Wave power project suffers wipeout

The California Public Utilities Commission in October nixed the first request it received to approve a power purchase agreement for a wave power project off the state’s northern coast.

The agreement between Pacific Gas & Electric Co. (NYSE: PGC) and Vancouver-based Finavera Renewables, Inc. (TSX-V: FVR) would have placed a 2 megawatt-capacity demonstration pump buoy several miles off the coast of Humboldt County. The power would be delivered to customers in central and northern California and would help PG&E meet the state’s renewable portfolio standard.

While some details of commission’s decision were confidential, in its rejection of the agreement CPUC said the project was not viable, the power purchase price was too high and that Finavera’s bid was out of line with other bidders. CPUC called wave technology “nascent” and “pre-commercial,” and said, while it is supportive of exploring ways to commercialize wave power, Finavera’s project “does not provide enough value to justify the contract price.” The commission also noted an incident in 2007 when one of Finavera’s test buoys sank off the Oregon coast at the end of its trial period.

In its response to CPUC’s preliminary decision earlier in October, Finavera said a bankable power purchase agreement is essential for commercializing any wave power project, and that a rejection by CPUC would hobble North American wave power projects. With the first wave power purchase agreement on the continent, the Humboldt project would have proven America’s support of wave energy technology, according to Finavera.

“This decision by the CPUC is out of step with federal policy and with other state and city initiatives,” Finavera CEO Jason Bak said. The company says it is exploring other possible ventures in California with PG&E while also investigating alternative funding for its wave projects, including the creation of a private consortium.

In its resolution, CPUC argued that its decision would not adversely affect wave power development, noting other Finavera wave projects and PG&E’s WaveConnect project, which aims to develop and commercialize effective wave power technologies.