SINGAPORE (Dow Jones) – Marine power technology company Atlantis Resources Corp. sees strong growth possibilities ahead, and is banking on this so-far underdeveloped area becoming a big renewable energy growth sector worldwide.
Countries with official targets for carbon emission cuts, where utilities and manufacturers want to expand their use of clean energy, offer lots of opportunities, the chief executive of the Singapore-based company said.
Generating electricity from turbines powered by tides or waves in nothing new. The 240-megawatt La Rance power plant in France, probably the world’s largest tidal power project, has used barrages to harness energy from tides and river water movements since 1966.
But similar projects that meet modern renewable energy standards – not blocking waterways and having less adverse environmental effects – haven’t yet taken off commercially, although small-sized demonstration models exist in Europe, North America and Australia.
While the largest modern project so far has a capacity of less than 2.5 megawatts, there is growing attention in this zero-emission energy despite relatively weak prices for mainstream power fuels like coal, oil and gas.
Atlantis, 49% owned by Morgan Stanley (MS), is a leading manufacturer of equipment to harness this power, and it has teamed up with Norway-based Statkraft (SKT.YY) and Hong-Kong listed CLP Holdings Ltd. (0002.HK) to catch the tide.
“There is lots of interest…tidal power is entering a commercial stage from a demonstration stage now,” Atlantis Chief Executive Officer Timothy Cornelius told Dow Jones Newswires.
There are opportunities, particularly in countries obliged to cut carbon emissions, where utility companies and large manufacturers want to diversify their portfolio of renewable energy beyond wind and solar power, he said.
Some large European power generators, such as German utility RWE AG (RWE.XE) and Spain’s Iberdrola SA (IBE.MC), are already investing in companies with the technology to develop marine power projects.
Atlantis believes tidal movements could generate at least 50,000 megawatts tidal power globally.
“Both the U.S. and the U.K. have enough tidal power (potential) to meet 15% of their total needs,” the company says.
Its primary focus now is the U.K., and particularly Scotland, which some describe as the Saudi Arabia of marine power.
The United Kingdom government hopes to be producing over 700 megawatts of power in Scotland by 2020 from tidal and wave energy projects in Scotland.
U.K. government asset manager Crown Estate is in the process of granting options – expected to be concluded this summer – for Northern Scotland seabed blocks for power projects, with the first systems being deployed as early as 2010-11.
Australia Project, South Korea Potential
Elsewhere, Atlantis expects its first commercial-scale project – a tidal turbine with a capacity of 1.2 megawatts located offshore West Australia – to become fully operational by early next year, Cornelius said.
This project, originating from a large manufacturers’ need to reduce carbon emission, will provide up to 20% of the power needs of the Mount Gibson Iron Ltd. (MGX.AU) mining operation in Koolan Island, he added.
The energy price spikes seen last year, growing alarm about the pace of climate change and a drive by the new U.S. administration to find deals in time for the December 2009 U.N. climate change summit in Copenhagen, have all combined to increase interest in renewable power.
However, the economic crisis and credit crunch are making potential investors think about potential risks.
Even so, Atlantis sees good business prospects, particularly if a new global pact to succeed the Kyoto Protocol includes the U.S. and South Korea, another Asian country that has shown great interest in tidal power.
Recently, state-owned Korea South-East Power Co. announced a possible $1.38 billion investment in a 460-megawatt project near Duckjuck island, while Korean Midland Power Co. is to generate 812.8 megawatts from less-environmental-friendly tidal barrages near Seoul in 2015.
“America may join carbon trading later…and South Korea has very strong natural resources for tidal power, with its underwater geography,” Cornelius said.
He argues that tidal energy projects should in time be able to compete with other power generating sources in terms of cost, noting that over 50% of Atlantis’ expenditure is related to research and development.
Atlantis has no plans to raise additional funds this year, after attracting investment totaling about $14 million since 2005 – including NOK45 million from Statkraft.
“We are in a financially robust situation already … Morgan Stanley is making long term commitment,” he said, adding: “We are waiting for chances to rock in 2010 and 2011
Source: By Max Lin, Dow Jones Newswires
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