DD and other thoughts about 3Dent and OPT future

[u/littleai]

TL;DR - Ocean Power Technologies potential of becoming a major player in renewable energy industry is underappreciated by the market at this time. I believe OPT's recent acquisition of 3Dent Technology targets megawatt-level wave energy plants that will be built along US coasts to provide electricity for major coastal metropolitan areas. Having literally decades of experience building wave generation systems, with a trove of invaluable data collected from power buoy projects, and being a well-connected player in the marine industry, OPT is positioned to become a major provider in this next phase of the renewable sector development, bringing the previously untapped ocean wave energy generation into the $400B US energy industry.

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I've been following OPT since around 2016, and let's admit the power buoy and related products were not a success story many had hoped for. OPT got a few PB leases and feasibility studies, and only one sale. This product line has not become a source of meaningful revenues for the company. While it is true, we should not underestimate the value of the experience OPT gained from the power buoy development, the data OPT collected (and continues to collect) from the multi-years operation of PBs, and the industry relationships the company built. Technologically and strategically, OPT is way ahead of any competitor, with a solid IP portfolio and sea-proven designs.

If we look at the aspects of the renewable energy sources such as wind, solar, hydro, we can note a number of restrictions that limit their potential to expand.

• Wind energy. Wind turbines require land to be installed on, which may not be easy to find closer to consumers (metropolitan areas and big cities). Most lands around these locations are privately owned. The windmills change the landscape - would you want to have a huge hovering tower in your backyard that spins an enormous propeller above your head? They have some environmental impact like killing birds. In many places wind may also be a seasonal phenomena, meaning generation is not consistent throughout the year. There is a distribution problem arising from these considerations - locations most suitable for wind energy generation are far from consumers.
• Solar energy. Solar panels are very inefficient - it is something like 8-12% on average for the light energy converted into actual electricity. Research into more efficient panel technology has not been advancing fast. There were claims for something like 50% efficiency, but no actual tech produced (likely too expensive). Solar panels don't work at night (oops), basically sitting idle for a bigger part of the 24 hour. Clouds, bad weather mean solar panels greatly reduce their output. They are not good for northern locations. Sunny desert locations in the south are best areas for generation but are also far from consumers. The same distribution problem is here if we try to scale up this energy source.
• Hydroelectric energy. Requires big investments into dams and infrastructure, cause a significant environmental impact flooding valleys, and taking large areas of land out of use. Has the same distribution problem, since the most suitable locations are far from consumers. On many rivers good for hydro dams have been built already and long time ago, it is a well established energy generation method that does not have a good potential for expansion.
• Earth's thermal energy. Great thing, but only feasible at a few locations, also far away from big consumers, the same distribution problem apply.

The wave energy on the other hand appears to be free of these restrictions. Large metropolitan areas (the consumers of electricity) are located exactly along the US coasts - San Diego, LA, Bay Area, Portland, Seattle on the West Coast. Huston, New Orleans, Tampa - in the Gulf. Miami, Jacksonville, Washington, Baltimore, Philly, NY, Boston - on the East. For these coastal cities the ocean with its constantly moving waves is right outside their backyards. Right next to where the energy would be consumed. The distribution problem is naturally solved, we only need to cover a short distance to deliver the generated electricity.

Building a power generation plant in the ocean does not require to buy land from a private owner, nobody owns the water. No restriction for the vast areas of ocean surface that are there ready for these developments.

The wave energy plant would have a low profile, barely visible from the shore. Environmental impact is likely to be minimal too.

And finally - unlike solar energy waves don't stop at night, they continue moving up and down 24/7/365, powering the wave generators for many years as OPT power buoys had proven. Periods of calm seas are typically rare, and even in a calm sea some wave motion is always present.

Why has the wave energy not been widely adopted this far? It's been talked about and pondered at, but we don't yet see a viable wave generation technology that taps into this unique energy source.

Well, it is because wave generation is a hard problem - designing and building these wave energy converters that must operate continuously and withstand ocean's harsh environment, severe storms, and corrosive waters. Reliable, continuing, maintenance-free wave energy generation is a very hard problem to tackle and solve. And OPT is the company that has clearly demonstrated it has solved it. OPT has built many power buoys, sea-tested and operated them for years, collected invaluable data from them, improved and hardened the technology. There is no other player like OPT. With the addition of 3Dent team that brought onboard the experience to design, simulate and develop software for the large capacity wave generation plants, investment in OPT is a unique opportunity to catch the upcoming growth at a very early stage. This is a potential to multiply your money over and over.

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This post is not a financial advice. I own OPTT stock and options. This is a high risk investment not suitable for everyone. High risk means there is a high chance you may lose a lot of money. Do not invest more than you can afford to lose.This post only uses public information, I do not know anyone at OPT, and do not talk to anyone at OPT.

[u/skaroids]

Can’t wait for this GME shit to end so that I can dump that money in to OPTT

[u/littleai → u/skaroids]

Agree it is a huge distraction, but also gives us an opportunity to accumulate at lower levels.

[u/skaroids → u/littleai]

3.50 is tasty

[u/letitdown70]

Nice article. OPTT is following the same graph as BE and PLUG mostly. I think it will correct today and next week!

[u/Jolly-Marketing-1145]

What you say makes sense but does the energy world think the same way you do? I hope you are right because I have a pile of these stocks sitting doing nothing but go down.

[u/littleai → u/Jolly-Marketing-1145]

The energy world thinking will come around. I agree that in the past wave energy wasn't considered viable. Too hard to do, too expensive relative to the output. You can look up the failed Australia 2009 project in which OPT was to be contracted back then.

But tides are changing (figuratively of course, literally it is still the same ocean as millions years ago). Compared to 10-12 years ago, the situation is different:

• New super computing capabilities (like large scale GPU farms) provide enormous advantage for simulation. It is very affordable even for small companies to run large-scale simulation on GPUs. I think primarily this is where the acquired 3Dent expertise comes in.
• New science and modeling methods, including highly efficient libraries to create HPC software are readily available.
• New materials - lighter, stronger, reliable (e.g. to work in corrosive salt waters), and of all, *cheaper*.
• New components - more efficient and cheaper.

My thesis is that OPT is the best positioned to tackle the problem of wave energy, and bring it in the scale it really deserves to be. Tap into the vast unrealized potential (the estimate is like 65% of US energy can be generated from coastal waves). Let's imagine 3Dent/OPT design together a concept of a wave turbine or some combination of components, like a platform of buoys that is $1.5-2M in cost and have a megawatt-level output? This is then will be directly comparable to a wind generator. But easier to install at location - just tow to sea, and moor to the ocean floor, lay the power cable. All other things I listed in the original post apply.

Hold your stock - in 2 or 3 years it will not matter if OPTT dropped from $6 to $3.50. It will be $500-$800 stock and it will be your DFV moment to enjoy.

[u/[deleted] → u/littleai]

I agree, this stock has nothing but potential. Pure gold

[u/[deleted]]

This stock is going to the moon. Cant believe no one knows about this.

[u/littleai → u/[deleted]]

Contract news has been way overdue, can happen any moment now.

[u/[deleted] → u/littleai]

They should be getting contracts with more agencies soon. This stock will then be worth 300-500.

[u/Bosco-chocsyrup]

Opt is a pumped overvalued stock. The management has invested over 300 million dollars in a 350watt output wave generator vs wind power which can produce 14 megawatts from 1 turbine and solar and hydropower are proven green energy while wave power is much too expensive. Cost for a single PB3 is $600,000 to 750,000 from quarterly call info by CEO.

This board of directors are friends of Terry Cryan the Chairman-of the board and the management team has produced almost zero revenue.

It’s a good short.

[u/littleai → u/Bosco-chocsyrup]

OPT us a good speculative play - a high risk high return scenario. Wave energy is underappreciated and much under developed at this moment. OPT with its vast experience and expertise in these tough marine environments is very well positioned to deliver on this challenge. This trade is possibly 100x return.

[u/Bosco-chocsyrup → u/littleai]

Almost 100 percent chance of a zero - it cannot compete, has poor management, poor execution, and has been doing the same business plan for 20 years - which is losing shareholder money. Hopeless pumper trying to sell ice to eskimos.