The U.S. Navy Loves This Micro Cap

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As a concept, tidal power seems straightforward enough:

The ocean moves continuously without incurring any problematic conditions like lack of wind or sun, as is the case in the best-known renewable energy sources. With a constant source of motion, all that's needed to generate power is a drive shaft connected to a dynamo.

But a concept – by itself – doesn't make any money… especially in the "renewable energy" space. You need an effective product to make an impact.

That's why the U.S. Navy loves this little company…

It's Always High Tide for These Buoys

Harnessing tidal power involves using coastal waters – and their wave and tidal currents – as a continuous source of energy. And several recent tidal pilot projects have indicated that there is considerable potential here for significant power generation.

Infrastructure development, of course, requires more than proof of concept. And you also need some significant investment. But this is where things are picking up…

To further this cause, the U.S. Department of Energy has entered the discussion by providing a new $16 million round of funding for tidal power. It includes 17 initiatives to improve efficiency, along with some necessary data accumulation and environmental impact studies.

There is no doubt the potential here is impressive…

Current DOE estimates put the possible annual power to be obtained at more than 1,400 terawatt hours of electricity. That would be enough electricity to power millions of homes.

As with most efforts to develop what remains a niche source, most of the attempts thus far have been by smaller companies with limited capital and a restrained ability to stay afloat (no pun intended) until the market expands.

But Ocean Power Technologies Inc. (Nasdaq GM: OPTT) – a firm I have followed for some time – is different.

The whole company is worth just $16 million at the moment. But it's having success now using stationary buoys to generate power.

Any move into the tidal wave sector remains a high-risk investment move, to be sure. Ocean Power Technologies, for example, has lost 67.5% of its value since I began tracking the stock in early April of 2011.

However, there's still some merit here.

In addition to landing one of the new DOE grants, Ocean Power has one pretty important partner in its current projects.

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About the Author

Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle

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  1. yngso | September 5, 2013

    You say when, Dr M, many say if. Have bought BNO and VXX.

  2. Graeme SIMPFENDORFER | September 6, 2013

    Dr Moors
    I suggest you might to look at Carnegie wave technology listed on Australian ASX
    They are currently installing a wave generating system at Garden Island Western Australia where the USA Naval forces share a base.

    Graeme

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