The Carnegie Wave Energy CETO Wave Energy Project

-Progress towards Commercialisation

Dr Laurence Mann

Research and IP Manager

Carnegie Wave Energy Limited.

October 2009

© 2009 Carnegie Wave Energy Limited

Carnegie Wave Energy Ltd – who we are

• Australian-based ‘CETO’ wave energy developerASX li t d (CWE)• ASX-listed (CWE)

• $100m Market Cap• 20 staff• Headquarters in West Perth, Western Australia• Wave Energy Research Facility in Fremantle, WA

Carnegie – what we do

• Develop & commercialiseDevelop & commercialise proprietary ‘CETO’ wave technology

• Build own & operate CETO wave• Build, own & operate CETO wave power stations

• Licence CETO wave technology to third partiesthird parties

• Sell services and equipment to CETO wave power stations (in f t )future)

CETO – technology overview

CETO – zero-emission power & freshwater

Wave Energy – abundant, high capacity, predictable

• Energy in the ocean swell generated by large offshore

storms

(not tidal energy which originates from gravity between

the Earth & Moon)the Earth & Moon)

• Located near load centres – no costly transmission (60%

of the world’s population lives within 60km of the coast)

• Abundant – global wave resource is 2TW (2 million MW)

or twice the world’s power consumption (World Energy

C il)Council)

• High availability of resource at best sites globally - less

intermittent and more predictable than wind or solarp

Wave Resource and Market Drivers

• AustraliaAustralia

o 500,000 MW of wave resource

o CETO considered pre-eminent wave technology

o Government Funding: $500m for renewable energy &

$1bn desalination

o 20% by 2020 Renewable Energy Target & Emission

Trading by 2011

Wave Energy– a global resource

– Power consumption grows…

Wave Energy Resource – average annual MW/km of wave front(this is not tidal energy)

Wave Energy – global & untapped

Southern Wave Energy Engine

Wave Energy– January 2008

Wave Energy– July 2007

Wave Energy – major energy companies involved

The enormous potential of wave energy is now increasingly recognized by governments, corporations and investors worldwide…

Scotland aiming to become "Saudi Arabia of marine energy” (Scottish 1st Minister)

Shell take stake in wave energy company

“EDF Energies Nouvelles

gy ( )

“Iberdrola Renovables begins tests on wave

energy plant”

“GE Invests in Wave Energy”

signs wave energy agreement”

“There is no doubt that marine power will be an important pillar of future energy portfolios….”Helge Daebel Emerald Technology Ventures

“Aquamarine and Airtricity to develop 1 GW of wave and tidal”Helge Daebel, Emerald Technology Ventures

Portugal Opens Pioneer Wave Power Plant

Chevron buys into wave energy

“Investec funds $250m for Carnegie wave power project”

Wave Energy – Technology Overview

Wave heights and the location of Australian wave sites suitable for base-load power generation (Class A wave regimes)

Australia’s Baseload Wave Energy Resource

CETO – how it is different

• Simple – no power generation equipment offshore

• No visual impact – fully submerged

• Enhanced storm survivability –yfully submerged and storm relief

• Zero-emission freshwater co-production possibleproduction possible

• Minimal environmental impact

• Offshore: Single moving part –low maintenance

• Onshore: Off the shelf power andOnshore: Off the shelf power and water production components

CETO – technology overview

• BA – proprietary design and core knowledge with respect to dynamic response and energy release

• Tether – provides flexible link between BA and pump. Tension member engineering group providing specialist input.

• Pump – Custom engineered in conjunction with specialist hydraulic cylinder manufacturersmanufacturers.

• Attachment – Designed and manufactured by advanced manufacturing and production y g pengineering group

• Foundation – designed, based on site specific sea bed substrate composition byspecific sea-bed substrate composition, by subsea engineering and deployment experts.

CETO – technology development timeline

1999 - 2003

Scale models & wave tank testingConcept

2003 - 2006

P f f C t

Scale models & wave tank testing

P t t d i i i

pDevelopment

Proof of Concept Prototype producing zero-emission power and desalinated water

2006 - 20082006 - 2008

Multiple, commercial design units generating power

Pilot Plant

2008 - 2010 • Commercial scale demonstration –starts in November 2009

Commercial Demonstration

R&D Facility - Fremantle, Western Australia

Perth city Fremantle

CETO onshore facilityCETO offshore test area

R&D Facility - Fremantle, Western Australia

CETO onshore facilityCETO offshore test area

2004 – CETO I Deployment (underwater laboratory)

2003-2006 -CETO I

LocationSchematics

Pipeline to shore

2007 –Design Validation

2006/2007 – Virtual Ocean & Computational Design

2007 – Wave Rider Buoy for Design Validation

2006 – Power Production

2008 – CETO 2 Deployment

Business Model - license fees plus project returnsj

• Projects undertaken on build, own and operate basis via special purpose company

• Projects will pay a license fee to Carnegie plus a dividend in line with any equity stake

• Licensee projects in non-core markets or where other parties benefit from a lower cost of capital e g utilitiesbenefit from a lower cost of capital – e.g. utilities

EDF EN - CETO licensee & JV partnerp

• Northern Hemisphere licensee of CETO

P C i li f / j t• Pays Carnegie capex license fee/project

• Carnegie retains right to participate in Northern Hemisphere projectsp j

• EDF EN has over 2,200 MW of installed renewable capacity in operation and another 1,000 MW under construction

• generated A$130 million earnings on A$1.8 billion revenue in 2008

• 50% owned subsidiary of the EDF Group - one of the largest power generation companies in the world

• EDF has over 120,000 MW, 38 million customers and 160,000 staff & generated A$9 billion earnings on over A$120 billion revenue in& generated A$9 billion earnings on over A$120 billion revenue in 2008

Investec – Australian Financing Partnerg

• Heads of Agreement to fund up to $250 million of first large scale project with Investec Australia - subject to certain conditions

• Investec has pre-emptive investment rights on subsequent• Investec has pre-emptive investment rights on subsequent Australian grid connected projects for 3 years

• Carnegie retains equity participation rights

• Projects to be developed in Special Purpose Company

• Projects will pay Carnegie a license fee/project plus dividendj p y g p j p

• Investec Australia is subsidiary of Investec International - $4.4 billion market capitalisation listed on LSE & JSE

• Investec is rated Baa1 by Moody’s Investors

CETO – project development timeline

2006 - 2008WA & Victorian wave research licensesWA SA & VIC j t it d d

Site

2008 - 2009Project Pre-

WA, SA & VIC project sites awarded

$12.5 million WA Govt grant for 5MW projectMoU with Dept of Defence for Garden Island

Identification

Project Pre-Development

MoU with Dept of Defence for Garden Island$250 million Investec HoA for 50MW projectFrench & Canadian Govt grants ($7million)

• Australian Govt grant application for 50MW project2010 - 20112010 - 2011

• 5MW Power Offtake• 5MW in WA

Small Scale Commercial Demo

2011 - 2013• 50MW Australian project• 10-20MW international

Large Scale Project

50MW Commercial Project

Vancouver Island

• Pacific Coastal Wave Energy Corporation a joint venture between Renewable Energy Holding Plc EDFventure between Renewable Energy Holding Plc, EDF EN and local company Global Energy Horizons (GEH)

• investigating the potential for CETO wave energy off the west coast of Vancouver Island in Britishthe west coast of Vancouver Island in British Columbia, Canada

• Granted an Investigative Permit November 2008 by British Columbia’s Ministry of Agriculture and Lands toBritish Columbia s Ministry of Agriculture and Lands to conduct a wave energy investigation over an area of approximately 475 hectares off Ucluelet, Vancouver IslandIsland.

• In April 2009, awarded CAD$2m through British Columbia’s Innovative Clean Energy (ICE) fund to develop a wave energy project off Uclueletdevelop a wave energy project off Ucluelet.

Reunion Island

• La Réunion, an overseas department of France in pthe Indian Ocean, has announced the funding of a research and development project with EDF EN to investigate the potential for Ceto wave energy,

• Includes adaptation and optimisation of the technology in La Réunion. gy

• The feasibility of a pilot plant will also be studied. Final contractual arrangements for €3M of fundingFinal contractual arrangements for €3M of funding are currently being negotiated.

Republic of Ireland

• The potential for commercial scale demonstration of the CETO technology is being investigated at Sustainable Energy I l d’ (SEI) t t it l t d ff S idd l iIreland’s (SEI) wave energy test sites located off Spiddal in Country Galway and Belmullet in County Galway.

• Ocean energy initiative funding of €26m is available for• Ocean energy initiative funding of €26m is available for research and facilities, and establishes a feed-in tariff of €220/MWh for wave and tidal power.

• Ireland has a renewable energy target of 33% by 2020, with an aim of 500MW of installed ocean energy by 2020 with an interim target of 75MW by 2012.

• To facilitate this development, ocean energy is currently given priority for grid access.

Bermuda

• Renewable Energy Bermuda (REB), a joint venture between REH, EDF EN and Bermudan based Triton Renewable Energy, have completed preliminary site investigation studies for a wave energy facility off the p y g gy yeast coast of Bermuda.

• REB plan to build and operate wave farms in Bermuda using CETO wave power technology with an initial test site of 2MW to be developedwave power technology with an initial test site of 2MW to be developed and subsequently a grid connected 20MW installation.

• September 2008 the Bermuda Electric Light Company Limited (Belco), as the main supplier and sole distributor of electricity in Bermuda, issued a Solicitation for interested parties to provide the island with renewable power supply.

• REB submitted a statement of intent (SOI) for a demonstration site of ( )2MW to be developed and subsequently a grid connected 20MW installation.

• REB were subsequently notified by Belco in February 2009 that its joint SoI with Triton has been successful and it expects to move forwards withSoI with Triton has been successful and it expects to move forwards with development of the 2MW CETO test site in 2010.

CETO – technology development timeline

2008 - 2010Commercial

Demonstration• Commercial scale

unit deployment

• Single autonomous unit and associated energy dissipation and instrumentation infrastructureinfrastructure

• Verify energy delivery performance of a single CETO unit

• Foundation scheduled for deployment in November 2009

• Stakeholder consultation and permitting underwaypermitting underway

• CETO unit and associated infrastructure deployment in Sepia Depression to the West of Garden Island following onof Garden Island following on from mooring deployment

Summaryy

CETO Advantages compared with competing wave t h l itechnologiesExpected to be cost competitive with fossil fuels when deployed at scale

Carnegie Global owner of CETO IPTarget first revenue generation 2011St t h i l t f dStrong technical team focused on commercialisation

D l t f i l l it b iUpcoming Milestones

Deployment of commercial scale unit begins in Nov 2009

Further Information

• Contact:Dr Laurence MannDr Laurence MannResearch and IP Manager Carnegie Wave Energy LtdLevel 1, 16 Ord Street West Perth WA 6005West Perth WA 6005AUSTRALIA+61 8 9486 4466lmann@carnegiewave.com

• Website: www.carnegiewave.com