Development
Limited
Business Development Strategy
The following corporate phases accompany the technical development outlined on the previous page. TWaveberg Development has licensed the exclusive rights to John Berg’s patents, in return for a stipend and a modest royalty on power sales. We seek $3 million in equity investment to build and display a full-size prototype at EMEC (European Marine Energy Centre). Following this stage, the company will proceed to full commercialization. John Berg remains as a trusted advisor to the company.
The business model for the Waveberg technology has two components to generate returns: 1) construction and operation of installations which generate revenues from the sale of water or power to the customer, and 2) licensing of technology for royalties. In the first case, the company will be a utility company, delivering electricity under long-term contracts. Capital costs of $2,500 per kW yield equity returns of 20 to 40% per year in the immediate markets above; debt for capital expenditures increase returns proportionately. Even the unlikely extreme of a total loss of the Wavebergs every 5 years due to storms only reduces the projected IRR to 20% per year, since the onshore generator and infrastructure would survive.
We anticipate engaging with local project developers as partners; they would be responsible for raising money, local permits and infrastructure. Waveberg Development would build and deliver Wavebergs for the projects using local toll manufacturing facilities for the massive frameworks and our own facility for the pumps, the heart of the system. There are a number of potential partnership structures, and the best ones will be based on the tax regulations and incentives locally, as well as the intentions of the local developer and utilities.
Our first commercial project is likely to be in Portugal. The Portuguese government, at the instigation of the Wave Energy Center in Lisbon, under the direction of Prof. Antonio Sarmento, has created the Pilot Zone, a designated part of the ocean where wave energy projects are pre-permitted. Marine Renewable Energy in Portugal (1.5MB PDF) Wave energy will receive feed-in tariffs of €0.26 for the first 4 MW, and €0.21 for the next 16 MW. Moreover, the main utility Energias de Portugal leads a consortium called “Waves of Portugal” which installed the demonstration project at Aguçadora of 3 Pelamis P1 machines. Pelamis retained 29% ownership, even though the partners paid the capital costs.
Royalty income is a second stream of potential revenue. There may be local or national companies or governments that do not want a partnership, but simply want to install the technology and receive the benefit of lower power pricing. For example, we recently fielded an inquiry from a large mining company on the coast of Namibia that wished to replace their diesel generation. Since a Waveberg only costs two years of fuel costs, we cannot recover the true value by sales of equipment alone, even with a substantial mark-up. On the other hand, such a customer is interested in stabilizing costs. A modest annual royalty, or even leasing them Wavebergs would realize cost savings and stability for them, with an enduring income stream for Waveberg Development.
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