Carnegie Wave Energy Ltd (ASX:CWE) has been awarded $2.5 million from the Australian Renewable Energy Agency (ARENA) to support the world";s first solar, battery and wave integrated microgrid project in Western Australia.

A microgrid is a discrete energy system capable of operating independently from the main power grid.

The Garden Island Microgrid Project will begin construction before the end of 2016 and be commissioned in the first half of 2017.

The project will involve the construction and installation of a solar panel system, a battery storage system and control system integrated with Carnegie";s CETO 6 technology and existing desalination plant.

Dr Michael Ottaviano, CEO, commented: 'The Garden Island Microgrid Project will be the first time anywhere in the world that wave energy will be combined with solar and batteries in a microgrid configuration.

The demonstration of this microgrid project will help drive the commercialisation of CETO and will be a model we will roll out to island nations around the world.


Funding details

ARENA";s innovative funding package for the estimated $7.5 million project is comprised of a grant of $0.7 million, followed by $1.8 million of convertible note funding.

The ARENA convertible notes will be unsecured debt with 0% interest over a 6 year term and can be converted by ARENA to ordinary shares in Carnegie at $0.053 per share.

The balance of funding will be provided by Carnegie equity and a project finance facility from the Commonwealth Bank of Australia.

The award of funding is conditional upon the completion of detailed design, award of the engineering, procurement and construction (EPC) and operations and maintenance (O & M) contracts, approvals and permits, power off-take agreement and Department of Defence approval.


Background

Carnegie is a clean energy company with a dual market focus on wave energy farms and island microgrids.

A microgrid is an energy system capable of operating independent from the main power grid.

Carnegie owns and develops the CETO wave power technology, and after nearly 10 years and $100 million invested, has a clear pathway to commercialisation.

A recent expansion into remote mixed renewable microgrids broadens the opportunity set, lowers the business risk and brings forward revenues.

Carnegie has a 35% stake in Energy Made Clean, a leading Australian solar and battery microgrid engineering, procurement and construction (EPC) company.

Carnegie's Perth Project is the only operational wave farm to produce both power and fresh water in the world.


Projects

Completed projects consist of:

- CETO 5 wave power and desalination project (Garden Island, Western Australia).

Current projects consist of:

- Wave and microgrid design project (Mauritius);
- CETO 6 wave project (Garden Island, Western Australia); and
- CETO 6 Wave Hub wave project (Cornwall, United Kingdom).

Carnegie has a pipeline of projects in Ireland, Chile, Canada and remote islands such as Mauritius, Bermuda and Seychelles.


Analysis

The $2.5 million funding package from Arena is a significant achievement for Carnegie as it looks to pioneer the combination of wave energy with solar energy and battery storage.

Funding will allow the company to use this microgrid project to drive the commercialisation of its CETO technology.

The model can then be used as a demonstration to support a roll out to island nations around the world, such as Mauritius.

Carnegie has operations in the remote island of Mauritius, and success there can also act as a commercial clean energy strategy for use in other remote destinations.

Through Carnegie's alliance with EMC, it is able to take projects from the design phase through to the operation and maintenance phase.

Carnegie is well capitalised have A$13 million cash, A$13 million in undrawn government grants and a $21 million undrawn debt facility at the end of the June quarter.

ARENA see Carnegie with the potential to develop a renewable energy solution that can change the way the world generates power.

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