While many investors count on contract wins to gauge the performance of Pentagon’s foremost contractor, Lockheed Martin Corp. (LMT - Free Report) has now chosen to ‘Go Green’ for a cleaner tomorrow. The company in partnership with a unit of Ocean Power Technologies Inc. – Victorian Wave Partners Ltd. – plans to generate electricity off the coast of Victoria, Australia in what will be the world’s largest wave energy project. Shares of Lockheed Martin gained 2.3% while Ocean Power shares skyrocketed 53.6% yesterday on the news.
This is a major step undertaken by the companies to make ocean energy commercially available. The project – involving three stages – is capable of generating 2.5 megawatts (MW) of power initially that will gradually be boosted to 62.5 MW of peak power. This wave energy generation project is expected to generate enough electricity to power 10,000 homes upon completion of construction by as early as 2018.
Ocean Power’s PowerBuoy technology will be used for the project. This is a wave energy converter technology that extracts energy from the surface motion of ocean waves. PowerBuoy moves up and down as waves rise and fall, generating electric power from mechanical energy. The generated electricity will be conducted to the shore via an underwater cable. Ocean Power is the pioneer in wave energy technology development and has established a string of projects worldwide. It has also many projects that are currently under development in Hawaii, Japan and Europe.
Per the agreement, Lockheed Martin is responsible for overall project management and will assist in manufacturing designs of PowerBuoys. The company will also lead the production of preferred PowerBuoy components and execute system integration of the wave energy converters.
As this wave energy project will contribute to Australia’s target of 20% energy from renewable sources by 2020, it has gotten significant grants from the Australian Renewable Energy Agency.
Despite Lockheed Martin’s popularity as a maker of fighter jets, notably the F-35, the company has also been known for its environmental stewardship. In Apr 2013, Lockheed Martin entered into an agreement with Reignwood Group to develop an Ocean Thermal Energy Conversion (OTEC) pilot power plant located off the coast of southern China. Per the agreement, this offshore plant with an electric generation capacity of 10 MW will be designed by Lockheed Martin. The plant will supply all the power for a green resort built by Reignwood Group.
Previously, Lockheed Martin had tied up with Makai Ocean Engineering also for the development of 100 MW OTEC plants for island communities in Hawaii and Guam.
The company presently retains a Zacks Rank #2 (Buy). Other stocks worth considering are Zacks Ranked #1 (Strong Buy) Northrop Grumman Corp. (NOC - Free Report) and Zacks Ranked #2 (Buy) Embraer SA (ERJ - Free Report) .