Gentec WaTS

Prospectus for Investors

Greenheat Systems Limited

Tain

Ross-shire IV19 1NE

Scotland

UK

Tel: +44(0)1862 892777

Mobile +44(0)7720 141 332

Introduction

The inadequacy in ineffectiveness of existing renewable energy ‘real time’ generators has created a wonderful opportunity for investors to capitalise on the generous payment regimes developed by countries all over the world. These Feed in Tariffs and ROCs are particularly generous for marine energy because of the exorbitant costs of environmental impact studies, the development and deployment of marine generators, their attendant infrastructure and connections to shore.

Gentec WaTS is a hybrid Wave and Tidal Stream (WaTS) system uses deep oceanic pelagic wave power to provide almost all of the energy although tidal stream energy will, from time to time, provide back up during extended periods of calm seas.

Thermal generation provides the world with almost all of its secure base load electricity. Heat is generated by either burning fossil fuels or by nuclear fission and these ‘heat sources’ are used to raise steam for steam turbine generating sets. Gentec WaTS provides an alternative ‘heat source’ for new or existing thermal power stations from the power of deep ocean energetic waves.

The basic idea of Gentec WaTS is to use a ship mounted WEC to convert the wave power directly into heat, store it on board and transport it as heat to shore, then convert the heat into electricity using ‘green steam’ to power steam turbines. A typical kneejerk assumption to this invention by all engineers is that the extra processes are ‘inefficient’ and it would be more efficient to generate electricity directly from the waves and tidal streams. This erroneous assumption is based on guesswork and not on careful study and research, but it goes a long way to explaining why a system similar to Gentec WaTS was not invented decades ago.

Using a Ship to harvest marine energy has several financial advantages over fixed location devices.

These include,

No permitting costs consisting of fees paid to a plethora of governmental and non-governmental agencies
No environmental impact studies to pay for before deployment
No ongoing environmental impact studies during and after deployment
In the UK, no Crown Estate fees to be paid for WEC and sub-sea infrastructure because there is nothing attached to the sea bed.
No sub-sea cables to lay, repair and maintain
Very long life-expectancy of ship WEC because it can shelter from severe winter storms – fixed location wave machines cannot do this.
Ship WEC can go to where the most energetic waves are.
Ship is propelled by wave derived steam – no ship fuel costs.
Gentec WaTS is a modular system and can be easily scaled. The table below is based on wave and tidal stream derived electricity generated in Scottish Waters where 5 Renewable Obligation Certificates valued at £50 each are payable on every MWh(e) generated. A nominal wholesale price of £80 has been added to give a total price of £330 per MWh(e).

Capacity MW(e)--------------------------------Turnover on Electricity Sales(Scotland)

1MW ----------------------------------------------------------------£2,890,800

10MW ---------------------------------------------------------------£28,908,000

50MW ---------------------------------------------------------------£144,540,000

100MW------------------------------------------------------------- £289,080,000

500MW -------------------------------------------------------------£1,445,400,000

1000MW -----------------------------------------------------------£2,890,800,000

The cost of wave power generation is notoriously high because the amount of electricity generated from fixed location wave energy converters is pretty low. The cost per MWh(e) can be as high as £44.00 which implies a total outlay in CAPEX OPEX and interest payments of £14.5 million for a 1MW WEC over a 15 year expected life term. If cost can be reduced to, say, £25.00 per MWh(e) the total outlay will still be £8.2 million over the same term.

In Scottish waters, a conventional 1MW wave energy converter would have a capacity factor of around 25% and would generate 2,190 MWh(e) worth £722,700 per annum assuming that the device worked flawlessly over the term. The outlay per year at the lower rate would be ~ £548,000 giving a possible profit of ~ £175,000 assuming no contingency spending.

The cost per MWh(e) of a Gentec WaTS wave energy system is very low at £20.00 because it has a capacity factor of 100% and a longer life expectancy of at least 25 years because the wave energy converter is mounted on a ship and the ship can shelter from severe stormy conditions that can destroy a fixed wave energy converter. The CAPEX, OPEX and interest payments of £21.9 million, if defrayed over the 25 year term will make the annual cost of production £876,000.

The annual turnover for a 1MW Gentec WaTS system based in Scotland is £2,890,800 from the table above returning an annual profit of £2,014,800. The OPEX is high at because it includes typical costs of operating a ship and the wages for crew and agents and £600,000 should be allowed for this annually. I have allowed for a CAPEX of £6 million for the ship and shore side facility where the electricity and, in some countries, the desalinated water is produced. However, it does not follow that a 10MW version of Gentec WaTS will have a CAPEX of £60 million. The CAPEX for a 10MW system will rise to £12.5 million with the OPEX rising by around 20%; the bigger the ship the larger the operating costs – but turnover will increase 10 fold to £28,908,000 making a profit of £27,680,000 annually.

The inadequacies and poor outputs of existing renewables like wind, wave and tidal has created a very attractive environment in which to make huge profits for very little investment capital expenditure. Once operational the capital expenditure could be paid off within a year in the case of a 10MW Gentec WaTS system. This is not a technical paper but a prospectus for the investor from an investor’s point of view.

No other renewable energy proposal can offer huge returns outlined above and recommend a rigorous due diligence exercise on the technical aspects of Gentec WaTS.

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