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Another renewables flop—more to come

Another renewables flop—more to come!

Investors are miffed—share price $0.009

Image: a wave energy thing?

The scenario is the same and the results are the same. This one for renewable energy is the old harnessing the ocean waves and tidal flows. The good thing is that the failed projects have become huge blogs of rust now being dragged away and sunk for diver recreation. Where does all that money go? This article fails to explain.

Australia’s most prominent wave energy company, Carnegie Clean Energy, has hit a fresh storm, with the announcement of the resignation of its long-standing chief executive and managing director Michael Ottaviano.

Source: ABC

Carnegie Clean Energy CEO Michael Ottaviano resigns amid growing investor discontent

The renewable energy darling is already dealing with growing investor discontent, allegations of misleading the market, a tumbling share price and concerns over the viability of one of its flagship projects.

Carnegie chairman Terry Stinson told the ABC the resignation was not a sign that Mr Ottaviano had failed.

He said that he and Mr Ottaviano both agreed “it was time for a change, for a bit of renewal”.

“If you look at the track record —what Michael and his team have been able to accomplish — if you look at the different variations of CETO [wave power technology],” he said.

“And having come from R&D myself — it’s not easy to go from a concept through to a functioning device.”

Mr Ottaviano is the third high-ranking executive to leave the company this year, following former chief financial officer Aidan Flynn and chief operating officer Greg Allen.

During his more than 10 years at the helm, the well-connected 45-year-old has never faltered on his message that the company would be successful, convincing governments to invest in its CETO wave power technology.

His corporate profile states that he “has been responsible for raising close to $200 million in equity, debt and government grant funding”.

Analysis of financial reports shows that the company also received $25 million in R&D tax refunds between 2013-14 and 2017-18.

The company’s grants include:

•Almost $29 million in Australian Renewable Energy Agency (ARENA) funding for projects off Garden island and Albany in WA

•More than $10 million in Low Emissions Energy Development funding and $15.75 million for the Albany project from the WA Government

The company has never turned a profit, which is not unusual for a company still trying to commercialise its technology.

But in recent interim results, Carnegie posted a $64 million loss, including a $35 million write-down of its most valuable asset — the intellectual property of CETO, which was first developed in 2003.

Its annual bill for board and key executive salaries has been about $1.4 million a year, according to annual reports.

Mr Ottaviano, who lives in the wealthy Perth riverside suburb of Mosman Park, took home a pay packet of more than $780,000 in 2016-17.

Board members include Mr Stinson, a former chief executive of Orbital Corporation, and former AFL commissioner Mike Fitzpatrick.

Missed deadline

Mr Ottaviano’s resignation comes a week after the ABC revealed the company had failed to meet the first funding milestone for a wave energy project in Albany, where it will test the latest incarnation of CETO.

The company revealed the slipping schedule after the ABC published news of the missed milestone, saying the project’s viability was at risk because of a potential shortfall in funding associated with R&D tax incentive changes.

The Federal Government plans to impose a $4 million cap on small companies with aggregated annual turnover of less than $20 million.

Carnegie’s share price plunged by 25 per cent to less than 1 cent when the market reopened after last weekend.

In a flurry of announcements at the close of the ASX on Friday, the company announced that the WA government had agreed to pay half of the $5.25 million milestone payment, as well as plans to sell a $2.5 million stake in its Northam Solar Farm and delays to its Garden Island microgrid project.

Investor complaints

The company’s home-grown technology to harvest power from waves has, until now, been irresistible to politicians of all stripes, along with thousands of small investors but once-loyal supporters have started to question the company’s ability to deliver on the dream.

A number of shareholders have lodged official complaints to the Australian Securities and Investments Commission, alleging the company was misleading the market over what projects would deliver.

They have also voiced concerns about a recent announcement Carnegie was selling a majority stake in its solar microgrid company, Energy Made Clean (EMC) at a 75 per cent loss to Sydney-based, TAG Pacific Limited.

But Mr Stinson defended the board, saying they had not misled shareholders.

“We follow very good governance, we disclose to the shareholders everything we’re doing,” he said.

Mr Ottaviano will be replaced by his long-time colleague, chief technology officer Jonathan Fievez, who will report to the board.

But Mr Fievez’s gross salary will only be $250,000, with an incentive bonus paid at the discretion of the board as well as share options.

A Carnegie spokesperson had previously told the ABC the company had no knowledge of the ASIC complaints.

They said the company undertook extensive due diligence in buying EMC, an acquisition approved by an extraordinary general meeting in December 2016, but did not explain why it was sold for such a loss.

{ 17 comments… add one }
  • Graham Richards 29/09/2018, 6:05 am

    Well now I wonder where those dumb shareholders will invest next, another dodgy power generation scheme? Probably they will. I’m dreaming up some futuristic, unworkable, far fetched contraption at the moment. I figured that the more improbable the concept & design, the more likelihood of scoring some big investment. Great way to make a living!
    I’ll give Freydenberg a call next week!

    • DT 29/09/2018, 6:34 am

      Invest in my next venture, simply called “TREES”.

      The soon to be patented system takes advantage of renewable and free wind energy and consists of generators on wires between branches and trunks, and subject to UN approval national parks will be utilised for this green scheme.

      It can’t fail, look at the wind turbines.

      I will be applying for extra funding to maintain the wires, and the poles and wires from parkland to electricity grid, gold plated ones of course.

    • Botswana O'Hooligan 29/09/2018, 8:23 am

      You know, if you wrote a book about all these crackpot schemes some people believe and pursue with some vigour, the authorities would have you locked up for a very long time.

  • DT 29/09/2018, 6:31 am

    No worries!

    It’s only taxpayer’s borrowed monies with an interest liability with each financial year budget, and a debt outstanding for future generations to deal with.

  • luk1955 29/09/2018, 6:56 am

    It gladdens my heart that another of these flaky scammy stupid green companies has failed. And that investors are hurting. Now let’s get back to coal and that other renewable resource known as crude oil. Oil that is made every day deep in the bowels (chemical factory) of the Earth.

  • Penguinite 29/09/2018, 8:00 am

    Just wait until the windmills and solar panels start to fail and watch the tsunami of tears.

    • DT 29/09/2018, 8:19 am

      I wonder how many landowners who lease land to wind and solar businesses have a clause requiring the site to be restored to original condition including dismantling and removing all equipment and foundations?

      • Penguinite 29/09/2018, 12:01 pm

        I suspect not many, if any, had that sort of foresight. Even if they did the chances of getting any satisfaction from a contract where the person is bankrupt is fraught with problems and costs. I cite Queensland’s defunct coal mines as prime examples. What little has been done has been paid for by taxpayers.

  • Jack Richards 29/09/2018, 8:17 am

    You’d have to be nuts to invest in something like that. Like many things it’s a great idea in principle but the technology to make it work is still a long way off. Didn’t they lose heaps in one near Wollongong that got wrecked in a storm or something and then had to be salvaged and sold off as scrap metal?

    • DT 29/09/2018, 8:20 am

      Yes, that’s is right Jack.

    • TommyGun 29/09/2018, 8:28 am

      There’s another one that ran aground in 2014 just off Carrackalinga Beach in SA. Weighs 3,000 tonnes. They’ve now decided it can’t be salvaged and will be left as an artificial reef. What a waste of money!

      • Biking Voter 29/09/2018, 9:14 am

        If I leave junk on a beach I get charged with littering and defacing the environment so why are these environmental vandals allowed to leave their rubbish behind and now claim it’s a new artificial reef.

  • Aktosplatz 29/09/2018, 8:26 am

    No surprises there.

    The main point is, though, none of this BS would have ever happened had it not been our stupid governments throwing taxpayer subsidies at them.

    This is the Big Red Flag against Morrison, that this hideous policy of RET subsidy is continuing.

    • DT 29/09/2018, 2:22 pm

      Aktoplatz, why blame a brand new PM who inherited the RET?

      How would his government, with the best will in the world, cancel Paris Agreement RET carbon dioxide emissions reduction? And what would be the compensation costs to business owners/shareholders who have government contracts based on RET? Assuming that Cabinet agreed to dump RET and Senate passed the repeal bill.

      As it is there will be no more contracts after 2o2o and a new minister has been appointed to deal with the anomalies, such as how to get the electricity grid back on reliable line.

      The Abbott Government attempt to abolish RET was blocked by the Senate.

  • Biking Voter 29/09/2018, 9:11 am

    And so Mr Ottaviano will take one step to the left (or right) and thus make room for Jonathan Fievez, who will now be afforded his turn at the trough of plenty.

  • Popular Front 29/09/2018, 9:27 am

    So, another frogshit ‘renewable energy’ scheme bites the dust. Oh dear, how sad, never mind. Mine COAL for energy you idiots!

  • John Klasen 29/09/2018, 9:36 am

    Isn’t it bloody marvellous how these crooks in Canberra from both parties are so free with our money, when are we going to have a royal commission into why we are being ripped off by these traitors to this country????

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