the potential upside with success in technology. The biggest value is being a grassroots project developer.

  1. Cool.

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