Stephen darori game changing technologies to the renewable energy industry business plan
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    Stephen darori game changing technologies to the renewable energy industry business plan Stephen darori game changing technologies to the renewable energy industry business plan Document Transcript

    • 20131123 Business Plan Newco Date: November 23, 2013 Company Name: Newco Company Address: Officially in Delaware, but actual operational location for the parent company to be decided. Flower Turbines LLC is now in the Long Island Technology Incubator at Stony Brook University, 25 Health Sciences Drive, Stony Brook, NY 11790. Leviathan Energy Hydroelectric LLC will follow shortly. Pioneer Valley Renewables LLC is at 39 Pokeberry Ridge, Amherst, MA 01002. Leviathan Energy LLC is incorporated in Nevada. Contact: Dr. Daniel Farb, dfarb@leviathanenergy.com US phone: +1-631-552-0284 (Israel is usually 7 hours ahead of the East Coast, that is, 1200 in New York is 1900 in Israel) Israel phone: +972-54-9730028 Web sites are in process of updating: www.benkatina.com is for Hydro and is updated. www.flowerturbines.com is for small wind and fairly well updated. www.leviathanenergy.com needs a thorough updating This material is confidential. -1-
    • Table of Contents Parent Company Introduction Corporate Organization Note Team Company 1 The Wind Energizer Executive Summary Type of Business Legal Structure Location Process Intellectual Property Technology & Innovation The Gearbox Issue Costs Market Financials Next Steps Company 2 Leviathan Energy Hydroelectric Executive Summary Type of Business Legal Structure Location Process Intellectual Property Technology & Innovation Competition Market Pricing Financials Company 3 Flower Turbines 4 5 6 8 Executive Summary Current Status Type of Business Legal Structure Location Process Intellectual Property Market Competition Product History Financials 29 31 31 32 32 33 33 35 39 41 43 8 9 10 10 10 11 11 14 15 15 17 18 18 19 21 21 21 22 22 24 26 27 27 26 29 -2-
    • Company 4 Financing and Projects Companies With Patents Only Company 5 Waves Executive Summary Company 6 Underwater Turbines Executive Summary Company 7 Small Horizontal Axis Wind Turbines Executive Summary 44 44 44 45 46 46 46 47 -3-
    • Parent Company Introduction Business Description Newco holds innovations in multiple types of renewable energy machines that result in largescale efficiency increases and new markets. Each market has the potential of at least $100 billion in sales. Vision and Mission My name is Dr. Daniel Farb, the founder, funder, and CEO. I’m going to start off by conveying my passion for what I’m doing, and why this is the right investment to make. I believe that we have the capacity to change the world, and I invite you, the investor, to join me first with your money and second with your friends and experience. I have a vision of a world that runs on a base of renewable energy using some of my technologies. I know this is going to work because I’ve lived it for a few years and I know the concepts and the science. I believe it so much that I’ve put around $3 million, the majority of my personal savings, into it. With this experience, I understand the markets and why this is a fit for those markets. Ultimately, cost is a major driver of energy investment, and the large improvements in efficiency that the inventions described make fit that criterion. Subsidies don’t last forever, and a product has to be able to stand on its own without subsidies. (We can of course make good use of existing subsidies.) This is a hot market. The world knows that climate change is occurring and wants to find renewable energy innovations that will stop it. Because we offer many ways to do it, your investment is safer because it is like investing in an incubator. This is a do-good investment you can be proud of. We are producing for existing markets. In the case of large wind, we can retrofit to an existing market. In hydroelectric, we offer a fantastic alternative to the existing market of pressure breakers, in addition to opening up new markets. And so on. And the world runs on electricity, and every country needs it cheaper, better, and cleaner. Each one of the following products has at least one area in which it is a major step above what exists on the market, and that differentiation is secured by a patent portfolio. You have a choice. You can make some nice money quickly by investing in a bunch of mobile apps, one of which will break through and quickly fall prey to the next cool app. Or you can invest in these game-changing technologies that will have a lasting impact on the world by becoming the new standard and in a few years see your investment grow a hundred times and keep growing for many years. I heard that Steve Jobs recruited an executive from Pepsi by asking him whether he wanted to make sugar water the rest of his life or change the world. Here is a choice to join another General Electric or Apple Computer in its infancy. Newco was founded as Leviathan Energy in Israel to introduce highly innovative, game changing technologies to the renewable energy industry in the belief that there is no need for anything to be burned and cause further harm to the planet in order to create electricity. The technologies are built on an amazingly simple concept: Making a flow of liquid or gas hit the turbine blades better can make large increases in efficiency. The execution and development -4-
    • of this concept are more complex, of course, and include innovative approaches and the use of a field called Computational Fluid Dynamics (CFD). The velocity at the point of the blades is part of the following basic equation (without adjustments for many efficiency factors): Power in watts = ½ x density x area x velocity cubed. This equation means that even a small improvement in velocity at the crucial location is CUBED. There is no better way to improve the profitability and use of turbines than to concentrate on this aspect of turbine design. You might say I’m going for the jugular. These simple and clear laws of physics are utilized in better ways that differentiate these products from the competition. It also means your investment is more likely to be right because it’s based on good science that everyone can understand. So the innovations cover small, medium, and large wind turbines, hydroelectric, underwater, and wave turbines. That is enough to open up new sources of power worldwide that solve most of our energy problem. All of the technologies have the capacity to reach a sound, repeatable business model that can work over and over. I know I seem overly ambitious. That is why I’m asking you to join me so I can hire effective, responsible people to implement the vision and give them the resources to imbue each step with professionalism. I want to concentrate on the high-level innovation and strategy. I don’t want to dwell on myself, but I feel it’s fair to say that I bring something unique to the company, in addition to dedication, as a multidisciplinary person who has the technology and networking skills to direct a company that needs to function in a multidisciplinary world. We are almost at the point of success with the first three technologies I will describe. With a little bit more of a push, we will achieve a victory. Corporate Organization Note I’m originally from the USA and moved to Israel 8 years ago. Although it was a great place to innovate, and many people went beyond the call of duty to help me, it proved a challenging environment for implementation in many ways. So I have decided to change the center of operations to the USA, which is also the world’s biggest market. The new organization is a Delaware C corporation holding company, which holds stock in daughter corporations, each of which has a distinct technology, intellectual property, and/or market. The holding company holds intellectual property that is generic for the daughter companies. The reason for mother and daughter companies is to obtain the advantages of synergy of technologies and staff while enabling companies with different patents and markets to differentiate themselves. Some people believe a company should have only one product focus. That is another reason for the differentiation into different companies or divisions. That is how GE works. It’s a proven model. Just like their major focus is electricity and innovation, we also have a single focus of clean electricity. The correspondences are as follows: -5-
    • Israeli Company US Company Leviathan Energy Renewables, Ltd. Newco, Inc. (holding) (holding) Leviathan Energy Wind Lotus, Ltd. Flower Turbines, LLC, in NY Leviathan Energy Hydroelectric, Ltd. Leviathan Energy Hydroelectric, LLC, in NY Leviathan Wind Farm Aerodynamics, Ltd. So far held by Leviathan Energy, LLC, in NV. The current intention is to make the US operational headquarters in Texas with a separate corporation. Leviathan Energy Waves, Ltd. So far held by Leviathan Energy, LLC, in NV Leviathan Energy Underwater Turbines, Pioneer Valley Renewables, LLC, in MA Ltd. Leviathan Energy Wind Turbines, Ltd. So far held by Leviathan Energy, LLC, in NV None New company dedicated to projects and project finance with the company products The opportunties and financials are described for each daughter company separately. Team We are in transition with a new team based partially in the US and in Israel. Here is a brief description of the current players: M. Daniel Farb Founder and CEO. Multidisciplinary high achiever. Author of over 100 books and CDs and over 30 patents. Set academic record at Yale (twice the ordinary load in one semester and received all As). Medical degree from Boston University and Executive Management from UCLA Anderson School. Ran a medical practice and a software company. Relevance to the task at hand: Unique individual with skills ranging beyond typical technology founder thinking who can understand the entire breadth of company challenges and tasks. Moshe Rosenfeld Part-time because his main job is Professor of Engineering at Tel Aviv University. A world expert in Computational Fluid Dynamics. Wrote over 100 articles. Consults for NASA. Guest professor at Caltech. Relevance to the task at hand: Many of the company’s inventions are based on CFD. Danny Forte Mechanical Engineer from the Technion. Previous jobs designing energy systems at Siemens, Ormat, and the Soreq Nuclear Research Center. Relevance to the task at hand: Broad energy engineering experience. Avner Farkash -6-
    • Engineering consultant who worked for the company many years. Provided the company with many insights. Designed some high-level systems and ran R&D teams. Relevance to the task at hand: Excellent part of a team for creative engineering. Dan Yehuda Schlesinger Engineering consultant who worked for the company at various times. Mechanical engineer with an MS in Industrial Management. Worked in over 3000 projects. Won the Kaplan Prize, Israel’s highest technological prize. Relevance to the task at hand: unique experience when the projects reach industrial scale. We had an excellent electrician (Morris Gal) and general technician (Boris Grad) in Israel that were laid off as part of the reorganization and want to rejoin the company’s new organization. They have superb practical experience in making labs and testing facilities, and not just buying off the shelf components. Relevance to the task at hand: They could aid the setup of new facilities very cost-effectively in the US and help us with the Israel market. Executives likely to join once the companies are active in the US: Arie Brish A former top executive at Motorola who has also managed startups. Relevance to the task at hand: He understands the value of the Wind Energizer in particular and wants to bring it to market in the US. Already located in Austin, TX, where he knows many of the energy players. Jonathan Edwards An executive with an energy consulting company and other companies. Well connected in Massachusetts. Relevance to the task at hand: Would make an excellent COO and then CEO of one of the daughter companies (Pioneer Valley Renewables) Asher Siegel A successful executive with Johnson and Johnson, helped bring a member company from zero to $5 billion Relevance to the task at hand: Would make an excellent COO and then CEO of one of the daughter companies. Maurice Bortz A lawyer who ran the business development for several corporations such as IDT. Relevance to the task at hand: Excellent abilities to network and development company partnerships Reuven Solomon Highly experienced marketer with MS both in Electrical Engineering and in Business Relevance to the task at hand: He specializes in marketing new products with new technologies. Further information is available. -7-
    • Company 1 The Wind Energizer Executive Summary Business Description Leviathan can usually enhance power output of large wind turbines by 20-40%, and sometimes over 100% at lower wind speeds, by making structures that change the wind before it arrives at the turbine. By increasing the effective velocity in the plane of the blades, it also rewrites the world wind map; previously unprofitable areas for wind farms can now become profitable. It is a relatively cheap static structure that works on an expensive dynamic structure. Because it can be retrofit to any turbine, it can enter the market more quickly. Vision Revolutionize and expand the large wind industry with a completely new technology Mission Provide add-ons to turbines that make a large increase in power. Once established and certified in the market, we will take it throughout the world. The Wind Energizer is a passive aerodynamic structure that partially surrounds the base of the windmill from a distance to increase the wind speed flowing through the rotors of the wind turbine. It is precisely constructed for each turbine based on wind flow and turbine geometry using computer models from the field of Computational Fluid Dynamics. The company’s first patent was granted in the US in May, 2012. It has zero competition and a unique set of patents. It has been proven on a small scale with test and control turbines as shown in our previous testing center in Israel’s Negev Desert. Ask to see our video of the test turbine turning in low wind with the nearby control turbine not moving. Market Every large wind turbine owner in the world is a potential customer. This market consists of 200,000 existing turbines growing by over 30,000 turbines per year. An additional huge customer value is the product’s effect on the turbine gearbox. Each extra year of life of such a gearbox is worth about $100,000. We can make the wind approaching the blades of uniform velocity so that the normal stresses on the turbine from the greater velocity at the top of the blades are practically eliminated. Many wind farms in India and China have a problem finding proper maintenance support for turbines in isolated areas, both in terms of equipment and -8-
    • manpower. Therefore the maintenance of the turbine is an even more important issue than in Western countries. When the effect on the gearbox is quantified through a certification process, it is likely that the total return on investment for the customer will in many cases be one year or less! There is additional income from carbon credits where available. The marketing strategy is to demonstrate and provide a product that has a fantastic return. Secondary marketing strategies are using pressure from renewable standards set by government and from shareholders in wind farms. This is the fastest way available to increase the supply of renewable energy. Financials The potential profits from selling a uniquely designed structure at a high markup are in the tens of billions of dollars. Sales are dependent on large-scale demonstration, which can take a few months to organize, and certification and bankability, which can take 6 months after that. After that, quick growth is likely. The growth potential is the world’s fastest growing renewable energy market. The personnel needed are a core of expert scientists and designers (ideally in Israel) combined with sales and manufacturing support in each major market. The product is the physical structure. Producing that requires computer modeling in the design process. A team, consisting of scientists and venture capitalists, assembled by Tel Aviv University for the international Cleantech Open competition, judged this as Israel’s third best clean technology for the year 2010. The product was examined by a number of technical teams. The CTO of Dewind asked for an exclusive. The CTO of Suzlon wanted an exclusive to bring it to his company. A team at the highest levels of GE wrote us it was a game-changing technology. However, manufacturers are not customers, and we need to demonstrate it to the customers, the wind farm owners, in their own market. A budget of $1 million per market makes a complete demonstration, testing, and certification package. More money is required to initiate company operations. Type of Business It is a unique combination of a technology and manufacturing business. The design of the structures for turbines requires application of and judgment in the use of computer models and aerodynamics. As the product starts to appear in wind farms, the models will become more sophisticated. There is no competition here due both to patents and expertise. The profit is from the manufacturing of a steel panel structure that can be outsourced to large numbers of contractors. Therefore, there is no bottleneck in implementation. Once the product is established, the typical customer will be a wind farm of 100 turbines, thereby allowing economies of scale in the construction. -9-
    • Each one is slightly different, but the manufacturing of the panels can be standardized. In some markets, a greenhouse type of construction is possible, thereby reducing costs. Legal Structure The proposed legal structure is an LLC daughter company. Location There should be a local office in each major market, such as the US, India, China, and Europe. The operational headquarters for the US should be ideally in Texas, which is the largest wind state in the country. The US Midwest is the best US market, due to the excellent winds and open countryside. The financial center of the company should be in New York, as this product is compatible with large-scale financing. The design headquarters of the company should be in Israel, under the guidance of Dr. Farb and Professor Rosenfeld, since this part of operations is high tech, and can benefit from a highly skilled labor pool familiar with Computational Fluid Dynamics. Manufacturing involves a heavy product, and can be outsourced locally in each major market. There is an overcapacity of steel fabricators looking for work. It is possible that as the business develops, we can save money by choosing a single low cost location for the manufacturing. Process The product has been proven on a small scale. The next hurdle is proof on a large scale. It is not a scientific problem, since the concept is scalable. It is a psychological issue for customer comfort. In addition, the certification of a largescale project is crucial to make the Wind Energizer bankable for the financial markets. This opens up the possibility of creative financial models. Each package of giving a Wind Energizer for free along with paying for certification and various expenses such as engineering, insurance, legal, and travel, can be budgeted as $1 million. We recommend one demo in each major geographical market to launch the product in that market. It is a matter of creating trust. An alternative development model is using government research grants. The best initial markets are the Midwest US and India, due to relative freedom from zoning and other issues. After that come China and Eastern Europe. The process of obtaining new business is relatively flexible, because the biggest expense of operations will be the cost of goods of outsourced manufacturing. The core is the management and the engineers who specialize in running the computational fluid dynamics models. Civil engineers for implementing design can be hired as needed. A small sales staff is adequate because the number of customers is relatively small and easily identified from public records and wind energy associations. A manufacturing director is needed to supervise the outsourcing of production. In summary, a relatively small team can deal with a large amount of business. This is a profitable organizational structure. - 10 -
    • Intellectual Property The relevant patents are as follows: IL2007/000348 Flow Deflection Devices and Methods for Energy Capture Machines Large, fundamental patent on the use of fluid dynamic structures in many types of turbines and is applicable particularly to both small and large wind turbines and underwater tidal turbines. This is the core patent for the Wind Energizer. The patent has already been approved in the US (8188611b2) and has entered the national phase in the following countries: Europe, Canada, India, South Africa, and Argentina. IB08/054024 SUPPORT OF FLOW DEFLECTION DEVICES IN WIND TURBINES Oct. 2, 2008 This has entered national phase in India and Canada. IB2009/050578 FLOW DEFLECTION DEVICE CONSTRUCTION February 12, 2009 This has entered the national phase in India, Canada, and the US. PCT 2010 Manufacture of Wind Turbine Enhancement Systems June 2010 IB10/052335 This has entered national phase in the US, Europe, India, China, and Australia. This intellectual property is highly enforceable because  Each product is protected in many ways: method of manufacturing, size, association with other devices, proportion, shape, and so on  The major customers, especially for the Wind Energizer, are utilities, energy farms, and other organizations which are conservative, highly visible, and unlikely to risk a patent infringement lawsuit.  The Wind Energizer product involves additional know-how and certification barriers.  PCT searches have not uncovered any significant prior art. Technology & Innovation The large wind turbine industry seems like a very ordinary commodity market with small tweaks that make continuous small improvements in the cost and efficiency of these turbines. Into this environment steps a game-changing technology, one of the rare cases in which there is no competing technology in existence. Furthermore, this technology works without even touching the wind turbine. How can this be? The Wind Energizer changes the wind before it hits the turbine so that the velocity is higher and the wind is less turbulent in the plane of the blades. It is a large structure, custom-designed for each turbine, using the discipline of computational fluid dynamics modeling and a new aerodynamic class of hollow, partial airfoils. It is easy for - 11 -
    • those with some scientific background to compare it to funneling of flow through Venturi tubes, but it is really based much more on equations relevant to aerodynamic lift. What does it do? 1. It increases the velocity in the plane of the blades, in most cases by 20-40%, but sometimes by much more. 2. It makes the wind front more uniform, thereby reducing stresses on the turbine’s components and reducing the maintenance and replacement costs by an estimated $100,000 per year. It is self-evident that using a static structure to do this is very cost-effective on an expensive dynamic piece of machinery. In fact, it is more profitable to buy only the Wind Energizer but it doesn’t do much good without the turbine! In our experiments with this on a small scale in Rotem Industrial Park in Israel, the Energizer lowered the cut-in speed by 1.2 meters per second. Cut-in speed is the wind velocity at which the turbine starts to turn. (We have spreadsheets available with the raw data.) We increase the velocity precisely at the point where the flow of wind hits the blades. By doing this, we are concentrating on the most powerful of the factors that affect power production. This is a very logical approach, but unique. Large wind turbine companies are concentrating on tweaking the efficiency and increasing the area or the height for higher velocity. The importance of their advances pales in comparison to our invention that increases the velocity. (Incidentally, the effect of increasing the turbine height is most effective closer to the ground because the effect decreases with height.) The Leviathan products are Flow Deflection Devices (FDD or FDDs) (also called Wind Deflection Devices—WDD) to be added to wind turbines. Different specific products are required for different sizes of turbines. The trade name of the product for large turbines is the Wind Energizer™. Extensive computer modeling by employee Prof. Moshe Rosenfeld has shown that the use of FDDs can make substantial improvements in the power output of wind turbines. There are several principle innovations for large turbines: a) Placement of the correct flow deflection device (FDD) in exactly the correct position can make a major difference in power output. In fact, incorrect three-dimensional placement can lead to a reduction in power output; b) Specific patented shapes that work better than others; c) Outline structures hollow on one side perform at least as well as solid, complete structures. In one stroke, better effectiveness is compatible with lower weight and cheaper manufacturing. The effect of the invention is (1) to improve power output from existing wind turbines and (2) to make the blades turn at a lower wind speed. (In the picture on the left, the red area represents the greatest velocity of wind speed. The wind is coming from the left and hitting the structure near - 12 -
    • the ground.) (3) There is another important benefit to the use of the Leviathan structures. Since the wind speed is usually higher at the top of the blades than the bottom, the turbine has higher maintenance due to shearing forces. The Leviathan structures partially equalize the wind speeds throughout the cross-sectional area and should therefore reduce maintenance. We will first explain advantages (1) and (2) in more detail. The structures are in the form of a large, interiorly hollow partial “doughnut” that surrounds the turbine’s tower. The doughnut may be elevated at least 3 meters off the ground before it starts if the customer wishes to have continuous ground-level property; if not, it can start at the ground. It then has a height of at least 10 meters more and a radial width of at least 10 meters more. Partial doughnuts can be built by quarter, especially where the wind comes mostly from one direction. The “doughnut” can be made of solid panels designed to withstand high stresses. 1) We have demonstrated from computer modeling and testing of a prototype that Leviathan can improve the kilowatt production of large wind turbines by 20-40% for wind speeds of 10 meters per second. Erecting large, simple structures in the vicinity of the turbines will accomplish this. They can be installed 360 degrees around, but are likely to be most cost-effective in the direction of greatest wind. This increased production of kilowatts is highly profitable for the purchaser, since the cost per extra kilowatt of generation is about $300-500. It is much cheaper than buying another turbine at a cost of $1-2000 per kilowatt. 2) The effect of the Wind Energizer is greatest at lower speeds and makes the turbine turn when there is otherwise no movement. So, for example, below 2 meters a second, there is not enough wind. At 2 meters per second, the power output with the Wind Energizer starts when the control turbine would remain still. The highest percentage increase is in this range. Here is a conceptual graph of how a typical Wind Energizer would change the percentage increase in performance at different speeds: (Please note that at the rated speed, the upper limit at which the turbine produces energy, the percentage increase falls to zero. This is a rare occurrence and rarely affects the profitability of the Wind Energizer. Since different turbines have different generator characteristics at the upper end, this was not displayed in the graph. Speeds above 12 meters per second are very rare.) - 13 -
    • The graph above shows 2 meters per second as the point at which the turbines do not turn. Most turbines without a Wind Energizer start at 3 meters per second. The Wind Energizer lowers that threshold to 1.8 in our prototype. A scaled-down version was constructed at a site in the Negev where Leviathan had leased land for an experimental wind park. The model involved a structure of 2x2 meters around a 4-meter radius placed adjacent to a 1-kilowatt capacity, 2.7-meter blade diameter turbine. We have thoroughly tested the Wind Energizer versus control on a small scale. In all data runs, some of which included thousands of data points, the Wind Energizer turbine produced significantly more power than the nearby control turbine. The following table is from one typical data run showing the increased power output in watts for different wind speeds. B is the control turbine. The ratio in the final column shows the increase of power from F over B in a ratio. Wind speed 0-0.9 1-1.9 2-2.9 3-3.9 4-4.9 5-5.9 6-6.9 Average of cells F Average of Cells B F/B 0.00 0 0 0.94 0 0 11.25 0.7 16 32.65 22.6 1.44 82.23 69.8 1.17 107.67 90.4 1.19 146.23 110.2 1.32 Results were outstanding. They indicate that our models of power improvement may have been too conservative. A run of 20 hours that included mostly a period of low wind up to 6 meters per second showed an increased power output in the Wind Energizer turbine versus the control turbine of 154%. The Gearbox Issue Normally, the wind speed increases substantially with elevation. This places tremendous stress on the blades and the gears that stabilize them, and replacement means both money for the equipment and a non-productive period of time for the turbine. A gearbox may cots $500,000 to replace and wear out after an average of 5 years. Extending the life of the gearbox by 1 year can be worth $100,000 to a manufacturer or wind farm owner. The Wind Energizer substantially reduces gearbox wear and tear by making the load on the blades more uniform. It does this by increasing the velocity mostly at the bottom of the blades and less at the top—the exact opposite of the normal wind pattern. - 14 -
    • We took a theoretical case of a wind turbine with an 80-meter blade diameter and hub height of 80 meters. We placed a Wind Energizer near it. In the computational fluid dynamics illustrations below, we see that the Wind Energizer creates a nearly uniform velocity over the blades’ swept area. We used a velocity of 10 meters per second on the ground and a velocity of 14 meters per second at the upper tips. The blade area is superimposed on the picture of velocity distribution. (Assumptions are flat ground, logarithmic inlet velocity, no effect of the blades upstream, and 10% turbulence intensity.) Without the Wind Energizer: With the Wind Energizer 120 m 40 m The following graph is also helpful in visualizing the change in velocity distribution. Note that the velocity of the red line is much more uniform. Costs Modern, high capacity wind turbines with a 1.5-3 megawatt capacity cost an average of $3.5 million, excluding the cost of land, infrastructure, regulatory approvals and other costs. The currently expected selling price of the Leviathan Wind Energizer is $300,000-600,000 per turbine, depending on the size. Production costs are forecast to be no more than $100,000300,000 per turbine. Market Opportunity Wind power remains one of the world’s fastest-growing energy sources. According to Wikipedia, Global wind power installations increased by 44,799 in 2012, bringing total installed - 15 -
    • capacity up to 282,587 MW, an 18.7% increase on the 238,050 MW installed at the end of 2011. Top 10 wind power countries in megawatts China 75,564 United States 60,007 Germany 31,332 Spain 22,796 India 18,421 United 8,445 Kingdom Italy 8,144 France 7,196 Canada 6,200 Portugal 4,425 Rest of 39,852 world Total 282,482 A quick estimate of 1 wind turbine per megawatt suggests close to 300,000 large turbines. Based on an average profit for the Leviathan product of $100,000 per turbine (as an add-on only) and a conservative 10% market penetration, the potential early stage profit is 30,000 turbines (for 10% market penetration) times $100,000 = $3 billion. A market penetration of 20% would mean profits of $6 billion. A profit per turbine of $200,000 would mean profits of $6 and $12 billion, respectively. 25% of the likely market of 500,000 turbines by 2020 at a profit of $200,000 per turbine means a profit (not just sales) of $25 billion. This is a large-ticket item that will face initial zoning barriers. However, within a few years, no wind farm will want to do without this crucial technology. (In fact, wind farm companies that fail to order one could face shareholder suits for negligence.) There are potential difficulties in the - 16 -
    • wind farms adjusting the leases of the farmland, insurance acceptance, and changes in their contracts with utilities since they will now be producing more energy than before. These are all problems that can be solved. The head of the Texas Wind Association told Dr. Farb, “The farmers would be glad to have shade for their cattle.” Potential offsetting advantages are the pressure that utilities are under in order to meet required goals of power from renewable energy. This offers a way to increase the yearly production of a turbine by at least millions of kilowatts without requiring new infrastructure or a new wind farm. This is a major selling point. This is a faster way to meet Kyoto demands for percentage of renewable energy in the grid. Other economic models are possible. For example, instead of sales, one could provide the Energizers without cost to the farm in return for 90% of the additional electricity produced, or for a partnership in the wind farm. In another model, purchasing the wind farm, retrofitting it, and reselling it at a higher price is an option. That is an especially powerful model for certain markets where wind farms were mistakenly located in low wind conditions. Eventually, we will partner with wind turbine manufacturers to offer these at the point of sale, but, for now, the retrofit market leads to faster profits. Competition: None Customer: Wind farm owners, who buy certified products to make more money. Growth potential: Currently no end in sight to the growth of the wind industry. Large areas of China, India, US, Russia and its neighbors, Brazil and South America, Australia, Africa, and Canada are open to growth. Pricing: Based on value to customer. We can sell based on a 3-year return on investment with a huge profit margin. Distribution Plan: The sales team meets the customer, makes a site visit, and creates a proposal. The engineering team designs the structures in our facilities. Our manufacturing director bids out the construction, usually locally with construction or steel firms. The distribution is relatively straightforward. Advertising: The best advertising is certification. There are so many opportunities for media for free that the advertising probably requires nothing more than attendance at trade shows and networking in professional organizations. Financials The previous discussions set the stage for a simple understanding of the financials. This is a winner technology that is highly profitable. Once we have certified the effect on the power curve and gearbox, the financial model becomes even more compelling and can be used in the negotiation of outright sales or the upgrading of wind farms in return for a share of the profits. The essence of introducing a revolutionary new product is credibility. That requires demonstrations and certifications and a period of negative cash flow initially that needs to be covered by investments, grants, or both. Once the first substantial orders come in, there will be sufficient profit in those sales for the company to prosper without additional funds. - 17 -
    • Financial viability: After initial launch, it is based on orders to a small sales and design team and manufacturing outsourcing, so it is safe and profitable. Next Steps For the sake of the market, we need to demonstrate this, ideally on more than one large turbine, and simultaneously certify it with a major German certification company so that it becomes bankable. This step will require around $1 million per turbine if we give away the Energizer. Here is a spreadsheet with typical costs for each demo: Wind Energizer Demo Tasks Costs in $ demo package Structure 500,000 Power curve certification 100,000 Gear Box Certification 275,000 Engineering 20,000 Travel 20,000 Insurance 20,000 Legal 10,000 Miscellaneous 55,000 Total 1,000,000 Some wind farms in Texas and Tata Power in India have offered to let us use their turbines as demonstration sites without paying for them. It would be best to do two demos, both for greater credibility and for the likelihood of these being the two easiest major markets to penetrate. Spreadsheets are available to illustrate the financials. Company 2 Leviathan Energy Hydroelectric Executive Summary How would you like to invest in one product that addresses the two major shortages of the century, energy and water? “Water shortage is now like the oil shortage.” Technology Predictions, Duncan Stewart, Director of Research, Deloitte Canada, Technology, Media & Telecommunications, and CleanTech Business Description - 18 -
    • Leviathan Energy Hydroelectric aims to become the world’s leading company for hydro turbines for piping systems. Its technologies enable the company to create a $100 billion market of retrofits and new opportunities in many kinds of industrial water and traditional small hydroelectric power. The Benkatina™ hydroelectric in-pipe turbines convert excess pressure into electrical energy for grid and off-grid uses. Because excess pressure, which always occurs in piping systems, can cause leaks and other problems, pressure breakers are an integral part of water systems. Current pressure breakers throw away all the energy associated with the pressure drop. One can think of the Benkatina™ as a pressure breaker that recycles the energy, thus making money for the client. Its unique efficiency converts a large part of the water pressure into electricity, over a wide range of conditions. It primarily addresses the small and medium range of renewable energy generation, and benefits water utilities, irrigation systems, and other water users or suppliers because until now there was no economic way to recover this energy. Vision To become the world’s largest hydroelectric in a pipe company. Mission Hydroelectric power is the most cost-effective renewable energy; we are opening up a new market of hydroelectric power from closed piping systems that will lead to and become a necessary part of the implementation of a smart water grid. Our development of software systems to integrate smart water and electrical grids is part of our long-term vision to use our unique hardware technologies as a platform for enterprise software sales. Market The retrofit market alone for water systems is around $30 billion. This is primarily a business-tobusiness sale to water utilities and municipalities. We will enter this market through a combination of representatives and strategic alliances. The specific solution will vary by country and by vertical market. In some cases, we will use direct contacts. There is a large market in off-grid village electrification in the developing world in Africa, South America, and the Asia-Pacific area such as India, China, and the Philippines. China has the largest market with an installed base of 56 gigawatts in small hydropower and an annual growth of 6%. In these locations, electricity is so expensive (diesel generators produce at $0.5 - $1.00 per kilowatt-hour) that any inexpensive source of energy is cost effective. The Benkatina is the most efficient in-pipe hydro turbine. This market will be reached through local representatives, NGOs, etc. Each market requires its own strategy, but sales through local and established distributors in the water field should work very well. Product and Competition The Benkatina™ Turbine is a major breakthrough in its ability to operate under a wide range of flow rates and pressures at high efficiencies within an enclosed system. It uniquely maintains exit pressure, works over a range of pressure and flow rates, and leaves the water supply unharmed. The only close competition is from running pumps backwards as turbines, which is - 19 -
    • much less efficient and sophisticated. Various types of propellers have a maximum theoretical efficiency lower than Leviathan’s tested efficiency. Company Highlights  The former company has sold 3 successful beta products (Mekorot Company - Israel, city of Davao in Philippines)  Received 1.3 million shekels under Eureka program  Received Eureka and Eurogia labels for technological excellence  MOU for orders from the Philippines, likely to be 4000 turbines when bank financing arranged.  Large number of other potential projects in discussion, some close to purchase order stage  Member for 2013 of Israeli government’s Smart Cities Marketing Group (highly competitive, 1 out of every 100 applicants chosen across all industries) Financials The customer receives a turbine with a ROI of 1.5-5 years that can provide on-peak power to the grid in most cases. Even at the stage of one-at-a-time production, the markup on each unit from 10 kilowatts and over is substantial because the product is valuable to the client. Manufacturing can be outsourced under our supervision so we can avoid a large investment in facilities, but we need our own testing, development, and quality lab. Funds and Investment The company needs $3 million to achieve profitability within two years. This would enable the company to enter into production and sales mode for its current product lines, refine them for easier installation, and reduce manufacturing cost, by using a low cost manufacturer and as well as development of applications and increased sophistication of technology. Some of the investment will be used for marketing, overseas certification, and demonstration sites. $5 million would enable faster development of our own components. - 20 -
    • Leviathan is interested in moving its production to low cost manufacturing countries, such as China, Brazil, and India. The company would need extra financial resources for travel, manpower, legal work, and manufacturing files to set up strategic partnerships, joint ventures, or distribution. Such negotiations have started. Such strategic alliances would give Leviathan access to some of the largest world markets. The opportunity is to join a company with multiple factors in its favor—technology, business approach, presence in crucial industries, etc.—and join it for its high growth phase. Type of Business This is a manufacturing business with largely technical sales. The competition is from a few other better-capitalized companies with inferior technology. The manufacturing needs to be located in several countries. In the West, it will likely be the US and maybe Israel. We need to produce in India for India, China for China, and Brazil for South America. This can be changed as circumstances develop. In the US and Israel, we can do well with contract manufacturing, as there are quality companies that are trustworthy. In the US and Israel, we need to have testing labs for the product and for research and development. We have applied for space at the Center for Excellence in Renewable Energy at Stony Brook University, which has around 100 square meters that would be excellent for our facility. Our current installation in Israel needs to be vacated due to bureaucratic problems. (Our landlord is being fined for giving us a space that is in a converted chicken coop and theoretically agricultural land.) The ideal way to enter India and China is to control our own subsidiary, even if with an investment locally, that manufactures, tests, and sells. In each case, setting that up could take $10 million. We believe that in Brazil it will be easier to find joint venture partners for manufacturing and sales. It is important to have our own facilities in those countries as a way of ensuring quality and intellectual property control. The customers will want to visit our facilities and know that we are delivering a reliable product. All locations have sufficient skilled labor. Initially products will be made per order, but if funding is sufficient, we will characterize the most likely components of sales and produce enough at one time to lower our costs. We will make one basic product for the many variations in size, pressure, and flow rate, off-grid or ongrid, etc., to make it as “plug and play” as possible. Legal Structure The company is an LLC in New York, which will be a daughter company to a Delaware corporation. Location - 21 -
    • The locations for manufacturing were already discussed. The plan for operative headquarters is within Stony Brook University in Long Island, NY. This location is near high quality metal working companies that cater to the aircraft industry, and to the financial and business networks in New York City. Sales will be a combination of direct sales and alliances. Examples: We have found excellent companies in the water treatment and pump industries in Holland and Turkey that want to represent us in those countries. We have an excellent representative, a small Israeli engineering company that has local partners, in the Philippines. In the US and Canada, we have initiated discussions with a major company in the water field about using their sales force. In summary, the best situation is to have personnel at headquarters who direct the relationship building to achieve proper distribution. Process The current stage of the business is early stage with some sales of our earlier level of technology. We are ready to make more sales while making further improvements in the product. The major issue to address at this stage is to have enough working models of our recent level of technology for customer confidence. We should have no problem obtaining certifications for working in the water system, since we are using mostly stainless steel and aluminum parts, but we still do need to obtain the certifications, such as CE in Europe, and there is a moderate cost to doing this. We need to test the quality and performance before sending out to customers, and we need our own development lab, so it is important for us to have a lab under our own control that is not outsourced. If we use contract manufacturing, we have much less of a problem to deal with changes in demand. Intellectual Property The company is the exclusive owner of the intellectual property of its in-pipe Benkatina hydroelectric turbine. Underlying technology is based on hydraulics, mechanical and electrical power, control engineering, and computational fluid dynamics. The intellectual property consists of so-far nine patents pending covering areas of phase separation, control of air and fluid pressure, blade and turbine design, relationships of turbine components, algorithms, new uses, etc. IL07/000770 Benkatina Hydroelectric Turbine Patent describing the new hydroelectric turbine and many of its applications The patent has entered the national phase in the following countries: US, India, Mexico, Russia. Valuable claims: relationships of more than one turbine in a pipe, topographic blade shape, hydroelectric storage use, use in gutters and infrastructure - 22 -
    • IB2008/055017 PLACING WATER TURBINES IN WATER FLOWS November 30, 2008 Valuable claims: Outflow system with floating turbine, turbine entry system for a dam or canal, in-stream version setup The patent has entered the national phase in the following countries: US, India. IB2008/055016 CONSTRUCTION OF AN IN-PIPE TURBINE November 30, 2008 Valuable claims: nozzle shapes and relationships, use of magnetic coupling to the generator to obtain sealed system, integrated generator coil, two-sided connection to generator, open top version for dams, casing construction The patent has entered the national phase in the following countries: US, India. IB2009/051038 Sewage Separation Turbine March 12, 2009 A peripheral but useful patent for a low rpm sewage separation device that turns a turbine that makes a good strategic match with the Benkatina Turbine The patent has entered the national phase in the following countries: US, India. IB2009/053611 Turbine Relationships in Pipes August 17, 2009 Valuable claims: separation of turbines in a pipe according to pressure in the pipe, system for easy replacement of nozzles The patent has entered the national phase in the following countries: US. The following patents are more valuable: Hydroelectric Turbine Nozzles And Their Relationships June 2010 10/52336 Valuable claims: Manufacturing nozzles according to computational fluid dynamic analysis, nozzles with guide vanes, nozzle sizes proportional to other structures, nozzle directionality, a nozzle replacement system, nozzle size algorithm. The patent has entered the national phase in the following countries: US, India, China, EU, Australia, Japan. Hydroelectric In-Pipe Turbine Blades June 2010 10/52337 Valuable claims: Highly streamlined blades for use in an aqueous environment, a new configuration for a propeller blades for inside pipe use. - 23 -
    • The patent has entered the national phase in the following countries: US, India, China, EU, Australia, Japan. Hydroelectric In-Pipe Turbine Uses June 2010 IB2010/52338 Valuable claims: energy storage using solids with an in-pipe turbine, energy storage in hydroelectric systems and relationships with the electric grid and a smart water grid (very valuable long-term claims), electrically powered pressure valves, use in thermosyphons and other cooling/heating systems. The patent has entered the national phase in the following countries: US, India, EU, China, Japan. In-Pipe Hydro Turbine with Air Bubble 6/15/2011 IB2011/052585 Valuable material, about in-pipe turbines within a system that isolates the turbine in air to increase its efficiency, particularly for situations of high elevation change The patent has entered the national phase in the following countries: US, India, Japan, Brazil. Technology & Innovation The company has progressed through several prototypes. This included three beta sales, two to Mekorot, the Israeli national water utility, and one to the city of Davao in the Philippines. Both customers are coming back for more. Mekorot used the turbine to charge batteries that provide mission-critical electricity for running their water system in areas removed from the grid. The photo above is from the first installation, a half-kilowatt system that powers a battery for video cameras, lighting, and sensors. The photo below is from the second installation. Both worked well for extended periods of time. - 24 -
    • There were some issues unrelated to the quality of the machine. For the first installation, they gave us the wrong specifications, so it didn’t produce as much power as they wanted, and they asked us to redo it at our expense. In the second installation, our engineer did not make a durable casing. This is a relatively easy thing to fix and at the time of this writing it should have been repaired. The third installation in the Philippines has worked successfully without any issues for 2 years. It supplies power that the water utility uses. The second phase of development was to expand on the foundation of geometries to control the pressure and turbine and to make a big step up in efficiency by introducing the air bubble concept. An attached air compressor simultaneously clears the blades of back splashing water and enables control of the outgoing pressure. This enabled Leviathan to provide something truly unique: high efficiency in the context of a piping system based on multiple factors that work together (air bubble, blade and nozzle relationships, revolutions per minutes of the rotor and generator, geometry of the whole system) over a range of flow rates to provide control of downstream pressure. We have measured efficiencies of 55% at flows producing only 1 kilowatt and 61% at 5 kilowatts. These are breakthrough numbers. The control of outgoing pressure is something that excites water utilities because it works with them to provide the right amount of pressure in a - 25 -
    • piping system. In order to convey water from place to place, there are inequalities in pressure introduced either by height or by pumping. These inequalities need to be managed. A consumer needs to turn on his faucet and obtain water that neither drips nor shoots. A utility can manage this excess pressure in two ways: Either leave it alone and let it damage the water system and sometimes leak, or buy a pressure valve (also called a “breaker’) that dissipates the excess pressure as heat. Leviathan now offers a third choice: Control the pressure and make money (electricity) from that excess pressure. The third stage of development is adding software control of the system. Not only will it enable remote control, it will have the capacity to integrate algorithms to maximize system efficiency. Part of this is optimizing other parts of the system. We plan to make the first “smart hydroelectric turbine.” The fourth stage is developing a nozzle needle to offer a higher level of control of the inward flow. The fifth stage is to take the turbine and its software and make enterprise software for utilities that connects the turbines and sensors throughout the water system together, and then connects to an electric utility smart grid to provide electricity at optimal times from the operation of the water grid. An additional area of development that is important for all these turbine types is to develop an easily used computerized platform, using computational fluid dynamics, for internal company use to enable relatively unskilled technicians to take the project information provided by the customer and quickly run an optimization model to determine the optimal turbine parameters for that customer. This should not be underrated as a powerful competitive advantage over any company that tries to copy the turbines themselves. It will take many years for a competitor to develop this capability. Competition The most commonly found way of utilizing downward flow to produce energy is to use a dam, or to stop the flow completely with one of several types of hydroelectric turbines. Such turbines have been developed over many years and are highly efficient, but they are more suited for large dams. It is well known that a large market exists for small stream hydroelectric around the world that requires new, less expensive turbines, and the market for uses of turbines in piping situations is currently almost untapped. There are two technologies competing with the Benkatina water turbine: (1) Reversed water pumps – Typically these become competitive for above 100 kilowatts because they are most competitive at a small operating range, so under 100 kilowatts a significant part of the cost goes to the installation to ensure that the reversed pump is operating at a very narrow range where it has optimal efficiency. This is a problem in - 26 -
    • piping systems where flow is variable. Rentricity is a US startup that builds turnkey systems using reversed pumps. They select sites where conditions are stable so that the infrastructure costs are lower but do not get optimum performance and therefore have a low efficiency. They could actually become a customer for us. Zeropex is another example of a company in this category that received a lot of attention and funding, but they have the additional problem that their components wear out quickly. (2) Lucid Energy installs small vertical axis wind turbine designs inside the pipes. Their solution has a very low efficiency (we estimate around 15%) and is designed for large diameter pipes with large flow. They do not publish their efficiency on their website; by contrast, Leviathan proudly states on www.benkatina.com that it has achieved efficiency of over 60% even at very low flows producing 5 kilowatts. It is well known that efficiency increases with the volume of flow, and Leviathan can anticipate demonstrating higher efficiencies at higher flows as it progresses. None of the alternatives control downstream pressure or adjust well to variable flow rates. These are key points to the water industry customers. Market The major markets are piping systems and rural electrification. Other major markets include irrigation, mines, gray water or partially treated water from treatment plants, applications to oil pipelines, coolant water of all types from apartment buildings to power plants, traditional hydroelectric, small sensor power, and green building. We can either make an outright sale to water systems, or make them a partner in the electricity production and provide the units to them at no initial cost. That strategy is very appealing to local governments. Sales can occur either through direct contacts at trade shows or through established companies in the water field who represent us. The best advertising is trade shows and word of mouth. Pricing The product is very profitable from 10 kilowatts capacity and up, and extremely profitable at 20 kwh and up. We are currently using the following pricing table when proposing systems to our customers: (Part number contains a number in watts.) Part # BGOF-500 BGON-1000 BGON-1800 BGON-3500 BGON-5000 End User Price 1-9 $7,131 $9,034 $9,145 $11,729 $13,806 10-49 $6,482 $8,213 $8,313 $11,170 $13,148 50-99 $5,146 $6,742 $6,835 $9,487 $11,323 100+ $3,778 $5,280 $5,368 $7,717 $9,402 - 27 -
    • BGON-7500 $17,810 $16,962 $14,622 $12,453 BGON-10000 $20,183 $19,222 $16,719 $14,419 This pricing is fair enough even for the existing micro-hydro industry, and, when calculating revenues and profits per unit, the following is the outcome (for 1-9 units) Part # 1-9 BGOF-500 $7,131 BGON-1000 $9,034 BGON-1800 $9,145 BGON-3500 $11,729 BGON-5000 $13,806 BGON-7500 $17,810 BGON-10000 $20,183 cogs $1,194 $1,554 $1,614 $2,914 $3,920 $5,130 $5,830 profit $5,937 $7,480 $7,531 $8,815 $9,886 $12,680 $14,353 What is the ROI? Different subsidies and incentives are available in different places around the globe. A conservative assumption is 0.10 USD/kwh. A 10KW system operating 24*365 would thus produce $8760 per year. For a cost of $20,000 the ROI would be 2.5 years. Including other costs of shipment and installation, the ROI would still be in the range of 3-4 years. Pricing can be adjusted to local conditions. Financials There are a number of immediate issues to address. There is a need to produce for several demo projects using our latest technology. We anticipate shortly two orders for 50-kilowatt turbines at $90,000 each from the Philippines that could be the first of thousands. They will only take them on good financing terms. Other potential contracts likely to conclude soon are in Israel, Turkey, Italy, and the US. Although each of these can be profitable from the parts alone, the engineering and overhead costs mean that we will suffer an initial loss from these projects without grants, investment, or export financing. We also need to set up a testing lab for each product and for further research. It is important to provide control software to accompany our product as soon as possible as it will make it much more attractive. Another issue is that by producing a moderate initial quantity we can reduce the price of manufacturing per unit and make each sale more profitable. This means an initial period of sales with negative cash flow that will establish credibility in more markets while we develop the product to a higher level. With several more projects as references, we can then anticipate faster and profitable growth. The market tends to be conservative so multiple proofs of concept are important. This is a profitable product, so it is just a matter of volume of sales to take the company to profitability once overhead and development costs are taken care of. Spreadsheets are available to illustrate the financials. - 28 -
    • Company 3 Flower Turbines LLC Executive Summary Business Summary: The company makes small vertical axis wind turbines with unique aerodynamics and design. We will sell successfully on the appealing concepts that are part of the turbines’ technology: eco-art, more power per square meter of roof space, bird and people safety, lower cut-in speed, etc. The technology matches a business model that will succeed with small wind--the mass sales and small wind farm model. Vision To become the world’s largest company for small vertical axis wind turbines, which we believe is a potential world market of billions of customers looking for the right product. Mission We have a unique business model that concentrates on four mass markets: (1) Clustered wind farms for on-grid electricity, particularly in countries with favorable conditions, (2) corporate image and advertising, (3) off-grid power in small villages, military bases, telecom towers, etc., especially throughout the less developed world, and (4) home and small business eco-art that produces renewable energy. We will combine technology that enables turbine grouping at close range with a mass-market sales strategy, primarily business to business, and mass production. We will empower all the people, governments, and companies that are looking for solutions for small, distributed power, whether to sell to the grid or to use internally, to do so using our products. Product: The flagship product is the patent-pending Wind Tulip, a 2kilowatt vertical axis turbine with two or three blades with the following features that enable it to lead the market for turbines close to people and on buildings: 1. Beauty is what customers want in an urban environment and is preferred by zoning. 2. Low noise and low vibrations make it ideal for rooftop and nearpeople uses. 3. Safety: Slow but powerful rotation along with the low vibration means that it is unlikely to loosen its bolts and fly away. Visibility in operation provides safety to birds. 4. Low turbulence creation: Unlike other turbines on the market, they can be placed close together and produce more energy in a smaller area. - 29 -
    • 5. Operation in high turbulence urban environment 6. Cost-effectiveness 7. Lower Cut-in Speed than competing turbines means more electricity for the customer. (It starts at 1.5 meters per second instead of 3.) 8. Ease of Installation: To be shipped as a kit to be assembled on site. Company Highlights: Several sales already, including the first and only small wind turbines connected to the Israeli national grid  Second place in the Israel Cleantech Open competition for the best clean technology, 2010  Chosen by the Bloomfield Science Museum in 2011 for their exhibit of Israel’s top 45 inventions  Chosen by President Shimon Peres for his annual open house to showcase Israeli technology  Received Eurogia Label for technological excellence  Local initial potential market of 30,000 wind turbines in Israel due to feed-in tariff program.  Potential market of hundreds of millions of wind turbines in India with local India partner (Thermax, a leading Indian manucturer that has started to invest $1 million in setting up the manufacturing production, and will invest more in marketing in India in return for marketing rights in India).  Videos of Wind Tulips: http://www.youtube.com/watch?v=d_CPRaFXGM http://www.youtube.com/watch?v=pccRfM6fGy w&feature=related http://www.youtube.com/watch?v=28ok_7bSFHc&feature=related  See company 10 at http://israel21c.org/technology/israels-top-45-greatest-inventions-of-alltime  http://www.energynow.com/video/2011/10/15/innovations-fuel-and-protect-earth-10152011 Hydro at 1 minute, Wind 7 min.  http://www.mfa.gov.il/MFA/InnovativeIsrael/From_solar_to_wind_energy-Jan_2011  JETRO (Japanese External Trade Organization) sponsored Leviathan Energy to participate in its Smart Grid and associated energy shows such as Wind Power in Tokyo in February 2013. Marketing The wind turbine will first enter the Israeli market with the more powerful three-bladed version, where the high feed-in tariff (around 1.6 shekels per kilowatt hour, or around $0.45) for the wind turbines enables the early production to be competitively priced. As mass production proceeds, the price per unit will drop significantly, so that the wind turbine will become competitive for more locations and markets. The experience of the initial Israel market will prepare the corporate market, where the visual impact of the Wind Tulip makes it ideal for corporate branding. Several other key markets and projects, such as New York, to which location the company is moving, have - 30 -
    • been identified. Many islands have high electricity prices that make small wind turbines very profitable even at an early stage of production. Profit Potential: The allocation at the current Israeli tariff could enable Leviathan to sell 30,000 turbines and quickly become a profitable company. The first samples of the turbines from India will arrive shortly, and an investment right now can ensure a successful market launch. The more money put into product launch in multiple locations, the faster the growth of the company. Once in moderate production, our target sales price of $7500 per unit (very competitive) will mean a profit of around $2000 per unit. We will be able to keep that $2000 margin or more as we move into full mass production and reduce prices in certain markets. Let us say that we maintain that $2000 margin for the foreseeable future in Western countries. For each 100,000 units we sell, the profit is $200,000,000. We should be able to do better than that in the Israel, New York, or Hawaii market alone. Note: By concentrating on direct sales to other businesses or to our own finance/project company, we keep the profit that would otherwise go to a distributor. SUMMARY +Advantages in Technology +Mass Sales Business Model +Mass Production in India +Innovative Financial Model = Major Global Company Starting Markets: Israel, New York, Islands: Gateway to developed world India: Gateway to developing world Current Status The company has gone through several sets of prototypes and is receiving an investment in the production of 2 and 3 bladed Tulips in return for a manufacturing joint venture and marketing rights in India. 3bladed Tulips are now in the initial phases of production in India. 2-bladed prototypes have been built but will be commercialized after that. Earlier versions were built and sold but are no longer being produced. The company has product depth with more product applications and patents on the way. Type of Business This is a manufacturing and sales business. We have chosen a partner for manufacturing. Thermax - 31 -
    • (www.thermaxindia.com) is a major and highly respected manufacturer in India that is investing $1 million in tooling and production for the two and three bladed Tulips in return for forming a 51-49 joint venture for manufacturing in India (with a 20% cost plus on anything the JV sells, meaning that both companies profit from the manufacturing alone no matter where sales occur) and marketing rights in India and maybe other locations. Some of this is not yet committed to writing but they have already started investing time and money in this. We have an excellent working relationship. What are the advantages for the parties? For Thermax: 1. A companion product for their solar rooftop product 2. Alliance with a technology company that can help with exports and interact constructively with their staff 3. A high growth area with a substantial market in India For Leviathan: 1. An investment that costs no equity 2. An alliance with a respected, quality manufacturer with global resources in a low-cost country 3. Outsourcing of the manufacturing 4. Guaranteed profits from manufacturing for the enormous Indian market (one company is both our industrial and sales partner) 5. A strong partner for manufacturing in other locations, such as China 6. A good mutual relationship with Tata Power that can result in an alliance for distribution in India (already in discussion) Products will at first be made to order until the market growth stabilizes, at which point they will be made for inventory. Sales will be made both directly and through representatives. An example is alliances with solar installers, who are looking for new products and already have expertise with rooftop installations. An example of direct sales is approaching large corporations with real estate holdings to sell hundreds or thousands at a time (example: Wal-Mart). Our strategy is to keep internal staff to a minimum by hiring sales or business development people who manage highly profitable relationships instead of individual sales to householders. Legal Structure Flower Turbines is an LLC in New York that will be a daughter company to a Delaware corporation. Location The initial manufacturing is in India. The initial customer bases will be these markets: 1. Israel, which has one of the world’s highest tariffs for small wind energy - 32 -
    • 2. New York, which has rebates of 50% on renewable installations, in addition to Federal tax credits of 30%. Long Island doesn’t benefit from state rebates but its electricity cost of $0.22 per kilowatt-hour is possibly the highest in the continental US. 3. Hawaii and other islands which have high energy costs from 20 to 50 cents per kilowatt hour 4. Italy, which has a high demand and subsidy for renewable energy 5. India, which has a billion people with no or unreliable electricity. This market requires a one-year delay for government certification. 6. Various other special markets and situations that come to our attention, such as the port of Antwerp in Belgium. The corporate headquarters are now in the Long Island High Technology Incubator at Stony Brook University in New York. New York is one of the initial target markets and the financial center of the US. In addition, the new Startup New York program offers many incentives. Process The company in Israel made several series of prototypes and sales and the product is now ready for a process leading to mass production. The major initial issues are to get as many initial models on the market with good data collection as possible and to get into mass production. Working models geographically near the customers are the best way to sell a new product. We anticipate the first 3-bladed turbine to be built in India by November 2013. Renewable energy groups, particularly those interested in promoting green solutions, will be important allies. Usually the major government guideline is acceptable zoning. We will purchase inverters (which connect electrical output to the grid) with UL certification for the US. More certification is involved for CE in Europe. In some cases, standards associations may have to be satisfied. The suppliers will mostly be from India and China. The objective is to drive production costs down as low as possible to make small wind a wise economic decision in more and more areas of the world. If Tata can sell a car for $2000 at a good profit in India, we can do better than that for a wind turbine. Intellectual Property The following patents belong to the company, and support the current products and future R&D, some of which will be done as part of the current project. The essential technology is aerodynamic, based on Computational Fluid Dynamics and other innovations. PCT IB2009/052235 Vertical Axis Turbine Foils May 27, 2009 National phase in the US - 33 -
    • PCT IB2009/053610 Vertical Axis Turbine Hybrid Blades 8/17/2009 National phase in US, Canada, India, China PCT IB10/052334 Two-Bladed Vertical Axis Wind Turbines June 2010 National phase in US, EU, Israel, India, China, Australia, Japan PCT IB2010/052782 Telecom Tower Vertical Axis Wind turbines June 21, 2010 National phase in China and India IB2012/ 053567 VARIABLE DIAMETER AND ANGLE VERTICAL AXIS TURBINE July 12, 2012 Entering national phase in US, China, Japan, India The company can use the following group patent for its inventions relevant to making vertical axis wind turbine installations. IL2007/000348 Flow Deflection Devices and Methods for Energy Capture Machines Large, fundamental patent on the use of fluid dynamic structures in many types of turbines and is applicable to flow deflection into small wind farms.. The patent has already been approved in the US (8188611b2) and has entered the national phase in the following countries: Europe, Canada, India, South Africa, and Argentina. The current Wind Tulip does not come with a built-in foil, but part of our plan is to reproduce the effect by creating external deflectors on rooftops. This makes the Tulip much lighter. The Tulip itself is based on components of the patents above, such as the combination of doublecurved blades with the overlapped space in the middle for the two blades or the ideal spacing for the three blades, the tapering that enables it to catch the wind from any direction, and the use of horizontal lips on the inside of the blades to improve the aerodynamics. It is a sophisticated marriage of technology and industrial design. The Wind Tulip is only the beginning for the company. Here are some of the other products we plan for long-term company growth, some based on the preceding patents: - Smaller Wind Tulip for slanted rooftops in an easy kit and off-grid needs for smaller amounts of power - Combination of small Wind Tulip with hot water heating for windy countries. Another special market for this is New York City, where a large proportion of the pollution comes from oil furnaces that boil water. This pollution is a matter of city government concern. - Variation of the full-size Wind Tulip with variable diameter blades that fold up in high winds for markets in hurricane and monsoon regions of the world, offshore oil platforms, etc. - 34 -
    • - Use of the Tulip and also other innovative turbine designs for telecom tower power (see separate business plan) Packable turbines for military and emergency use Hybrid drag and lift turbines with innovative blade designs to take advantage of the best of each Market The rooftop niche alone is vast, enabling hundreds of millions of buildings in the US and throughout the world to obtain some of their electricity in this way. With the Wind Tulip’s target price of no more than $7,500 per rooftop vertical axis unit and a capacity of 2 KW, the addressable market has a potential value of several tens of billion dollars. The major markets are business-to-business and consumer. Business clients include shopping centers and warehouses whose roofs can enable the placement of a small power center, office center parking lots, and rural businesses such as farms. There is a market of 1 million telecom towers that require energy. -The American Small Wind industry estimated that by 2020, small wind turbines could contribute up to 50 Gigawatts to the US electric supply. As of 2010, the total American installed base for small wind turbines was 100 MW. (AWEA 2010 Global Small Wind Report) -There are hundreds of small wind turbine companies, making horizontal and vertical turbines, but there are no leaders, and none have significant sales. One of the horizontal axis leaders was Southwest Windpower, whose Skystream 3.7 model sold 8000 from 2006 to 2013, and the company recently closed its doors. - For 2009, the value of the world market was as followsi: United States UK Rest of World TOTAL Installed Capacity Added 20.3 MW 8.62 MW 33.9 MW 62.8 MW Units Sold Sales Value ($m) 9,800 3,280 17,720 30,800 82.4 27.3 161.6 271.4 Israeli Market The Israeli Public Utilities Authority (IPUA) approved feed-in tariffs in the fall of 2009 for small wind systems. IPUA finalized the low-size wind turbines (under 15 kw) to NIS 1.65/kwh, and the mid-size wind turbines (from 15kW to 50 kwh) at NIS 1.29/kwh up to a total installation base of 30 Megawatts, which are 30,000 2 kilowatt wind turbines. (The reason it isn’t 15000 turbines is based on the Israel Electric Company’s definition of a kilowatt as performance at wind speed of 9 meters per second, where the Tulip produces 1 kilowatt.) When this installation base will be used up, the IPUA will provide another installation base for small wind but at less favorable subsidies. Contracts are for a term of 20 years. Leviathan Energy’s Wind Lotus was the first approved wind turbine to be hooked to the IEC grid. This is a predecessor to the Wind Tulip turbine. We estimate that in the next five years that there is over a 100,000 small wind turbine potential for Israel. - 35 -
    • The feed-in tariff for PV is collapsing  2008 ₪2/Kwhr,  2011 ₪1.67 / Kwhr,  2012 ₪1.2/ Kwhr  2013 ₪0.79/ Kwhr), The earlier high tariffs created a large, educated market among moshavim, kibbutzim, farmers, and business people that have used up their quota for solar and are still looking for further, similar investments, in addition to those who did not get involved in PV, and see their neighbors profiting from their investment. Geographically, Israel has some excellent sites for wind turbines. These include the Golan, the backbone mountain ridge spreading from Har Gilboa until the Southern Hebron, the high Negev, Eilat, and the coast line. Israel represents a serious revenue stream potential with excellent profitability. It is also an ideal beta marketing site used as a staging platform to launch the product into the world markets. . US market The US is now the main market for small wind turbines in the world. According to the American Wind Energy Association (AWEA), in 2009, despite an abysmal economy, the U.S. small wind market (turbines with rated capacities of 100 kilowatts or less) grew by 15 percent. That growth included an increase of 20.3 megawatts of new capacity and $82.4 million in sales. Government incentives, improved zoning procedures, consumers’ growing affinity for residential clean energy, and emerging financing mechanisms are driving the consumer acceptance of small wind. The 2009 American Recovery and Reinvestment Act expanded available federal investment tax credits for small windmills to 30 percent of the total cost of a wind system, an enormous boost that puts small wind on equal footing with the fast-growing residential solar industry. There are subsidies available to farmers via the United States Department of Agriculture (USDA) that cover 45 percent of installed costs when they purchase small wind turbines. Most small wind turbines in the U.S. market generally under-perform because they are built for higher wind speeds than what is typically found in most locations. The wind map shown is a good indicator for siting small wind turbines. The best locations are in the West of the USA, either in the Rockies or in the plains. Eastern California and Washington State are also good locations as well as the coastal areas in Alaska. In the Eastern part of the USA, only parts of the Appalachian Mountains stand out, aside from the coasts. - 36 -
    • The Off-grid Market The Off-grid market will increase faster than the on-grid market, with an annual growth rate of 30%. In 2005, 1.6 billion people worldwide, a quarter of the world population, had no access to electricity in their homes. Four out of five people without electricity live in rural areas of the developing world. World electricity demand is expected to double between now and 2030, with most of the growth in the developing countries, where electrification rates are not keeping up with the population growth. - 37 -
    • Current electrification solutions are usually based on diesel-electric generators, which are expensive, though often unreliable, stand-alone systems. Hybrid wind–diesel power systems are among the most interesting and environmentally friendly technological alternatives for the electrification of remote consumers. Potential Market for Off-grid Electricity in the Developing World 10 GW While the developing world has a high growth market for wind turbines, the developed countries should not be overlooked. Just in the US, the off-grid diesel generators had a total generating capability of 127.5 GW, growing at between 1.7% to 2.65 % annual growth rates. Most of this market is a backup to the grid. Telecom base stations The telecom base stations require about 1 kwh 24 hours/365 days. Two thirds of the energy is for air-conditioning and the rest is for the communication equipment. A new report released by Mobile Experts (Dublin, Ireland) predicts a dramatic increase in renewable energy usage by mobile operators. “The changes in ROI expectations will create a tectonic shift in the industry, converting over 150,000 base station sites from diesel generators to alternative energy sources over the next 10 years. “ The change in this market can already be seen. The Government of India has initiated some major incentives, to drive installation of thousands of solar panels and wind turbines. This kind of government program will build enough economy of scale for small wind turbines. Photovoltaics Markets as Model for the Small Wind Market This is a model for our success as a wind company. The established photovoltaic installation companies can be our allies. We don’t need to build a distribution chain from scratch in many markets! - 38 -
    • Worldwide Photovoltaic Installed MW Installed 1977 1978 1999 2000 2001 7000 6000 5000 4000 3000 2000 1000 0 2008 2002 This chart shows the phenomenal growth of the photovoltaic market. Small Wind is where the PV market was in 1996 and possibly could grow faster than PV. Investing in small wind at this time would be getting on the ground floor, just before major growth will occur. Similarly, the photovoltaic market was non-existent four years ago in Israel. Due to feed-in tariffs by the Israeli government, the Israeli photovoltaic market grew from virtually zero in 2007 to over a billion dollars in 2013. Small Wind Turbine Competition The market is waiting for a product that can offer inexpensive electricity with low maintenance costs. The historic leaders are Southwest Windpower (SWWP), which has manufactured over 140,000 wind turbines in a 25-year period; followed by Marlec (80,000 wind turbines, 30 years); Ampair (20,000 wind turbines, 35 years); Fortis (6000, 20 years); Bornay (4000 wind turbines, 35 years); Bergey (5800 wind turbines, 30 years); Proven (2500 wind turbines, 25 years); and Eclectic (2000 wind turbines, 5 years). Most of the wind turbine manufacturers make HAT (Horizontal Axis Wind Turbines) but most of the more recent startups make VAT (Vertical Axis Wind Turbines). There is also a wave of Chinese small wind turbine manufacturer startups, which usually make very inexpensive low quality wind turbines. Here is a list of a few. Manufacturer Bergey Windpower Mariah Power Type of Wind Turbine Website Country Rated Power HAT VAT http://www.bergey.com/ http://www.mariahpower.com/ USA USA 1 KW, 10 KW 1.2 KW - 39 - Year Est. 1980 2005
    • 2005 VAT http://www.pacwind.net/ www.wepower.us USA Proven Energy, Ltd. Renewable Devices Swift Turbines Southwest Windpower Inc HAT www.provenenergy.co.uk UK HAT UK Westwind turbines HAT http://www.renewabledevices.com/ http://www.windenergy.com/index_ wind.htm http://www.westwindturbines.co.uk/i ndex.asp Wepower (PacWind) Wind Turbine Industries 0.5 KW, 2 KW, 10 KW 2.5 KW, 6 KW, 15 KW 1982 2002 HAT HAT http://www.windturbine.net/ USA UK USA 1.5 KW, 5 KW 0.9 KW, 1.KW, 3. KW 3 KW, 5 KW, 10KW, 20 KW 10 KW, 12.5 KW, 15 KW, 17.5 KW, 20 KW 1985 1984 1920 We believe that the market leader will be the company that can produce a turbine that produces sizable energy at the right price point. An important point is that we can not only compete on price, but also on price per rooftop square meter because of the cluster effect. This concept is similar to that of commercial real estate, where the cost per square foot is crucial. We believe that there are a number of flaws in the current business models used by small wind manufacturers, and that Flower Turbines can address them successfully. The key is creating true customer value, which our technology uniquely enables us to do. Others Flower Turbines Inadequate customer value: Selling single Selling groups or masses of turbines at turbines at high markup. An example is a moderate markup. The small wind farm 5-kilowatt vertical axis wind turbine sold segment can purchase 30 or more wind by another manufacturer for $32,000 but it turbines at a time in a business-to-business produces less than half the energy of our sale. As such, we can offer improved unit for each wind speed. payback scenarios for these customers. Turbines whose close placement interferes Turbines whose close placement enhances with each other each other The major market is individual ones in The major market is urban, followed by fields, so they build turbines built for high special circumstances such as village speeds. electrification. In all cases, low noise and vibration enable use close to people and buildings. We build turbines for the lower speeds found in urban and suburban settings. - 40 -
    • No attention to esthetics Moderate level production Sales wherever available Traditional marketing Distribution through individual dealers Esthetics has a monetary value, whether from pride of ownership or corporate branding or ease of zoning. The Wind Tulip is functional Eco-Art, which can be used in locations such as parks and parking lots to add beauty that people find relaxing to watch while they produce electricity. True mass production, led by partnering with an Indian company that can deliver quality mass production in India Targeting special markets initially, either those with a high tariff or those with a naturally high cost of electricity or those with a high need for electricity. Israel has one of the world’s best wind tariffs. New York offers excellent rebates through Nyserda. India offers outlets to a market of hundreds of millions of people who want reliable electricity. Numerous islands have high electric costs. Creative marketing through crowd funding and activists interested in saving the planet. Distribution in other ways, such as through established solar dealers or construction companies. Product History Leviathan Energy’s Wind Lotus Ltd. has been in operation for several years. Using computer simulations, the original patented ideas of wind amplification were verified and demonstrated in full scale working prototypes. In fact, the Wind Lotus as a first stage prototype for the Wind Tulip achieved a likely world record for the lowest cut-in speed for a wind turbine. The Israeli Ministry of the Environment also documented its extremely low noise in an evaluation. A series of prototypes were built and tested at the company’s testing ground in the Rotem Industrial Park, Dimona. After having developed different physical models based on computer simulations, Leviathan Energy research engineers built eight solid metal three-dimensional wind turbines to predict the performance of future models. - 41 -
    • Note: The prototypes were designed to test the functionality of the wind turbine. The Wind Tulip, the product to be marketed was designed to be aesthetically pleasing as well. Three prototypes were built for commercial purposes; at Sdeh Boker Educational Institute, at a private home, and at Herods Hotel in Eilat. Wind Lotus™ Rotem Industrial Park Dimona, Israel Two of the wind turbines have been hooked to the Israeli Electric grid, and have proven their efficacy in producing electricity. The two last wind turbines were the first small wind turbines hooked to the Israeli Electric Company grid and are producing electricity. Leviathan Energy used the market feedback and field experience acquired from the Wind Lotus to design a costefficient quality turbine; the result is the Wind Tulip. In August 2010, the Wind Lotus™ Wind Lotus™ Israel Electric Herods Hotel in Eilat Sdeh Boker Educational Institute Corporation announced that Leviathan Energy Wind Lotus Ltd. is the only company connected to its grid. In the photo, the Minister of Energy came to inaugurate the earlier version Wind Lotus connection to the national grid. In 2011, Leviathan unveiled its Wind Tulip prototype at the Eilat Hilton in honor of Earth Day. - 42 -
    • As the wind hits the turbine, the Wind Tulip appears in different shapes that intrigue the observer. As designed, the Wind Tulip is a beautiful, functional wind turbine. The Wind Tulip's many shapes Even with minimum marketing efforts for the Wind Tulip, Leviathan Energy has been bombarded by inquiries from potential clients and distributors. Buyers from Western countries are attracted to the Wind Tulip’s striking design, and comment that the Wind Tulip’s aesthetics will allow them to penetrate the market stringent zoning regulations. Quietness and the low vibration output are significant factors in their buying decisions. The unveiling of the first Wind Tulip was at the Hilton Hotel in Eilat in honor of Earth Day. This demonstrated the value of the turbine for corporate image and advertising as well. Both of these are highly profitable applications that can give a higher return on investment to the customer than the electricity alone. Financials The company has these immediate needs: 1. Establishing the production in India following the first prototype. Many decisions need to be made about weight, materials, etc., down to the last detail. That will require frequent trips from an engineer to India. Also possibly the use of consultants and software. 2. Paying for initial demos in as many districts or countries as possible where there is not an initial customer 3. Obtaining certifications where needed 4. Equipment for making measurements according to wind speed 5. Training installers 6. Hiring someone to supervise the initial installations and contracts (including legal expenses) 7. Putting together the correct partnership for the crucial Israeli market. (We have changed the original model of doing this internally in the company in Israel to one of closing the Israeli company and allying with a large and financially stable company or group of appropriate parties to handle the launch of the product in Israel and everything involved in it as a separate entity run by Israelis who are familiar with all the bureaucracies and how to deal with them.) 8. Setting up a team and test installation for New York and an island market This crucial period requires employee or consultant time, overhead, software, legal expenses, travel expenses, equipment expenses, etc. $1 million should be sufficient to accomplish most of - 43 -
    • the steps above and $2 million for all of them and bring to the milestone where serious sales can begin. At that point, some more money may be required to get into the market faster. At that point, we expect to produce sales that use up all available production from India as it increases and for the company to grow exponentially. The company decided to begin with production of its 3-bladed Tulip because it is easier and cheaper to manufacture and produces more power. The 2-bladed is better for advertising and narrower spaces. Spreadsheets are available to illustrate the financials. Company 4 Project Finance Company The group of companies will perform best by having a special and dedicated financial company that provides financing for projects involving the technologies here and participates in the development of those projects: 1. Separate types of investors are attracted to the technology itself and others to the relative safety of projects. 2. The equity investors will see higher returns when a related company is responsible for driving demand for the new technologies by making the projects. 3. Sales can occur faster when the customer doesn’t have to buy the product. All he has to do is rent us the space and get 10% of the production. This is particularly effective for the hydro company because municipalities often have limited and fixed budgets. 4. This gives us the liberty to develop creative financial instruments that drive growth. For example, some investors may want to obtain depreciation of assets. Another example is offering a guaranteed high income to the general partners and the limited partners profit from the remainder. 5. We can sell shares in projects through crowd funding and other platforms and profitably enhance the democratization of energy ownership. 6. We can package and sell proven projects at a high profit to insurance companies, etc. This company can make an extremely high return on capital in a safe manner. Oversimplified example: The company spends $150,000 to build a wind farm that generates 20% per year for 20 years unfinanced, 40% when financed. It sells the package with the financing for $600,000 or without financing for $300,000 after several months of operation when the profitability is verified so the customer obtains a healthy 10% per year. Spreadsheets are available to illustrate the financials. The following companies are in patent stage only. Company 5 Waves Executive Summary - 44 -
    • Leviathan Energy Waves, to be reincorporated in the US, has a unique patented technology (granted so far in US, New Zealand, and Japan) for obtaining energy from surface waves—a technology that is likely to increase the cost-effectiveness of energy from waves by a factor of four to five. Vision To become the leading wave energy company in the world Mission We need to establish the technology first in a wave pool, then live, and then begin sales of our initial units while developing the real-time wave shape manipulation part of the system. Market and Competition No wave energy technology on the market is doing well right now; all have efficiencies of at most 5% or much less and hide that fact from their websites, and require large amounts of ocean space to obtain relatively small amounts of energy. Leviathan Energy has taken a fresh look at the physics of waves and has developed a system of much greater efficiency. Some of the major points of the technology are the following:  Simultaneously obtaining energy from vertical and rotational wave motion  Use of fluid dynamic techniques to improve the flow into the blades  Controlling the shape of the waves in order to make the energy flux easier to capture  Direction of near-surface flows into the waves The major differentiating point is that most other wave solutions are based on utilizing the up and down movement of the waves, but the apparent up and down movement is really rotational, and we take advantage of both. The innovative points mentioned above should drive down the price of electricity derived from a Leviathan wave farm once in mass production to that of wind farms or better. Leviathan offers a way to turn tens of thousands of kilometers of potential wave power into reality. Investors can benefit from entering what will be a major world industry at an early stage, and should expect a slower research, development, and testing period of about one to two years for individual models followed by rapid growth rate greater than that of the wind industry. The company will experience the fastest growth by cooperating with experienced energy farm developers in order to obtain permissions quickly for as many wave farms as possible. It is anticipated that each unit will be around 7 meters in diameter and have a capacity of around 100 kilowatt hours (varying by wave characteristics in each location). They should sell for around $200,000 each at a profit of around $100,000 each, with the exact price dependent on many factors such as the distance from shore, which affects anchoring and electrical cable costs. 140 of these can fit in a line in each kilometer, for a capacity of 14,000 kilowatts (14 megawatts) per kilometer of ocean space. Putting in an additional two rows is certainly desirable, as that is part of the technology associated with the concentration of flow and alteration of wave shape; that would mean a total of 42 megawatts per kilometer. Of course, actual output will usually be below the capacity figure because waves are usually lower than maximum. It nonetheless - 45 -
    • provides a greater amount of energy than wind for the same space, and the production of electricity rather than just selling the units will also be highly profitable. Company 6 Underwater Turbines Executive Summary Leviathan Energy Underwater Turbines applies fluid dynamic technologies to underwater river and tidal turbines to NACA 4448-foil increases in the power output for each blade size. make huge 400 Total Available Power Gain (%) 350 300 250 200 150 100 50 0 -50 -0.20 -0.15 -0.10 -0.05 0.00 0.05 0.10 0.15 0.20 0.25 Axial position (m) The product is based on two patents, one already granted in the US. It is a synergy of unique fluid dynamic foil shapes with propeller blades that harvest the resulting changes in flow better after the foil directs the maximum velocity to the plane of the blades. The result, depending on the blade diameters involved, is an increase in power output by 50-250%. The geometry is very exact and the results are dependent on these relationships as the chart of power vs. position shows. The US Navy 0.30 designed the blade innovations under our direction, and they estimate a substantial theoretical increase of 50% over other turbines of 10-meter blade size. Additionally, there will be more power produced from the lower flow speeds at which it starts turning. The company also intends to produce smaller versions for canals. The economic model is not only to sell the turbines, but also to build underwater energy farms and own the stream of revenue from the electricity. Its production of energy at slower current speeds where other turbines cannot even start turning opens up many new locations for implementing tidal and run of river farms in the Nile, Danube, Mississippi, Amazon, and so on, and redraws the world map for underwater energy. This invention can also be used for micro power systems such as meters on pipes and SCADA systems. By functioning at lower speeds, it enables greater sensitivity to flows. A very important practical point is that the shroud enables a fish friendly protective netting to be in place, therby differentiating what we offer as a more ecological alternative. Company 7 Small Horizontal Axis Wind Turbines - 46 -
    • Executive Summary Leviathan Energy Wind Turbines is the producer of a new foil-enclosed intermediate-size horizontal axis wind turbine. This unique product opens up a wealth of new locations for wind power and competes favorably with current ones. Its potential to open up new markets for wind energy leads to potential sales in the billions. The technology is the equivalent for the wind of the underwater technology. The market envisioned is worldwide. Rural areas that are currently not suitable for large wind turbines abound. Reasons could be difficult access, inability to put enough large ones together in one location, or even the desire of the farmer to own his electrical production or supply his business. The current major barrier to development of this market is its cost-effectiveness. Once built and tested, we assume the following economic model: The generator will have a 50 kilowatt-hour capacity, which compares favorably with other 10-meter turbines, which have a 10-20 kilowatt hour generator and cost at least $60,000. We believe we can be much more costeffective than the competition. A marketing campaign focused on rural areas is likely to result in sales of 1,000 units the first year after the demonstration phase is completed and 10,000 the next. An additional sales model is to make intermediate size rural wind farms wherein Leviathan leases the land and sells the electricity. - 47 -