The home-grown technology of Carnegie Clean Energy to harvest the power of waves has, until now, been irresistible to politicians of all stripes, along with thousands of small investors.

Key points: Perth-based energy company has heavily sold the wave power dream

Perth-based energy company has heavily sold the wave power dream The Carnegie share price has plummeted after the company posted big losses

The Carnegie share price has plummeted after the company posted big losses Many investors are now furious and experts doubt the technology will ever work

But a storm has hit the Perth-based renewable energy darling, leading many once-loyal supporters to question whether it is time to stop pouring money into the dream of wave energy.

While the company is not alone in struggling to compete with the dramatic drop in price of solar and wind power, it is facing questions over whether wave power will ever be commercial.

The ASX-listed company is also struggling financially and has long been dependent on shareholder capital, as well as tens of millions of dollars of government grants and tax breaks, to fund its research.

In recent interim results, Carnegie posted a $64 million loss, including a $35 million write-down of its most valuable asset — the intellectual property of its CETO technology, which was first developed in 2003.

It has lost two long-serving executives this year — chief financial officer Aidan Flynn and chief operating officer Greg Allen.

Its share price has dropped from highs of 25 cents more than nine years ago to around 1.4 cents today.

Carnegie Wave Energy's CETO pump for the submersible buoys ( Supplied: ABC Radio )

Many of its once-faithful investors have become angry at the company over the loss of shareholder value and what they allege have been failures in due diligence and misleading information about projects.

Carnegie's directors include former AFL commissioner Mike Fitzpatrick — a big shareholder — and well-connected chief executive Mike Ottaviano, who took home a pay package of more than $780,000 in 2016-17.

The company has never turned a profit, which is not unusual for a company still trying to commercialise its technology. But shareholders have voiced their concern about a recent announcement Carnegie was selling a majority stake in its solar microgrid company, Energy Made Clean (EMC), at a 75 per cent loss.

Long before this announcement, others had made complaints to corporate watchdog the Australian Securities and Investments Commission (ASIC) alleging the company had misled the market, including over a project for the WA government in Albany. ASIC is looking into those complaints in line with their policy.

"CCE is deliberately misleading the Australian public and shareholders about projects," one complaint alleged. "CCE constantly use optimistic and attention-demanding phrases in making announcements to the market. "Unless investors are astute in the electricity market we will continue to be misled on CCE value."

Last straw for a true believer

The ABC has spoken to many investors who were particularly incensed they were asked to take part in capital raising in May to fund the growth of the wave and microgrid businesses, only to learn in June that the company was selling most of the microgrid business.

They include Gold Coast investor Paul Quirk, a true believer in a renewable energy future who, until this year, was excited about the long-term potential of Carnegie and its CETO technology.

But the EMC sale was the final straw for Mr Quirk, who was once one of Carnegie's top 30 investors.

Paul Quirk lost tens of thousands of dollars when he sold his shares in July. ( ABC News: Steve Keen )

He sold all his shares in early July, losing tens of thousands of dollars on a company in which he first invested almost a decade ago.

He said he was frustrated with the company's board and executives, and also the fact that the technology was still in the research and development phase.

"We've been through CETO 1, 2, 3, 4, 5," he said. "CETO 6 is supposed to be the commercial product."

A Carnegie spokesperson said the company had no knowledge of the ASIC complaints.

They said the company undertook extensive due diligence in buying EMC, an acquisition approved by an extraordinary general meeting in December 2016, but did not explain why it was sold for such a loss.

Do you know more about this story? Email turner.rebecca@abc.net.au or diss.kathryn@abc.net.au

Carnegie's technology is still in the development phase, so the company has long been financially supported by government grants and research and development tax breaks.

The company's Facebook page and ASX statements often include photos of Mr Ottaviano with politicians of all persuasions — from federal Treasurer Josh Frydenberg to WA Premier Mark McGowan — to promote projects which have been funded by their governments.

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The company's grants include:

Almost $29 million in Australian Renewable Energy Agency (ARENA) funding for projects off Garden island and Albany in WA

Almost $29 million in Australian Renewable Energy Agency (ARENA) funding for projects off Garden island and Albany in WA More than $10 million in Low Emissions Energy Development funding and $15.75 million for the Albany project from the WA Government

Doubts if wave power will ever work

Wave energy is about five to 10 times more expensive than solar and wind, according to Jeff Hansen from the University of Western Australia's wave energy research centre.

His team has been working with Carnegie on the $19.5 million Albany project to try to deliver wave energy at a commercially competitive price and design an effective device.

"To engineer things to survive in the marine environment, it takes a lot of effort and they have got to be very robust and I think that's one of the focuses," he said.

But many renewable energy experts around the world have been sceptical about whether wave energy would be an affordable and reliable source of power for at least 20 years, if ever.

They have questioned whether governments should be investing significant amounts of money in wave energy technology.

The company has received millions in government grants for the project at Sand Patch, near Albany. ( ABC News: Benjamin Gubana )

A 2017 study by energy researchers from the University of Strathclyde and Imperial College London found similar commercialisation problems in the UK, blaming government and industry for having a "fundamentally over-optimistic view" of what could be achieved.

It cited how the wave industry had burned through 200 million pounds since the year 2000 with very little progress to show.

The director of the Grattan Institute energy program, Tony Wood, said there was still much to be learnt about how to make wave energy commercially viable.

"I think it's still in the prospective stage — it might be one of those ones that does get consigned to the dustbin of history," he said.

"I mean geothermal has had that challenge — many people thought it was going to be fantastic but it's never made the grade. It's been 30 years away for the last 30 years."

Perth-based David Harries, one of the architects of the Renewable Energy Target policy and a director of EMC before it was bought by Carnegie, said it would be a challenge to ever get the cost of wave power to be competitive with solar and wind.

Professor Harries says the high density of wave energy is both attractive and destructive. ( ABC News: Kathryn Diss )

Professor Harries, an energy consultant and part of the University of Western Australia's school of engineering, said the high density of wave energy was its key attraction, but also a problem because it was destructive energy.

This created the challenge of building energy converters which could survive these forces.

"Wave energy developers are keen to tell of the advantages … that it is firm, it doesn't stop at night like solar, it doesn't turn on and off like wind and that it's incredibly consistent," Professor Harries said.

"What they're not being told is it's not quite as consistent as it's made out to be and when you add on the energy density with that inconsistency, it's far more difficult than we've been given the impression."

Renewable energy consultant David Leitch said industry was questioning whether wave energy companies like Carnegie would ever be successful.

"It's one of a number of renewable energy technologies competing for a share of the renewable energy market, in terms of its development," he said.

"It's a long way behind some competing technologies, so I don't think investors should be looking for any positive cash flow for 10, 20, 30 years.

An ARENA spokeswoman said the costs of wave energy were expected to come down with more global deployment.

"Wave energy can be predicted over a longer timeframe than wind and also requires less space to generate the same amount of electricity," she said.

"Marine energy technologies could potentially complement wind and solar or be deployed to power coastal or offshore infrastructure."

There were five previous versions before Carnegie developed its CETO 6 technology. ( Supplied: Carnegie Clean Energy )

Carnegie CEO remains upbeat

Mr Ottaviano was upbeat about the potential of his company's technology, which he said could be commercial within five to 10 years.

"We've got a very good track record in delivery and we've succeeded in the past where many others have failed," he said.

But he acknowledged it still needed government support.

"Wave energy is a little different. Wave energy is still emerging as a new renewable energy technology," he said.

"Carnegie is at the forefront of wave energy globally and it's this sort of support which is required to help any power technology through its emergence."

Mr Ottaviano also defended his salary, saying it was voted upon by shareholders every year.

WA's Regional Development Minister Alannah MacTiernan has also been a big believer in the potential of wave energy.

Erika Techera from UWA's Oceans Institute, with Albany MP Peter Watson, Minister Alannah MacTiernan and Carnegie CEO Michael Ottaviano at the Sand Patch site. ( ABC News: Benjamin Gubana )

Her Government last year awarded a $15.75 million contract to Carnegie which will allow it to test its CETO 6 technology off the coast of Albany, where the waves are considered some of the most consistent in the world.

Ms MacTiernan said governments needed to be "technology makers, not technology takers".

"We would not have the internet, we would not have touchscreens if there had not been a preparedness by governments to co-invest in this early stage of the development of technology," she said.

"That is part of the role of government.

"Of course, we believe that there is a very, very good prospect that this is going to become a technology that will be competitive with all those other renewable energy technologies."

But the WA Opposition has questioned whether taxpayers are getting value for money because the only requirement is that Carnegie build a common user infrastructure to connect wave energy to the grid and generate 1MW of power for one year — enough to power about 200 homes.

Nationals MP Terry Redman, whose electorate neighbours Albany, highlighted that it was very expensive power and there was a chance the infrastructure could become a stranded asset if Carnegie left.

"I know what anything sitting in the ocean does over time, it's going to deteriorate," he said.

"It can't be used for commercial purposes with that sort of capacity."