Ocean Power IPO Heads for Choppy Waters

In 1886, an entrepreneur had the bright idea of building a machine that could harness the massive power of ocean waves.

He anchored it off the San Francisco coast, and within months a ship carrying 40 tons of dynamite veered close to the rocky coast. The crew abandoned it, and when it detonated, it carried the wave-power technology with it.

That should have been a sign, but other businessmen continued to place wave-power machines off the California coast. The potential was just too enticing: Using natural resources, without having to find or exploit them, to generate electricity.

But none succeeded, and many were abandoned to become curious landmarks for passersby.

But with energy alternatives to oil in bigger demand, wave power is back in vogue. Early Wednesday, New Jersey-based Ocean Power Technologies(OPTT Quote) went public in an initial offering that priced 5 million shares at $20 each -- at the low end of its expected $20-to-$22 range.

The stock was recently off 79 cents in its first day of trading to $19.21.

While Ocean Power's works are unlikely to explode in the ocean or be abandoned, the long history of wave-power technology is worth bearing in mind because of the risk involved. In Ocean Power's case, the risks revolve around its large losses to date and the intense competition in rapidly developing energy niche.