NEW YORK (Associated Press) - Hydroelectric power has been around for decades, but an emerging technology is taking hold to capture energy from the ocean's crashing waves.

Several start-ups have begun deploying buoys that harness energy from wave movement in coastal areas of the U.S., Canada, Europe, South America and Africa. The energy is then sent back ashore via underwater cables.

Ocean power is just one type of renewable energy whose outlook has brightened amid surging energy prices and growing concern about global warming. Within that environment, companies like Finavera Renewables Inc., Ocean Power Technologies Inc., Ocean Renewable Power Company LLC and Pelamis Wave Power have emerged to develop wave-energy projects across the globe.

However, their acquatic technology still has some hurdles to overcome, and projects will take at least a few years before adding watts to the grid.

Finavera deployed a $2 million prototype floater off the coast of Oregon for testing in September. However, the buoy sank about a month later because its water pump was overwhelmed.

The Canadian company reduced the value of intangible assets related to its AquaBuOY 2.0 buoy to 1 Canadian dollar ($1) in December, resulting in a third-quarter write-down of 5.8 million Canadian dollars ($5.8 million.)

In addition, a U.S. Navy study performed offshore Hawaii found that the wires and buoys pose entanglement risks; the potential to entrap and injure marine animals; danger to divers and marine life from electrical leaks and electromagnetic radiation; and will affect shoreline conditions.

Nonetheless, San Francisco-based utility PG&E Corp. inked a power-purchase agreement with Finavera in December to start receiving power in 2012 from a project off the coast of Northern California. German power provider E.ON AG has also teamed up with Ocean Prospect Ltd. to explore a project off the coast of Cornwall, U.K.

However, results for Ocean Power's fiscal third quarter fell far short of Wall Street expectations. The company's loss widened from the year-ago period as it invested heavily to deploy its wave technology.

Ocean Power reported a loss of $4 million, or 39 cents per share, for the three months ended Jan. 31, compared with $1.5 million, or 30 cents per share, a year earlier. Revenue more than doubled to $1.4 million, but analysts had expected a loss of 29 cents per share on revenue of $2 million, on average, according to Thomson Financial.

Ocean Power's stock has dropped nearly 40 percent since its initial public offering last spring as investors dumped riskier stocks amid market turmoil. Its shares fell 43 cents, or 3.4 percent, on Monday following its third-quarter report, and they lost another 74 cents, or 6.1 percent, to close at $11.43 Tuesday.

Nonetheless, Global Hunter Securities analyst George Santana maintained a "Buy" rating on Ocean Power's stock in a note Tuesday, saying the company offers "one of the most attractive valuations in the universe of alternative energy stocks."

New contracts, technology advances and "building enthusiasm for ocean power" will provide stock catalysts in the short term, Santana said. But a tight credit market has made it incredibly difficult for such start-ups to access venture capital to improve their emerging technology.

"Market conditions for small-cap companies have been difficult with the recent subprime mortgage meltdown and subsequent impacts," Finavera Chief Executive Jason Bak said in December. Soon after, the company reported a private placement of 2.1 million Canadian dollars ($2.1 million) worth of stock.

Finavera, which is traded on the Toronto Stock Exchange's Venture Exchange, has lost over 60 percent of its market value over the past 52 weeks, trading recently around 16 Canadian cents (16 cents.)

Source: CNN 

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