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Trimaran – Wave Energy : Green Capital Group

STATEMENT

The following study refers to the evaluation of the technical and financial data of a Trimaran wave energy project of 8 MW power. The purpose is the objective presentation and evaluation of the system, to enable the project owner to extract the appropriate technical and financial conclusions.

  • The main sources of this study are:
  •  The data given from the inventor
  • Banking & Loan Data
  • Materials suppliers
  • Published literature and seminars on the field of the wave energy

STUDY STRUCTURE: The Study begins with a general description of the existing wave energy technologies, so that the benefits of the Trimaran application can be clear, understandable and not just accepted. Further on, the Trimaran Technology will be described, giving the main advantages of the system, as also the big potential and the new horizons opened. And, finally, the economical calculations and results are presented and discussed. The results will be presented for the worst case scenario and for the normal running conditions. OBJECTIVES OF THE INVESTMENT: The main objectives of the investment are:

  • Investing in long life RES technology for the medium and long-term economic benefit of the investor from the sale of the electricity produced to Electricity Authority of Cyprus (E.A.C.)
  • Utilization of the sea wave energy offered.
  • Help the objectives of the Republic of Cyprus, and the commitments to the European Union to increase the participation of RES in the energy potential of Cyprus.
  • The acquisition of the applied knowledge on the field of wave energy
  • Practical action to reduce the dependency on fossil fuels.

SUMMARY – EVALUATION: Between all known technologies of Wave Energy Utilization, the “Trimaran” technology is the only one which can utilize wave of 20-30 cm height and therefore also suitable not only for open seas with high waves (as the usual systems) but also for sea areas like Mediterranean or even gulfs and rivers. The output of the system can be adjusted on the wave height and, of course, the higher the wave the cheaper the system. The installation of the system is very easy and quick since no infrastructure is necessary. And, additionally, it is modular and therefore expandable. That gives the chance to the Investor to start with a small system and expand gradually to bigger systems using the income from the first one. Wave energy conditions and therefore the output of the weave energy systems are usually predictable. There are enough measurements all over the world of wave heights in different distances of the sea shores and in different time seasons. This gives to Trimaran a huge advantage in the Energy Market Competitions since it can supply the Power Users (customers) with 24 hours per day service. This is not the case with other R.E.S. technologies. To evaluate the project, we decided to calculate for two separate running conditions:

  • The Worst Case Scenario
  • The Normal Running Scenario

Between these two Scenarios the main differences are: GENERAL

Assumptions Worst Case Scenario Normal running Scenario
Loan covers the future purchase of a 2 MW wind turbine YES NO
The Power is to be sold to the Government YES NO
The Power will be sold at the free market NO YES
Payment for the Usage of the Grid System NO YES
Limitation on System Life YES, 20 years YES, 20 years

FINANCIAL

Assumptions Worst Case Scenario Normal running Scenario
Production efficiency 55 % 65%
Cost per kWh (includingDepreciation) €  0.02 €  0.08
Selling Price per kWh €  0.13 €  0.18
Payment for the Usage of theGrid System 0.00 €  0.0214  /  kWh
Total Loan €  30.000.000 €  26.400.000
I.R.R. 20 years 11.50 % 17.40 %
N.P.V. 20 years €  19.400.000 €  39.275.000
Annual Production €  5.000.000 €  7.575.000
Net Profit in 20 years €  36.500.000 €  66.500.000
Average annual Net Profit €  1.800.000 €  3.330.000
Production of the wind turbine included NO NO
Expected extended life after the 20 years At least 10 years At least 10 years
Expected annual production per extended year €  5.000.000Not included in calculation results €  7.575.000Not included in calculation results

Based on these two comparisons we can be sure that the IRR and the NPV after 20 years running are very sufficient and that we can additionally expect an additional production after the 20 years, between 5-7.000.000 per year. This income is to be seriously taken in account since the system has a constant efficiency and will be serviced and repaired from the manufacturer according to a special contract considered in the calculations, with a cost of € 60.000 per MW (€ 480.000 for 8 MWs). The whole investment is also completely safe since it does not depend on any other factor than environmental uncertainties such as: Earthquakes, storms and natural disasters in general tension that can lead to collapse of the installation. For this coverage, as well as malicious damage to the entire project, the whole installation shall be insured, which is included in the annual running costs. According to all above, we conclude that investing on the Trimaran technology is a very positive combination of low risk and high expected profit. Especially because of its modularity, giving the chance to the investor to start with a low capital investment and “leave the system grow” using the profit gathered from the production. In markets where the Energy is not a monopole of the government, we would surely suggest to go in the new energy market, having big advantages against the competition as described above – and of course a very high profit. It is also useful to see from the graphs attached, for the normal running scenario, the influence of a possible selling price to the I.R.R. We can easily go in the free market with even lower prices and still remain on the profitable side of the project.

Applied Methods for Harnessing Wave Energy

A Historical Overview

The idea of harnessing energy from the ocean’s waves was tossed around for a couple hundred years. But it wasn’t until the oil crisis of the 1970s that it started to gain some significant attention [source: CRES]. The concept resurfaces whenever oil prices rise. So far, engineers have developed and implemented several methods for collecting wave energy. These methods can be implemented on the shoreline, near the shore or offshore. Most devices that are near or offshore are anchored to the sea floor. Here’s a list of the major kinds of wave energy converters (WECs), or devices that transfer wave energy to usable electricity. Terminator: Wave energy devices oriented perpendicular to the direction of the wave, are known as terminators. These terminators include a stationary component and a component that moves in response to the wave. The “stationary” part could be fixed to the sea floor or shore. It must remain still, in contrast to the movable part. The moving part works kind of like a piston in car — moving up and down. This motion pressurizes air or oil to drive a turbine. An oscillating water column (OWC), shown in the image above, is a terminator. OWCs have two openings — one on the bottom that allows water to enter the column and one narrow passage above to let air in and out. As waves come and fill the column with water, this pressurizes the air inside, which forces the air through the opening above. The air encounters and drives a turbine. Then, as waves pull away, water rushes out, which sucks more air back down through the top, driving the turbine again. image006 Another  terminator,  an  overtopping  device,  includes  a  wall  that  collects  the water from rising waves in a reservoir. The water can escape through an opening, but while passing through, drives a turbine. The most famous kind of terminator, however, is truly the Schwarzenegger of WECs. Salter’s Duck includes a bobbing, cam-shaped (tear-shaped) head that drives a turbine. Though not fully realized, theoretically, this device would be the most efficient WEC. image007 In this diagram, you can see how an overtopping device works. After waves topple over a wall into a reservoir, the water drains out of an outlet, where it drives a turbine. Attenuator: These devices are oriented parallel to the direction of the wave. One of the most well-known examples of this is the Pelamis, a series of long cylindrical floating devices connected to each other with hinges and anchored to the seabed. The cylindrical parts drive hydraulic rams in the connecting sections and those in turn drive an electric generator. The devices send the electricity through cables to the sea floor where it then travels through a cable to shore. image009 Point absorber: These devices aren’t oriented a particular way toward the waves, but rather can “absorb” the energy from waves that come from every which way. One such device is called the Aquabuoy, developed by Finavera. In a vertical tube below the water, waves rush in and drive a piston, a buoyant disk connected to hose pumps, up and down to pressurize seawater inside. The pressurized water then drives a built-in turbine connected to an electrical generator [source: Finavera].  Many  Aquabuoys  can send  electricity  to a central  point.  From  that point, electricity is sent down to the seafloor and then to shore via a cable. image010

THE  “TRIMARAN”  TECHNOLOGY

A SPECIAL BOAT WITH FLOATERS

Trimaran is a boat with floaters which converts the sea waves into electrical energy mechanically and not hydraulically. It works by exploiting the completely irregular and chaotic behavior of the sea waves regardless of whether they are high or low, long or short. The vessel is a typical Trimaran design, having as a result that it always floats on the surface of the sea waves and never sinks under any weather conditions or circumstances. The vessel carries a series floats at both sides. The complete device can be operated either close to the sea shore or far away, in the open sea. image012

What makes the practical difference between

“Trimaran”  and the previous Technologies?

The new Technology opens a new horizon for the wave energy applications. The main advantages follow in bullet points:

  • Suitable for both, sea shore or open sea installations
  • No expensive infrastructure necessary
  • High performance even with very low waves beginning from 20-30 cm. This makes it suitable for seas like Mediterranean, a sea which includes huge amounts of islands.
  • Much more efficient
  • Mobile, easily movable
  • Modular, easily expandable

THE MAIN TECHNICAL CHARACTERISTICS

image014 Trimaran can be adapted to any output necessary, using different construction possibilities.  For  example,  by  increasing  the  number  of  floaters,  the  area  and length of each floater, the length of the main vessel or even the length of the levers, Trimaran can adjust its output to any wave height. The wave movement transmission to the axis is very high, from 55% to 100%. And, additionally, there is no power reduction by the time, as usual for other competitive systems, such as photovoltaic or wind generators. The construction is simple, since all the parts and technologies applied are already available in the market and tested for many years. This fact, reduces the risk of the maturity if the technology to the minimum, since – although Trimaran is new as idea – the technologies applied and all components are completely mature. It can be very easily manufactured, actually assembled, in a mass production line. The rotation of the main axis can be very easily changed, making the Trimaran easily matched to any kind of generator, converter and inverter available in the market. For all new technologies, a main problem is the maintenance and the monitoring of the results, alarms, warnings, etc. It is electronically connected to a special detecting and managing system. All  these  services  are  completely  undertaken  from  the  manufacturer  under  a yearly  contract  of  €  80.000  per  MW. The   price   of   €   3.300.000   per   MW   offered   by   the   manufacturer   is a turnkey offer including training and commissioning. Concerning the installation, the system can be installed in a short distance to the shore and therefore there is no need of kilometers long undersea cable and the corresponding energy losses. It is also modular and easily expandable with more units. The floaters can be easily disassembled and that makes the transportation (land or sea) very easy. The  six  unit  system,  called  “flake”,  consists  of  six  units  of  1  MW  plus  the  prepared supports for the installation of a Wind Generator of 2 MW in the middle. For this study, we assume that the company will buy a 6 MW “flake”   plus 2 MW Tirmaran – system (totally 8 MW), already prepared to accept later a 2 MW Wind Turbine. We do this to avoid complications with the applications to the government, since the government does not have any plan to accept a combination process of wave and wind energy. Therefore we will first apply for the wave energy system and as second step it will be very easy to apply for an additional 2 MW wind generator. It is completely ecological. There are no polluting wastes as gases, liquids or other materials. The function is completely silent avoiding even the noise pollution and any negative influence on the sea life.

THE POTENTIAL OF THE SYSTEM

The Trimaran system is a really unique and pioneer idea. It can produce directly kWhs, 24 hrs per day, having solved the main problem of the wave energy applications: The depth of the sea, the wave height necessary and the irregularity of the transferred movement. It can be adapted to any wave condition. There is no environmental pollution at all, the system is compact and therefore there are no negative factors to secure all the permissions necessary from the government. Although it is compact it can produce Megawatts and can expand the produced power just by adding more and more units. Compared with the existing wave energy applications for Megawatts it is much cheaper and much easier to install. And, of course, much more efficient. In case we also consider the possibility of selling the CO2 emission-rights to any other industry worldwide, the profit will be much higher and the payback time even shorter! It  is  very  ease  to  transport  anywhere  and  this  makes  the  spectrum  of  its applications very wide. It can be used from the supply of power to any country with sea shore, or to separate small islands, up to covering the needs of any other open sea application. That  gives  for  example  the  additional  freedom  to  the  company  to  install  the system at any other country where the waves are higher or the permission easier or even the power is higher subsidised and bring the profit back to Cyprus.

“The  Worst  Case  Scenario”

ASSUMPTIONS FOR THE CALCULATION

The following calculations are based on certain assumptions, so that the results really  represent  the  “worst  case  scenario”. Output Assumptions:

  • The wave movement transmission efficiency is between 55% and 100%. We calculate with the minimum of 55%, as guaranteed form the manufacturer.
  • Since the system will be maintenance and serviced by the manufacturer, the life of the system is theoretically unlimited. But, again, to calculate the worst scenario, we assume a life of the system limited to 20 years. Anyway, evaluating the system, we have to consider that its life will be much longer since the manufacturer will service the system and change all necessary parts under paid contract continuously. This gives an additional income of about €  4.940.000  per  extended  year,  not  included  in  the  calculations.

Financial Assumptions:

  • Although all functions will be monitored and all service & maintenance will be done form the manufacturer, we   assume   a   yearly   personnel cost   of   €  150.000 to cover all possible future needs.
  • The   power sold   to   the   Grid   can   be   subsidised   with   €   0.13   per   kWh   or   the  power can be freely sold to the market. And since the Cyprus Power Station in  Cyprus   have  a  cost  of  €  14.50  per  kWh  and  sell  to  their  customers  about  €   25   /   kWh,   it   is   very   easy   to   sell   at,   say,   €   18-20 / kWh. But, again, we remain  to  the  lowest  income  of  €  0.13  /  kWh.
  • We do take in account the possibility of installing an additional 2 MW Wind Power Generator and, therefore, include this purchase cost in the total loan necessary. This total loan is calculated to be paid back using the 8 MW Wave Energy System only. The production of the wind generator to be installed will not be included in the calculations, since the installation is not sure.
  • Since the system is new and we cannot know if some parts of it will not be charged with  V.A.T.  (usually  electromechanical  parts  are  excluded),  we assume that the total purchase amount will be charged with V.A.T. (19% in Cyprus).

“The  Worst  Case  Scenario”

THE CALCULATION RESULTS AND CONCLUSIONS

The results can be described as very positive, despite the 100 % bank lending of the project. (Please find attached calculation results and graphs, based on the assumptions given above). The  study  is  based  on  a  selling  price   of  €  0,13  /  kWh.  Using  the  usual  wave  heights  of the sea surrounding Cyprus, the system will annually produce in the 20 years of the   duration    of    the   contract   with    the   EAC,    an    annual    income   of    around    € 5.000.000 per year. This income will be constant for the whole duration since no performance reduction is expected by the time. From this income different cost will be deducted, such as taxes, maintenance, spare parts, labors and insurance. The payable taxes in Cyprus are:

  • 10% for income (P.A.Y.E.)
  • 20 % on the 70 % of taxable income for the defense.

Therefore, a mixed taxation of 18% is taken in account as the highest possible, giving again the worst case scenario. Based on the above, it is concluded that this project is not only viable with I.R.R. index of more than 11.55 % and N.P.V. of €   19.400.000 in 20 years , but also profitable. The whole investment is also completely safe since it does not depend on any other factor other than environmental uncertainties such as:

  • Earthquakes, storms  and  natural  disasters  in  general  tension  that  can  lead  to collapse of the installation. For this coverage, as well as malicious damage to the entire project, the whole installation shall be insured, which is included in the annual running costs.

Under the a.m. assumptions, the safety limit of I.R.R. > 11 % has been set, in order to  be  absolutely  safe  for  the  sustainability  and  the  good  performance  of  the project. The funding will be made with fifteen-year loan at 2 % and will cover 100.00 % of the total initial investment.

  • During the first fifteen years, the total amount of the loan plus the interest will be paid back.
  • From the  15th year onwards, all annual income of  €  5.000.000  from the Production will be free and available to the owner – actually for much longer than 20 years.

The net profit of the project is calculated for the 20 years, with all taxes paid, to € 36.500.000 with an Average Annual Profit of €1.800.000. Based on our calculations, the minimum safety limit of the I.R.R. > 11 % can be easily reached even by this worst case scenario.

  • To cover the total purchase cost, a loan will be agreed of  €  30.000.000 to include also the purchase cost of a 2 MW wind turbine, as also the first payment to the V.A.T. account.
  • The loan  will  be  fully  paid  back  in  15  years.  For  the  first  five  years  no payment will be made and the total amount will be paid in the next 10 years, in equal annual amounts
  • The loan interest will be 2 %

“The  Normal  Running  Scenario”

ASSUMPTIONS FOR THE CALCULATION

The following calculations are based on certain assumptions, so that the results represent the normal financial and running conditions. Output Assumptions:

  • The wave movement transmission efficiency is between 55% and 100%. We calculate with the normal and usual running efficiency of 65%.
  • We choose to sell the production to the free market and therefore have to pay  for  the  usage  of  the  distribution  net  a  fee  of  approx.  €  0.0214  /  kWh.
  • Since the system will be maintenance and serviced by the manufacturer, the life of the system is theoretically unlimited. But, again, to be on the safe side, we assume a life of the system limited to 20 years. Anyway, evaluating the system, we have to consider that its life will be much longer since the manufacturer will service the system and change all necessary parts under paid contract  continuously.  This  gives  an  additional  income  of  about  €7.575.000 per extended year, not included in the calculations.

Financial Assumptions:

  • Although all functions will be monitored and all service & maintenance will be done form the manufacturer, we assume again a yearly personnel cost of  € 150.000  to  cover all possible future needs.
  • The   power sold   to   the   Grid   can   be   subsidised   with   €   0.13   per   kWh   or   the power can be freely sold to the market. And since the Cyprus Power Station in  Cyprus   have  a  cost  of  €  14.50  per  kWh  and  sell  to  their  customers  about  €   25  /  kWh.  Between  all  usual  R.E.S.  technologies  applied  in  Cyprus (Photovoltaic,  Soral-thermal,  Wind  Turbines,  Biomass),  only  the  wave energy – and the biomass – systems can produce 24 hrs per day and offer a continuous and steady power availability to the clients. The biomass has a much higher cost and is limited in output through the small quantities of the available organic input materials, as also from firm environmental restrictions.  Therefore,  we  can  easily  compete  the  E.A.C.  selling  to  the clients at, say,  €  18-20 / kWh. We calculate using the average possible price of €  0.19 / kWh.
  • Since the system is new and we cannot know if some parts of it will not be charged with V.A.T. (usually electromechanical parts are excluded), we assume again that the total purchase amount will be charged with V.A.T. (19% in Cyprus).
  • To cover   the   total   purchase   cost,   a   loan    will   be   agreed   of   €   26.400.000 including the first payment to the V.A.T. account. But, we do not include the purchase cost of a 2 MW wind turbine, since its production does not take any part in the calculations.
  • The loan  will  be  fully  paid  back  in  15  years.  For  the  first  five  years  no payment will be made and the total amount will be paid in the next 10 years, in equal annual amounts.
  • The loan interest will be 2 %.

“The  Normal  Running  Scenario”

THE CALCULATION RESULTS AND CONCLUSIONS

The results can be described as very positive, despite the 100 % bank lending of the project. (Please find attached calculation results and graphs, based on the assumptions given above). The  study  is  based  on  a  selling  price  of  €  0,19 / kWh. Using the usual wave heights of the sea surrounding Cyprus, the system will annually produce in the 20 years of the  duration  of  the  contract  with  the  EAC,  an    annual    income   of    around    €7.575.000 per year. This income will be constant for the whole duration since no performance reduction is expected by the time. From this income different cost will be deducted, such as taxes, maintenance, spare parts, labors and insurance. The payable taxes in Cyprus are:

  • 10% for income (P.A.Y.E.) on the subsidized price
  • 20 % on the 70 % of taxable income for the defense.

Therefore, a mixed taxation of 18% is taken in account as the highest possible, giving again the worst case scenario. Based on the above, it is concluded that this project is not only viable with I.R.R. index of  17.40 %  and  N.P.V.  of  €  39.275.000 in 20 years, but also very profitable. The whole investment is also completely safe since it does not depend on any other factor other already mentioned environmental uncertainties. Under the a.m. assumptions, the safety limit of I.R.R. > 11 % which has been set to secure the sustainability and the good performance of the project, is very easily reached after the 9th year of running! The funding will be made with fifteen-year loan at 2 % and will cover 100.00 % of the total initial investment.

  • During the  first  fifteen  years, the total amount of the loan plus the interest will be paid back.
  • From the  15th  year onwards, all annual income of  €  7.575.000 from the Production will be free and available to the owner – actually for much longer than 20 years.

The net profit of the project is calculated for the 20 years, with all taxes paid,  to  €66.650.000 with an Average Annual Profit of €  3.330.000.