BlueTech Forum 2011 - Hot Tech Area - Smart Infrastructure and Smart Water

This morning we have four interesting new technologies, new developing companies that are going to make their presentations. The first one is global water Resources and the presentation will be given by Jason Bethke, who's the president and CEO. This is a company that is focused on smart water infrastructure. The second company is zeropex and presenting will be Duncan Collins, who's the managing director. And here is. They're focused on the topic of energy recovery, which is obviously an increasingly more important area of interest these days within the water industry. Then we have a company out of Australia called Clovis and Tony Keating is the program manager for this particular company. And this company is focused on protecting the sewer infrastructure, also a very hot topic in the wastewater industry today. And finally, the fourth company is Hydrovolts, and Mike Layton, who's the chief operating officer will be making the presentation. And here again is a technology that is focused on energy recovery. So I'd like to get the ball rolling and ask Jason to come up to the podium.

Thank you, Bill. Thanks for having me here. First off, I'd like to decline the promotion to being president of the vice president for Global Water fathom, but I appreciate that we've got the booth outside, so this is a quick hitting presentation. Any questions that you might have, I'd be happy to answer those after, after we finished here. So our technology is about putting water scarcity management tools in the hands of customers, 1.25 million by the year 2015. It's about recognizing the power of that information and transforming the water business as we go along. We're looking to deliver these tools to what is an underserved utility market, the small to medium sized utilities, in an affordable, reliable way. Really what it's about is implementing the instant on smart grid for water. And I was going to play a video, but I think the point to that video is that Global Water, when it was founded, was founded on the principle of water scarcity management and as a utility. So we own the water lines, the pump stations, the pipelines that serve 42,500 service connections in seven operating utilities. Through that process, we learned how to deploy technology. And starting about 2008, we realized that the municipal market was going to suffer many constraints and budget constraints and water scarcity issues that were emerging. So we formed a new organization that leveraged our investment in people and technology and processes to deliver that same technology that we use in our utilities to the invincible market. So today those utilities run roughly 46% less power, 65% less labor, and roughly 90% less O& M capex. And so that's the type of technology we're now bringing into the municipal sector for these municipalities. So our market is the municipalities water districts, they're facing new issues in the last several years, the biggest one being budget constraints. So the budget constraints are high. They're looking, they're now finally down to their sort of minimum operating levels after the reduced funds of the last of the economic downturn. They've got lots of water scarcity issues. So we're seeing droughts, we're seeing a new emergence of water scarcity drivers and service level issues. So as you know, many cities in California are actually closed every other Friday or every Friday. So the ability to provide services to their customers is drastically reduced. And they have limited IT resources. And so many times what you see is contracted desktop support for many of these municipalities. They don't have the IT infrastructure or know how to deliver this smart grid for water to their customers. And they have failing infrastructure and they need the management tools necessary to manage those assets as they go forward. So our market is roughly 23,000 towns and cities throughout the US that fit this criteria. And our hosted utility to utility software as a service model really allows us to access every single one of them. So where are we at from the standpoint of stage? Well, we fully cash flow or fully cash flowing entity. Every single project we do generates ebitda. So it generates that EBITDA in two ways. One through recurring revenues and one through implementation fees. So what we do on the implementation side is bundle the technology, bundle the implementation services, bundle the utility know how into a package and then finance that through a private label tax exempt municipal lease purchase program and then couple that with the recurring services fees which essentially guarantee that that infrastructure will last its full life for the utility. So full risk transfer delivery methodology. And then we use our utilities proven systems to rapidly deploy those those systems. So we offer that service to municipalities on what amounts to a cost per account per month basis. So really changing the way we go from a capital sale to what essentially is a P and L sale into the municipalities. Our first advanced meter infrastructure installation was for our own Utilities in 2006. We currently serve about 170,000 customers. So if you'd like to see those facilities, please come visit us at Global Water. That's an EPA award winning facility, It's LEED certified and is in what used to be the fastest growing city in the US So what's our strategy? Well, this whole business was built for one person. It was built for the municipal decision Maker, our buyer. And so this buyer is risk averse, fearful of the budget cuts, specifically about perhaps their jobs. And they simply can't afford to make a mistake or have a failed implementation. So the way we get around those pieces for that municipal decision maker is really to provide this utility to utility solution, essentially utility to utility certified products that we're using in our own utilities to generate those efficiencies that we now can transfer into the municipalities. And so this utility to utility concept, really brother of the industry, allows us to transfer that risk to us and provide those services to the smaller utilities. And then we bundle all of those technologies. So whether it be the advanced meter reading infrastructure and the technology necessary to put that data in hand to the customer, or the customer service and billing components that are part of this technology, allows website, credit cards, seven different ways to pay your bill and present it to the customers, or whether it's the software as a service asset management program which comes with all of the knowledge that we bring to it from a utility perspective. So it's an instant on functionality for those municipalities. Bundle that and all the capital costs required into a unique bundle. And we can then deliver that to the customers, our utility brethren, essentially on what amounts to a rental model. It's very disruptive to the existing channels to market. And so what we built from Global's perspective is really a way to take technology from its infancy, prove it in an operating utility and then deliver it to the customers in a new way, a new channel to market. So I think that's it. So thank you very much.

Good morning everybody.

I think.

My name is Duncan Collins. We have a company called zeropex, originally founded in Norway, but now with offices in the UK and in Sacramento. And we produce a water turbine that controls pressure whilst producing electricity. As you can see here, we have a complete system that's been fully developed. It's cost us an investment of around about $8 million so far, funded by Statwell Ventures and Energy Ventures, both based in Norway. And the system you see here is a complete system with a turbine and generator, which is the device on the skid, together with a control panel. And that allows us to control the flow and pressure on a water utility's pipework. And we have ranges that allow us to deliver between around roughly 10kW to 100kW per system with flows from around about 100gpm up to about 5000gpm per system. And as the water flows, we produce electricity. But here's the thing, our turbine actually allows US to control the downstream pressure or flow, which enables us to replace a mechanical valve in the water distribution system. And that means the water company gets control of water delivery in a smarter way. The importance of that is that there's a parallel relationship between water pressure and leakage. So for instance, if you reduce the pressure from 60 psi to 30 psi, you halve the leakage. We can modulate the downstream pressure or the output from our turbine instantaneously and in fact we can even use it to boost pressure from time to time, which may be useful, for instance, if there was a fire. In fact, in one location in the uk, there's a city that has too little pressure in the breakfast time and we use our system to boost the pressure there, but recover energy from the rest of the day where there's excess pressure. So we have a system that enables a water to utility to deliver water in a smarter way whilst confronting the important issues of energy recovery. Here's a little diagram. I don't know if you can see it all, but there's a kind of typical city where you'd normally have a traditional turbine would be on the reservoir in the top corner there. And the thing with a regular turbine is that all you can do is have a zero ongoing pressure on the downstream side. So you're just dumping water into an open source. Where we benefit is a little bit lower down as the treatment works. Well, if we were to put one of these zero pegs units there and there's a gravity flow, we also qualify for feed in tariffs, so you get a very rapid return on your investment. And we can have an ongoing pressure to get the water through the filters. And then further down the distribution system on the lower level you may have quite high pumping pressures in order to be able to deliver that water to the end of the pipework. Well, at the front end of that there may be excess pressure and we can recover some of that pumped energy. But if it's a hilly area, you might need much higher pressures and we have the opportunity to recover significantly more energy. So if it's a gravity flow, it's renewable, if it's pumped, its energy recovery. And our customers are the water utilities, they own the assets, they own the pipe, they own the water. And very easily you can identify where our system fits. In the USA there are around about 300,000 mechanical PRVs at the moment throughout the country and a certain percentage of those will suit us, Perhaps somewhere between 5 and 10% in our initial studies. It's a pretty big market. Here's A case study of a typical water utility. In fact, this one is in California where we're hoping to complete negotiations for the contract within the next few weeks. There's a differential pressure here around about 130psi and around a 2.7mg flow, which produces an average delivered power to the wall of around 49 kilowatts. This is a $240,000 investment. But despite the fact that it's a pump flow and there's no feed in tariffs, we still are getting a return on that investment within about three and a half years and producing around about US$70,000 per annum in revenue. Again, the interesting thing here could be that California is mandated to try and find 12,000 megawatts of distribution, distributed generation over the coming years. And Diffgen could be part of that. Our strategy at the moment is to concentrate on three markets where we currently set up and selling Norway, because we are a Norwegian company originally, but Norway has very low value for electricity. So it's not going to be a big market for us, but it's allowed us to develop the system. We also are working extremely well in the uk. Now, the UK has a very sophisticated water market consisting of around about 25 companies of which 12 to 15 of those could be classified as large utilities. And in the UK there's around about 40,000 PRVs, which we reckon we have a market somewhere between 3 and 4,000 if we get there. In the USA, we're concentrating initially in California. And the route to market essentially means that we're working, we're working with delivery partners in each of those locations so that we are working in the UK with a number of strategic partners. Working with the water companies in the usa, we have a combination of direct sales and also working with consulting engineers and reps in the traditional way. Okay, thank you very much.

Well, good morning. My name is Tony Keating. I'm from Australia, as introduced before. So I actually work for a company called Uniquest. We're a technology transfer company that has agreements with a number of Australian universities and research institutes. And our job is really to try and take technology from those universities and try to commercialize them. We tend to take things a little bit further than the sort of standard US TLO approach and we will form spinoffs ourselves, run those spin offs and take them to that next level. And today I'm here to talk about Clovis. Clovis is a technology that we're looking at spinning out of the University of Queensland in Australia. And it's a sewer Corrosion prevention technology. So as many of you probably know, the sewer, sewers around the world is a very large hidden piece of the infrastructure. Estimates of the US is around $1 trillion worth of infrastructure in the sewer system. And this infrastructure is being attacked at the moment by corrosion. And this corrosion is causing design lives of sewers to be reduced from 50 to 100 years down to 10 years. So it's a very big infrastructure problem at the moment. So the sewer corrosion is caused by some bacteria which live in the wastewater. And this bacteria are called sulfate reducing bacteria, which converts sulfate in the wastewater stream to hydrogen sulfide. That hydrogen sulfide is then converted by another set of bacteria into sulfuric acid, which then eats away at the concrete and destroys your sewer. So Clovis is really a new way of treating this, preventing this from happening. It's a two part solution. The first part is actually just a new chemical mix which is actually proven to kill the sulfate reducing bacteria. So at the moment, the water utilities, the municipalities are using a number of chemicals to treat this problem, but they're all addressing the hydrogen sulfide itself rather than the bacteria. So what we're proposing is we're using a new chemical which is able to actually kill that bacteria. And so because we can kill a bacteria, we can now intermittently dose, so we can dose every five days rather than put a continuous dose in the chemicals. And this substantially reduces our operating costs. Our estimates are that we're between three and six times cheaper than the currently used chemicals. So there's a very big region there for operating margin as well. We have a patent applied for on this chemical mix, and that's sort of the first part of the solution. The second part is actually a software tool which was developed again at the university, which allows you to model the sulfide production and where the corrosion is going to occur. As well as being able to model the sulfide production, we can also model the effect of dosing on that production. So therefore we can optimize our dosing regime. Our estimates in the field are that actually the municipalities and utilities are significantly overdosing at the moment, even with chemicals spread. So that means that there's a much bigger spend that needs to be occurring. Some recent studies in the Gold coast in Australia showed that by using this software tool, they can reduce their operating expenses by 50% just by optimizing how they're dosing. The market here is very big. The US EPA estimates that around $14 billion a year is being spent on prevention on repair of hydrogen sulphide sewer Corrosion In Australia, because of our lower population, it's only around one and a half billion, but it's still a very big market. Typically, what we see is that the utilities and the municipalities are currently using chemicals, and their estimated spend is around between $0.50 and $1.50 per person per annum that they're serving so large million people. Cities are spending millions of dollars just on chemical dosing itself. So our sort of initial target market here is actually just go in and replace the chemicals that they're using, give them a savings on their chemical cost because we're three times cheaper. So we can definitely save them money, but also we'll take some of that away as well. So there's significant upside room here for our margin. What's interesting is this is actually coming out of a very long research program at the university, and it's clearly shown that industry is very interested in this problem. The industry in Australia, So this is seven of the major Australian water utilities has spent $14 million on this one research project. The research project is to identify and to look at ways of preventing sewer corrosion and odours. So there's an industry need out here. They're willing to spend the money, and they've already spent significant funds here. We've done. The researchers have done laboratory and field trials already. The laboratory trials have been essentially taking bacteria and the gross stuff from the sewer, putting it in a jar, and then adding chemicals in and showing that we can actually kill the bacteria very effectively. So obviously, the more bacteria you can kill, the slower their growth rate back up. So then the more intermittent your dosing can be, you can stretch that dosing out, save money on your chemicals. They've also done field trials at the Gulf coast in Australia and shown that it takes around five days for hydrogen sulfide production to reoccur after a single dose over about half a day. So we can dose for half a day, wait five days, then dose again. And so that's one of the major reasons that our cost is so low. The actual software, the optimization software, has actually been used both in house as consulting by the university, but also in the water utilities themselves since 2009. And I've got a quote here that basically says that one of the big water utilities in Australia managed to save opex of around $1.3 million a year just by using this software to optimize their dosing. And so they previously were using seven dosing stations. The software told them that they could actually be getting away with only three. So they did that. And Then now they've got a savings of over a million dollars a year. So our strategy at the moment, at the moment we're out looking for funds to run two real commercial scale field trials. The field trials that were done before were sort of research based ones where they looking at different conditions here we want to run for multiple seasons, for periods of time, set up the supply chains of the chemicals, various things like that. And we're pretty comfortable in Australia that we actually have two water utilities ready to go with this. They've both said, yes, we'll let you run the field trials. So we have that organized and we're pretty confident that we can actually convert one of those into a lean customer and then work from there. Obviously we're here in the US at the moment and starting to look at perhaps doing one of those field trials in the us. One of the sort of keys here, and I probably should have harped on this a little bit before, is that we're dealing with water utilities here. We're dealing with municipalities, which as everybody knows here are very conservative organisations, very slow to move one. There are sort of two keys that we've looked at here. The first one is that we're using chemical dosing. It's exactly the same chemical dosing infrastructure they're currently using. It's the same method. So we're just replacing the chemicals that are being used. So that's one good thing for them. They don't have to buy new infrastructure. There's very little switching cost for them. The second part is how do we sell to them? And so we've looked at the market, looked at the ways that people are currently purchasing. So the municipalities are purchasing chemicals, they're purchasing licenses, they're doing full service programs. And so we're looking at the different ways that we can offer to fit in their purchasing cycle, because that's very important. They're not going to want to change completely the way they're buying or the way they're preventing corrosion at the moment. So we're looking at essentially three levels of purchasing one of them where they're just purchasing a license to use the chemicals. They then buy the chemicals themselves. The second one, which is essentially we supply the chemicals and so they pay us for that supply chain. And then the third one is we look after the complete system. They come to us and say, we need you to prevent corrosion in this portion of our network.

You do that.

So we're trying to fit in with what they're doing both on the purchasing side as well. As on the technology side, we think that's probably one of the most important things when dealing with this industry. Thank you, and I'm happy to take questions later on.

Good morning. I'm Mike Layton. I'm the CEO of Hydrovolts. I've actually been with the company since February. And the nice thing about our technology is rather simple. I'm not an engineer and it's allowed me to come up to speed real quick with this company. What Hydros does is we make electricity out of the power in general, water flow in canals and wastewater plants. It requires no permanent structures, so no dams. Our turbines can be dropped into the water relatively simple. You need to put cables on the shore to hold them in place, and you, you can drop them in the smallest one by hand and then small crates. The advantage that we have as well is that unlike wind and solar, our power generates 24,7. It's constant and it's predictable. The need is there in the market for several reasons. One is that in developed countries, there's a need for green energy and actual requirements. And in the developing countries, they have places where the grid is unreliable or they have villages that are just off the grid. Our power that's generated can either be put on the grid or used to generate batteries, recharge batteries or power a small village or part of a village, or a wastewater treatment facility at a village. Our advantage of our competition is that we have a horizontal axis. You can see that we lay flat water most of our competitions in the vertical, which causes issues for them. They have to have floats. If the water changes speed too much, they have problems with the way it drags. Ours also can be submersed in the water. Our generators are in the end caps on the side so that it can run under water. We've tested this and the way we set it up, it's completely watertight. It can run out of the water as well. Above, above water. Another advantage we have is we have a patent pending on a rotor design called a flip wing. And what it does is as the water pushes across the top, the plate flips over and then as it comes on the downward stroke, it has little or no drag. The other advantage is that the flipwing, also in tests we've done so far, self clears itself. So small branches, weeds that come across catching it, and it clears itself out the other side. On the screen here, you'll see we've got a small portable one up in the leaves. Left on the bottom would be our 5 kilowatt machine, which we have Put in the bottom of a canal and tested that as well. And on the far right is when we put in a wastewater plant in Seattle, Washington, we put it on the outflow of their process with a different blade configuration. So the other advantage we have over competition is that this thing is very portable and it can be put in many locations and it can be installed very quickly. The market, our main market is going to be irrigation districts, canal operators and water treatment plants. So you may ask yourself, why don't we put it in a river? Our competition is trying to put in rivers and there's three things that stop them. I think you probably want them to be would be fish. If there's fish in the water, especially in the United States, you have EPA regulations and you have to have your turbine certified fish friendly, which is a long expensive process. Second is boats, navigation and recreation boats. No matter how you put these in the water, they're going to obstruct the river. So there's a problem there. Third is debris. Rivers have logs, all sorts of things floating down that can damage. When we put these in wastewater plants and canals, the only debris is weeds going down, maybe a plastic bay once in a while. With the self clearing, we can continue to have power with little problems with breakage due to debris. Our target customer is a medium to large engineering organization with controlled water resources that size. They have budgets that will them to put this in. They also have a staff that understands the advantages of putting these in and the power saving and they can also know how to regulate them. The other advantage is There are over 400 irrigation districts in the Western U.S. and over 5,000 water treatment plants in the U.S. and the market is much larger locally. We estimate that just in the Western US that we could put in 80,000 turbines. We estimate that we can put a turbine in about every hundred yards in a canal. Stage. The company was founded in 2007. We finished our first round of financing in 2010. In 2009 the company may have started hearing about it because we started winning some awards. And with those awards came some funding. So our first funding was about $100,000 in awards. Right now we have seven full time employees. So we are a startup at this stage still. We have two prototypes that we've demonstrated. I currently have one in a canal that's been running for four weeks. It hasn't leaked, it hasn't broke and it's producing power. We have our first sale to engineering firm called DLZ. They have a contract to put up to 400 turbines in a canal in India. I am scheduled to deliver three of them to them late August versus September. And they've given us a letter of intent for another 400 if it works as planned. We plan to be shipping turbines by late 2011. In our first round, we waived $950,000 from Angels and corporations, and several of the corporations have been very helpful. They've given us insight. They've allowed us to use their engineers, and one of them even gave us $100,000 credit to use their engineer and their services. And they can manufacture pieces of our equipment for us. We have several partners, University of Washington, Woods Hole or Sonographic Institute, Harvard, and the US Navy. Our one of our small turbines was tested by a cadet for its project in waves, and it generated. It generated 30 RPM in waves, which is a market that we could go into down the road. But seawater and rivers are probably going to be marked down the road because of the barriers to entry and the problems with the machinery. But that has allowed us to have the Navy ask us to come test one of our turbines. And in doing so, it's going to open up our ability to get some grants for some of the smaller turbines, which could fund commercialization of one of our products. We've been voted best investment opportunity in three contests, and we have sales inquiries from 18 countries. Another interesting thing that's happened since we did this is that we've been contacted by two wastewater facilities, one in Washington and one in Montana. One in Washington is the one you saw on the first screen. That's a small 1kW unit that they want to put in. The utilities are excited about it and they're going to fund 70% of the install in Montana. There's two other plants that are much larger. It looks like we should be getting a contract for that in September for installing February or March on the backside of the wastewater plant. Again, although I think that canals is a bigger market, it appears that at the moment the wastewater community is being early adopters of the technology are going through this. So our strategy strategies to do demonstration projects for early adopters and drive customer inquiries. Then we want to distribute the turbines through pump dealers. Now why pump dealers? Pump dealers for irrigation districts. They sell them the pumps, they maintain the pumps. They have the equipment to install our machines. The pumps they have are huge, the grand. They also have the ability to maintain them. So they are a perfect match for us to distribute through the canal districts. We plan to sell the machines initially. We are going to make three sizes, Class 1 which is going to be about 1 kilowatts, Class 2, which should average about 5 kilowatts, and Class 3, which will average 10 kilowatts. We're only making three models because this is not going to be an engineered product where we can continually make new ones at different prices. We want to make this modular and scalable. If you needed a larger turbine, I would like to just add another rotor section to it, not remake or redesign the whole machine. What we want to do is become the Honda portable generator of hard hydropower. So we're going to make these inexpensive, and we want to make them in mass production. Our machines, as I said earlier, can either be put on the grid or they can be used for remote power. Depends on what your needs are. This one will do either one. So the return on investment. We're looking at a return on investment of about five years in our target markets, and that's using 11 cents a kilowatt hour. That does not include any incentives. We're building this company so that we can make money without incentives. If there's incentives available, then hopefully people will get a shorter return on investment. We'll buy more shoes. Currently, we're in the process of looking for funding. We have a $6,000 raise going on right now. We've raised about 300,000 right now. We have plans that in first of the year we may go for more money, which allow us to do more than just to expedite our growth and implement a couple other strategies that could be possible, such as some leasing or financing options, which would take a lot more cash to do. Thank you for your time.

I'd like to thank our speakers. And we're on time also. Just one thing. In filling out the survey, you might be wondering what Disruptometer is. We're really trying to ascertain which of these technologies is truly disruptive in their industry. In other words, how would it change their way of dealing with a certain problem and providing them with a phenomenal incentive to make that change? Okay, so.