Ocean Power Technologies Inc. (NASDAQ: OPTT) was for all practical purposes gone and forgotten about until 2013. A research report with huge upside seemed like the first real sign of life in quite some time for the company. Its alternative energy is more than an interesting, as it harnesses the power of waves to generate electricity.
Now we have news that is making the stock surge even more. The company’s wholly owned project called Victorian Wave Partners (VWP) has signed an agreement with the Australian Renewable Energy Agency. This agreement is a deed of variation to the original funding teed through which a A$66.5 million (Australian dollars) grant was previously awarded by the Commonwealth. Ocean Power’s press release shows that this grant will be used towards the cost of building and deploying a 62.5MW peak-rated wave power station off the coast of Portland, Victoria, Australia.
This is close to $60 million U.S., and even after a 30% pop in the stock, Ocean Power’s market cap is still barely $33 million.
Changes under the new agreement are the incorporation of milestones, acceleration of reimbursement of eligible expenses and an increase in the number of milestones to better support project cash flow requirements.
This agreement also recognizes the role of Lockheed Martin Corp. (NYSE: LMT) as the lead for systems integration of the PowerBuoys and overall program management. VWP was awarded the Australian grant, and this sets out the terms of the grant, including the requirement to obtain significant additional funding. The planned Portland wave power station has a total project value of A$232 million, and at completion would be the largest of its kind in the world.
Ocean Power shows that 28 PowerBuoys would be 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.
As a reminder, a firm called Ascendiant Capital called it a new Strong Buy and issued a $5.00 price target last May.
The news was enough to have Ocean Power shares up almost 31% at $2.89 Tuesday, on almost 10 times normal volume of more than 5.2 million shares. Its 52-week trading range is $1.45 to $3.82.