Floating for success16 January 2008
While recent commercial agreements have launched Oceanlinx into a new stage of business operations, research and development remain the core of its activities, reports Suzanne Pritchard
Established under the name Energetech in 1997, the subsequently re-named Australian wave power company Oceanlinx has since invested more than A$30M (US$27M) on research and development of proprietary technology. The company has looked to using wave energy to produce electricity and also to provide either desalinated industrial or potable water from sea water.
Oceanlinx’s wave energy converting device uses an oscillating water column (OWC) within a fixed or floating platform, and the movement within the confined tube drives air through a turbine. The floating platform can be sited offshore in depths of more than 30m, which enables the units to generate higher outputs in comparison with wave energy systems operating closer to shore. The fixed structure – which is an alternative design that sits on the seabed – allows the technology to be operated in shallow water near to the shore, such as at Port Kembla in New South Wales.
The system works by taking the trapped, but moving, air above the OWC and forcing it through a specially designed duct that narrows to a minimum cross-section at the patented turbine, which accelerates the flow and turns the blades. This has the effect of accelerating air flow to rotate the turbine. Continuous shaft rotation in one direction is achieved by the Denniss-Auld turbine though the airflow reverses cyclically, first being pushed up and compressed by a rising wave and then being sucked back through the device as the water level falls.
Software and logic control systems allow the turbine blade pitch to be adjusted throughout a wave cycle, which enables them to be pitched optimally to throttle the power output to the generator. The control system thereby allows the generator to produce electricity within its design sea state limits. It also enables continuous generation of electricity in either very low or high waves without under- or overloading the generator or requiring it to be shutdown.
To hold the wave energy converter in position in deep water, the company employs catenary mooring systems that draw upon the established and proven technologies of the offshore oil and gas sector when designing floating production and storage units. The mooring system comprises lengths of chains, wires and synthetic ropes to connect the device to anchors on the seabed but this concept design allows significant flexibility. It facilitates a wide range of mooring line sizes and strengths, and various positions for anchoring to the seabed which enables the unit to successfully deal with variable site-specific conditions. The catenary system keeps the unit in its planned position and excursion limits, allows for a progressive uptake of mooring loads, contributes to modified motions and power output, and also prevents high impulse forces.
To reduce vertical oscillations caused by the waves in its floating units, a heave plate (a horizontal steel or other rigid material structure) is fixed to each leg or the base of the unit. The inertia of the water mass above and below the heave plate has the effect of dampening the motions, bringing about a partial difference in timing, or phase lag, between the relative vertical movements of the unit and waves. Energy conversion is enhanced by the device falling as the wave inside the OWC rise, and vice versa.
Between 1997-2003, with the assistance of academic and research organisations such as the University of New South Wales, Oceanlinx aimed to prove its wave energy converter technology in a series of computer modelling and wave tank tests. By 2002 research and testing had advanced to the point where ‘proof of concept’ was needed.
Over the next three years a full-sized working prototype was designed and built at Port Kembla. The prototype turbine is a 21 bladed, variable pitch system of 1.59m diameter with a rotational speed of 500rpm. It was designed by Oceanlinx and Airgasco and built by Vale SMS. The factory endurance test was witnessed by Lloyd’s Register. In June 2005, the unit was deployed with a 450kW power capacity and at the end of 2006 permanent installation was completed.
Oceanlinx wanted to both confirm the unit’s performance and provide a basis for its ongoing design improvements programme. The company also believed using a full-scale unit would enable potential customers to appreciate the commercial appeal of the technology, especially as its proximity to shore made it well placed for generating peak power to the transmission grid.
Although Port Kembla was originally envisaged as a pilot plant, Oceanlinx has since announced that it is to be connected to the grid early this year. Under an extended production test, a power purchase agreement (PPA) was signed with Integral Energy, and the unit is reported to be performing in line with forecasts and the company is pleased with the results.
Apart from Port Kembla, Oceanlinx has achieved a number of project developments for its wave energy converter internationally – in the UK, US and southern Africa.
In June 2007, Oceanlinx signed a letter of intent with the South West of England Regional Development Agency (SWRDA) for the establishment of a 5MW generating facility as part of the £28M (US$56M) Wave Hub, which will have a maximum capacity of 20MW. Oceanlinx is one of four developers chosen to participate in the project, the others being Ocean Power Technologies, Fred Olsen and a consortium called WestWave which will use the Pelamis technology of ocean-power-delivery.
The Wave Hub will function as an electrical ‘socket’ on the seabed about 18.5km off the Cornish coast, which will enable developers of wave energy technologies to connect their devices to the grid. The seabed plug venture will cover an area of 4km by 2km with each developer granted a lease of 5-10 years in area of 2km2. Water depth is approximately 50m. Funding for the scheme has been secured, planning permission granted and Wave Hub is due to be operational in 2009.
Oceanlinx is also providing a wave power unit off the coast of Rhode Island. The company signed a memorandum of understanding (MoU) for the first 1.5MW unit with the state Government in October 2007. A further 15MW-20MW of capacity is to be installed. The initial device will be funded by grants from Rhode Island, with the larger generating facilities seeking finance through low interest rate bonds.
Off the coast of Hawaii, the company is to provide 2.7MW of capacity, equal to three to four units of its wave energy converter technology. An MoU was also signed last October, funding is from Oceanlinx and other parties, and a PPA is under negotiation.
Entrance to the southern Africa market has been achieved with a recently signed contract in Namibia. Oceanlinx agreed a deal to provide a 1.5MW unit, and once the unit reaches 85% of stated performance criteria there is a trigger order for 10 more units. The first unit is to be delivered in the second quarter of the year.
Back in Australia, however, is where the biggest project is to be built: a 27MW scheme (18 x 1.5MW units) at Portland, Victoria, where permits are being sought. The Victoria government has approved a grant of A$1M (US$0.9M) and initial payments have been made to partly fund deployment of the first unit.
Raising further finance
Oceanlinx’s activities are broadly in line with expectations, it says, and with progress on various ventures and contracts its directors are stepping up their plans to begin the commercialisation stage of business operations, which they anticipate will deliver positive net revenue streams. As a result, in October 2007 the company announced its plan for a stock market flotation.
The firm is working with Libertas Capital, its nominated adviser and broker, to be listed on London Stock Exchange’s Alternative Investment Market (AIM). In preparing information for the proposed listing, the company’s summary of key advantages of the wave energy converter technology are:
• Increased power output – a floating device will operate in greater water depths where the wave power levels are higher.
• Reduced costs – by moving to fabricated structures, enabling shipyard manufacture and potential volume efficiencies and savings.
• Simpler, cheaper mooring – easier to install than that which might be needed closer to shore, such as the tethered system at Port Kembla. Also, as the device can move with waves, there would be less force on the structure.
The company believes that admission to AIM will also raise its profile internationally, which it hopes will help increase access to capital markets. A company spokesman said that Oceanlinx has been engaged in investment meetings since announcing its intention to join AIM.
The net proceeds of the listing will be used to: construct and deploy more wave energy converter units; continue research and development, including further refinement and optimisation of the technology; and expand its international business, marketing, sales and project activities.
To further build shareholder value, Oceanlinx intends to raise the profile of its technology and capitalise on a number of linked parts of the renewable energy and water value chains. By operating on a build, own and operate (BOO) basis, the company hopes to tap revenue streams from various sources, such as the sale of electricity as well as potable water supplies to utilities and commercial customers, plus the creation of carbon credits and renewable obligation certificates. It is also looking to form special purpose vehicles (SPV) for some future projects, which would allow it to raise debt finance at the SPV level on a limited, or non-recourse (off balance sheet), basis and later look at options to partly sell stakes in the project ventures upon higher valuations as well as selling down of partial stakes in the SPVs.
Under such BOO and SPV structures, Oceanlinx also hopes to acquire additional income from royalties for the use of its technology, as well as through operation, maintenance and technical support contracts.
The prime characteristics of attractive markets, according to Oceanlinx, are:
• Favourable wave climate – units will be deployed where the average wave power intensity levels are 20kW/m-70kW/m, there is consistency of wave direction, a relative absence of extreme wave conditions and a predictable climate.
• Favourable tariff structure – markets with premium or favourable tariffs for electricity or potable water. Island economies, in particular, exhibit such characteristics.
• Regulatory and community support – attractive regulatory environments with incentive off-takes on a commercial basis, the availability of grants and governmental financing, and strong local community support for renewable energy.
• Carbon credits – where the value of these credits in relation to the energy converted, taken together with underlying tariffs, is high and where there is reasonable certainty and visibility above those potential market or mandated revenues streams into the future.
Oceanlinx points out that the detailed design of the device is still under development and will vary to some extent with the characteristics of particular deployment sites.
Maintaining a strong research and development programme is described as being key to its strategy. With this in mind, the company has constructed a one-third scale model of its current floating unit chamber design. This will be used as a research facility to test across the full spectrum of expected wave conditions. The unit has been deployed at a fixed mooring off the coast of Port Kembla for testing and verification.
The patented airflow turbine, which is a major part of its intellectual property, has also been a focal point for research and development efforts. The turbine was developed in wind tunnel tests and using computational fluid dynamics (CFD) modelling. Oceanlinx noted that as well as providing a measure of dampening effect on wave motion in the OWC because it provides a measure of resistance to airflow, the turbine is also capable of self-starting under load. It is possible to produce torque at very low speed and to control blade angles to accelerate up to generation speed, and therefore no power import is required to bring the unit up to required power performance.
The company is currently working with US-based turbo-machinery company Concepts-NREC to further develop the reliability and efficiency of the device. Ongoing development of the mooring design is also being conducted by offshore engineering specialist JP Kenny.
In addition to using energy from waves to produce electricity, Oceanlinx is using it to desalinate water using reverse osmosis. This is achieved by using the electrical energy generated by the unit to pump water under high pressure into a semi permeable membrane within a reverse osmosis plant. Only potable water will pass through the membrane and water with higher saline concentrations than allowed is rejected. Independent research indicates that the projected costs of water supply from such a system are potentially less than those from reverse osmosis plants powered by fossil fuels.
Conventional reverse osmosis desalination is a well established technology. However Oceanlinx believes that more development is required in energy minimisation, such as through the use of a direct drive pump onboard its wave energy converter unit, and in materials handling and transport. The company is working with specialists in mechanical engineering and pumping to provide this direct link between wave power and the delivery of clean water at a competitive price to local markets.