Baha Mar Financial Battle Won’t Derail Innovative A/C Project

posted in: Blog | 0

Posted: Sunday, July 12, 2015 6:42 pm | Updated: 7:04 pm, Sun Jul 12, 2015.

By TIM STUHLDREHER | Staff Writer at Lancaster Online

“The life of an entrepreneur is a roller coaster of elation and disappointments,” Jeremy Feakins said. As chairman and CEO of Ocean Thermal Energy Corp., the Lancaster-based renewable energy company, Feakins speaks from experience. There’s elation in bringing to market what Ocean Thermal calls a “global game-changing technology.”

Hydrothermal power plants and air conditioning systems are non-polluting. They can generate large amounts of fresh water — suitable for drinking or agricultural use — as a byproduct. But things don’t always go as smoothly as you’d like.

One of Ocean Thermal’s leading ventures is a planned $130 million seawater air conditioning system for the Baha Mar resort in the Bahamas. It would potentially be Ocean Thermal’s first operational project. The $3.5 billion resort, which features four luxury hotels, a championship golf course, a panoply of shopping and dining outlets and the Caribbean’s largest casino, would be an ideal showcase for the system, which Ocean Thermal says can cut costs by up to 90 percent compared with conventional air conditioning.

But the resort, which was scheduled to open last year, is still incomplete. Late last month, its developer filed for Chapter 11 bankruptcyThe filing “could result in a prolonged delay,” Standard & Poor’s wrote in a research update that placed the Bahamas’ government on notice for a potential credit rating downgrade.

Feakins is unfazed.

“We don’t believe that our contract is in danger at all,” he said. The bankruptcy resulted from a “commercial dispute” between the developer and the lead general contractor, China Construction America, he said. Officials have said in court filings that construction is about 97 percent complete. The resort’s backers and the Bahamas government say they’re eager to get it up and running.

While Ocean Thermal has spent about $6 million doing preliminary work, the main phase of construction for its project has not begun. The plan was for Baha Mar to open with a conventional air-conditioning system, which would become the backup system once Ocean Thermal’s system came online. That was scheduled to happen in 2016. Ocean Thermal’s air conditioning system is “essential” to the complex, Feakins said.

“Our system saves them seven megawatts a year,” he said. That’s a lot, both financially and in terms of stress on the island’s less-than-robust electrical grid. He conceded that there will likely be some delay while Baha Mar and its contractor resolve their dispute. Once they have, Ocean Thermal and Baha Mar can get together and figure out a revised timeline, he said.

Those discussions will also involve DCO Energy, the New Jersey-based company that is the project’s engineer and contractor. DCO Chairman and CEO Frank DiCola is an investor in Ocean Thermal and a board member. Ocean Thermal’s contract with Baha Mar is a 20-year energy services agreement, signed in 2011 and revised in 2013.

Under it, Ocean Thermal — through DCO Energy — will build and operate the air conditioning system. Baha Mar will buy its output. That arrangement means Ocean Thermal isn’t a party to Baha Mar’s bankruptcy. The resort hasn’t been billed for anything, and won’t be until the system is running.

The money invested so far “is our risk as a project developer,” Feakins said.

Besides Baha Mar, Ocean Thermal has other projects in the pipeline, including ones in the U.S. Virgin Islands and the Caymans.

It plans to become a public company, but has not yet done so, Feakins said.

Its investors include hundreds of individuals. About 80 percent of them are central Pennsylvanians, Feakins said: “It’s really quite amazing how many local investors have supported our mission.”

William Tell, president of the insurance agency NTI Group, is one of them. He said he knew going into his investment that there would be “delays and challenges,” but he’s excited about Ocean Thermal’s technology and the potential for positive humanitarian consequences.

“Words cannot explain the impact this would have on blighted communities around the world,” he said.


 

Read the original article here on Lancaster Online.

 

Leave a Reply

Your email address will not be published. Required fields are marked *