Gambling Greenie

CWE: a mounting wave may roll us shorewards soon

Does "green" investment really pay off?

The AIR’s Gambling Greenie, a rank amateur, gave himself a notional $50,000 in January 2011, and has tried to make money by investing in “green” companies on the Australian stock market.  

Companies developing alternative energy or ways to clean up the environment tend to be among the riskiest shares on the market. 

More than a year later, the GG is still giving it his best shot, using such sophisticated tools as flipped coins, gut instinct, and the careful analysis of green tea leaves. Investment adviser he is not, but he hopes to have fun and if he doesn’t have fun he must be learning something. So far he has lost a small fortune and is not sure what he has learnt.  But it is all about the future . . .

The Gambler's Portfolio

BE NOT downhearted, all ye chlorophyl-coloured capitalists!  It is true that the new government in Canberra has more than its fair share of climate-change sceptics, if not outright deniers. They are hurrying to abolish the carbon tax, the Climate Change Commission, the Climate Change Finance Corporation and the Climate Change Authority and say they won't be investing taxpayer money in "speculative" ventures.  (They will be pumping our money into uncompetitive factories owned by multinational car companies, but that's a different matter.)

But the money poured in by previous governments has already helped to germinate the occasional seed. Carnegie Wave Energy (ASX code CWE) may well be one of them.

The Gambling Greenie bought shares in Carnegie back in January 2011,when alternative energy was still in political favour, and has lost almost half his investment.  He paid too much, too soon, perhaps, but thanks to tens of millions of dollars of grants and tax rebates from state and federal governments over the years, Carnegie is at last about to start its first commercial demonstration.

The GG wishes he had put more of his own money into Carnegie back in June this year, when the shares were languishing at less than 3c each. They almost tripled in value before the end of August and although they have fallen back since they are still selling for around 6c each.  

Carnegie's CETO technology uses big buoys tethered just below the surface. As each buoy moves to and fro and up and down with the passage of the waves, the movement pumps seawater at high pressure through pipelines to the shore, where it can drive electricity generators and/or be fed into a desalination plant to produce drinkable water.  Desalination plants normally have to use large amounts of electricity to force the salt water through the plant's membranes.

Carnegie is now in the process of building and installing commercial scale buoys off Garden Island in Western Australia. It hopes to be generating both clean water and power – and earning money – towards the end of next year.

It is clearly still a speculative investment. It has been working on the technology and the refining its designs since 2004, and has still to prove that it can deliver on a commercial scale, economically and reliably, over the long term.  Its chances of winning further federal funding, post-election, must be slim.

But it has $12 mln in cash, a further $18 mln in undrawn government grants, and some impressive partners, including the big French  utility EDF (Electricité de France).  Pilot trials and independent assessments have given it the big tick.


The GG is licensed to drive a motor vehicle and has had formal training in the use of a chainsaw. He  is not an adviser and has no links with the financial services industry. He is not sponsored by anyone. He does own shares in a number of "green" companies, and has the losses to prove it.  He will refrain from dealing in these shares for at least 48 hours before and after writing about them.

It will be selling its power and water to the state and federal governments – electricity to the Department of Defence facilities on Garden Island and water to the WA government's Water Corporation.

The Gambling Greenie missed his chance in June but is still tempted to "double up" by buying another 15,000 shares.  However, the company has been issuing news bulletins at every stage of the process of Perth project, almost to the point of announcing the purchase of additional paper clips for the office.  It is currently giving presentations to existing or potential investors in major cities around the country –   

That's usually a sign that a company is about to ask the punters put up more money.  The Gambler will wait two or three weeks in the hope that CWE will announce a share purchase offer at a reasonable discount to the current price.  .

24 September 2013

© Adelaide Independent Reporter  2013