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OPT announces funding agreement with Australian Government for A$66.5 million grant

January 16, 2014 • Grants

Ocean Power Technologies Inc. (Nasdaq: OPTT) has announced that Victorian Wave Partners Pty. Ltd (VWP), a wholly-owned subsidiary of Ocean Power Technologies, Australasia (OPTA), has signed an agreement with the Australian Renewable Energy Agency (“ARENA”).

Wave power station  Image credit: flickr User:  AxelN

Wave power station
Image credit: flickr User: AxelN

According to the news release by OPT, the agreement represents a Deed of Variation to the previously concluded Funding Deal, which saw the Commonwealth award a A$66.5 million grant to VWP to cover the cost of building and deploying a 62.5 MW state-of-the art wave power station off the coast of Portland, Victoria.

The grant was awarded through a competitive process undertaken as part of the Renewable Energy Demonstration Program administered by ARENA. The funding deed for the project outlines the terms of the grant including the requirement to secure significant additional funding.

Some of the important changes in the agreement include the incorporation of milestones for each of the three stages of the project, acceleration of reimbursement of eligible expenses for stage one and two, as well as an increase in the number of milestones to better support project cash flow requirements. The agreement also identifies the role of Lockheed Martin as the lead for systems integration of the PowerBuoys and overall program management.

“We are very grateful for the support of the Australian Government and ARENA during this process to make positive changes to the original Funding Deed. This new agreement significantly improves our ability to attract investors during the early stages of the project,” said Charles F. Dunleavy, Chief Executive Officer of OPT.

“We are also pleased to offer the prospect of manufacturing, engineering and maritime jobs in Victoria based on OPT’s unique and game-changing technology, at a time when more traditional manufacturing jobs are experiencing enhanced competitive pressures. We have been impressed with the commercial and results-oriented way in which ARENA has worked with us after assuming responsibility for a wide range of projects and programs last year.”

The total project value of the Portland wave power station, which would be the largest of its kind in the world, is estimated to be AU $232 million. With twenty-eight PowerBuoys connected to the grid by an underwater substation and a submarine cable the plant would be capable of providing power for up to 10,000 homes.

Since the original announcement of the grant, project developer VWP has managed to complete engineering milestones and conduct surveys and studies to meet the requirements for licenses and approvals. The Company is currently engaged in assessing power purchase agreements with local industry and utilities.

“We are pleased to support development of the VWP demonstration project. It aligns with our vision of a society increasingly powered by competitive renewable energy as well as our commitment to sharing knowledge and information about our projects with the industry,” said Ivor Frischknecht, Chief Executive Officer of ARENA.

Further, an article featured on Reuters reveals that Ocean Power Technologies Inc. went up 52.9 % to $3.38 in pre-market following the funding deal with the Australian Government.

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