Recession leaves Pelamis wave project struggling to stay afloat

Collapse of Australian-based infrastructure giant Babcock & Brown means 77% share in the Aguçadoura wave plant is now up for sale

Duncan Clark
guardian.co.uk, Thursday 19 March 2009 16.05 GMT

A pioneering wave-energy project in Portugal has fallen victim to the global economic downturn after the collapse of its majority owner, Australian-based infrastructure giant Babcock & Brown.
Last September, three machines manufactured in Scotland by Pelamis were connected to the grid near Aguçadoura in northern Portugal, becoming the world's first commercial wave-power plant.
The devices, shaped like giant articulated snakes and collectively capable of powering more than a thousand homes, were installed at a cost of about £7m. Most of the money was provided by the energy firm Enersis, which had been purchased two years previously by Babcock & Brown for nearly €500m.
Babcock & Brown had taken on considerable amounts of debt and last year its share price plummeted as global credit dried up. Last week, it was placed into voluntary administration, having begun the process of asset disposal. The company's 77% share in the Aguçadoura wave plant is now up for sale.
To make matters worse for the Pelamis project, the generating devices themselves have suffered various technical hitches and have been brought onland for repairs. Until a new owner takes over the majority stake, Pelamis is unable to fix these problems and the devices will stay out of action.
Pelamis insists the technical challenges are not serious. Max Carcas, a spokesman for the Edinburgh-based company, said: "In a project of this nature, the world's first wave energy plant, it's inevitable that there will be niggles and issues to tackle. We've had nothing that isn't expected."
Though Carcas expects to see the three generators reconnected to the Portuguese grid at some stage, he acknowledges the collapse of Babcock & Brown leaves the project "in a state of limbo".
There have been mixed results so far in 2009 for Pelamis. Last month, energy firm E.ON, one of Britain's big six energy suppliers, announced it had placed an order for the company's second-generation P2 wave power device. This marks the first time a utility has purchased a marine energy generator in the UK, according to Pelamis.
The P2, which is 180m long (50m longer that the devices in Portugal), will be installed at the European Marine Energy Centre in Orkney. E.ON expects the P2 to be fully operational by 2010, with the following two years used to "test and improve the device's working capabilities".
A spokesman for E.ON said: "As an island, the UK's potential for wave and tidal power is massive. It's very early days but if things go well, we'd expect wave generators to become as familiar a sight as wind turbines are today."