Consider it one small step in the emerging world of ocean power.

Ocean Power Technologies Inc. (NSDQ: OPTT) said Wednesday that it has launched a buoy that can generate electricity from the motion of the ocean off the Hawaiian coast.

The PowerBuoy – which captures the motion of waves as mechanical motion, before converting them into electricity through a power take-off system and transmitting the energy to shore through underwater cables – was dunked off the coast of the island of Oahu as part of a program the Pennington, N.J.-based company has with the U.S. Navy.

Ocean Power has signed two contracts with the Navy worth a total of $4.7 million to test the PowerBuoy's ability to power the Navy's Deep Water Active Detection Systems (DWADS), which track the movement of ocean-going vessels.

But since it launched its first 40-kilowatt PowerBuoy off the coast of New Jersey in 2005, Ocean Power has also landed larger-scale wave power development deals with utilities in the United States, Spain and Australia.

In October, the company announced it had landed a $2 million contract from the U.S. Department of Energy to support the launch of a PowerBuoy off the Oregon coast, part of a project with utility Pacific Northwest Generating Cooperative meant to grow to 50 megawatts eventually.

Ocean Power also has a deal with Spanish utility Iberdrola to deploy a PowerBuoy off the coast of Spain. And in May, Ocean Power announced an agreement with Griffin Wave Power Ltd, a subsidiary of Australian energy developer Griffin Energy Pty Ltd., to develop a wave power station off the cost of western Australia aimed at producing up to 10 megawatts initially and with the potential to grow to 100 megawatts eventually.

;The ocean power business now makes up a tiny portion of the renewable energy market, with less than 10 megawatts of installed capacity. But it could grow to a $500 million market in the next six years, according to a report from Greentech Media and the Prometheus Institute (see Trawling for $500M in Ocean Power).

The industry's 35 most active companies have received just over $500 million in investments since 2001 from a variety of sources, including venture capital, loans and certain types of government funding, the report says.

But the next six years will likely see more than $2 billion invested to build commercial ocean wave power farms and another $2 billion spent on research and development, the report said.

The ocean power industry includes companies seeking to harness the motion of waves to generate power, such as AWS Ocean Energy, Wave Dragon, Oceanlinx, Pelamis Wave Power and Finavera Renewables, as well as those seeking to capture tidal forces to make electricity, such as SMD Hydrovision, Marine Current Turbines, Open Hydro and Ocean Renewable Power.

A March 2007 study led by researchers from the Electric Power Research Institute in Palo Alto, Calif. found that 10 percent of U.S. energy demand could be "credibly harnessed" from wave and current energy.

But the industry still has technical hurdles to overcome, said Greentech Media analyst Daniel Englander.

"As the industry evolves, I think there's going to be a convergence" of technologies, with the best-performing winning out over less successful competitors, he said.

In October, the California Public Utilities Commission rejected a proposal from utility Pacific Gas and Electric Co. to buy power from a 2-megawatt ocean power project being developed by Canada-based Finavera Renewables (TSX-V: FVR), saying the project wasn't feasible and would cost too much (see California Sinks Its First Wave Energy Project).

Finavera had poor luck with one of its buoys off the Oregon coast last year, when the buoy sank one day before the end of the six-week test run (see Pulling Energy From the Sea). The buoys convert the vertical motion of waves into pressurized seawater, which in turn drives a piston and forces seawater through a turbine.

Ocean Power, on the other hand, "hasn't had any major malfunctions or problems," Englander said. "The issue is getting to full-scale deployment."

So far, Ocean Power – which was founded in 1997 and went public on the London Stock Exchange in 2003 and on Nasdaq in 2007 – is among a handful of companies in its industry that have achieved significant installations, Englander said.

Others include Pelamis Wave Power, which recently opened a wave power project off the coast of Portugal and raised £5 million ($7.5 million) from investors, and Marine Current Turbines, which installed a tidal power turbine off the coast of Northern Ireland this fall, he said.

Carolyn Elefant, general counsel for legislative and regulatory affairs for the Ocean Renewable Energy Coalition trade group, said that large-scale ocean power projects are just the beginning for the industry.

"What we would like to see ... is the development of technology that can be exported and integrated into other hybrid uses, like floating data centers, offshore aquaculture or uses like that," she said.

Google, for one, has filed a patent application for a floating data center that could be powered by ocean currents (see Google Sets Sail With Ocean Power Patent).

Join industry leaders and influencers at Greentech Media's new conference series Greentech Innovations: End-to-End Electricity on November 17 and 18 in New York City.