Periodic Reporting for period 1 - C-Heat (Condensed Heat - Optimization and scaling up of an energy efficient, long-during biomass condensation boiler with curved heat exchanger)
Reporting period: 2015-12-01 to 2016-03-31
BioCurve and Quintín have developed a biomass condensing boiler with a patented spiral heat exchanger and patented self-cleaning rotating burner that has been internationally awarded (i.e. Expobiomasa, Spain; BoisEnergie d'Argent, France), which led C-Heat to surpass from far the current state of art, in terms of performance (10% higher than high-end average boilers), ripping design (extremely compact with the best materials) and price (at least 20% less than comparable solutions). BioCurve is an engineering company founded in 2013 by a 20-years-experienced team, committed with the development of high quality products capable to respond to the increasing challenges of our society. Together with Quintín, a company established in 1973 oriented to the manufacturing of curved metallic elements, we have a team of excellence with backgrounds in diverse engineering specialties and broad experience in the boiling industry. We laid the groundwork for a new generation of condensing boilers, based on biomass as feedstock, suitable for domestic and small scale industrial heating. Former technologies for domestic heating are either unsuitable for moving forward towards a sustainable energy model across EU, or insufficient in terms of energy efficiency. In order to overcome these issues, BioCurve and Quintin have developed a cutting edge biomass boiler capable of working under condensing conditions. Thanks to a novel spiral heat exchanger that enhances 50% the exchange surface, C-Heat compact solution shows > 100% energy efficiency by capturing almost all latent heat of condensation of water vapor in the exhaust stream. In addition, an accurate control of the system enables low temperature applications (i.e. radiant floors). Until now, C-Heat has passed rigorous technical assessments, procuring international quality certifications (EN14785 and EN303-5 class 5 standards). Also, several units are well operating in real condition since 2013. Therefore, an appropriate technology readiness level together with the unmet needs invite us to establish an ambitious but achievable aim for the next years: To become an international reference in the bio heating domestic and tertiary segments (i.e. detached houses, neighbor communities) as well as the small scale industry (i.e. farms or small food producers). In fact, it does lead us to believe that C-Heat is potentially the best solution for the appointed market niches, if we notice its competitive price and its unique features.
Along phase 1, a comprehenisive Feasibility Study was prepared in order to gain further insight into commercial, technical and financial issues of the C-Heat solution. Several conclusions can be extracted. Regarding the technical aspects, its feasibility can be confirmed. Several risks have been identified and evaluated bringing back the conclusion that the development of C-Heat 200 kW and a 1MW encapsulated energy station is highly desirable, as it will enlarge our product portfolio in the large power output segment (>50kW), where we are already highly competitive. For low power units, (< 50kW) further technical improvement (i.e. component resize and optimization) is required together with the manufacturing capabilities. Meanwhile, the commercial assessment gives us the confidence that the market opportunity is large and C-Heat is a highly attractive and competitive solution. The consortium that we have formed, Biocurve and Quintin, has large commercial expertise which makes easier to attach C-Heat to the already established commercialization channels. We already have an incipient network (France, Spain, Ireland and UK partners) which is growing everyday (i.e. relevant contacts in Denmark, Chile and Belgium). At first, we will get focused on the building sector –new and retrofitted- and the organic farm sector (i.e. poultry, farms, horticulture, etc.) for introducing C-Heat. However, there are many evidences of other feasible niches, especially for our large power units (1MW energy station) to be explored in the future. In terms of the financial evaluation we claim a highly profitable project (TIR ~17%). It must be pointed out that, in order to attract the interest of distributors and installers, estimations are made considering attractive margins along the distribution chain. Other topic approached was the possibility of financial constraints. In this sense, we found out that it is unlikely that C-Heat will get into a lack of funds scenario. However, if so, the proposed strategy, based on a conservative growth and the entrance of new shareholders would overcome the issue. Therefore, the conclusion is that we must go ahead with C-Heat project. Firstly we will apply to SME Instrument to get a phase 2 funding. For that, and in order to address the project in a coherent way, we have prepared a detailed action plan, including the main tasks to be developed, schedules, budgets, work force requirements.
The 2013 EU directive for energy efficiency reset the goals for 2030, compared to 1990 levels: decrease of 40% in greenhouse gas emission and a 27% increase of renewable energy supply. The use of a cutting edge biomass condensing boiler, based on a novel heat exchanger and a self-cleaning rotating burner plate, together with a renewable source of energy (biomass), not only is well aligned to the EU goals on energy matter, but also it contributes to the growth of a “smart Europe”. Our concern about the environmental sustainability comes together with a value proposition capable to produce a significant socio-economic impact. In terms of economic value, the business will be ready for launch in 4Q 2018. Next year, in 2019, we expect to sell at least 200 units between Spain, France, Belgium and the UK. In 2020-2021 the business should take off and the units sold will reach over 580 units, with a turnover of 5,766,000 € and a net profit above 1Mio. € by 2021. By the end 2023 we envisage a consolidate business, with a turnover of 11,400,000€ and net profit of 2, 4Mio. €. To comply with business projections we foresee 37 direct new jobs from 2019 to 2023 (20 employees in Quintín and 17 in BioCurve. An estimated TIR= 17% and the VNA= 853,484 € for a five year projection (2019-2023) can be calculated. Under our reference scenario, the payback period would be 3 years and the ROA will vary from 10% the first year (2019) to 23% for the fifth year (2023), while keeping a low financial leverage, below 16% for the period. Furthermore, corresponding with BioCurve and Quintin compromise with the need to transit towards a green economy, we wish to take C-Heat opportunity to also perform social activities with awareness purposes. In this sense, within our communication strategy, among others, we plan to participate in relevant communication channels (newspapers, magazines) where C-Heat project will be presented linked to the need for transiting towards a sustainable energy model. For us, C-Heat project is not just about profitability, but also about innovation and social development. For this reason, we plan to keep on working on the R&D side, seeking for better solutions. We believe in the continuous improvement, therefore, in order to take full advantage of C-Heat project, we understand that part of the benefits must be addressed to promote and contribute to build a “smart, sustainable and inclusive” EU for the 21st century.