2. Charles Collins
IESE MBA
The Opportunity
Commercialize Building Integrated Wind Turbines (BUWT) on “The Island”
Island Fact Sheet:
What is the Product? How to monetize? Why Now?
•Self-contained 8,872
Self contained
km2 island of 3.9mn
people
• Strong Public support on
• A Building Integrated • Building Owners allow us
•Strong Winds during 4
the island for using
Wind Turbine which can to install the turbines and
months of the year
renewables for achieving
coincide with peak be retrofit to fit on connect to grid in
g
energy demand due to greater autonomy
existing buildings or be exchange for 18% profit
tourist season
incorporated into new share • Innovative new technology
•Traditional Wind
building developments will create new market
• We generate revenues
Turbines not suitable for
and draw funding from
• Takes advantage of the through power
strong winds
•There are ~63k Venture Funds Private
Funds,
amplification of wind
lifi ti f id generation and th sale
ti d the l
Commercial Buildings Equity, and Government
speeds by built forms of CERs (Carbon Credit)
on the Island grants
• Marries the sources and • The installations will
•Most Costal Areas are
• Innovative Business Plan
uses of power on the generate utility quality
densely populated (441
does not require tax
people/ m2) leaving little
peop e/ ea g tt e island for maximum cash flows through the
room for traditional breaks for profitability
efficiency use of long term
wind farms
contracts
PRODUCT SPECIFICATIONS:
SPECIFICATIONS
Rated Power per BUWT: 500 kWH
~Annual Energy Production: 1,274,580 kWH
Carbon Credits (BUWT/yr):
( y) 680 metric tons
Installed Cost / kWH: $1,100.00
1
3. Charles Collins
IESE MBA
A New Business Model for the Wind Industry
Profits do not depend on government subsidies or tax breaks
Source of Revenues
Uses of Capital
•BUWT siting &
sources
•Internal R&D •Project
implementation Department and Management and
planning Prototyping Quality Control
•Contract •Patent Owner
Patent •In house
In
Internal Res
Counterparty •Manufacturing engineers for
•Presentation & Sell Electricity
Oversight and ongoing
demonstration of logistics maintenance and
technology management operations
Gross Revenue
$191,187
Contract
Manufacture Install Operate
per yr per BUWT
Host
BUWTs BUWTs BUWTs
Buildings
@ .15 $/kWH Gross
External Partners
•Commercial •Established •Contract
Sell Carbon
Real Estate production partner Installation from
Consultants w/ Credits
to manufacture experienced turbine
local networks: using existing lines crews and building
where possible: structure erectors:
t t t Gross Revenue
G R
$16,983
per yr per BUWT
@ $25.00/ton CO2
2
4. Charles Collins
IESE MBA
Detailed Revenue and Cost Calculations
The projected revenues are based on market price and BUWT efficiency assumptions
•Production per Turbine •Carbon Credit Revenue per •Costs per Turbine
How does this Turbine
•Capacity Factor: 30%
Capacity •Maintenance and Insurance
Maintenance
differ f
diff from a •Emission Factor (kg CO2 ($/kWH): 0.014
•Rated Power per Turbine
Offset/kWH):
traditional wind (kWH): 500.0 •Annual M&I Costs:
0.53 17,844
•Availability: 97%
Turbine? •CO2 Offset (kg Per year Per •Annual Payments to
•Hours Per Year: 8,760
Turbine): Building Owner (18% profit
•Annual Energy Production
679,351.14
679 351 14 share): 37,471
share) 37 471
•Lower C
L Capacity
it Per Turbine (kWH):
•Sales Price ($/Ton Offset •Total Annual Costs:
1,274,580
due to compact Carbon): 55,315
•Generation Revenue per
25.00
size and building •Estimated Annual Net
Turbine
•Total Carbon Revenue Per Income ($):
integration •Energy Price to Consumer
Year ($): 152,856
,
($/kWH): 0 2
0.2
16,983.78
16 983 78 •Estimated Installed Cost
•Energy Value when sold
•Estimated Total Gross
•Higher Generation ($/kW): 1,100 (Includes
wholesale ($/kWH): 0.1
Annual Revenue ($): estimated cost of Carbon
Revenues due to •Energy Sold Onsite: 50% 208,171 Credit Filing)
•Gross Revenue Rate
onsite sales at •Estimated Installed Cost ($)
($/kWH): 0.15
550,000
550 000
market rate
kt t •Estimated Annual Revenue
•Payback Period Per Turbine
191,187
(yrs) 3.60
•Lower Installed
Cost as building
structure
str ct re replaces
Power Carbon
tower
Cost Structure
Revenues Revenues
3
5. Charles Collins
IESE MBA
Market Penetration Targets and Timeline
2642 Turbines producing 15% of Island Power will be implemented by Year 19
Island Electricity Consumption (kWH/year) 22,450,000,000
Target % of Power to be Provided
Target % of Power to be Provided 15%
2642
Required Number of Turbines 2,642
2518
Est # Commercial Buildings on Island 63,661
# of turbines/ Building 2 2347
Target # Buildings 1,321 2176
% of All Commercial Buildings on Island
% f All C i l B ildi Il d 2%
2005
1834
1663
1492
Positive Cash Flow At 750 BUWTs
1321
1150
Prototype Only
950
Functioning BUWT in
g
Year 1: Will be critical in 750
fund raising and contract
550
acquisition effort
350
200
85
30
10
1
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Targeted Number of Installed BUWT by Year (Cumulative)
T t dN b f I t ll d bY (C l ti )
4
6. Charles Collins
IESE MBA
Cash Flow and Funding Needs
Cash Flow Positive Starting Year 7, CAPEX Self Financed Starting Year 10
$450
Phase 1: Venture Finance of 3.8mn over 2 yrs
Cash Flow Highlights: $400
Phase 2: Private Equity Finance of 6 4mn over 1 yr
6.4mn
•Initial Valuation of
Initial
$350
3.8mn with Discount
Phase 3: Debt Financing of 105mn over 4 yrs
Rate of 35% $300
•Positive Cash Flow
$250
achieved during year 8
ons
•Initial Debt Principal
$200
Millio
Paid by Year 10
•Possibility of Self $150
Financing after Year 10
$100
•Leverage Never
Exceeds 81% of Firm $50
Value
$0
•Conservative Valuation
does not include Market
-$50
Price increases for 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Electricity or Carbon
C ed ts
Credits
20yr Cash Flow P j ti
20 C h Fl Projection Cumulative C h N d
C l ti Cash Needs
Year 1 2 3 4 5 6 7 8 9 10
Number of Installed Turbines 1 10 30 85 200 350 550 750 950 1150
New Turbines Per Year 1 9 20 55 115 150 200 200 200 200
Annual Income
A lI 152 856
152,856 1 528 559
1,528,559 4 585 678
4,585,678 12 992 753
12,992,753 30 571 184
30,571,184 53 499 571
53,499,571 84 070 755
84,070,755 114,641,939
114 641 939 145,213,122
145 213 122 175 784 306
175,784,306
CapEx 550,000 4,950,000 11,000,000 30,250,000 63,250,000 82,500,000 110,000,000 110,000,000 110,000,000 110,000,000
Simple Free Cash Flow (397,144) (3,421,441) (6,414,322) (17,257,247) (32,678,816) (29,000,429) (25,929,245) 4,641,939 35,213,122 65,784,306
Cumulative Cash Needs 397,144 3,818,585 10,232,907 27,490,154 60,168,971 89,169,399 115,098,644 110,456,705 75,243,583 9,459,277
NPV 3,847,204 5,590,869 10,969,114 21,222,627 45,907,793 94,654,337 156,783,783 237,587,352 316,100,987 391,523,210
Implied Leverage 10% 61% 58% 81% 71% 31% 17% 0% 0% 0
5
7. Charles Collins
IESE MBA
Marketing Strategy
BUWTs will be marketed through a consultative selling process
Key Marketing Question Answer based on Firm Marketing Action Plan
Strategy
What is the desired outcome of Building Owner Signs long term Focus on Commercial Building
the sales process? contract (20yrs+) for BUWT Segment and with emphasis on
Segmentation
installation portfolio owners
What do we offer these Reliable,
Reliable Localized Power supply Use Consultative Selling Process
Building Owners and and 18% Profit Sharing. to demonstrate the contract
Customer Needs
Operators? Enhanced Building Value benefits in one to one meetings
and presentations
How do we get access to the At first we need the help of Partner with the top Commercial
Executive Level Decision people in the professional Real Estate Brokers to get us in
Decision Process
Makers? network of targeted owners the door to their clients. Offer
finders fee for consummated
deals
How do we build credibility We need to have demonstrated First, successfully launch a
Branding
with potential contract proof that our product works and working prototype of the BUWT.
holders? the we can seamlessly Salesmen will take potential
incorporate out product in their clients for site visits and
buildings demonstrations
Context Does the context (business Yes. The island’s residents have Develop marketing materials
environment) provide us with demonstrated their desire for focused on the alignment of our
any advantages? greater energy independence. product with the goals of the
Islanders.
Islanders Seek out political allies
for our projects
6
8. Charles Collins
IESE MBA
Operations: Detailed Implementation Strategy
Deployment involves a 2 pronged approach: BUWT installation and Carbon Filing
ID Task Name Duration Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11
1 BUWT Implementation Schedule 76 days
2 Building/Wind Assesment 1 wk
3 BUWT Integration Design 2 wks
4 Environmental Study 3 wks
5 Contract Consumation 1 wk
6 Permitting and P ublic Consultation 6 wks
7 Economic and Fiancia l Analysis 2 wks
8 Manufacturing 1 wk
9 Site/B uilding Preparation 1 wk
10 Construction/Installation 1 wk
11 Commissioning 1 wk
12 Operation and Maintenance 1 day
13 CDM Proj ect Cycle 201 days
14 Project Proposal (PIN Submission) 3 mons
15 Carbon Asset Due Diligence
g 2 mons
16 Validation P rocess 2 mons
17 Negotiation of Project Agreements 3 mons
18 Periodic Verification 1 day
Key Risks: BUWT Process Key Risks: CDM Process
• Adverse Environmental • Failure to achieve Regulator
Impact Found Approval
• Contract Negotiations • Failure to find Buyer
Collapse • Fewer credits awarded than
• Permit Not Granted projected in CF Analysis
pj y
• Damage to Existing Building
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