ceto emigrating, page-36

It’s great to see that after the short term Tretch Solution we are picking ourselves up off the floor.

Clearly the after effects are still evident in posts but many interesting points have been raised.

Since commercial demonstration is the issue (as in the REDP application) the plant scale needs to be sufficient for that purpose. What size is that? It is mostly to convince the funding institutions that wave power is practicable for full commercial scale. 3 to 10 MW is a pilot plant size so that costs are largely ignored. The intention is to say, “It works!” At 30 to 50 MW is about the smallest respectable size from which costs could be meaningfully extrapolated for full scale plants. Investec was happy with this if a grant carrot came with it. A grant helps reduce the risk. (Note that OPT’s 19MW proposal misses out on that scale parameter as well.)

I think that CWE has first to complete its CETO III development before it goes anywhere else. The LEED grant will help pay for this and they can sell it to the Dept of Defence when finished to recoup costs.

Gaining some Federal funding is not a lost cause. The DRET is presently skimming funds from various places ($65 M from REDP) to give ACRE a working kitty. After some caning from various quarters through not providing one dollar to CWE the government will be able to justify special support. (After all, it was waiting for the results of the CETO III tests!) But this won’t be until 1H10. In which forms ACRE support can come I suspect is still being thrashed out. Note also, that this new body will want to justify its existence by making some contributions in a reasonably short time, and who better than to those companies that have ready made proposals.

While the original ASX ann relating to the Investec HoA mentions “projects that connect into the Australian National Energy Market”, the next few words are, “and in New Zealand”. Does that mean wave plants at Stewart Is (NZ) are OK but Perth (Aus) is not? I suspect the intent was to specify that the power produced be immediately saleable into an electricity network (small letters) and not NEM per se. Officially the HoA has now lapsed but renewable energy is Investec’s main plank so that after all the due diligence performed I think they would be highly suggestible for a similar project.

No matter where in the world CWE establishes wave farms it is economic to either manufacture components for all in one place or to utilize off-the-shelf items. Even if CWE can get a contract for Reunion Is it would get better economies of scale by including the numbers of buoy-pumps for the Garden Is project, and possibly for the DoD communications station at Exmouth although that’s a bit early stage.

Now that there is a definitive position with respect to REDP Michael O may well be more forthcoming with their potential scenarios. A slap in the face is very sobering. They did do their best. Their product is just as excellent as before. The AGM on 19 Nov may therefore be a good opportunity to hear some frank explanations and people should be constructing their most eliciting questions. Management may even be open to shareholders thoughtful suggestions!

Juke