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Energy+ Kazakhstan Our sponsors:. 2 Kazakhstan Population: 15 million Remote settlements: 1 million.

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Presentation on theme: "Energy+ Kazakhstan Our sponsors:. 2 Kazakhstan Population: 15 million Remote settlements: 1 million."— Presentation transcript:

1 Energy+ Kazakhstan Our sponsors:

2 2 Kazakhstan Population: 15 million Remote settlements: 1 million

3 3 Problem

4 4 Solution Portable Affordable Sustainable * * Image is taken from

5 5 Target Market 7,500 families of sheepherders in Karaganda region live in remote areas without access to electricity use generators powered by gasoline that predominantly used for heating Summer pasture

6 6 Needs, Applications, Benefits 2.5 kWh a day covers everyday needs in electricity (heating, refrigerator, lightning, TV) Serve in emergency situations Quality of life Communication Wooden top of the yurt

7 7 Needs, Applications, Benefits Fresh water Technical support Electric water pumping Free technical service for a period of two years: Installation Maintenance Warranty Instruction manual Flock in the steppes

8 8 Needs, Applications, Benefits Through: Selling dairy products (access to refrigeration) Acting as shearing station for neighboring farms Fuel ($15,894 over 5 yr) Transportation of sheep to shearing station and to local market Time Savings Additional Income Sheep shearing

9 9 Total Social Benefit Additional Income Savings Dairy products sale $4,134 Shearing $19,685 Savings on fuel over 5 years $15,894 Avoided cost of transportation/shearing $ 3,544 TOTAL SOCIAL BENEFITS $43,256 SROI = 30.08

10 10 Cost Over Useful Life Price of Unit ($) Total Cost Over Useful Life ($) E+ Wind Turbine (2.5kWh) China Generator (3kWh) Yamaha Generator (2.3kWh) Yamaha Generator (3kWh) Cost of Fuel Over Life ($)

11 11 Open source technology Designed by Scottish engineer Hugh Piggott Successfully implemented in Nicaragua, South America and Scotland Product Proven Technology

12 12 Product Cont… Portable Light weight Communication tower Modifications

13 13 Product Cont… Local materials ($826 per unit) Local labor ($200 per unit) Price ($2,500 per unit) Non-cash payment (barter) Affordability

14 14 Product Cont… B attery back-up Simple design Free service Rated wind speed (5 meters/second) Reliability

15 15 Rated Wind Speed Comparison Energy+ Wind Energy (2.5kWh) Beijing Bergey Windpower (1.5kWh) BRIZ Windpower Russia (2.0kWh) Karaganda Windpower (4.0kWh) 5 m/s 11 m/s 10 m/s Average wind speed in Karaganda (over 6 m/s)

16 16 Needs, Applications, Benefits Exchange one wind turbine for approximately 26 sheep Reduction of CO 2 by 3.6 tons annually Environment Non-cash payment

17 17 Non-Cash Payment Karaganda plant Energy+ $1,75126 sheep @ 30 kg $2,500 Energy+ CostPriceEquivalent to 26 sheep @ 30 kg Wholesale price

18 18 Sheep sales G&A expense Transportation expense SubsidiesTurbine expense Selling expense Business Model Turbine sales Capital Needs $119,473 Revenues:Expenses:

19 19 Sales Year 1Year 5 Sales Net Income Year 3

20 20 Awareness about benefits of wind power among end-users is low There is also a risk of negligence and misuse of equipment Potential Pitfalls

21 21 Marketing Strategy Objective Build Trust

22 22 Promotional Campaign Demos Cafés Petrol stations Water-pumping stations Shearing stations Local markets

23 23 Promotional Campaign Trials 1month 2 months 3 months

24 24 Promotional Campaign Education Local authorities Farmer associations International organizations NGOs

25 25 Current Status Preliminary survey conducted; Registered non-profit company; Pilot project to start end of March 2007: Translated manual into Russian; Found a machine shop; Priced materials, tools and equipment; UNDP proposal pre-approved; Started working with local administration and our manufacturing partner.

26 26 Expansion Plan Geographic expansion; Product modification; New segments; Rest of the world.

27 27 Thank You

28 28 Two Businesses in One Market is not developed No notion of personal selling, marketing, delivery and customer service as we know it Business is based on relationship and contacts It adds credibility to sales people when they know all facets of sheep herding Living and working conditions Needs in electricity Slaughtering seasons Sheep sale to markets Sales people only deliver sheep to wholesalers For installation, there are two sales people traveling to settlements

29 29 Open Source Technology Can be easily implemented by competitors Negative Positive Modifications to fit local environment (portable, etc.) We offer a package not just hardware (non-cash transaction, free technical support, transportation, vaccination, etc.)

30 30 Why Not Financing Option We want to have a clean transaction to avoid the risk of uncollectible accounts Financing option would increase transportation cost for Energy+ and sheepherders themselves Sheepherders do not have alternative investment opportunities Sheepherders can afford to sell up to 50 sheep in a single transaction

31 31 E+ 2.5kWh wind turbine China 3kWh generator Yamaha 2.3kWh generator Yamaha 3kWh generator useful life, yr 12 5 10 price of unit, $ 2,500 669 1,362 1,496 cost of fuel, $/life - 17,244 13,795 20,693 maintenance, $/life 600 250 500 battery, $ 1,000 - - - cost over life, $ 1,650 17,544 14,345 21,243 saving, $ - 15,894 12,695 19,593 Cost Over Useful Life

32 32 Risks Action plan Alternative solutions in the market Market potential (low demand) Dependence on suppliers Negligence Financial ProjectionsMarket study Technical service, simple design Low capital needed for start up with additional suppliers Market expansion, convert non- users Increase switching costs for end-users in form of additional value, e.g. vaccination Risks and Action Plan

33 33 Sensitivity Scenario 3 - Changes in the selling price of livestock by 20% per annum Scenario 2 - Changes in the wind turbine cost by 20% per annum Scenario 1 - Changes in the number of sold wind turbines by 10% per annum

34 34 Absence of proven technologies in the market with attractive economies Low awareness about benefits of wind power generation among end-users Negligence and misuse of equipment due to poor product awareness Key Market Restraints

35 35 The development of alternative sources of energy is one of the primary goals of the Government Support of the agricultural sector of economy by the Government Willingness of akimats (local authorities) to develop the wind power generation capacity Key Market Drivers

36 36 Lamb Meat Market Trends Most meat exported Deficit of meat supply locally Growing demand due to return of national traditions to slaughter a sheep for family and religious holidays Growing prices for lamb meat due to increasing prices for feed and inflation rate of 10%

37 37 People Behind the Project

38 38 Manufacturing Partner Selection criteria Reliability Commitment to wind technology History of joint projects with founders of Energy+ Technical skills One of the oldest electro-mechanical plants in the region Experience in producing wind technology Current installations Management skills Ability to work in teams on small and medium size projects Organization of production and scheduling skills Flexibility Capacity can be added modularly Contract Anti-damping law Cost of marketing Manufacturing Marketing Production Assembly Warehousing Marketing Transportation Installation Technical support Karaganda plantEnergy+

39 39 Technical Sales Personnel Hired locally Sales person, technician and installer in one Requirements include: Own vehicle (a light truck or a pickup) Basic knowledge of electro-mechanics Knowledge of sheep-growing sector Familiar with lamb meet distribution network Experience of working with local authorities Willingness to travel Good peoples skills Training provided: Knowledge of E+ technology and its advantages over competing technologies Installation skills Troubleshooting and ongoing maintenance Customer care

40 40 Generation of great volumes of electric power from wind – 100 times higher than modern electricity consumption; At the height of 10 meters wind power is 4,000kWh/m 2 ; More than 10 regions with average wind speed 8- 10m/s; Chilikski Corridor and Dzungarian Gates – wind power capacity 17,000kWh/m 2 Wind Potential

41 41 Wind Map of Kazakhstan Karaganda 5-6 m/sec Karaganda 5-6 m/sec

42 42 Target Market Sheepherders Live in remote areas No access to electricity Average number of sheep: 1000 per flock Typical family size: 5 people 10 including seasonal workers Travel with their livestock

43 43 Through wind turbine sale Improved living conditions Improved working conditions Access to quick medical service CO2 reduction by 43.2 tons over 12 years Ability to pay for electricity with no money Access to vaccination Migration prevention from country to big cities in search of jobs Through establishing a venture Bottom-up technology transfer Creation of jobs locally Local capacity building Providing employment to machine shops around the country Local technical innovation Newly created demand for specialists in renewable energy project development Wind resource study Additional Social Benefits

44 44 Social Return on Investment Social Benefits$16,307,624 PV of Social Benefits$6,553,668 Social Costs$542,191 PV of Social Costs$217,894 SROI30.08 SROI Ratio = Present Value of Social Benefits Present Value of Social Costs

45 45 Implementation Plan 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 Business planning Registration Financing Marketing research Pilot wind turbine Subcontractor negotiations Organization of production Hiring and training

46 46 Financial Snapshot 38.95% 3.18 years 60 units $57,074 Payback Period Break-even Point Internal Rate of Return Net Present Value Financial Needs $119,473

47 47 Expenses Wind Turbine Purchase Year 1Year 5 Technical Sales Expense Transportation Expense R&D Expense Management Salaries

48 48 Capital Use Area of ExpenditureCapital Need, USD R&D and start-up costs21,574.80 Marketing & Sales34,214.29 Turbine costs17,518.29 Overhead46,165.35 Total Capital Need119,472.74

49 49 Management Team

50 50 Market Size Filter 1 Outcome 1 High wind potential 40,000 settlements 100% Filter 2 Outcome 2 No access to electricity 24,000 settlements 60% Filter 3 Outcome 3 Sheep-growing sector 21,600 settlements 90% Filter 4 Outcome 4 No other alt. energy 20,952 settlements 97% Filter 5 Outcome 5 Willing to switch 8,380 settlements 40% Filter 6 Outcome 6 Can pay with sheep 7,542 settlements 90%

51 51 Filter 1 Outcome 1 High wind potential 40,000 settlements 100% According to scientific research all rural areas of the Karaganda region have good wind potential, appropriate for the implementation of our project. We have taken as potential buyers all rural inhabitants, among them there are farms with with electricity supply. Filter 2 Outcome 2 No access to electricity 24,000 settlements 60% Market Size

52 52 Potential target market for wind energy is not only sheepherders, but also scientists working in expeditions, military workers, and other potential individual end-users. There could be other sources of clean energy generation such as biomass and solar used by sheepherders. Filter 3 Outcome 3 Sheep-growing sector 21,600 settlements 90% Filter 4 Outcome 4 No other alternative energy 20,952 settlements 97% Market Size

53 53 As sheepherders will be reluctant to by new wind generation technology, there are about 60% of potential buyers who will continue the usage of their familiar sources of energy. According to the end-user survey, the average sheep flock consists of 1,000 – 1,200 sheep. Majority of cattle growers will have ability to pay for the wind turbine with sheep (26 sheep). Filter 5 Outcome 5 Willing to switch 8,380 settlements 40% Filter 6 Outcome 6 Can pay with sheep 7,542 settlements 90% Market Size

54 54

55 55 Energy per day: 2.5kWh Type: 3 bladed Battery: 12V, 50 Ah Useful days: 109.5 Fuel consumption, liters/hour: 0 Cost of unit: $1,752 Maintenance $/year: $50 Battery cost: $200 Controller: $300 Cost over useful life: $1,650 CO2 emission. t/year: 0 Useful life: 12 years Product Characteristics

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