When it comes to harnessing the power of nature for energy, the wild west of renewable resources lies in the ocean. And it can be rough on the choppy seas. Just ask Canada-based Finavera Renewables (TSX-V: FVR).
In late October the company watched its wave-to-energy converting test buoy sink off the shores of the central Oregon Coast. The buoy, which cost about $2 million to develop and build, had been in the water for just under 2 months.
Could what happened to Finavera's buoy be a metaphor for the fate of bringing ocean power to the masses?
Part of the problem is that when it comes to ocean power, "a lot of these companies don't get past the research and development phase," said Sean Brownlee, a green-technology consultant and former director of venture capital firm 3i.
Despite the challenges, companies are ponying up to develop technologies to capture the energy from movement, like the undulating action of waves and the constant ebb and flow of tidal waters.
They are drawn to the possibilities. Due to water's density, tides and waves can easily generate more electricity than other renewables like wind and solar.
The ocean is also a more dependable energy source as waves are always moving, and the movement of tides is predictable.
In a March study led by researchers from the Electric Power Research Institute in Palo Alto, Calif. found that 10 percent of U.S. energy demand could be "credibly harnessed" from wave and current energy.
But turning such optimistic statistics into a reality is a lot more difficult than first appears. For one, whatever companies put in the water has to withstand the relentless beating the ocean can deliver.
Finavera was one day shy of removing the buoy, called AquaBuOY 2.0, after testing some of its power-generating components when it fell below the water's surface.
The company's wave power system acts as a sort-of hydraulic pump, converting the vertical motion of waves into pressurized sea water, which in turn drive a piston and force seawater through a turbine.
Finavera isn't sure why AquaBuOY 2.0 went down. But it could be the pump responsible for removing water from the flotation part of the buoy failed, said Myke Clark, vice president of policy and public relations for the company.
Clark doesn't think anything was amiss with the energy generation portion of the device.
"Clearly we didn't plan for this," Clark said. But he also added the buoy was a prototype and wasn't designed to last the five or more years that would be needed for commercial usage.
Finavera isn't alone in needing to ensure such issues are addressed before reaching the mass market place. In addition to keeping ocean-energy systems afloat or functioning if they are tethered to the ocean floor, companies face additional hurdles. Among them is ensuring a low impact on marine wild life.
But perhaps the biggest challenge will be raising the funds needed to take the industry to the next level, which requires the deployment of capital-intensive projects.
So far, no company has been able to make energy from the ocean commercially.
At this stage of ocean power development many companies are hard-pressed to show investors inspiring economic data, like the costs associated to the amount of energy produced, Brownlee said.
And unlike solar and wind power, "there is really no federal recognition for this in terms of subsidies," he said.
As much as venture capitalists are known to take risks, there is a limit. "They want some known variables to be there," he said.
Brownlee suspects such barriers have kept many private investor groups looking on without diving into ocean power.
According to Greentech Media Research ocean power only saw one $15 million funding round for the year so far while solar has already reached about $1.2 billion (see Solar Venture-Capital Funding Powers Past Biofuel).
To be fair, solar is a much more mature market which has benefited greatly from government subsidies.
Still, Brownlee doesn't see much happening for ocean power as a sector until major events occur like the ability to garner government subsidies or build large-scale projects demonstrating that the technology works on an economic level.
Brownlee wishes he had a better take on the space. "Intuitively it makes sense," he said. "And then you start to see the challenges and then you see (the companies) have mountain to climb ahead of them."
So far governments, government-associated entities and utilities have been the ones doling out most of the funds, which have come in the form of grants, investments and debt.
Daniel Englander, Greentech Media Research analyst and PV News assistant editor, has a more positive view on the sector's future. He points to companies like General Electric and its willingness to get into the space. GE took an undisclosed equity stake Ocean Power Delivery last year.
Ocean Power Delivery has been working on a wave power farm off the Portugal coast, among other projects.
And the Carbon Trust, a private company set up by the British government in response to climate change, announced in late September a £3.5m (about $7 million) program to accelerate the sector's development.
The trust claims marine energy has the potential to provide 20 percent of the United Kingdom's electricity needs.
In June, Pacific Gas and Electric Company along with the City of San Francisco and Golden Gate Energy Company said they would conduct a study to assess the possibilities of harnessing the tides in San Francisco Bay.
PG&E said it would provide up to $1.5 million for the research.
And there are other funding options out there. "A lot of companies are looking to go public and raise the money they need," Englander said.
Earlier this month Reuters news reported a slew of ocean power companies pondering the jump, like Australia-based Oceanlinx-which the news agency said wanted to list on AIM in December and raise up to £35 million pounds ($72.6 million).
But the public market can be harsh too. In April, Ocean Power Technologies (NSDQ: OPTT) made its Nasdaq debut listing at $20 per share to close at $17.74
"I'm hopeful," Englander said. "But a lot of these companies need to do the legwork."
And not helping matters is one of the leading ocean power company's test-buoy sinking, he said.
Despite the disappointment, Finavera claims it's still on track with its wave buoy development. A larger scale device is scheduled to float on open waters in 2008 for another pilot test.
If things go as hoped, Finavera will be selling a buoy system capable of delivering electricity for 10 cents per kilowatt hour.
But that's three to five years from now, Clark said.
Until then, investors will debate if one of the last frontiers of renewable energy can be successfully explored. And companies like Finavera will be charged with the task of proving it.