Carnegie Makes Significant Progress on Perth Wave Energy Project (Australia)

During the quarter Carnegie Wave Energy Limited made significant progress on its commercial demonstration project, the Perth Wave Energy Project.

In addition, Carnegie continued to make technical and commercial progress on its proprietary CETO wave energy technology and commercial site development. Highlights from this quarter include:

– $9.9m in grant funding from the Australian Government’s Emerging Renewables Program (ERP) for the Perth Wave Energy Project which complements the existing $5.5m funding from the Western Australian State funding through the Low Emissions Energy Development Fund (LEED);

– Australian Prime Minister, the Honourable Julia Gillard visited Carnegie’s private wave energy research facility to announce the signing of an electricity supply and grid connection agreement for the Perth Wave Energy Project between Carnegie and the Department of Defence.

– Advancing the detailed design stage of the Perth Wave Energy Project, on track for completion by the end of 2012.

– Welcoming highly experienced cleantech investor, 88 Green Ventures (Australia), as a substantial shareholder.

– Completing a year-long Bermuda wave study that demonstrates the viability of the Island’s wave regime for a commercial CETO wave energy project.

Carnegie’s main focus remains the design and delivery of its first grid connected demonstration project, the Perth Wave Energy Project.

Perth Wave Energy Project

$9.9m Australian Government Grant for Perth Wave Energy Project During this quarter, Carnegie announced a $9.9m grant from the Australian Government’s Emerging Renewables Program (ERP) to support the Perth Wave Energy Project. This is Carnegie’s first grid-connected CETO wave energy project and will be located at Garden Island in Western Australia. The Australian Government grant complements existing grant funding for the Project from the Government of Western Australia’s LEED Program.

The Project will be 1 to 2MW in capacity and, based on the recently completed preliminary design, is expected to cost $31.2m. The combination of State and Australian Government funding allows the Project to proceed with approximately 50% Government funding. Both the ERP and LEED funding are milestone based and are paid in arrears as project milestones are met. Carnegie will fund the balance of the Project.

Detailed design is now underway, part of which includes applying for and all Government approvals required for the construction and operation of the Project as well as carrying out further formal community consultation. Construction and commissioning of the Project is scheduled to occur in 2013 with first power due for delivery into the grid at the end of 2013. Further details of the Project will be released as the detailed design and approvals process proceeds. The Project will deliver Carnegie its first power sales revenues through the sale of the electricity to the Australian Department of Defence.

PWEP Agreements with Department of Defence

In July, the Australian Department of Defence (Defence) and Carnegie signed formal electricity supply and grid connection agreements for the Perth Wave Energy Project. These significant agreements govern the exclusive purchase of all the electricity generated from the Perth Wave Energy Project by Defence at the prevailing renewable energy wholesale market rate. The agreements also allow the connection of PWEP into the local Defence electrical infrastructure at HMAS Stirling, Australia’s largest naval base.

Carnegie and Defence have also now signed a formal licence agreement which provides Carnegie with approval to undertake the Project on HMAS Stirling and tenure over the onshore site, which will house the power generation system of the PWEP. This is a predisturbed site and a former quarry used for construction purposes, and close to the grid connection point.

PWEP Overview

The Perth Wave Energy Project (PWEP) will mark the first demonstration of a complete grid-connected, multiple unit, commercial scale CETO system anywhere in the world.

The PWEP is a key step in Carnegie’s commercialisation pathway for CETO and will be the primary focus of Carnegie through to its commissioning and operation. Successful completion of the Project will provide Carnegie with the confidence to pursue targeted commercial project opportunities in attractive wave power markets.

The purpose of the Project is to demonstrate the system engineering, detailed design, manufacture, construction, deployment and operation of a CETO wave energy system to produce and sell electricity to a credible customer via a utility compliant grid connection.

There are a number of key objectives that the Project is designed to meet including:

– Demonstration of a larger capacity CETO unit than either the CETO 3 or CETO 4 units developed to date

– The production of utility quality electricity by generating and exporting power to the grid for a sustained period

– Verification of the accuracy of Carnegie’s computational CETO system modelling against the measured Project performance

– Understanding the interaction of multiple commercial scale CETO units operating in an array

– Confirmation of the feasibility of the deployment, operation and recovery of the Project’s major elements including pipeline, CETO units and foundations

– Recording of the environmental interactions of the Project in order to demonstrate and verify that it has minimal impact

– Demonstration of Carnegie’s ability to plan, resource and execute a commercial scale CETO project.

The Project size will be finalised during the detailed design phase but is expected to be between 1-2MW in capacity. Based on the completed preliminary design, the Project is expected to cost $31.2m. Detailed design is currently underway and on track to complete by the end of 2012. This stage also involves Carnegie seeking all government approvals required for the construction and operation of the Project and carrying out further community consultation. Construction and commissioning of the Project will occur in 2013 with first power due for delivery into the grid at the end of 2013. A more definitive delivery date will only be possible upon the ordering of long lead items at the completion of detailed design.

The key activities that Carnegie will undertake for the Perth Wave Energy Project include:

– Implementation of Project plans such as Risk Management and Community Consultation Plans

– Community consultation and engagement throughout the Project life

– Detailed design and engineering

– Securing all necessary approvals including environmental, planning and native title

– Studies and surveys to support the environmental impact assessments required for approvals including benthic and terrestrial habitat mapping and geophysical and geotechnical surveys

– Securing onshore and offshore tenure

– Procurement and Manufacture of all components

– Project Construction including the early securing the required offshore vessels

– Commissioning and practical completion

– A minimum of 12 months operation

As both the ERP and LEED Government grants are milestone-based, retrospective funding, Carnegie will be reimbursed for the government’s share of the expenditure on each activity once Carnegie has satisfactorily completed that activity.

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Press Release, July 30, 2012