Friday, February 26, 2016

Tides Power Up the Big Apple

New York City with its sweeping skyscrapers and noisy taxi cabs seems like an unlikely location for tidal power development.  However, the Big Apple is host to the Roosevelt Island Tidal Energy Project (RITE) located in the East River running along Manhattan’s east side.  Although New Yorker’s call it a ‘river’ it is actually a strait separating Manhattan from Long Island.  More importantly, it connects Long Island Sound with the New York Harbor and the tides of the Atlantic Ocean rule the waters.

Verdant Power, a private held company headquartered in New York, has been testing a prototype underwater turbine called the Gen5KHPS that can generate up to 1.0 megawatt. It is a perfect location.  Any New Yorker can testify to the turbulent waters swirling around the East River.  The water current changes direction four times each day and when water velocity exceeds 3.3 feet per second, Verdant’s turbine begins to rotate.  The turbine apparatus has been designed to turn around each time the current flow changes direction so it captures energy from the water movement ‘tide in’ and ‘tide out’. 

The company was not among the recipients of $16.9 million in grants awarded by the Department of Energy in 2013, and described in the post “Holding Back the Tide” on February 19th.  However, Verdant Power has not been left out.  In December 2015, Verdant was among six tidal power developers awarded a total of $10.5 million by the DOE.  Verdant is to design and test a frame that can support three of the company’s Gen5KHPS turbines together.  The multi-turbine frame is expected to bring efficiency and scale to a tidal power project.

There is much more work to be done to put the most efficient and rugged energy conversion devices into the water.  That will require capital. The federal budget for fiscal year 2016 included only $40.8 million for marine hydrokinetic power development.   Fortunately, Verdant Power has received support from state agencies as well as the U.S. federal government.  The New York State Research and Development Authority (NYSERDA) has also provided support for the RITE project.  Consequently, it may require private sources to bring Verdant’s technologies to commercial reality.  The Verdant has plenty of investment banking and finance talent on its management team and board of directors.  With any number of investment banking institutions literally next door, the team should be able to find willing ears to hear the story of their successful turn at generating electricity with the tides in the East River.  Verdant Power might be among the first marine hydrokinetic power developers to give investors a taste of the potential returns in this emerging energy source.

One more tidal power development story is coming in the next post.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

No comments: