Morgan Stanley raises stake in tidal power firm

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U.S.-based investment bank Morgan Stanley has increased its stake in Singapore-based tidal power company Atlantis Resources Corporation, targeting a marine energy sector that covets the global success of wind power

Morgan Stanley told Reuters it now has the largest shareholding in Atlantis after a non-cash deal, to be announced on Monday, whereby it added its own tidal power project development business to the bigger company.

The combined pressures of climate change, rising energy demand and security of supply are driving a hunt for alternatives to fossil fuels.

Wind power is one of the frontrunners in renewable energy technologies, and this year surpassed a global 100 gigawatts installation milestone which is more than Britain’s entire electricity-generating capacity.

Many tidal power turbines look like wind turbines, but operate underwater to catch the tidal flow of water instead of wind, and the industry wants to emulate the commercial success of offshore wind, given parallels in installation and grid connection.

“We think we’re really there,” said John Woodley, co-head of Morgan Stanley’s European and Asian power, gas and related businesses. Atlantis plans to test 1 and 2 megawatt (MW) turbines next year, building on smaller models, and aims to start installing commercial-scale “arrays” from 2012.

No array of multiple underwater turbines exists anywhere yet, said Timothy Cornelius, Atlantis chief executive, underlining the immaturity of the industry.

“Once we achieve economies of scale … we’ll be cost-competitive with offshore wind which has seen incredible uptake and investment in the last two years.”

The gravitational pull of the moon causes the world’s seas to rise and fall twice a day. Tidal power has significant advantages over wind, including a more predictable power source and less intrusion, and competition is emerging.

In March, a joint venture of British and South Korean companies called Lunar Energy and Korean Midland Power announced plans for a tidal power project to power some 200,000 homes off South Korea by 2015.

Cost is a fundamental challenge, as for many alternative energy technologies such as solar panels which are far more expensive than conventional fossil fuels like coal and gas.

Apart from driving underwater turbines, tidal power can also be tapped using barrages which capture water at high tide and then generate electricity in the same way as a dam. Britain is consulting on a project in the south west of the country called the Severn Barrage, which could provide around 5 percent of current UK electricity demand.

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