According to Chilloutman's calculations, a WEC unit rated at 1.5kW produces electricity at an average of 1.05kW per hour (1.05kWh), which is 70% of its rated capacity (1.05/1.5 = 70%). So every hour of every day of the year these units will produce 1.5kW. I note no downtime is included in the calculation, so already that calculation can't be correct.
According to the calculation, a 30 unit array will produce "$82,782 in annual income (actually that should be revenue) per 30 1.5 Kwh buoy array minus production and ongoing maintenance costs and maintenance down time".
But unknown at this stage:
1. What is the payback period on the capex investment - 1, 2, 3,...10 years?
2. What is the IRR and/or the NPV for the project - metrics normally calculated to determine the attractiveness of an investment in a project?
3. What are the production and ongoing maintenance costs, and the downtime?
So it is impossible to determine how profitable the investment in this project will be. This imo is why the SP is not responding well to the company's announcements, because without any optics on profitability, how can the market make any kind of valuation. In the absence of clarity on that, the market will discount its valuation of the company to reflect the level of perceived risk on profitability.
Having said the above, I don't believe the cost structure has to be compared directly to solar if the company is going to target those specific markets where wave energy has a competitive advantage (solar power can't power island electricity grids at night, unless storage is added, which then makes it prohibitively expensive), but worth understanding the relative cost structure to determine where its competitive advantage is (I do think the company has correctly targeted the right markets for this reason).
Wave energy is clearly an emerging technology, so one might argue companies like SHE are a bet on future technology capability. The fact that they don't (as a sector) publish info on cost structure and/or profitability tells us they're not there yet, but it would be to everyone's benefit I believe for them to be more open about such data so we can better understand the trajectory to (hopefully viable/profitable) commercialisation.
Cheers, Sharks.
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