240212 UK Wave and Tidal Report · Carnegie welcomes the UK Parliament’s report on “The Future of Marine Renewables in the UK” World class marine energy resource capable of

ASX Announcement 24th February 2012

Carnegie welcomes the UK Parliament’s report on “The Future

of Marine Renewables in the UK”

World class marine energy resource capable of supplying 20% of the UK’s electricity needs.

Developing the wave and tidal energy industry will provide significant economic benefits to the UK.

The UK leads the wave and tidal energy industry globally but requires with a visionary approach to retain this position.

£200m grant funding allocated to marine energy in the UK to date.

Wave energy developer Carnegie Wave Energy Limited (ASX: CWE) welcomes the UK House of Commons Energy and Climate Change Committee report on ‘The Future of Marine Renewables in the UK.’ The report highlights the opportunities and benefits of developing a world leading marine energy industry and the need for the UK to adopt a visionary approach to its continued support of marine energy. The report recognises that wave and tidal energy combined has the potential to meet 20% of the country’s electricity needs while also becoming a major export opportunity for marine devices, components, other equipment and specialist skills. The UK has the largest wave resource in Europe, is less variable than wind energy, can be forecast several days in advance and provides a good match with seasonal electricity demand. While the UK is currently the world leader in the development of wave and tidal devices, the report urges a further strategic, long-term vision for the marine energy sector to ensure the UK does not lose its early-mover advantage on the basis that wave energy clearly has the potential to deliver significant economic benefits to the UK, from what is a modest government investment. The UK has allocated over £200m of public funds to date to marine energy grant funding. Significant future funding rounds have also been announced including recently the DECC Low Carbon Innovation Fund (£20m) and the Scottish WATERS2 Fund (£6m).

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The report issues a number of recommendations to help ensure the UK retains its leading position, such as providing increased clarity about revenue support beyond 2017 and ensuring appropriate investment in new grid connections. Tim Yeo MP, Chair of the Committee, said: "We are extremely well placed to lead the world in wave and tidal technologies, which could potentially bring significant benefits in manufacturing and jobs, as well an abundant supply of reliable low-carbon electricity. A more visionary approach from the UK Department of Energy and Climate Change could help to boost confidence and drive the pace of development." Carnegie has worked with the UK Government, and other key stakeholders, to identify and develop potential commercial CETO project sites in the UK and has leveraged the UK’s experienced marine industry in commercialising the CETO technology. Carnegie looks forward to working further with the UK government and marine industry to demonstrate the technical and economic viability of wave energy and its contribution to the energy mix. Carnegie’s Chief Executive Officer, Dr Michael Ottaviano, presenting at the Jefferies Global Clean Technologies Conference in New York City yesterday, commented that “Carnegie applauds the UK Government’s foresight and support for the burgeoning wave and tidal energy industry to date and encourages a strategic, long-term vision to see that pioneering vision come to fruition.” Dr Ottaviano’s presentation from the Jefferies Global Clean Technologies Conference is attached. About CETO The CETO system distinguishes itself from other wave energy devices by operating out of sight and being anchored to the ocean floor. An array of fully submerged buoys is tethered to seabed pump units. The buoys move in harmony with the motion of the passing waves, driving the pumps which in turn pressurise water that is delivered ashore via a pipeline. On shore, high-pressure water is used to drive hydroelectric turbines, generating zero-emission electricity. The high-pressure water can also be used to supply a reverse osmosis desalination plant, replacing greenhouse gas emitting electrically driven pumps usually required for such plants.

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CETO Technology characteristics include:

CETO converts ocean wave energy into zero-emission electricity and desalinated water.

CETO is environmentally friendly, has minimal visual impact and attracts marine life.

CETO is fully submerged in deep water away from breaking waves, beachgoers and where it is safe from storms.

About Carnegie Carnegie Wave Energy Limited is an Australian, ASX-listed (CWE) wave energy technology developer. Carnegie is the 100% owner and developer of the CETO Wave Energy Technology intellectual property. For more information: Dr Michael Ottaviano CEO & Managing Director Carnegie Wave Energy Limited +61 8 9486 4466 Email: [email protected] Website: www.carnegiewave.com F

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23rd February 2012

Jefferies Global CleantechConference

Dr Michael OttavianoChief Executive Officer

Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 1Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 1

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Disclaimer

The information contained herein is confidential information. By accepting such information, the recipientagrees that it will, and it will cause its directors, partners, officers, employees and representatives, to useg p p y psuch information only to evaluate its potential interest in discussing a transaction similar to that describedherein and for no other purpose and will not divulge any such information to any other party. Anyreproduction of such information, in whole or in part, is prohibited.

The information contained herein has been prepared solely for informational purposes and is not an offer tobuy or sell or a solicitation of any offer to buy or sell any security or to participate in any trading strategy orto enter into any transaction. If any offer of securities is made, it shall be made pursuant to a definitiveoffering memorandum prepared by or on behalf of any fund or other issuer which would contain materialinformation not contained herein and which would supersede this information in its entirety.


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Carnegie Wave Energy (CWE) – snapshot

Australian Stock Exchange (ASX) - CWE

Market capitalization $52m

Average daily volume $50,000

Debt Nil

Cash $7.5m

• Inventor, owner and developer of proprietary wave energy technology ("CETO")

• CETO produces zero-emission power and desalinated freshwater directly from the ocean'swaves

• 84 patents or patent applications

• 20 engineering commercial and administration staff20 engineering, commercial, and administration staff

• Over AU$50m development capital raised since 2006

• Business model is focused on OEM but other revenue sources applicable – site development,


licencing, D&C, BOO etc

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Board of Directors

Dr. Michael Ottaviano, MD & CEO• Technology and R&D background • Clean Energy Council board member

Grant Mooney, Chairman• Extensive experience in capital raisings,

M&A and corporate governanceClean Energy Council board member • Member of Australian Government's

Energy White Paper committee • CEO since 2006, oversaw increase in

market capitalisation from $5M

• Director and company secretary to several ASX-listed companies across a variety of industries including technology and resources

Kieran O'Brien, Executive Director• 15 years as Executive of Ireland's Electricity

Supply Board

Greg Bourne, Non-Exec Director• Former CEO of WWF Australia

Former Special Adviser to the UK PrimeSupply Board• Fmr Chairman of the Board of ESBI, Alberta• Formerly Acting Secretary General of the World

Energy Council• Chairman of the Energy Standing committee of

• Former Special Adviser to the UK Prime Minister on Energy and Transport

• Director of BP Scotland, Regional Director - Latin America, and Regional President - BP Australasia

the Irish Academy of Engineering

Jeff Harding, Non-Exec Director John Leggate, Non-Exec Directorg,• Previously CEO of Pacific Hydro,

Australia's largest renewable energy developer

• Oversaw the international expansion of Pacific Hydro with growth in market cap

gg ,• Former Chief of Information of BP• Serves as Senior Advisor to CleanTech

Advisory Council at Vantage Point Capital Partners

• Honoured as Commander The Most


Pacific Hydro with growth in market cap from A$5M to over A$750M

• Chairman of AIM-listed Ceramic Fuel Cells

• Honoured as Commander, The Most Excellent Order of the British Empire by the Queen in 2004.

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Carnegie’s World Class Relationships

• Grant of $12.5 million for Perth project.

• MoU for Perth project collaboration and offtake• Feasibility study for U.S. Naval Communications base

• Collaboration agreement & concept funding for a 5MW Irish CETO project

• Northern Hemisphere licensee & JV development partner• $5m French Govt. funding for Stage 1 Reunion Island project

• Northern Hemisphere EPCM partner

• Desalination research project with funding granted• Desalination research project with funding granted

© Copyright Carnegie Wave Energy Limited 2011 5Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 5

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Global Wave Energy Market Size

• Global marine energy sector worth US$760 Billion by 2050A

• Nearly $100 billion in estimated annual revenue by 2025• Equates to 2.5% of current global electricity production

B


UK Carbon Trust forecastsIEA, EIA, Frost & Sullivan, company estimates

AB

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Wave Energy Advantage – stability & predictability

Typical Resource Profile

predictability

Wave Wind Solar

Wave energy is also generally predictable 2-3 days in advance of production


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CETO Wave Energy – renewable water & power

CETO aims be the cheapest, most robust and widely adapted wave technology due to:

• Engineered simplicity – pumps offshore, power and water production onshoreg p y p p , p p

• Scalable – modular array design, global resource & market

• Flexible - variety of water depths, swell directions, seafloor conditions, offshore power platform option


• Minimal impact - no visual impact, co-exists with marine life, small footprint

• Desalination - hydraulic power allows efficient “direct desalination“ independent of power production

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Significant De-risking Over Last 4 Years & Major Milestones in Next 18 Months

2013

Major Milestones in Next 18 Months

Completed

Demo scale mains/grid connected

Commercial projects

2006

2009

2011

Commercial

$60m invested to date

1st Demo Project(s)

1999 Prototype producing zero

connected project(s)

2003

2006 Commercial scale units demonstratedMultiple,

commercial design units generating

Commercial

Rollout

Pilot Plant(1/3rd Scale)

Project(s)

Scale models & wave tank testing

producing zero-emission power and desalinated water

Commercial Unit Demonstration

generating power

Concept Development

Proof of Concept

© Copyright Carnegie Wave Energy Limited 2011 10Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 10Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 10

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CETO 3 - demonstration prototype

t t d i 2011• tested in 2011• independently verified• 80kW rated capacity• ~ 100 x CETO 2 scale up p


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CETO 3 - in-ocean off Garden Island, WA


Fully submerged Commercial Scale CETO unit in operation next to deployment barge

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PWEP – environmental monitoring

• Environmental management plan & extensive stakeholder consultation

• Underwater video & noise monitoring surveys before, during and after single unit deployment

• Analysis undertaken by Curtin University Centre for Marine Science and Technology and consultants RPS Environment

N i ifi t i t l i t− No significant environmental impacts identified

− 27 fauna species found including one shark one ray 24 teleost and oneshark, one ray, 24 teleost and one crustacean species

− Potential for a CETO array to increase the biodiversity of a habitat otherwise poor inbiodiversity of a habitat otherwise poor in marine fauna


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EDF EN & DCNS – independent testing CETO unit (2009 France)(2009, France)

EDF EN conducted significant DD including independent expert’s reports and wave tanktesting of prototype (above) before signing licence and JV agreement with Carnegie


testing of prototype (above) before signing licence and JV agreement with Carnegie

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CETO 4 Unit – Reunion Island with EDF

• Licence & JV with EDF EN

• DCNS providing EPCM

• $10m spent by EDF & French Govt.$ p y

• 150kW unit to be installed Q1-2012

EU22c/kWh tariff (AU30c/kWh)• EU22c/kWh tariff (AU30c/kWh)

• CWE option to buy 49% of local SPV


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Developing & De-risking CETO – significant technology risk now mitigatedtechnology risk now mitigated

Very high h l & NOWtechnology &

commercial riskRisk Profile

NOW

Significant technology risk mitigated

Standard project

mitigatedSystem

integration risk

risk

CETO 1, 2, 3, 4 Grid- ConnectedDemonstration

Europe, Remote Islands, Americas Australia

2004 2012 2013 2016

ProjectAmericas, Australia...


Technology Development Focus

Demonstration Project Focus

Commercial Project Focus

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Australian Demonstration Project Example - Garden Island, WA

HMAS Stirling – Australia's largest naval base

Perth – 30kmKwinana Desalination Plant

© Copyright Carnegie Wave Energy Limited 2011 17Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 17All figures in $ Australian (AUD = 0.90 USD)Carnegie’s Albany project site, Western Australia

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Developing an International Project PipelinePipeline

• Pipeline initially focused on high tariff (power & water) regions –European wave FiTs & islandsEuropean wave FiTs & islands

• Ireland: Govt grant, EU22c/kWh tariff, site selection study and 5MW project conceptual design completed

• Scotland: 5 x ROCs site assessment study completed• Scotland: 5 x ROCs, site assessment study completed• Bermuda: monitoring buoy, local developer, high power price

($400/MWh)B iti h C l bi ff h li G t t h tli ti• British Columbia: offshore licence, Govt grant shortlisting

• Reunion Island: Govt grant, EU22c/kWh tariff, EDF, DCNS, CETO 4 unit and project expansion planned

• Activities also include Chile, China, Indonesia, Australia, Spain


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CETO – cost competitive in an increasing number of markets over the next 10 years

0 50

Market power prices$/kWh

markets over the next 10 years

0.40

0.45

0.50

Medium term (CETO LCOE ~ offshore wind)

Short term (CETO LCOE ~ island diesel)

0.30

0.35 (CETO LCOE offshore wind)

0.20

0.25

0 05

0.10

0.15

‐

0.05

UK Islands Portugal Ireland France (RI) Chile


CSIRO estimated general long run cost of wave energy (report March 2011)

Long term (CETO LCOE ~ onshore wind)

Commercial in Confidence © Copyright Carnegie Wave Energy Limited 2012 19

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Upcoming Milestones

2012• Q1 CETO 4 deployment at Reunion Island by EDF• Q1 - CETO 4 deployment at Reunion Island by EDF

• Q1 - Government grant decisions

Q1 D t ti j t it l ti• Q1 - Demonstration project site selection

• 2nd half - Demonstration project construction commence

2013

• Demonstration project commission• Demonstration project commission


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Milestones


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Documents

240212 UK Wave and Tidal Report · Carnegie welcomes the UK Parliament’s report on “The Future of Marine Renewables in the UK” World class marine energy resource capable of