Paul Tudor Jones Has Waded Into the Fray, Bankrolling Underwater Turbines in New York’S East River
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As energy prices soar, a motley crew of green- power entrepreneurs is racing to harness the oceans. Billionaire Paul Tudor Jones has waded into the fray, bankrolling underwater turbines in New York’s East River. By Anthony Effinger B l o o m b e r g M a r ke t s J u n e 2 0 0 7 85 Making waves: Dublin-based OpenHydro has installed tidal turbines off the coast of Scotland. Blo o m b e r g M a r ke t s 86 J u n e 2 0 0 7 ‚When the tide rushes into New York Harbor, a strange thing happens at the Gristedes supermarket on Roosevelt Island. The freezers, cash regis- ters—even the red neon “Bagels” sign— hum with electricity from the rip coursing up the East River. • The power comes from six underwater turbines bolted to the river bottom by a little-known startup called Verdant Power LLC. The 7-foot-long blades turn, silent and out of sight, until the flux crests. When the tide turns, How It Works: the contraptions pivot 180 Unlike rivers, tides run in two directions. Rotors on Ver- degrees and make juice on dant’s six tidal turbines are mounted behind generators. the ebb. • Tiny Verdant has The units pivot when the tide turns, aiming their noses a rich and famous partner, into the current. The turbines make power 77 percent of billionaire hedge fund the time, stopping at high and low tide. manager Paul Tudor Jones. His Tudor Invest- ment Corp. has staked $15 million on New York– From New York Harbor to San Fran- there, they’ll get first dibs on federal li- based Verdant, a company cisco Bay, a new breed of green-energy censes. The price of one of these poten- with 20 employees, zero entrepreneurs is warring over the tides, tial golden tickets: $0. the next big thing in alternative power. profit and one very aggres- As oil and natural gas prices climb, he froth is flying. Washing- sive competitor lurking upstarts such as Verdant and rival ton-based Oceana has an- just upstream. Oceana Energy Co. are vying for inves- gered Verdant Power tors’ money and staking executives by seeking a site claims to America’s coastal Tjust north of Verdant’s East waterways. Since 2005, the River turbine farm. Oceana, chaired by U.S. Federal Energy Regula- William Nitze, son of the late NATO ar- tory Commission, which reg- chitect Paul Nitze, has also irked the ulates the energy industry, city of San Francisco by laying claim to has granted Oceana, Verdant the currents that swirl beneath the and six other companies the Golden Gate Bridge. The company has exclusive right to study the applied for a total of 13 study permits tides in 21 locations, from and is trying to use its pull in Washing- the East River in New York ton to steer taxpayer money its way. to the Icy Passage in Alaska. “They’re claim jumpers,” Verdant Power If the companies can figure co-founder William “Trey” Taylor says Paul Tudor Jones is betting on tidal power. out how to make projects pay of his competitor. PREVIOUS PAGE; OPENHYDRO; MICHAEL J.N. BOWLES(2) B l o o m b e r g M a r ke t s J u n e 2 0 0 7 87 Tide Power Gushers? Why the East River: East River, New York Turbines need fast currents, which occur where tides push Golden Gate, California through narrow channels. When the tide rises in New York, Puget Sound, Washington water rushes north up the East River, between Manhattan Columbia River, Oregon and Queens, accelerating to 500 feet per minute. Tides in Canada’s Bay of Fundy, the world’s largest, rip along at Wrangell Narrows, Alaska 800 feet per minute in some places. Icy Passage, Alaska Piscataqua River, Maine Bay of Fundy, Canada Inside a Turbine: The blades on Verdant’s tidal turbines turn slowly—about 32 times a minute. Housed in front of the rotor is a gear- box and a generator. The turbines are designed to detach easily from the bedrock for servicing. Verdant needs to put about 300 turbines in the East River to reach its goal of generating 10 megawatts, enough to light 8,000 homes. Oceana co-founder John Topping says his company has played by the rules. He says the best tidal sites were there for the taking. “Somebody is going to do it, and we racingracing ttoo mmasteraster tthehe ttides.ides. OOnene ooff to catch the wave of money that’s want to be the somebody,” says Topping, Oceana’s consultants helped design a washed over energy startups as the president of the Washington-based Cli- bunker-busting nuclear bomb for the price of oil has tripled during the past mate Institute, which promotes aware- U.S. military. An engineer at Dublin- five years. Costly OPEC crude and con- ness of global warming. based tide power company OpenHydro cern about global warming have ush- The idea that the oceans might yield Group Ltd. used to advise Ferrari SpA. ered in a rich era for green power. an endless supply of pollution-free Another tide entrepreneur built a fast Venture capitalists have invested mil- power has lured an odd cast of charac- boat for Colombian drug smugglers, lions of dollars in solar-energy and ters. Tudor Jones joins a crush of engi- which landed him in prison. geothermal startups. Money managers neers, lawyers and former politicians Tide power proponents are trying such as Tudor Jones are clamoring Oceana Energy has snapped up rights to tide power sites. ‘Somebody is going to do it, and we want to be that somebody,’ says co-founder John Topping. KEVIN HAND (ILLUSTRATION) Blo o m b e r g M a r ke t s 88 J u n e 2 0 0 7 WAR OF THE TIDES Verdant co-founder William Taylor wants to put 300 turbines in New York’s East River to power 8,000 homes in the city. 89 after companies that cook up gasoline substitutes from corn, sugar and soy- beans. Alternative energy stocks have surged the way dot-com shares did in 1999. The 43-stock WilderHill Clean Energy Index has rocketed since its August 2004 debut, rising 62 percent as of April 11. Tudor Jones, 52, has five people evaluating alternative-energy invest- ments at his firm. A fishing enthusiast, he’s chairman of the National Fish and Wildlife Foundation. He declined to be interviewed for this story. Dan Schiff, an analyst who works in Boston at On New York’s Roosevelt Island, this Greenwich, Con- supermarket gets electricity from six Verdant turbines such as the one on necticut–based the left. Tudor Invest - ment, says his says. “It looks like someone is trying boss is eager to in- to corner the market.” That’s not the vest in green com- case, he says. Oceana needs to study panies, provided lots of sites because many won’t make they pay off for the grade, says Hoover, 29. He got the firm’s inves- interested in tidal energy while at New tors. Tudor Jones’s Orleans–based Tulane University Law flagship Tudor BVI Global Fund Ltd. an Oceana unit applied to FERC for a School, from which he graduated has posted an average annual return of permit to study a swath of the East in 2002. 24 percent since its inception in 1986. River north of Roosevelt Island. The “We’re always interested in deploying stretch is called Hell Gate, for the cur- o far, the reach of tide capital in a green fashion with a good rents that once wrecked sailing ships power enthusiasts far ex- return,” Schiff, 30, says. against hidden rocks. The frigate HMS ceed their grasp. Taylor Tudor Investment is hardly betting Hussar sank there in 1780, with a trove foresees a time when hun- the farm on tide power. The firm man- of gold coins. The treasure has never Sdreds of Verdant turbines ages $16.1 billion and has committed a been found. in the East River will power 8,000 mere $15 million to Verdant. Tudor In- In a filing with FERC in July, Ver- homes in New York. He imagines drop- vestment has also invested in Bermuda- dant lawyer Gilbert Sperling com- ping his machines into rivers and bays based Infinity Bio-Energy Ltd., which pared Oceana with “dot-com exploiters the world over to light houses and of- makes ethanol from sugar in Brazil. who seized domain names and held fices, desalinate water—even pull hy- “We’ve been looking at a lot more of them for ransom.” Oceana plans to drogen from water to provide fuel for these,” says Schiff, who sits on Verdant snap up sites and then sell the rights, green-power cars. Because water is 850 Power’s board. Sperling wrote. times denser than air, a tide mill can The clash between Verdant and “I fully appreciate their position,” generate more energy than a much Oceana started in March 2006, when Oceana General Counsel Mike Hoover larger windmill. Unlike breezes, tides are predictable. That’s Verdant’s vision. Right now, its generators power a grocery store and ‘We’re always interested in deploying charge a few hybrid buses on Roosevelt capital in a green fashion with a good Island, which lies between Manhattan Island and the borough of Queens. The return,’ says Tudor Investment analyst company is still testing its turbines and Dan Schiff. doesn’t collect a dime.