Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - SYNERGY (Plugplay gasification plant for onsite conversion of otherwise unusable waste into renewable energy)

Teaser

The object of this project has been to prepare a robust strategy for Synergy commercialization and design the best plan for the international expansion of our business activity. During the last 3 months we have been working to confirm the technical, economic and commercial...

Summary

The object of this project has been to prepare a robust strategy for Synergy commercialization and design the best plan for the international expansion of our business activity. During the last 3 months we have been working to confirm the technical, economic and commercial viability of Synergy.
Synergy technology is intended to the thermal processing of industrial wastes or low-valuable by-products through the process of gasification, cleanly converting these materials into useful energy. Our new product will cover the need to reduce waste management and energy costs, displacing consumption at peak demand and providing renewable source of electricity and steam for industrial processes. The technology can be installed with no interruption of the manufacturing process, and the business profitability of our customers will increase based on operational savings, with return of investments in 2 to 5 years, offering a winning value proposition.
An array of several industries generate huge quantities of wastes, such plastic industries, food and drinks manufacturing, paper and pulp manufacturing, textile industry, or biodiesel production. These industrial waste streams could be transformed in a more valuable product, but state-of-the art technologies are not viable for relatively small fractions of waste. We have ranked the potential industrial sectors to address in terms of 3 key variables: energy expenditure, waste disposal expenditure and turnover. Apart from the percentage of these expenditures over turnover, we have considered the Heating Value available on each sector’s characteristic waste streams (syngas quality).
As conclusion, we have focused our go-to-market strategy in two initial sectors: plastics and food & drinks production. The addressable market only in Italy for these sectors implies more than 3.8 million tons each year. Out of these, total waste disposal expenditure accounts more than EUR 578 million while energy expenditure totalized over EUR 3.2 billion every year. Synergy technology is able to transform approximately 99% of waste into syngas (express on mass basis and depending on the waste characteristics). Considering a conservative conversion rate of 90%, 3.8 million tons of non-hazardous waste could be potentially converted into 3.4 million tons of usable fuel gas.

Work performed

During this project, we have performed a deep evaluation of Hysytech’s growth potential, and we have designed a flexible plan for different alternatives of business models. Our commercial efforts will be focused, not only in increasing our customer’s portfolio, but also in partnering with key market players who would act as energy aggregators or investors. Our go-to-market strategy targets as first customers and early adopters of Synergy technology those small-medium industry operators, producing average range between 2 and 6 tons of industrial waste per day, who want to grow their business profitability.
For the commercial deployment of Synergy, we have decided to produce two plant sizes: one with 100 kg/h capacity (or 100 kWe) for industry generating 2 tons of waste per day; and one with 300 kg/h (or 300 kWe) for industry producing 6 tons of waste per day. During this study we have identified potential suppliers for the plant components and confirmed the cost structure for the industrial production of both sizes of plants, including OPEX and finance models based on revenues from avoided costs (i.e. from waste management costs, savings from natural gas and electricity supply and avoided CO2 emissions).
After a thorough analysis of competitors and FTO, we have confirmed that Synergy is the only gasification system in Europe applicable for the on-site industrial waste valorisation, converting non-recyclable fractions of industrial waste into an efficient source of energy, with proved financial viability for low rates of waste with moderate heating value. Waste-To-Energy applications are mainly intended to treat Municipal Solid Waste, and a large number of facilities are incinerating waste with no additional generation of a fuel gas that can be used for energy purposes.
Given that Synergy is created to fill a gap in the market for user with specific needs (around 100 up to 300 kW of power), we have focused our primary analysis in technology companies providing small-capacity operating facilities. We have analyzed the competitive strategy of different companies offering relative small-scale solutions. After the competitors and FTO analysis, we have concluded that there are no commercial solutions operating within the low capacity ranges targeted by Synergy (i.e. daily capacities between 2 – 6 tons). Most WTE small-scale plants are intended to treat MSW (some of them combining other industrial waste streams in small fractions) with the lower capacities in the range of 10,000 tons/year (compared to Synergy’s 700-2,000 tons/year).

Final results

Synergy will be offered as a service through both direct-purchase (turnkey with O&M contracts) and leasing solutions. The leasing model will allow us selling more equipment, gaining competitive advantage and offering repeat business with happy clients who want to integrate future improvements. Our commercial plan is intended to secure strong partnership agreements with energy aggregators to support the business model based on shared benefits from Energy Performance Contracts (EPC). We are seeking initially to forge partnership within medium volume companies, as these companies provide shorter decision making process. With a growing presence in the market, proven reliability and an auditable manufacturing and supply chain, our next step will be securing at least one larger scale agreement per target country.
During a first exploitation plan (2020-2023) we will approach ESCOs as key business partners to exploit the turnkey plants. We plan to share savings with ESCOs through EPC with industry operators, considering revenues from the avoided costs (solid disposal, natural gas and electric power) and Renewable Energy Credits (or other applicable incentive as Guarantee of Origin) from avoided tones of equivalent CO2. By 2023 we expect cumulate sales of 28 plants with 100kg/h capacity and 27 plants with 300kg/h capacity, which represents an annual turnover over €27.5M from turnkey sales and O&M services.
We have designed a first business model for the long-term exploitation of EPC based on average customer’s economics. Our Financial Plan supports a favourable profitability to attract the interest of possible business partners, first with ESCOs aggregators, and, after deployment in a second exploitation plan, with leasing companies and private investors. As detailed in this study, from each Synergy plant we would receive significant revenues from avoided costs on customer’s economics, i.e. avoided waste management costs, energy costs, and equivalent CO2. The customer would still have earnings from the saving share (about 25,500€/year for a 100kg/h plant), and the lease would be amortized after 5 years, what means that they could convert a current cost into a future revenue.

Website & more info

More info: http://www.hysytech.com.