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NEPTUN Report Summary

Project ID: 728996

Periodic Reporting for period 1 - NEPTUN (Novel closed-cage system for high-value marine aquaculture)

Reporting period: 2016-07-01 to 2016-12-31

Summary of the context and overall objectives of the project

Feeding a growing population: a EU and global challenge
The worldwide demand for seafood products is in a period of exceptional growth boosted by a growing global population and dietary changes towards Omega3 rich diets. In 2014 the world per capita fish consumption reached a new record (20 kg per person), yet ocean fisheries stocks are near to or beyond their sustainable limits. With a global population projected to grow up to 8.3bn by 2030, FAO estimates that aquaculture should supply up to 93.6 million MT of seafood products by 2030 (i.e. 30% increase over 2015 production of 70.2m MT) to maintain current fish consumption worldwide.

Up to the task?
Achieving a sustainable intensification of aquaculture output requires from the development of eco-friendly and profitable production methods, as current standard solutions (mainly open-cage aquaculture systems – OAS) rise concerns about their environmental, social, and economic impacts: Conventional OAS are permeable to the surrounding sea. The high number of fish confined in them provides excellent conditions for parasite growth and transmission within the nets and towards the local environment. This requires extensive use of pharmaceutical and pesticides, which along with fish sewage contaminates the nearby sea and seabed, leading to eutrophication of the marine environment. Lastly, OAS are associated with a high level of fish escapes, causing genetic pollution and habitat modification in the local ecosystem. As a result, governments all over the world are implementing stricter licencing systems limiting the number of operational sea sites and the maximum allowable biomass per license, and thus hampering the expansion of the aquaculture industry.
More eco-friendly technologies such as land-based recirculating aquaculture systems (RAS) offer a promising solution to reduce environmental impacts while maximising production, but their widespread use is hindered by substantial barriers, particularly for grow-out systems (i.e. poor quality management, lack of production know-how, steep-learning curve, and inadequate facility design) resulting in low overall profitability, high-energy consumption, and high capital investment. Consequently, the industry is reluctant to change over.

Our solution
NEPTUN is a novel floating Closed-Cage Aquaculture System (CCAS) for wholly sustainable and cost-effective inshore aquaculture. NEPTUN combines a fully impermeable and durable fibreglass enclosure with an innovative hatch technology, patented by Aquafarm Equipment AS (AFE – Patent ref. NO332955). Our system guarantees safe sludge removal and eliminates fish escapes and the need for chemical treatment to prevent algae growth and sea lice infestation (NEPTUN incorporates sophisticated oxygenation and water treatment subsystems to regulate water intake, giving full control over operations and against pathogen growth). NEPUN’s environmental friendliness (i.e. min. waste, pharmaceutical and pesticide disposal, and no interaction with marine habitats) and biosecurity will support the sustainable intensification of aquaculture activities, unlocking the industry’s full potential for growth, without unacceptable ecological damage.

NEPTUN Phase 1 aim
The overall objective of the NEPTUN Feasibility Study is to validate the market and commercial feasibility for our disruptive technology - the only floating CCAS large and robust enough to withstand the whole grow-out cycle of fish in coastal farming, allowing the industry to use the maximum allowed biomass and larger fish densities, without any detrimental effect on fish health or the environment.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

We have carried out a full market analysis, including interviews with significant and world class industry players, economic market and competitor product assessment; revision of product development costs, price structure of the final product and anticipated revenues; development of the business plan including risk and results dissemination strategies; IP management including freedom to operate analysis and IP strategy; maturation of plans for the full pre-commercial pilot of the NEPTUN prototype via the development of the Phase 2 development plan. The main conclusion reached through the Feasibility Study is that the project to further develop NEPTUN to reach commercialisation stage should continue as there is clearly a high market demand for the product and little signs of mature market competition up to the present day. Furthermore, the strategic business plan has been reinforced through the positive response from potential clients and relevant stakeholders (e.g. policy makers) and interest to participate in the envisaged NEPTUN Phase 2 project (e.g. through participation in the project steering committee).
The decision to initially target medium to large-scale aquaculture companies farming high-value species (particularly Atlantic salmon as the main product in our NO home market) remains unchanged although we expect to focus on the Northeast Atlantic and Mediterranean countries in the first years after market launch, followed by the Americas and Asia as we build our manufacturing, logistics, and sales organisations there (year 2 and 4 post-project, respectively).
The anticipated profile of initial customers for NEPTUN also remains unchanged. However, the expected price structure and projected revenues following commercialisation have been slightly changed due to the incorporation of the multi-purpose working platform. This platform brings highly valuable added-value to our clients (confirmed through interviews with potential customers) and a reduction in the total investment needed to start an aquaculture endeavour of similar characteristics, since it incorporates elements that minimizes intervention from land (i.e. min. infrastructure needs). The Feasibility Study results support the need for very careful IPR management both during Phase 2 development and especially following initial commercialisation of NEPTUN. Special attention will be given to the possibility of applying patent protection to our new design and to careful monitoring of potential competitive suppliers that target CCAS farming systems (see competitive landscape). Consideration of the organisations identified in the report, and ongoing monitoring for similar commercial players, will be very important to not let NEPTUN become a victim of its own success following increased coverage upon commercialisation and subsequent growth.
The Phase 2 product development phase will see AFE make final adjustments to the NEPTUN prototype in response to test demonstrations under real-life conditions. During this phase of development, we will benefit from funding to support the cost of implementing the solution and involving potential clients, and then incorporating feedback into the final product. Aside from leading to a stronger product, this will allow AFE to make essential new industrial contacts through our customers and their associates, and thus effectively disseminate the benefits of using NEPTUN. We will also benefit from the ‘Business Coaching Services’ to support our expected growth, both the ‘the impending rapid organisational growth that will accompany the commercialisation of the solution.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

Our Phase I Feasibility Study revealed a need for CCAS solution for sustainable fish farming that balances cost-efficiency with superior control and management features, and supports substantial improvements in production capacity. Developing a solution that withstands the whole grow-out cycle of fish and enables higher fish densities with reduced environmental impact and no disease outbreak risk, is the key challenge that the industry is currently facing to support a sustainable intensification of aquaculture activities. In addition, new farming technologies need to enable a substantial reduction in feed costs through the optimisation of the fish feed conversion ratio (FCR) and the reduction of time to harvest, since fish feed represents as much as 40-50% of the overall production expenses.

We list the principal novelties that make NEPTUN an authentic breakthrough in the marine aquaculture system and the state of the art.

- Robust design: NEPTUN enables inshore grow-out husbandry in CCAS for the first time in the largest rearing volume in the market (21,000m3). We use highly durable glass reinforced polymer (GPR) so our innovative CCAS endures high stress levels under adverse weather conditions (currents of 0.75 m/s and winds of 30 m/s), offering our clients an extended cage lifespan of up to 30 years (average lifespan of competing solutions: 10-20 years). In addition, our solution incorporates a multi-purpose platform enabling modular/customized design, and is site-independent.
- Cost reduction: Previous results have shown that reduction in feed costs of min. 10% and optimisation of FCR to 0.87 are feasible in routine operations. Offers excellent ROI values, reaching break-even during the first 1-2 years. Besides, NEPTUN guarantees that mortality rates can be kept under 0.5% in post smolt farming (fish up to 1 kg).
- Environmental friendliness: NEPTUN significantly reduces the environmental impact of fish farming by avoiding direct contact with the surrounding marine ecosystem, and creates a bio-secure habitat for fish with minimum disease outbreaks (i.e. min. pharmaceutical use). NEPTUN incorporates a system for effective, automated collection and treatment of waste (recovery up to 90%) helping to protect the sea and seabed (min. eutrophication). Consequently, NEPTUN facilitates a sustainable expansion of current farms production capacities and access to new farming sites without impacting fish health and welfare.

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