1. Renewable Wave Energy Investment OpportunityMichael Smurfit Graduate Business School By: Allan John Kerr & Colleagues

2. AGENDA1 Opportunity Identification 2 Market Analysis Evaluation 3 Opportunity Feasibility 4The Verdict 3. Opportunity Identification Ocean Power Technologies: Technology Utility PowerBuoy System Autonomous Power Buoy 4. Competitive Advantage Fossil Onshore PowerBuoyOffshoreSolarFuel Wind High (1000xEnergy DensityGreater than Wind)Very High Low Moderate LowHigh accurate Dispatch Low (except Low (except Predictabilityforecasts days in only some sites)Moderatesome sites) advance Load Factor30%-45%50%-90%25%-35%25%-35%10%-20%Visual ImpactMinimal Very highModerateLowUnobtrusive Limited in USExtensive along Limited high Potential Sitescoast linesExtensive LimitedModerate indensity Europe Cost Per* Kilowatt Hour- Remote $0.07-$0.10N/A$0.09-$0.10 $0.16 $0.25-$0.50 power Cost** Per Kilowatt $0.05$0.04 $0.04-$0.05 $0.07-$0.09 $0.10-$0.25 hour- Utility Power* These costs assume high production volume. Subsidies, credits, grants will further reduce costs. ** Based on projected cost of 500 kW PowerBuoy, in commercial production volume. 5. Competitive Advantage OPTs PowerBuoy: Ocean Tested Certified Grid Connection Efficient in harnessing wave energy Numerous potential sites near population centers Potential to offer cost competitive renewable energy Environmentally friendly, benign, and aesthetically non-intrusive Significant commercial relationships 6. Business Strategy Increase PowerBuoy output Construct demonstration wave power stations Maximize revenue opportunities with existing customers Expand revenue streams from our autonomous PowerBuoy GeographicMarkets 7. Market Analysis Market Investment: Oligopolistic Market Structure, Uneven Global (i) Investment, Variance in year-to-year overall market investmentMarket Environment: Political & Legal (ii) Incentives, Funding Issues, Social &Environmental FactorsMarket Projections: Significant Increase in Ocean Power as an Energy (iii) Source, Vast increase in the number of countries adopting it 8. Market Investment Global Distribution Historical Distribution ofof Ocean Investment in Ocean PowerEnergy Ocean PowerCompaniesTechnologies Companies 9. Market Environment U.S. Energy Improvement &A Tax LegislationExtension Act of 2008B Grid Link Issues C Low Investor ConfidenceD Environmental Lobby 10. Market Environment A Tax Legislation Grid Link Charges Potentially Outside B Developer Control Grid Link Issues C Low Investor ConfidenceD Environmental Lobby 11. Market Environment A Tax Legislation Current global market climate B means credit is Grid Link Issuessparse & investment is low C Low Investor ConfidenceD Environmental Lobby 12. Market Environment A Tax Legislation B Grid Link Issues Claimed visual C intrusion, Marine Low Investor Confidence life intrusion, Interference withsea trade D Environmental Lobby 13. Market ProjectionsUK3% of its electricity supply could be generated by tidal energy means by 2020.UK will account for about half of global capacity by 2020 14. Market ProjectionsUK3% of itsGlobal electricity supply could be generated Market size said to by tidal energydouble between means by 2020. now and 2015.UK will account $2 billion to be for about half ofinvested in R&D global capacity by over the next 6 2020 years 15. Market ProjectionsUK Viability3% of itsProjections are Global electricity supplydependent upon could be generated Market size said to current projects by tidal energydouble between being implemented means by 2020. now and 2015.successfullyUK will account $2 billion to beProven feasibility for about half ofinvested in R&Dshould breed a global capacity by over the next 6wave of increased 2020 yearsinvestment in this sector 16. Opportunity Assessment OPT Mission: Lead commercial adoption of wave power with the potential of competing head-on with fossil fuels Industry & Demand: 2) Cost of Fossil Fuels 3) Dependence on Foreign Energy 4) Environmental Concerns 5) Government Incentives 17. Opportunity Assessment Commercial Relationships: US Navy: Electrical infrastructure for deep sea detection Iberdrola Spain Electrical Utility: Continued to Expand Contracts Intellectual Property: Opt holds 37 patents Certified International Electric Grid Compliance Direct transition from 150kw to 500kw in works 18. Key Financial Data 2007 $m2008 $m Change % Revenue 2.54.8 +89%Operating Expense 11.1 16+44%Net Loss9.614.7+52% -Nature of industry-investment isnt matched by revenue -9m of operating expense is product development -3rd Quarter results show FYE 2009 show working capital of 85m which in annual report state will sustain them until 2010 Cannot guarantee either whether or when well become profitable! 19. The Verdict The Downsides: The Positives: Suitable for more long-term Future Growth Potentialinvestors Proprietary Technology No short-term gains/no Strong ClientdividendsRelationships Risk to cash flow in short- Early Stage in Lifecycleterm 20.