Hydropower promises smooth sailing for green investors

Eco-money Green investors who turn their attention to wave power can save the planet and reap a healthy return.

Harnessing renewable energy from the sea could one day enable the world to end its reliance on fossil fuels.

Because seawater covers more than 70 per cent of the world's surface, transforming wave power into electricity offers an opportunity to make an ecologically sound investment while simultaneously getting in on the ground floor of a major new global industry.

"Looking at oceans as an energy resource is a new thing," says Kyle Ash, the senior legislative representative for the environmental organisation Greenpeace.

Power produced from the oceans could fulfil much of the world's energy needs, providing trillions of watts of energy, known as terawatts. A single terawatt is enough to power about a billion light bulbs.

"According to academics, the world's oceans produce 90,000 terawatts of power," Mr Ash says. "While it will not be possible to harness all of that power, even a tiny fraction could supply all the world's electricity needs."

Greenpeace believes that wave power will initially be used to provide electrical power for many of the world's islands. As most island communities rely heavily on oil for their power needs, wave power can play a key role in reducing reliance on fossil fuels.

Although some US states are now starting to grasp the importance of wave power, Mr Ash believes that the US lags behind Europe.

For example, the UK-based tidal energy company Marine Current Turbines (MCT) has developed what it claims is the world's first commercial scale underwater turbine. The turbine device, named SeaGen, generates electricity directly from tidal streams.

According to Paul Taylor, the spokesman for MCT, tidal power offers a key advantage over other renewable energy sources such as wind and solar power.

"Tidal power is totally predictable. If an energy buyer wants a specific amount of power in five years' time, tidal movements can be forecast accurately enough to provide for a precise future requirement," Mr Taylor says.

The fact that the industry is at such an early stage in its development and not yet fully competitive means that investors have an opportunity to buy into a fledgling industry that is set to grow quickly over the coming years.

"Wave power is now at the stage wind power was 20 years ago," Mr Taylor says.

So far, investors in companies such as MCT have tended to be large organisations. The French power giant Alstom, for instance, has just acquired a 40 per cent stake in AWS Ocean Energy, a pioneering Scottish wave-energy company.

Although the European wave power market is open to institutional private investors and to high-net-worth individuals willing to bankroll or buy the new wave-power companies, opportunities for ordinary green investors are still limited.

However, opportunities to invest in wave power are emerging as some of the early players start to list on leading stock exchanges. One example is the US-based Ocean Power Technologies (OPT), which listed on the Nasdaq in 2007.

OPT uses a device that uses a floating buoy anchored to the seabed, named PowerBuoy, to capture wave energy and convert it into electricity. The company has installed some initial PowerBuoys in coastal locations such as New Jersey and Hawaii. In common with other wave-power companies, OPT believes the dependability of wave power in contrast to other forms of power is a key strength for the new industry.

But, while few would argue against the logic of replacing fossil-fuel consumption with wave power, the jury is still out on what will be the full environmental effect of the technology. Environmental organisations such as Greenpeace have yet to be fully persuaded that a power-generation technology that involves anchoring large buoys to the seabed and laying miles of cable will have an entirely beneficial environmental effect on the world's oceans.

"We think wave power is part of the renewable energy mix," Mr Ash says. "And some authorities in the US are now starting to put resources into studying the overall environmental impact of wave power. We hope that the new technology's environmental impact will be positive on the whole."

Greenpeace believes that the drive to deploy wave power could help convince world opinion of the need to preserve the ecological balance of the world's seas and oceans.

"Hopefully, wave power will sharpen the world's political focus on our seas and oceans," says Mr Ash.

There is growing concern that ocean acidification, a problem often associated with greenhouse gases, may be causing untold damage to the world's seas. Just as carbon dioxide is being pumped into the atmosphere, it is also being absorbed by the world's oceans, where it increases the sea's acidity levels. Seawater acidification reduces the ability of marine creatures to create shells and skeletons, harming everything from commercial oyster beds to coral reefs.

By turning their attention to wave power as the technology matures, green investors can help harness the huge potential power of the world's oceans to reduce reliance on fossil fuels while providing an inexhaustible supply of clean renewable energy.