Acquisition of Breakthrough Wave Energy Technology
Catalyst Hunter 12/09/2014
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Currently capped at around $2M to $3M, Stonehenge Metals Ltd (ASX: SHE) may be a few weeks away from entering the renewable energy game – a sector that could be worth over $600BN globally by 2015.
SHE is working to close a deal to acquire the potentially revolutionary and disruptive ProteanTM Wave Energy Converter technology – A system that can generate power and desalinated fresh water from the waves in the ocean.
The Protean WEC Buoy converts relative movement between the static ocean floor and the floating buoy into energy
This scalable piece of renewable energy tech is heading towards commercialisation.
There are two key features in this technology:
1. It is designed to maximise energy converted by harnessing all six degrees of wave motion:
The wave energy converter uses all 6 degrees of wave motion to collect energy
2. It has a flexible and adjustable design that allows collection of wave energy to always occur at water’s surface, regardless of depth – the surface is where the most energy can be collected:
There is a reduction in energy density as ocean depth increases – Protean sits at the ocean surface for maximum energy collection
The technology has been 10 years in the making – and in a few weeks SHE can secure an option to acquire this technology.
The technology has passed the demonstration stage already – the next step is delivering a pilot project and then commercialisation.
The share price spike experienced by another ASX listed wave energy company, Carnegie Wave Energy, for simply taking part in a trial of wave energy systems in Western Australia shows just how much the market can respond to any movement in the renewables sector.
As a key part of the acquisition deal, SHE needs to raise at least $1.2M from a $1.5M rights issue . The price of the new shares under the offer is $0.005. We are expecting a result to be announced in the next few weeks.
No money, no deal and we’ll know soon after the rights issue closure date of 22 nd of September whether SHE is a player in the renewable energy game or it remains solely a uranium and vanadium developer.
This is the exact kind of stock that catalysthunter.com looks for:
“ CatalystHunter.com provides alerts when an ASX stock is close to a share price catalyst that could potentially initiate a share price movement. “
SHE: The Upcoming Share Price Catalyst
Imminent Acquisition of Potential Breakthrough Wave Energy technology
SHE are currently raising $1.5M via existing shareholders to fund the development of the ProteanTM technology. This offer closes on 22nd September, 2014. Following this the company has 3 months to place any shortfall.
If this cash is raised, SHE will have a 24 month option to acquire 100% of the technology, with a commitment to a $500k minimum spend on the technology over 18 months.
Sean Moore, the Protean WEC inventor, will be joining as Chief Technology Officer WEC to spearhead the Pilot Project.
Sharp timetable for acquisition deal
SHE’s rights issue to shareholders has already opened – a prospectus detailing the deal and the WEC technology has been sent to existing investors.
The offer closes on the 22 nd September, with any shortfall to be taken in the weeks after, in order to raise the minimum $1.2M required to close the deal.
At that point SHE’s initial plans for the technology acquisition will be funded.
SHE’s development plan for the wave energy tech
If and when SHE seals the deal to acquire the technology here’s what SHE plans to do:
- Deliver a pre-commercial pilot array of the acquired technology (targeting installation in Western Australia);
- Kick off a fixed price (A$500k) turnkey project to deliver a 30 buoy pilot project within 18 months;
- Test the power generation array of 30 x ProteanTM WEC buoys (each buoy 1.5kWH);
- Test the transmission setup in preparation for full commercial trials; and,
- Commission an independent report.
Once the pilot project is completed SHE plans to:
- Deploy a larger scale pilot;
- Commercialise a Protean array for small/medium customers; and,
- Seek Australian & international strategic alliances (for deployments, testing & funding)
How the Protean wave energy tech works:
The ultimate goal in development of the wave energy technology and SHE’s interest in acquiring it is its commercial potential.
The Protean technology appears scalable and could be built for a relatively low cost.
The Protean buoys are designed to be smaller, lighter, cheaper to deploy and capable of generating power much more efficiently than rival systems.
The system is protected by Intellectual Property and has been tested to the demonstration stage with a Pilot Project and commercialisation now the next steps.
Here’s how the technology works and why it could be sold around the world:
- The Protean TM WEC system uses buoys that float on the ocean surface and are tethered, usually by a simple clump weight, securely to the sea floor
- Wave energy causes the buoys to move through six degrees of motion – up-down, back-forth, side-side, yaw, pitch and roll – the six degrees of movement is unique to this technology and sets the Protean apart from the rest
- The movements caused by the waves make a counterweight move and a pulley rotate which produces direct drive power through an energy conversion mechanism
- Each buoy in the pilot project array is designed to produce up to 1.5kWH and buoys can be deployed in small or large groups off any coast in a variety of depths and surface conditions
The Protean Technology is designed to work at a variety of depths
Those are the basics of SHE and its effort to acquire this technology through a $1.2M capital raise (minimum) over the coming weeks.
SHE’s imminent potential acquisition of this wave energy technology is a tight fit for catalysthunter.com’s requirements: an ASX stock which is EXTREMELY CLOSE to a share price catalyst that could spark a share price movement.
Read on for some more in depth information about SHE and the wave energy technology that could soon be part of its project portfolio.
Wave energy potential
Renewable energy is a hot topic around the world with every variation of the technology being developed at a fast pace – wind turbines, solar panels, tidal energy and now wave energy are all potentially the next global fuels for the 21st century.
So it stands to reason that the markets can sometimes get excited by the potential of new renewable energy technology. Assuming the deal goes through, SHE’s move to acquire the Protean TM wave energy system may result in significant share price appreciation – especially if they can progress with the technology and take it to the commercial stage.
Rapid price increases have happened before in the wave technology space, and for far less concrete reasons... have a look at what happened to Carnegie Wave Energy back in 2007/08:
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
The massive share price spike in the first few days of 2008 is explained pretty simply . There was a push in bone-dry Western Australia to get a desalination plant happening called the Southern Seawater Desalination Plant (SSDP).
There was a lot of speculation, particularly in the media, that Carnegie’s wave energy technology would be considered to supply some of the power to the plant.
Well, the plant is up and running now and it draws its energy from a solar and wind power. Close, but no cigar. But just the sniff of a power contract for Carnegie’s wave energy technology was enough to get the markets as worked up as a 6ft swell on that occasion. Since then Carnegie has retreated significantly.
The fact remains that there is not one single company in the world with wave energy technology operating at a commercial scale.
SHE is a high risk investment right now. SHE still need to complete the acquisition of the Protean TM wave energy technology. Even once that has happened, the technology may never get to commercialisation.
Whichever wave energy company cracks the commercialisation code stands to make millions from selling its technology to the world.
The Protean technology that’s been developed has been designed from the get go as a scalable, low cost and highly effective power generation system.
Investment in the renewables sector is huge, and trending upwards:
Global new investment in renewable energy
SHE says if the deal goes through it plans to invest in the tech and accelerate its development so eventually sales can be made.
This deal for SHE is an opportunity to acquire a company that’s developing technology that could potentially change the way the world is powered. The UK Carbon Trust reckons wave energy could be a very large power sector by 2050:
Forecast growth of wave energy market
SHE wants to be part of this, and the technology it’s potentially acquiring is well advanced down the development path.
Turning wave power into electricity
The Protean Wave Energy Conversion Technology system has been in development since 2004 and has now passed the demonstration stage.
It’s been 10 long hard years in the making – and SHE could be acquiring this technology over the coming months:
Protean’s path to development
As you can see from the pictures above, the process to get the Protean ready has been steady – lots of research, then small scale tests followed by larger and larger tests until a demonstration device was ready to show the market.
But why bother? After all, wind and solar power are pretty well established and those technologies are expanding across the world. Here’s why:
Scaled Energy Density Comparison
Wave power is quite simply massive. Solar power needs sunny weather to operate at maximum and wind needs wind. But the ocean is always moving and the density of the energy available to harvest is far higher.
But it has to be harnessed and so far there are no companies with wave energy technology operating at a commercial scale.
The Protean TM technology is aiming to be the first and SHE could benefit hugely from that ambition if they decide to acquire the technology fully and the commercialisation of the Protean TM system is successful.
Here are more details on how the technology works:
How the Protean Technology works
The Protean system is a buoy tethered to the sea floor, which has pulleys, a counterweight and an energy conversion mechanism.
When a wave moves it has six degrees of motion – up-down, back-forth, side-side, yaw, pitch and roll – and the buoy captures and converts the energy from each of those movements. Capturing six degrees of motion is unique to the Protean TM wave technology.
The power is then transmitted to the power station on land and then fed into the grid of the city or town the array is connected to.
The Protean system is designed to be installed in small or large groups to form ‘wave farms’ that can be set up off any coast and at any depth.
The simplicity of its design is a big advantage. Based on work completed to date, it should be significantly cheaper to manufacture and much easier to install than larger rival systems. A larger scale (300kWp) Protean buoy device concept is shown on the right in this image:
Weight to energy generation comparison
Moving forward, SHE plans to accelerate the development of a pilot project and win commercial contracts for the technology. The initial focus of this effort will be in Western Australia where the system has been developed and tested but the ultimate prize is the global market for electricity and desalinated fresh water supply.
12 weeks to close the deal
But remember, all of this depends of SHE’s ability to raise at least $1.2M within 3 months from 22 nd of September. The current rights issue offers new shares at $0.005 per share.
In a few weeks we could see SHE become Australia’s newest player in the renewable energy game with a scalable, cost-effective and highly advanced wave technology system to push forward to commercialisation.
That’s just the thing we look for at catalysthunter.com – and we’ll be keeping a close eye on SHE’s progress.