Two years ago Ocean Power Technologies looked like it was about to sink beneath the waves. The company was founded in 1994 to build wave power generators — buoys that would float just offshore, creating electrical power as they bobbed up and down and sending it back to shore on a cable. OPT was involved in two multimillion-dollar projects to build offshore “wave farms” to generate power — one in Australia and the other in Oregon. In 2014 both of those projects fell apart (U.S. 1, April 8, 2015).
Ocean Power fired its CEO and replaced him with a power industry veteran, George Kirby, in the photo at right, in hopes of turning things around. Now Kirby has led the company through a dramatic pivot in strategy, and the turnaround is starting to pay off.
Ocean Power’s struggles, and the potential solution to them, have their roots in the nature of the technology itself.
As a source of alternative energy, wave power is attractive. Like solar and wind power, it is potentially clean and virtually unlimited. Unfortunately for solar power, there are nights and cloudy days to contend with. Wind turbines are similarly dependent on having favorable weather to work. But on the sea, the waves never stop. Theoretically, a generator that drew power from the ocean swells could work all the time.
But wave power also has some daunting drawbacks. A solar panel can be placed on a suburban rooftop, in the same place where the power will be used. Wind turbines are more unwieldy, but windswept hilltops are still relatively accessible. Wave power, on the other hand, requires equipment be installed and maintained in saltwater oceans, which is one of the most hostile environments for any kind of machine.
The difficulty of maritime operations contributed to the failure of OPT’s Oregon project. In 2012 the company received a permit from the federal government to build a “farm” consisting of 10 of its largest buoys off the coast of Reedsport. The project was supposed to provide power for 1,000 homes and be a demonstration of the feasibility of wave power. Instead, it was a demonstration of the problems associated with it. By 2013 it had been scaled back to a single prototype buoy, held to the seafloor by three anchors. The project was completely abandoned after one of the anchors capsized while being towed to the test site. The next year the project was completely scrapped.
At the same time, the company was forced to back away from a $66 million wave power project off the coast of Australia. That plan was scuttled in 2014 without any equipment making it as far as the water when the Australian government changed the terms of a funding deal.
Amid those two setbacks, there was further scandal when investors sued the company over an announcement related to the Australian project that had caused the stock price to jump. OPT fired its CEO, Charles Dunleavy, and replaced him with David L. Keller.
Keller began a pivot in strategy that was continued by his successor, Kirby.
It turned out that developing full-scale buoys to send power ashore was proving too risky and expensive. There was, however, a way forward that might turn one of wave power’s disadvantages into an advantage. Rather than making giant buoys for large-scale applications, the company could instead focus on a smaller model of buoy that would provide power at sea to remote sensors and platforms.
Kirby’s goal was to deliver a commercial product as quickly as possible. This summer the company launched its first commercial buoy off the coast of New Jersey, and is testing it with two kinds of sensors for two commercial clients. This fall OPT landed a $250,000 contract from the Navy to develop a version of its power buoy that could be used for offshore military sensors. It has also leased one of its units to a Japanese shipbuilding and engineering firm, which plans to test it out.
“We’ve gone through some very methodical steps in order to drive towards completion of a commercial product,” Kirby said.
Kirby said the company is targeting the energy industry, which has a great deal of offshore infrastructure, as well as the military as potential major markets for wave power. As it stands, remote, floating, offshore sensors have only a few ways of getting power, all of which come with major drawbacks. A diesel generator requires periodic maintenance and refueling. Batteries don’t last very long before they too need replacement. Solar panels quickly become salt-encrusted and useless. Kirby says power buoys would be perfect for these kinds of uses.
The buoy currently floating off the coast of New Jersey is carrying equipment to see if it is suitable for scientific research. The WCS, a New York-based group dedicated to wildlife preservation, is interested in using the buoy to spy on sharks. The group’s seascape project is an ambitious plan to monitor the movements of undersea wildlife, including sharks that migrate from Montauk, New York, to Cape May, New Jersey.
Currently the WCS conducts this research by hanging a battery-powered listening sensor from a buoy or a ship, then returning months later to collect the data to see what it picked up. The instruments are sensitive enough to pick up the sound that sharks make as they swim. Using a power buoy instead, the sensors would have enough electricity to transmit the data back home in real time. Ocean Power is currently testing the sensors on the buoy to see if it’s quiet enough for sonar purposes. (In 2011, the company did a similar test with Navy sonar, and determined it wasn’t a problem.) “We’re reasonably comfortable there will be no negative interactions,” Kirby said.
While this project has yet to lead to a purchase, OPT did lease a buoy to Mitsui Engineering, a Japanese company, for testing. “They want to use our power buoy to test various concepts around increasing the efficiency of power generation in hopes that this could at one point be used for grid-connected commercial applications,” Kirby said. The two companies have a longstanding partnership, and Mitsui has tested OPT equipment before.
In September the Department of Defense Office of Naval Research gave OPT a $250,000 grant to design a new mass-spring oscillating buoy for use with “mission critical sensors.” The new design differs from the already-built power buoys in that it contains no external moving parts. The DOD offered further grants up to $750,000 if the first one is successful.
Kirby said the company has been completely focused on bringing commercial products to market. The building of the commercial buoy took the company’s small team of engineers many late nights and weekends. “When we completed final assembly of it in the shop, we had two power buoys sitting in our parking lot waiting for a weather window to set them up in the ocean,” Kirby said. “It was just really exciting. It was something that many people on the team had never seen before.”
Meanwhile, Kirby has been promoting the power buoy concept to the oil and gas industries and trying to build demand for the product. He said OPT raised about $6 million from investors last year.
In July OPT stock jumped on news of the successful offshore deployment of its test buoy, and has since cooled off somewhat. It was $6.62 as of press time, up from its $1.40 low in February of 2016.