Presentation on theme: "Waste-to-Energy with a Next Generation Small Scale Plasma Gasifier"— Presentation transcript:
1Waste-to-Energy with a Next Generation Small Scale Plasma Gasifier Presented By Dr. Abraham E. Haspelto NY Energy & Environmental FundersMARCH 8, 2013|Company Confidential
2Presentation Outline Value Proposition Cogent’s Waste-to-Energy System Marketing & Business ModelTeam & PartnersDevelopment & Deployment PlanCogent’s Next StepsIn the next half hour, I’ll cover the who, what, when, where, how, and why.
4Small Footprint & Low Capital Cost Feedstock Flexibility Why Invest in Cogent?Small Footprint & Low Capital CostEfficient ConversionFeedstock FlexibilityThe Future:CompactAffordableEfficientFlexibleSmall-scale PlasmaDigesters, PyrolysisWTE systems can be differentiated by 3 main qualities – how efficient they are at converting waste into electricity, how big and costly they need to be in order to do so, and what kinds of waste they can actually accept. As you can see in the Venn Diagram, today’s systems generally combine positive attributes in two of these three areas with negative attributes in the other. This makes them unable to reach some of the highest-value market opportunities, which require systems that blend all three. Cogent will have the first small-scale, flexible, efficient, affordable system, that will be ideally suited to capture the distributed WTE market.Incineration, Large-scale Plasma
5Cogent’s Advantage Cogent can go where its competitors can’t To more attractive markets, such as islands, which have:High electricity prices (e.g., $0.42/kWh in USVI)High municipal solid waste (MSW) disposal costs (e.g., $70/ton in the Bahamas)Insufficient MSW for traditional waste-to-energy (WTE) systems (e.g., tons per day in Antigua & Barbuda, Dominica, Grenada; a few hundred tons per day in Bahamas, Guam, St. Lucia, USVI)These markets are inaccessible to competitors because their systems are too big, too inefficient, or too specialized in their feedstock requirementsAs a result, Cogent will deliver:A solution for waste elimination and cost-effective electricity generation at an appropriate scale with almost no environmental impactHigh rates of return to its investorsThe unique ability of the Cogent system to remain small and flexible while achieving big-plant efficiencies means that we can go where our competitors can’t. In particular, that means islands like nations in the Caribbean, Guam, and Hawaii. I’ll go into more detail later about these specific market opportunities. Our competitors can’t go there because the big systems require more waste than is available, while the small systems aren’t efficient enough to produce net electricity. Cogent’s system allows it to access markets where electricity - the main source of revenue - is 3-4 times as expensive as in the US. As a result, Cogent expects to control this lucrative market segment and deliver a solution for waste elimination and cost-effective electricity generation at an appropriate scale with almost no environmental impact, and high rates of return to its investors.
7The Cogent WTE Process Schematic PREPROCESSING (COTS)Incoming solid waste handling & storageWaste separator, dryer, shredderConveyor to plasma processorPLASMA WASTE PROCESSINGOxygen production system (COTS)Plasma gasification unit – produces syngasSyngas scrubberPOWER GENERATION (COTS)Primary electricity generator powered by syngas from plasma processing unitSecondary generator powered by waste heatCogent’s system follows a standard waste-to-energy process. Incoming waste is handled using a separator (primarily for metals or large items), a dryer if necessary, and a shredder to prepare the waste. These subsystems are all commercial off the shelf products. The shredded waste is then conveyed to the plasma processor, which is the innovative element in the Cogent system, and the only non-COTS component. After the waste is vaporized into synthesis gas – also called syngas - in the plasma chamber, it is cooled via heat exchanger and scrubbed of any remaining contaminants. From the scrubber, the gas is introduced into a generator where it is combusted to produce electricity. Exhaust heat from that primary generator is used to power a secondary generator to produce even more electricity.COTS = Commercial Off The Shelf
8What is Plasma? Plasma is the “4th state of matter” Ionized gas with temperatures of 10,000+ degrees KLightning is an example of naturally-occurring plasmaSo, because the innovative part of the Cogent system is the plasma processor, let’s talk about plasma. Plasma is extremely hot, electrically charged gas, generally seen in the form of an arc between two poles – like cloud-to-ground lightning. Industrial plasma systems generate and control these arcs to produce small, long-lasting plasma jets or fields, which can then be used for various purposes, including ours. These temperatures are so high that production of ash and toxic chemicals such as dioxins and furans does not occur, unlike in some competitive technologies such as incineration.
9Conventional Plasma WTE Processing Indirect processing methodUse plasma to heat the environment inside a processing chamberEssentially “cooks” the waste, producing partially-processed syngas (requiring additional processing) and consuming significant electricityOne way to use plasma is to harness the energy from plasma torches to heat the inside of a vessel, essentially creating an extremely hot oven, where the plasma torches act as the heating element. This is how traditional plasma WTE systems work, like the ones pictured here from AlterNRG and Pyrogenesis. However, this method creates a partially-processed syngas that requires a second “polishing” stage before proceeding to scrubbing and combustion. The conventional method is very energy intensive, and requires large scale before the total electricity production becomes greater than the amount that the system requires to power its own operation – called the “parasitic load”.AlterNRG (Westinghouse)Pyrogenesis
10Next Generation Cogent WTE System Waste FeedDirect processing methodCogent’s breakthrough: plasma modules stacked vertically with cross-module connections create a long, continuous plasma column with a uniform high-temperature processing zonePlasma field fills the processing chamber, rather than just heating the environmentWaste is introduced directly into the plasma field and is vaporized into a clean syngas in a single step as it passes through the processorUses less electricity for processing, leaving more net electricity for saleAll other major components are proven, COTS systemsInstead of using torches to heat the environment, Cogent uses an innovative new plasma system developed at INL to harness the full power of the plasma field and apply it directly to the waste feedstock. By creating a long, continuous plasma column filling the processing chamber, the waste can be introduced directly into the plasma field where it is completely vaporized in a single step. This fact, plus the energy-saving design of the vertical stack of linked plasma modules, means that the Cogent system will have substantially less parasitic load than conventional systems, and can therefore produce substantial net electricity even at small scale. As I mentioned before, this is the core innovation of the Cogent system. All other components are COTS, so this breakthrough is what we’re focused on, and is what gives us our competitive edge.
11Next Generation Plasma Processor Peter Kong, Ph.D., Idaho National Laboratory (INL)INL Inventor of the Year50+ Scientific Papers; 30+ Patents20+ Years of Plasma ExperienceDeveloped numerous prior generations of plasma processing technology including large-scale waste processing systemsDr. Kong’s most recent invention is the core of Cogent’s system“Modular Hybrid Plasma Processor” (MHPP)Operational since now operating Generation 5Over $5M DOE funding invested to dateDeveloped for low cost bulk production of nanomaterialsVideo of Dr. Kong & operational MHPP available atThe MHPP technology is fully operational at INL, producing nanomaterials more effectively than any other systems on the market due to the same efficiencies that will make it a new generation of waste gasifier.Dr. Kong has worked with waste at large scale using previous generations of his plasma technologies. He believes that applying the latest generation of the plasma technology to waste at large scale is a reasonable scope of work.
12System Energy BalanceThis process diagram gives our best estimate of electricity output from the conversion of one ton of standard composition MSW. The specific numbers may vary depending on the actual composition of the waste, the real-world efficiency of the plasma system, specific COTS component selection, and even atmospheric and environmental conditions, but the basic ranges are what matter at this point. We project that our system will be able to convert a ton of waste into nearly 1MW of net electricity. This is roughly the same efficiency as today’s large-scale facilities, but in a much smaller package.
13WTE Competitive Landscape High Power OutputIncinerationLarge Footprint& High CostSmall Footprint& Low CostPyrolysisThere are lots of proven players in the upper left quadrant, and there’s nothing wrong with that. They are very effective at what they do – converting large amounts of waste into large amounts of electricity – and there are lots of them. There are nearly 100 incineration facilities in the US, and around 400 in Europe, as well as many in Japan. However, those big facilities require lots of infrastructure – trucking, storage, electricity transformation and transmission, land, etc. They also require a huge amount of waste, which can only be found in a limited number of locations. And, they require enormous amounts of capital, making such projects challenging to execute.Most of today’s alternative WTE technologies fall into the lower right quadrant – they’re generally deployed at smaller scale, and with less cost, so they are more manageable – but they simply aren’t very efficient, and are often very particular about their feedstock, limiting their application. The upper right is the place where we see huge opportunity – lucrative markets, manageable project scope, and limited competition.Incineration –Pyrolysis –Digesters –DigestersLow Power Output
15Price of Electricity ($/kWh) Waste Disposal Fee ($/ton) Target MarketsHigh value opportunities are particularly present on islandsHigh cost of electricityHigh cost of waste disposal / landfill feesLocationPrice of Electricity ($/kWh)Waste Disposal Fee ($/ton)Bahamas$0.33$70Bermuda$0.39-Cayman$0.37$89Curacao$0.42Jamaica$0.35$52Hawaii$85USVIWe believe that our best market opportunities will be in island nations, states, and territories. Islands generally depend on fossil fuels – mostly diesel – to power their electricity grids, which means high prices and vulnerability to volatile oil markets. They have extremely limited landfill space, which means that waste disposal fees are substantial, and that they are urgently seeking alternatives to landfill, like WTE. As you can see, prices for electricity are 2-4 times what we pay in the US and Canada, while waste disposal fees are comparable to the upper half of the range of what Americans pay. As you can imagine, at cents per kWh, selling electricity is a pretty lucrative business.Caribbean electricity data primarily from CARILEC 2010 tariff survey. Caribbean waste disposal data from PAHO 2005 solid waste management report. Hawaii information from websites of local service providers.
16Target Markets “Closed loop” scenarios Customer produces waste & consumes energyDistributed generation – same model as rooftop solar panelsHotels & ResortsPorts / HarborsGovernment & Military InstallationsCollege CampusesAgricultural & Livestock OperationsFactoriesIndustrial & Residential ComplexesShipboardRecreation FacilitiesIt is important to note that the prices on the previous slide are retail prices. We expect our systems to operate in a distributed generation mode, same as a solar panel, and by offsetting energy use at the customer meter, we’ll be able to sell electricity directly to the user at some discount to the retail rate, rather than generating power for the utility and selling it to the utility at a much lower wholesale rate. As such, we’re targeting opportunities where a large user (or group of users) produces substantial waste and consumes substantial energy in roughly the same location. Some examples include hotels and resorts, ports and harbors, industrial facilities, and large agricultural operations.
17Initial Market Interest Letter of Intent (LOI) from Caribbean Community Climate Change Centre committing to assist Cogent in:Placing an initial commercial systemMinimum 10 additional systemsVacation ResortsPorts & HarborsAgricultural OperationsUS Insular Affairs: Guam, USVIGov’t: Curaçao, Trinidad & Tobago, BelizeCommercial / Industrial / Agricultural: Jamaica, Hawaii, Honduras, Bahamas, BarbadosLimited landfill space makes waste disposal an urgent problem for island nations, states, and territories.In fact, we’ve taken some initial steps to lock in the Caribbean market. We’ve established an LOI with the CCCCC, representing the CARICOM nations of the Caribbean, under which they plan to assist us in placing an initial system as soon as we have a commercially available product, followed by at least 10 more systems over the coming several years. We’ve also met with the office of Insular Affairs regarding the USVI and Guam, and had meetings with high-level government officials in Curacao, Trinidad, and Belize regarding placements for our system as part of their strategy to handle their waste and power problems. In addition, we have spoken with large-scale commercial entities in Jamaica, Hawaii, and other islands about using our system in their facilities. Reaction is universally positive – everyone has expressed a desire to use a system like what we have described to them. Of course, they all want to see proof that it works as described before they can commit to purchasing a system.
18Business Model Two Components Cogent Energy Systems will build & sell fully packaged WTE systems - $7.5M projected capital cost + 20% annual royalty1st full-scale system: projected $7-8M cost to buildNth full-scale system: projected $4-5M cost to buildIndividual operating companies will own & operate each WTE system with multiple revenue streamsLong-term Purchase Power Agreement (PPA) with userLong-term waste disposal (tipping fee) agreement with userPotentially available additional revenue streamsCarbon credits (~0.5 ton CO2e per ton of MSW)Sale of metals, chemicals, and vitrified slag components - depends on waste stream compositionTax credits, rebates, and local incentivesOur business model will involve two components. Fundamentally, Cogent Energy Systems is a manufacturing company. We will build and sell WTE systems as efficiently and cost-effectively as possible. This is the company that you’d be investing in. We anticipate that in most cases, we will sell our systems to operating companies, who will in turn run the system for an end user customer. In some cases, the end user may simply buy and operate the system themselves. In other cases, Cogent may be directly involved in the operation of the system. But the base case is for Cogent Energy Systems to sell a unit to an operating company, who then charges an end user customer to accept its waste, and converts that waste into power that it sells to that customer. The next two slides will show financial projections for such an operating company, and for Cogent Energy Systems.
19Why Customers Will Buy From Cogent Operating a Cogent WTE system will be profitable from day one, with pre-tax IRR of 20% or more, and 20-year total net cash flow of nearly $30MCritical Input AssumptionsOperating companies pay Cogent $7.5M purchase price and 20% royaltySystems cost $550,000/year to operate, with uptime 340 days/yearOperating companies sell electricity at an average $0.30/kWh, while the projected 20-year unlevered levelized cost of electricity from a Cogent system is approximately $0.16/kWhOperating companies receive waste disposal “tipping” fee of an average $30/tonCapital cost is financed over 10 years at 4% interest (IADB, Ex/Im)Buying and operating one of our systems will be a good investment. With the right financing, a customer will be profitable from day one, and earn nearly $30M in profit over 20 years. This projection assumes that the operator can sell power to the user at $0.30/kWh, which as you’ll recall, is a discount to the rates being paid today across the Caribbean, Hawaii, Guam, and elsewhere. We also assume a tipping fee of only $30/ton, which is substantially lower than what customers pay in many of our target locations. So, the end user saves money, the operator makes money, and Cogent sells systems.In $ ThousandsYear 1Year 2Year 3Year 4Year 5Year 6Net Cash Flow$391$464$538$614$691$770
20Why Investors Will Profit From Financing Cogent Cogent will sell 35+ systems over six years, earning nearly $300M top-line revenueCogent anticipates exit via acquisition in year five or six, to potential buyers including energy companies and utilities, equipment manufacturers, military contractors, landfill and waste management companies, or other WTE companiesIn $ ThousandsYear 1Year 2Year 3Year 4Year 5Year 6New Systems Sold1234918Net Cash Flow($4,300)($2,100)$1,600$10,400$22,700$64,400Now, as for Cogent Energy Systems itself, we make money by selling systems and collecting annual royalties. In some cases, prices will vary, or royalties will be pre-paid, or other non-standard arrangements may be in force, but for the purposes of this projection we have assumed a $7.5M sales price and 20% annual royalty from the operating companies. As you can see, we have forecast a relatively slow ramp-up of sales and deployments. We expect to sell around systems over the next six years and exit via acquisition, at which point we’ll all make our money. Obviously, equity investments now will be illiquid until such an exit. To give you a sense of the kind of returns we’re looking at, let’s assume an acquisition multiple of 5 times trailing profits. In this model, at the end of year 6, that would mean a transaction of about $320 million. Our dilution projection indicates that an entity investing the capital needed for us to get to market (more on those details in a couple of slides) would end up owning about 35-45% of the company by the time of an exit. That means a payout of about $112-$144 million, on an investment of around $6 million or so.
22Cogent Energy Systems Management Team President: Abraham E. Haspel, Ph.D.President of Cogent Analysis Group. Former Deputy Assistant Secretary of Department of Energy, COO of Office of Energy Efficiency & Renewable Energy. Former Assistant Deputy Secretary of the InteriorVP, International Market Development: Douglas RussellFormer executive at Natsource (a carbon asset management firm). Former Director, Air Issues Branch, and Director General, Air Pollution Prevention Directorate, Environment CanadaVP, Operations: Paul VickersProcess Engineer with extensive refinery, chemical plant and power plant design, start up and operating experience at Shell Canada and TransAlta. Director of Sustainable Development at TransAltaVP, Marketing & Strategic Planning: Joel HaspelVP, Renewable Energy at Cogent Analysis Group. Former VP of Marketing & Strategy with venture-backed software startup Plethora TechnologyCFO: Bert T. Edwards, CPA, CGFMFormer Assistant Secretary and CFO, U.S. State Department. Led entire public sector practice as Partner at Arthur Andersen
23Cogent Energy Systems Partners Idaho National Laboratory – R&DOne of the nation’s leading research facilities in clean energy, nanotechnology, and nuclear R&DCogent agreements with INL:Work For Others (WFO)Exclusive Worldwide License Option Agreement (LOA)Cooperative Research & Development Agreement (CRADA) Awaiting Execution Upon FinancingCreare, Inc. – Engineering & DesignJay Rozzi, Ph.D. – Team LeadSpinoffs Hypertherm (Plasma Torches), Edare (Manufacturing)Past projects include a portable plasma decontamination unit for the U.S. Air Force, as well as systems for the Mars Rover, Hubble Space Telescope, and C-17 aircraftGershman, Brickner & Bratton, Inc. (GBB) – Waste HandlingSpecializes in landfill and recycling facility design and management, solid waste management planning, and solid waste handling infrastructureManages Guam’s solid waste infrastructureINL’s plasma system is the core of our opportunity. As such, we have entered into a Work For Others agreement with them, which allows us access to their staff and facilities on a contract basis. We have also entered into an exclusive worldwide license option agreement, which makes Cogent the only company able to commercialize the patented plasma system for waste-to-energy purposes. Finally, we have completed a Cooperative Research and Development Agreement – a CRADA – which will govern the scale-up effort and will be executed as soon as we have the financing required to fund the work.Creare’s experience with plasma torches at Hypertherm and a plasma-based decontamination unit for the military give them domain expertise required to bring together INL’s groundbreaking plasma unit with the proven COTS components that make up the balance of plant, and design the necessary control systems so that relatively low-education workers can operate the system in the field. GBB will ensure that the complexities of handling heterogeneous waste input streams are well understood and accounted for.
25Three Phase Process Phase 1: $750K Phase 2: $3.2M Phase 3: 4-6 MonthsSingle full-scale plasma module for demonstration and testing (1 of 3 for entire MHPP system)LOI from customer for initial unit purchasePhase 1:$750KFull-scale 3-module MHPP system completedDetailed design for fully integrated WTE systemSigned contract with first customerPhase 2:$3.2MFinal balance of plant and total system cost depend on customer details – type and volume of feedstock,Deliver fully integrated WTE systemPhase 3:$2.25M-$5.25M4-6 Months4-6 MonthsWe have designed a phased approach to get to market. Each phase includes some funding for sales, marketing, overhead, infrastructure, and contingency, in addition to engineering and materials, which make up the bulk of the costs. The phases are designed to hit critical milestones necessary to give customers and potential future investors or lenders the confidence necessary to move forward. So, in phase 1, we will design, construct, test, and demonstrate a single plasma module that will convert waste feedstock into syngas that can be combusted to generate electricity. This proof of concept at full scale will allow us to execute at least one LOI with an initial customer – most of the groups I mentioned earlier have indicated their willingness to move forward once a demonstrable plasma system is shown. Phase 2 will consist of construction of the rest of the complete plasma system and the use of test results to complete the final detailed engineering design for the balance of plant. This will also allow us to execute a firm contract with the initial customer, enabling us to select specific COTS components. In Phase 3, we will complete and deploy the integrated WTE system to the customer.
26Cogent’s Next Steps Raise Investment Capital Scale & Test Core Plasma Processor (CRADA with INL)Secure First Client & Determine Operating ParametersProcure COTS Components Optimized for First ClientIntegrate & Test End-to-End WTE System (Partnership with Creare)Deploy Initial System to First ClientInitiate Repeatable Sales & Delivery Processes
27Thank YouFor More Information, Please Contact Dr. Abraham E. Haspel, President