Ocean Power Technologies: Ride the Marine Energy Wave

Kermit the Frog was wrong. Being green is hot. Investors can't seem to get enough of solar power IPOs. It seems that everyday, more and more hybrid cars are on road. Supermarkets and Retail stores are encouraging patrons to bring reusable cloth bags with them when they shop.

The Powershares Wilderhill Clean Energy ETF (Amex: PBW), a proxy for the renewable energy market, is up 36.38% this year. To paraphrase Boone Pickens "With 80 dollar a barrel oil, everything will get its chance." To that end investors have been chomping at the bit to get their hands on ever sort of "green" energy stock. The bulk of shareholder's knowledge, however, stems from the major varieties of clean energy: Ethanol, Solar, Wind and Fuel Cells, as well as the resulting "pin-action" plays derived from alternative sources of power. Increased ethanol production means greater need for fertilizer and farm equipment, so Agrium Inc. (NYSE: AGU) and Deere Co. (NYSE: DE) are prefect choices to reap the benefits. There are a few overlooked sections of the alternative energy market and one may provide the juiciest returns overall. Our Oceans.

Marine power is a relatively new concept that first got its footing in the late 1980's. Primarily explored by Universities and European governments, ocean power has recently found its second wind. There are now a few publicly traded companies that are directly working on ocean power. Specifically wave power in one of three areas: Buoy systems, Tidal Dams and Current Flow Tubes. The Current Flow Tube method of wave power uses large pipes placed under water in the ocean's various continuous current ways. Water flows through these pipes and turns large propellers at one end, which in turn, spin large turbines. Energy is then transferred via wire to the grid. Buoy Wave Power employs large floating metal structures that are chained to the seabed. As the waves passes by, the float bobs up and down converting the kinetic motion to energy. Several of these are strung together to create a Wave Farm capable of producing megawatts of power. The third variety of marine power implements the use of a tidal dam. Similar to a hydroelectric plant, a wall is built at a certain point in the ocean to capture the energy created as the tide rushes in. The flowing surf spins turbines similar to a current tube. There are currently no tidal dams in production and they are still in the research phase of development.

Creation of a tidal dam would be an immense undertaking, suitable only for a large utility group. I suggest investors principally focus on buoy and current marine energy. The following is list of publicly traded corporations that have operations in those areas. Keep in mind that these are longer term picks and at the time publication none of these are profitable. Investors may want to purchase one or two and "forget" about them for while.

Finavera Renewables Inc. [TSX-V: FVR] trades on the Toronto stock exchange and engaged in marine energy through its Aquabuoy subsidiary. Its latest breakthrough comes in the form of Aquabuoy 2.0, a real world test of its technologies. Finavera has started wave projects in Washington State and Oregon as well as Portugal, Canada and South Africa. The company also balances its marine activities with wind farms located within Irelands Cloosh Valley and County Galway. It also controls smaller wind projects in Canada. Finavera is currently trading at 44 cents. Investors with a longer term point of view may want to overlook the penny stock price for good future prospects.

For those of you who have easy access to global markets you may want to consider Renewable Energy Holdings PLC [LSE: REH], an English company trading on the London stock exchange. Like Finavera, REH specializes in a number of green methods of energy production. In addition to its wave projects it also counts wind energy and bio-fuels in its arsenal. Renewable Energy was trading at 48 p.

The third company is a pure play wave and marine energy. Ocean Power Technologies (NASDAQ: OPTT) uses its patented Powerbuoy Smart System to produce electricity. It has several marine ventures including a project for the United States Navy in Oahu, Hawaii. The company also is working on 1.39 megawatt facility for Spanish Utility Iberdrola S.A. The Nasdaq listed shares where recently trading at $16.98. Recently some Governments within the European Union and Canada have stated that by 2010 at least ten percent of the energy generated within their borders must come from renewable sources. This certainly bodes well for ocean power going forward into the future. It would be wise for investors to investigate marine power for their portfolios.

Disclosure: Author did not have any position in any of the companies listed in this article.