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.
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.
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.
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.