Periodic Reporting for period 1 - PROMETHEUS-5 (Energy efficient and environmentally friendly multi-fuel power system with CHP capability, for stand-alone applications.)
Reporting period: 2015-02-01 to 2015-07-31
site, via the reformation of the fuel, and feeds the PEM fuel cell, resulting in the production of electrical power. The nominal capacity of the power system is 5 kWe, while, in the case of CHP, an additional 7kW of thermal energy is produced. Regarding its electrical efficiency, it is greater than 35%, while the total efficiency, when thermal power is included, exceeds 85%. The proposed innovative and efficient technologies address major EU and global challenges, dealing with both environmental and efficiency issues and they are in accordance with the Roadmap for moving toward a low-carbon economy in 2050. The product targets decentralized power production, where numerous applications have been identified. The sectors that will mainly be focused on are the followings: telecommunications, biogas production plants, transportation, marine, households, hospitals, etc. Currently, this market segment is served by diesel or gasoline generators which rely on mature and relatively low cost technology. However, the proposed system has electrical efficiency twice that of the conventional technology and less than half of its emissions. Also, it presents lower operational and maintenance costs and noise-free and reliable operation. The main objective of phase 1 of the project is to conduct a feasibility study evaluating all aspects of the commercial application of the developed product. This includes the following:
- Description of current technology/solutions.
- Description of proposed technology – Specifications.
- Comparison between the proposed and the existing solutions.
- Comparison with competitors and their position in the market.
- Market identification: market description, market trends, potential applications, potential market share.
- Time plan elaboration and cost estimation for standardization of manufacturing techniques and construction of complete production line.
- Techno-economic study: Calculation of various investment ratios, such as return on investment period (ROI), internal rate of return (IRR), net present value of the investment (NPV), taking into account several economic parameters like initial capital cost, depreciation rate and various operational parameters.
- Environmental impact.
In the first section, the company and the team which will implement the project are briefly described. In the same section, the product (Prometheus-5) and the proposed technology are analyzed, while the characteristics and the advantages of the specific technology over other technologies, used in micro combined heat and power systems, are thoroughly described.
The second section incorporates market analysis of Prometheus-5 and description of the competition. More specifically, the market`s main characteristics are recorded, including supply and demand as well as qualitative and quantitative analysis by market sector and by geographical area. In a further step, both commercially available and under development competitive products are identified, and the advantages of Promeheus-5 are revealed. The section is completed with a SWOT analysis, following the analysis of market leaders and major players.
In the third section the five year financial plan of the investment is deployed. In a first step, sales forecast over a five year period is presented, taking into account detailed sales assumptions for each market sector. Subsequently, all financial cost drivers are defined and forecasted in a five year period, including cost of goods, administrative and operating expenses, depreciations and financial expenses. In addition, the financial model of the investment is analyzed, resulting in a five year forecast of income statement, balance sheet key figures, working capital and cash flow statements. The financial analysis was conducted after the extensive analysis of available data and trends in the targeted markets. The evaluation methods used are Internal Rate of Return (IRR) and Net Present Value (NPV).
For the market analysis, secondary data from market studies, international institutional studies and information from unofficial resources of the targeted market segments have been incorporated.
Currently, the market of remote or back-up power generation is served by diesel or gasoline generators which rely on mature and relatively low cost technology. These are the main competitors of Prometheus-5. However, they offer about half of the electrical efficiency and present other drawbacks such as high operational and maintenance costs, large amounts of pollutant emissions, vibration and noise. Operational cost of the proposed system (with LPG as feeding fuel) is more than 2 times lower than that of a conventional ICE generator, while the latter emits three times more CO2 as compared to the proposed fuel cell system. When biogas is used as feeding fuel, the surcharge in carbon footprint is zero.
The business case for the production and distribution of Prometheus-5, includes an approximately €5 million investment, in order to create a modern building and an innovative production line. A total of 1750 m2 building area is needed and 46 job positions will be created. The above budget will be covered by a minimum participation of own capital (founders or investors) and a long-term loan. The investment scenario includes production capability of 5.000 systems per year, assuming 312 days per year operation, 1 shift.
Development strategy scenario assumes niche markets penetration primarily, like telecommunication stations, trucks and boats, and penetration in high volume markets, such as micro-CHP, in a second step. Sales assumption for market penetration in each market segment are presented in details in the feasibility study. Incorporating all above mentioned sales assumptions, the investment creates 1.8m€ revenues the first year and targets more than 57m€ for the fifth year. The investment presents a ten year net present value of 49m€ and an impressing 44% internal rate of return for the same period while the return on investment period is less than 4 years. The analysis concludes that the investment is able to return significant profits and the product has a wide sales portfolio. However, there are difficulties that have to be overtaken and milestones to be succeeded. Strategic and effective actions of marketing and selling tactics have to be undertaken, in order to secure the assumed sales. Time is an enemy of the plan in terms of competition, thus Helbio should start the investment quickly, before large-scale competitors enter the specific market.