Start up of Manufacturing of Pico- and Micro Hydro Generators and Small
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Project Name: Start up of Manufacturing of Pico- and Micro Hydro Generators and Small Wind Turbines Using a Patented Direct Driven Radial Flux, Permanent Magnet Generator, Republic of Panama. a) Organization leader data: Organization: Autoridad Nacional Address: Albrook, Edificio 804, del Ambiente (ANAM) Panama City, Republic of Panama Contact Person: Ing. Eduardo Reyes position: Sub-Administrador General de la Anam Phone 500-0800 E-mail: [email protected] Fax 500-0820 [email protected] b) Others Group member data: Organization: Luz Buena, SA Address: Antigua Estación del Contact Person: Ing. Heine Aven Ferrocarril, local no. 3 position: Gerente General Ancon, Panama City Phone: 232-7690 E-mail: [email protected] Fax: 232-7437 Organization: Phaesun, SA Address: Antigua Estación del Contact Person: Ing. Heine Aven Ferrocarril, local no. 2 position: Gerente General Ancon, Panama City Phone: 232-7927 E-mail: [email protected] Fax: 232-7437 Organization: Ing. Antonio Clement Address: Villa Las Cumbres, A-4 Alcalde Díaz, Ciudad Bolívar Contact Person: Ing. Antonio Clement position: Gerente General Telefax: 268-4819 E-mail: [email protected] Page 1 of 24 Table Of Contents 1.0 Executive Summary 3 1.1 Objectives 3 1.2 Activities 3 1.3 Results 4 2.0 Company Summary 5 2.2 Start-up Summary 6 3.0 Products 7 4.0 Market Analysis Summary 9 4.1 Market Segmentation 12 4.2 Target Market Segment Strategy 13 4.3 Industry Analysis 14 4.3.1 Competition and Buying Patterns 14 5.0 Strategy and Implementation Summary 15 5.1 Competitive Edge 15 5.2 Sales Strategy 16 5.2.1 Sales Forecast 16 5.3 Milestones 18 6.0 Management Summary 19 6.1 Personnel Plan 20 7.0 Financial Plan 20 7.1 Important Assumptions 21 7.2 Break-even Analysis 22 7.3 Projected Profit and Loss 22 7.4 Projected Cash Flow 23 7.5 Projected Balance Sheet 24 Page 2 of 24 1.0 Executive Summary This project document describes a new start up based on a patented (pending) manufacturing process for direct driven, radial flux, permanent magnet generators that can be used to generate electricity from rivers with low hydraulic heads, wind, sea waves, river currents, and human or animal motions. The generators are especially suitable for rural electrification. The manufacturing process is developed by Mr. Antonio Clement who has received several distinguished awards for his inventions. Mr. Clement was the first Panamanian to receive the gold medal from the World Intellectual Properties Organization in Geneva, Switzerland. In 2006, Mr. Clement received the third prize in the category FIRE in the prestigious Energy Globe contest. The new start up will be organized as a separate department in Luz Buena, SA, a photovoltaic retail and installation company serving the Panamanian market where the existing administration and technical staff will be involved. Additionally, the proposed products will be marketed internationally through Phaesun, SA, a Panamanian wholesale company that serves the Latin American photovoltaic market. The new venture will complement the company mission of Luz Buena and product specter of Phaesun. 1.1 Objectives The specific objective is to ensure the start up of a manufacturing company in Panama dedicated to the industrialization of a unique product based on patented production process of low RPM radial flux permanent magnet generators (patent no. US60/711,944) where the Alianza contributes with “seed money” to initiate operations. The company will serve the Latin American markets. Our primarily objectives are: 1. Sales of $500,000.- by 2010. 2. Gross Margin above 30% during the first three years of operation. 3. Establish presence with renewable energy generation systems based on the patented production process operating in 50% or more of the countries in the regions served (south of the United States boarder) during the first three years in. More specifically, the seed money will be used to fine tune prototypes in operations or in production. Furthermore, the seed money will be used to buy the initial inventory of raw material and tools required for manufacturing, and hire initial staff. 1.2 Activities The activities as described in “5.3 Milestones” are divided into a preparation phase and a scale up phase which are dependent ona signed contract with the Alianza and the reception of the payment as given in the preliminary approval of the Alianza based on the project line out. Preparation Phase: The preparation phase consists of activities that will be started upon signing of the contract with the Alianza: During February, some pico hydropower plants available in the market will be purchased and subsequently tested and compared to existing prototypes in operation. Based on results Page 3 of 24 that compare prototypes with existing products available in the market, an evaluation will be made on technical characteristics and a cost-benefit analysis to better position the product in the market place. In the same time period, the standard size (0.5kW, 1kW, and 3kW) portable hydropower plants will be measured to get the curve of Watt vs. hydraulic head. Mr. Clement will fine tune prototypes and production using existing inventory from Clement Energy. Technical staff from Luz Buena will receive training in production and participate in the production during the start-up phase. External workshops will be used to do the metal work required to produce the turbines and structure. For the local market, Luz Buena will advertise in a magazine directed to the agricultural industry. Some of the initial production will be based on non-standard models using existing inventory from Clement Energy. Scale-Up Phase: When the funding is approved and received in the Luz Buena account, the purchase of initial inventory and tools required for the manufacturing will be started. The hiring of production workers and rent of manufacturing space will start early in the second half of 2008. When the technical data of the standard products are well established at the end of the first half of 2008, Phaesun will e-mail existing and potential clients with information. Already, Phaesun has promoted the Clement Energy concept in ExpoEnergia 2007 where it received contact information from several companies and institutions interested in the product. 1.3 Results Based on the attached business plan, Luz Buena will produce approximately 500-1000 units (depending on product mix) of power generating units in a 3 year period benefitting approximately 2500 – 5000 people with basic electricity needs. A pico hydropower plant will reduce the cost of energy by approximately 20 times (4 times more cost effective per kW installed x 5 times more daily operating time) compared to that of a PV system based on the following assumptions: The cost per installed kW is approximately $3,000,- for a pico hydropower plant and $12,000.00 for a PV system which reduces the cost of installed power by 4. The daily operating time for a pico hydro electric plant is 24 hours while a PV system operates on an average between 3 and 6 hours depending on the region and time of year. For simplicity, the estimate is based on a 5 time longer daily operation time using pico hydropower plants compared to the daily operation time of a PV system. The new department will additionally generate 15-20 new employments in Panama during the same time period. Please refer to the attached business plan for a more detailed explanation how the results are expected to be achieved. Page 4 of 24 2.0 Company Summary Luz Buena, founded in 2002, distributes and installs affordable, easy to use, high tech, quality products to improve comfort and living conditions in rural areas. The range of products covers components and systems related to solar energy and water production. Luz Buena is based in Panama and serves the local market. Through its sister company Phaesun, SA which was founded in 2001, Luz Buena can offer a marketing channel for markets covering Latin America. Phaesun, SA is part of the Phaesun Group www.phaesun.com with headquarters in Memmingen, Germany, a wholesale group specializing in stand-alone renewable energy systems covering markets in Africa, Asia, Europe, and Latin America. Both Luz Buena, SA and Phaesun, SA are 100% owned by Heine Aven but management in Phaesun GmbH are expected to invest in Phaesun, SA during 2008. Luz Buena’s missions are: 1. To improve living conditions and comfort to people living or traveling in areas without access to the electric grid or safe utility water. 2. To obtain healthy profits to its partners and owners in order to secure the solidity and expansion of Luz Buena so that more people will be able to improve their lives through its products and services. 3. To motivate its employees, partners, suppliers, and clients in a manner that raises the fulfillment of this mission statement. By extending into manufacturing and marketing of pico and micro hydro generators using the patented manufacturing process for direct driven radial flux, permanent magnet generator , Luz Buena aims at further contribute to better quality of life for people living off grid along riversides with low hydraulic heads not currently being explored due to lack of cost efficient technologies. The direct driven radial flux, permanent magnet generators need hydraulic head of only 1 meter to generate energy for lightning, infotainment, telecommunication, refrigeration, or small industries and hence will upon up a large number of new potential sites for electricity generation. Page 5 of 24 2.2 Start-up Summary Appendix B: Initial cash outlays The initial outlays are primarily to fine tune and test prototypes, and purchase tools and initial inventory. The seed money from Alianze will enter the company as initial working capital and used togehter with other capital from other sources.