PG&E to ride the waves with Finavera

Vancouver, British Columbia's Finavera Renewables (TSX: FVR) made a deal today to sell wave power to San Francisco's Pacific Gas & Electric.

This is the first commercial power purchase agreement for wave power in the U.S. and a big boost for Finavera, which lost one of its test buoys in November and reported a working capital deficiency of Cdn$4.1 million earlier this month.

The deal with Pacific Gas & Electric, a subsidiary of PG&E (NYSE: PCG), is for a 2 megawatt project that would catch the waves off the Northern California coast.

"It is a nascent industry, but it's one that we are very optimistic about," Jennifer Zerwer, spokeswoman for Pacific Gas & Electric, told the Cleantech Group.

Finavera's Humboldt County Offshore Wave Energy Power Plant is expected to begin delivering renewable power in 2012.

Zerwer said Palo Alto, Calif.'s Electric Power Research Institute estimates that about 8,000 MW of wave power energy could be captured off the California coastline.

"This is only a 2 MW deal, but we're really excited about what it could bring for the future," she said.

The Finavera project came to Pacific Gas & Electric through the utility's 2006 request for offers for its renewable portfolio standard program.

"We put out a request for offer every year for renewable energy projects," said Zerwer. "So we'll continue to consider projects in the future."

Financial terms of the agreement and the cost of the project were not disclosed.

The power plant would be made up of clusters of Finavera's AquaBuOYs, which convert the vertical kinetic energy of waves into pressurized seawater by means of two-stroke hose pumps (see Building a bigger buoy).

Take a look at an AquaBuOY here >>

The pressurized seawater then flows into turbine driving an electrical generator. It can plug into the grid using an undersea transmission line.

In early September, Finavera deployed a test buoy off the coast of Newport, Ore., but the buoy took on water as the company was retrieving the system a few weeks later.

But Finavera said it manged to get plenty of good data out of the buoy, which will remain on the sea floor until winter weather conditions improve.

The company said all of the data from the test buoy will be used in the design of its next generation, AcquaBuOY 3.0 system.

And while a sunken buoy can be disheartening, Finavera isn't the only marine power company going through growing pains.

New York's Verdant Power is trying to get tidal power from the Big Apple's East River (see Verdant deploys tidal power array in New York).

The company had to pull all six of its turbines out of the water after taking some damage from the river's rougher than expected tides.

Today's agreement calls for Finavera to deliver 3,854 megawatt hours of wave powered electricity annually to Pacific Gas & Electric over the term of the contract.

Finavera, which develops wave and wind energy projects, has wave plans in development in the U.S., Canada, and South Africa, and wind farms in development in Canada and Ireland.

The company also closed a Cdn$1.1 million first tranche of a private placement today.

Finavera hopes to raise a total of Cdn$2 million in funding from the unit offering, but that's down from a previously announced, and now canceled, Cdn$23 million offering.

While Pacifc Gas & Electric's deal with Finavera is a first for the U.S., it's not the first dip in the wave power pool for the utility.

In February, the company filed permit applications with the U.S. Federal Energy Regulatory Commission for a WaveConnect project, similar to the U.K.'s Wave Hub plan (see U.K. plugs into Wave Hub).

"By putting it together independently, we're going to be able to allow multiple wave energy conversion device manufacturers to demonstrate a variety of different devices on a common site," said Zerwer.

But the timing for that project is heavily dependent on the regulatory agencies, with Zerwer saying it could take around five years to get approval.

The WaveConnect project, which is separate from today's deal with Finavera, is also expected to use the Humboldt county waters, as well as the waves off Mendocino.

Although it will take some time to clear regulatory hurdles, Pacific Gas & Electric said WaveConnect's two locations could each provide up to 40 MW of electricity if fully developed.

California's Renewable Portfolio Standard Program requires utilities to get 20 percent of their energy from renewable sources by 2010.

Pacific Gas & Electric is currently at 12 percent for renewables, with 18 percent under contract.