kemah power, llc -...
TRANSCRIPT
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General Company Description
Kemah Power LLC is a start-up business based in Barrington, Illinois that offers
comprehensive services around mounting Vertical Access Wind Turbines (VAWTs) onto
existing structures. Kemah Power, LLC focuses on three services: VAWT consultation,
licensing, and dealership.
It is Kemah Power, LLC’s mission to provide the finest renewable energy solutions
regarding consultation, supplying, and licensing of Vertical Access Wind Turbines (VAWTs) on
an existing structure, such as conventional transmission towers, monopole towers, billboards,
road signs, utility poles, buildings, stadiums and the like. 1 In addition, Kemah Power, LLC will
also focus on development of more efficient ways of generating renewable energy in wind. The
company will specifically focus on research and development of its Power Tree2 structure for
this purpose.
Kemah Power, LLC will be led by Gregory Schmitt, an experienced Chief Executive
Officer of R.J. Schmitt and Associates, Inc. He has many years of experience in real estate.
Through a combination of wholesome education and good work experience, Gregory Schmitt
will be able to successfully execute the business plan for Kemah Power, LLC.
Kemah Power has identified three keys to its success. The first is the need to offer more
efficient solutions than competitors. The second is to offer solutions on an economically feasible
scale. The third is to establish an environmental bottom line.
Kemah Power, LLC envisions the environment it operates within to be sustained use by
future generations. Therefore, an environmental bottom line is crucial to its business operations.
Specifically, the company has focused on development in wind as a renewable energy source.
Kemah Power, LLC is able to bring innovative thinking into traditional renewable energy
concepts. As conceptualized in its patent3, Kemah Power, LLC will apply VAWTs, a smaller
type of wind turbine that captures wind from 360 degrees as compared to bigger horizontal
access wind turbines (HAWTs) that capture wind in one direction only, onto existing structures,
saving customers significant costs in the process. Kemah Power, LLC realizes that not only do
VAWTs capture more wind, are more affordable and useful to people without access to vast
amounts of land, but mounting them onto existing structures conserves land that can be kept in
its natural state.
Through a combination of strong management skills of Gregory Schmitt, a
comprehensive business plan, Kemah LLC will be a lasting and profitable business.
1 This is the patent Kemah Power, LLC applied for. Public No: US 2010/0230975 A1. Inventor: Gregory C. Schmitt.
Assignee: Kemah Power, LLC, Lake Barrington, IL (US). 2 Power Tree is a trademark of Kemah Power, LLC. The Power Tree was designed to allow multiple VAWTs
mounted on one structure, thereby maximizing the production of electricity, while minimizing the consumption of land: VIDEO: VAWT Power Tree. URL: http://www.youtube.com/watch?v=FXfcRzyXdSA. Trademark information available at http://www.trademarkia.com/power-tree-77741465.html 3 See footnote 4.
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Service and Products
Kemah Power offers a variety of VAWT services: VAWT consulting services, Patent
licensing services, and VAWT supplying service.
Consulting Service
Kemah Power, LLC will offer customers the uniqueness in purchasing its services in a
bundle. The consulting service is the first part of the bundle. During this phase Kemah Power,
LLC will provide information on mounting VAWTs on existing structures to customers
interested in generating energy through wind but who do not necessarily have the financial
resources of purchasing new land or allocating a certain amount of land per turbine for mounting
horizontal access wind turbines. Land prices vary across and between States. Consulting services
provide customers without broad financial capacity with an opportunity to generate wind energy
at their own business or community without committing to spending high amounts of money on
buying a HAWT or VAWT.
Kemah Power LLC will provide customers with a qualified engineer to test out
possibilities of mounting VAWTs on a structure the customer specifies. Consulting services will
then recommend a model of VAWT from our five suppliers. Their recommendation will be
based on factors such as stability, weight issues, and wind generating capacity of the VAWT.
Their recommendation will be the most optimal choice for generating wind energy in each
specific setting. Furthermore, Kemah Power, LLC will provide customers with a detailed
analysis of the local wind speed and electricity to project the rate of return. Recommendations
will vary depending on research of factors that vary across geographical locations in the United
States. These factors include: wind speed, type of VAWT-hosting infrastructure. In addition,
customer preferences for issues of aesthetics, total energy-generating capacity will alter
recommendations.
Consulting will be charged a fee that is bearable by both customers who are committed to
mounting a VAWT and to customers who are merely interested in learning more about the pros
and cons of mounting VAWTs to pre-existing structures.
Patent Licensing
This is the second type of service Kemah Power, LLC will offer. Purchase of any service
past the consulting services will be part of a binding contract to pay the licensing fee for the
Patent and for purchasing VAWT(s) from one of our suppliers. Kemah Power, LLC offers
consulting to help customers determine if the remaining two services are necessary. If mounting
VAWTs on pre-existing structures is desirable, then a licensing fee to use the Patent will apply.
Dealer/Distributor
Dealer/Distribution entails the use of VAWT suppliers guaranteed through contractual
agreements Kemah Power, LLC will have with local VAWT vendors. Specific names of VAWT
suppliers will be determined in the R&D phase. The goal is to source VAWTs locally so as to
lower carbon footprint from supply transportation. In the case no customer demand exists in an
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area that does not provide VAWTs locally, Kemah Power, LLC will offer one of its closes
suppliers.
Maintenance and Installation Servicing
This aspect of Kemah Power, LLCs’ servicing will be a partnership with local VAWT
installation businesses if installation is not already provided by the VAWT supplier. Technical
colleges might be a good source to look at for supply of skilled workforce who is capable of
mounting and maintaining wind turbines. Sourcing labor from local communities may be
appealing to customers if they are interested in promoting local jobs’ market. Kemah Power,
LLC strives to achieve win-win situations for its customers and for its local community.
VAWT Supplying Service
Kemah Power, LLC will provide consulting service to those who are interested in
sourcing energy from renewable sources, such as the wind. Kemah Power, LLC will specialize in
consulting interested parties on usage of pre-existing infrastructure to host one of the above five
VAWT models. There will be a detailed analysis of the wind power available in the locale, the
support system of the pre-existing infrastructure, and the rate of return for mounting type X
VAWT on such an infrastructure in such a locale. Based on recommendations by our engineer
and consideration for locale-related factors, Kemah Power, LLC will recommend a type of
VAWT. Extra models will be available as local VAWT suppliers are available and are willing to
strike a partnership with Kemah Power LLC. As of now, Kemah has identified six potential
VAWT models:
VAWT Model
Names
Company Weight Material
(Generator)
Swept
Area
Design
Life
See
Appendix
WindCharger
$7,000
Sauer Energy 125 lbs Rare Earth
magnetics:
NdFeB
5.5 square
feet
20 yrs 1
Gale T1-R15
$8,450
Tangarie
Alternative
Power
118 lbs High quality
aircraft
aluminum
6.24 sq. ft. 30 yrs 2
Helix Wind S
322 Wind
Turbine
$10,500
Helix Wind 295 lbs Ultra tough
Aluminum Alloy
34.33 sq.
ft.
30 yrs 3
Eddy
Urban Green
Energy
202 lbs n/a 25.4 sq. ft n/a 4
5
$8,650
Seahawk+
$9,000
PAC Wind 180 lbs n/a n/a n/a 5
Marketing Plan
Customers
Kemah Power LLC aims to market primarily towards owners of existing structures such
as conventional transmission towers, monopole towers, billboards, road signs, utility poles,
buildings, stadiums and the like. These structures can be owned by the public and or the private
sector. Within the first five years of operation, Kemah Power, LLC will seek to use $1 million
per year in grant funding to test the applicability of mounting VAWTs on existing public
structures in order to show that business around mounting on privately owned structures is
possible. As for the public sector, Kemah Power, LLC will focus on communities that seek to
begin a process of sourcing energy locally and from environmentally friendly sources. A focus
on billboard companies and cell tower owners will be critical to Kemah Power, LLC’s marketing
strategy. There are 170,000 cell towers, 450,000 billboards and over 100 million utility polls in
the United States.4 Potential private sector customers would also include individual customers
who are interested in installing wind turbine(s) on their own property.
Potential consumers at Kemah Power, LLC are interested in investing in renewable
energy because they care about their impact on the environment and constantly seek to lower
their carbon foot print. Kemah Power LLC provides them with that opportunity via its business
operation focus on three parts of VAWTs: consulting, licensing, supplying and providing
upkeep. These three sectors of business collectively enable Kemah Power, LLC to gain valuable
insight on the life cycle of VAWTs from the first decisions made to purchase them, to the
sourcing and transportation, to the installation and upkeep, and finally to the up-cycle potential
after significant wear and tear has been diagnosed by our outside partners focusing on
maintenance and installation. Kemah Power, LLC has the advantage of coordinating outside
maintenance work while being the conduit for consulting and licensing individuals or groups on
VAWTs and situation-specific mounting prospects. Coordination of its own divisions and
outside VAWT supplier companies ensures the public with transparency in business operations
so that progress of business profits and environmental sustainability can be measured
simultaneously. Kemah Power, LLC customers will be those who care about corporate social
responsibility and accountability. They will be keen on insisting best service and product
delivery in wind energy solutions.
Advertising
4 Identified by Gregory Schmitt and described in patent application.
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The target markets are billboard companies, stadium owners, municipality governments.
The Patent application indicates that any method for “mounting a VAWT to an existing
structure, such as conventional transmission towers, monopole towers, billboards, road signs,
utility poles, buildings, stadiums, and the like” fall under legal control of patent 12/720,377. We
will advertise to our target market by showcasing benefits of having locally controlled sources of
energy in comparison to privately-owned energy suppliers. Benefits of generating energy locally
include being able to reinvest profits back into local communities, which will create multiplier
effects that can strengthen other key local businesses as well as the labor market. Kemah Power,
LLC will advertise to billboard companies by elucidating the appeal of mounting a VAWT next
to an advertisement on the billboard, promoting the socially attractive idea that the billboard
company itself cares about the environment.
Kemah Power, LLC will stress the appeal of doing business and protecting the
environment to potential billboard, community and stadium owners etc. in product and service
advertisement. Specifically, Kemah Power, LLC will cite market researches and survey results to
support the success of this advertisement concept. To all parties in Kemah Power, LLC’s target
audience group, wind energy represents an additional energy source that will generate enough
electricity in the long-run to create extra income that will offset costs of mounting VAWTs onto
existing public structures. The company will stress this as an advertising point. In addition,
system design, blade speed, and environmental impact aspects of VAWTs in and of itself will be
good advertising points for the reasons listed in the next few sections of Kemah Power, LLC’s
market plans.
Potential Competitors
HAWT businesses are competing against us. Kemah Power, LLC realizes the potential
competition from suppliers, producers, and service contractors of Horizontal Access Wind
Turbines (HAWT). HAWTs generally have steeper power curves than VAWTs, but the slope of
the curve depends on the model. With steeper power curves, VAWTs can produce energy at a
higher rate, attracting consumers who need a higher amount of renewable energy. The following
graph illustrates the costs and benefits of choosing HAWTs vs. VAWTs:
Benefits/
Model
Potential for higher power
output
Shorter Rate of
Return
No need to purchase land and
mounting pole
HAWT X
VAWT X X
Competition is also based on location of Kemah Power LLC’s branch distribution.
Renewable energy is attractive to customers who want to lower their ecological impact.
Suppliers of solar energy products and services could be a competitor depending on the location
of reference. Kemah Power, LLC would face less competition in Wisconsin than in California
from solar energy service and product suppliers. Suppliers of alternative renewable energy
sources could also be potential competitors based on the availability of the renewable energy
source in question. Traditional Horizontal Access Wind Turbines’ (HAWTs) product and service
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providers provide the biggest challenge to Kemah Power LLC’s market. Customers interested in
wind energy may be indecisive on purchasing a HAWT or a VAWT. In this case, it helps to
identify a few outstanding unique qualities of VAWTs over HAWTs.
Differences
Kemah Power, LLC holds a competitive edge against competition from other energy
solution businesses in three ways, two of which are inherent qualities of VAWTs: system design
and blade speed and the third being an inherent quality of providing service and products around
renewable energy sources: environmental impact.
System design
Vertical access wind turbines are designed to be non-intrusive. Their compact design
enables the turbine to be integrated into existing structures, whether it is a building, light pole or
stadium. From an economic perspective, onsite installations drastically increase rate of return
versus off-site installations of HAWTs. Offsite installations are subject to transmission and
distribution costs that onsite VAWTs are not.
Blade Speed
From the perspective of blades, VAWTs champ HAWTs in many ways. First of all,
VAWTs require significantly less wind speed to generate energy than traditional turbines. The
minimum wind speed necessary to turn a blade on a VAWT is 5mph, approximately is 2.2 m/s. 5
Therefore, VAWTs enable more wind energy production at places that are not traditionally
identified as high wind potential areas. Furthermore, ability to collect wind on a 360 degree basis
highlights VAWTs efficiency compared to HAWTs which can collect wind energy from only
one dimension. Overall, VAWTs overcome limitations of HAWTs in its ability to capture wind
from multiple directions and its ability to capture lower speed winds, improving its attractiveness
in the market of wind turbines and especially towards non-traditional markets.
Environmental Impact
With energy prices on the rise, businesses are searching for strategies to reduce the cost
of energy. This trend is fostering a great deal of business interest in renewable-energy options.
Wind power is cited as the fastest growing alternative energy segment of the renewable energy
economy and provides an attractive cost structure relative to other alternative energy sources.
Large horizontal access wind turbines (HAWTs) have traditionally dominated the wind
energy market. HAWTs are generally made of 4 feet or larger blades.6 The size of the blades
makes it hard for HAWTs to be located in anywhere but rural areas. Typically, they are clustered
into wind farms in rural lands. These large systems seriously limit the ability of many companies
to seize the opportunity of producing wind power right at their building or plant. This is due to
5 http://sauerenergy.com/
6 http://greenterrafirma.com/wind%20turbines.html
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the economics of horizontal wind turbines that favor large units, big installations and current
technology dynamics.
However, new technology offers an opportunity to break this cycle. VAWTs address an
array of known short comes under the HAWT model, such as noise pollution, bird endangerment
and space limitation, while not compromising any significant advantages of HAWTs.
Our chosen models have low decibels, as illustrated in the following graph:
Sauer Gale T1-R15 Gale T2 Helix Wind Eddy
With background
noise at 10’
At 10’ At 10’ -- At 12m/s
34 db 58 db 58 db < 5 db above
back noise
<36 db
Renewable Portfolio Standards make renewable energy more competitive than traditional
energy sources like coal and petroleum. American Wind Energy Association (AWEA) has
standardized technical procedures to test small wind system performances and safety criteria as
of December 2009. Standardization helps stabilize variables such as cost of installation and
maintenance for Kemah Power, LLC consumers. Furthermore, Congress has passed the
Emergency Economic Stabilization Act of 2008 that makes wind turbines more affordable.
Specifically, it introduced a 30% federal-level investment tax credit (ITC) to help purchases of
small wind systems with capacities of 100kWh or less.
In addition, explicating bonds and other federal level incentives will assure customers on
VAWT investments. Property-Assessed Clean Energy (PACE) bonds will help consumers invest
in Kemah Power, LLC services. PACE bonds are generally issued by municipalities and bought
by banks. Municipalities will then lend the proceeds to residential and commercial applicants to
help their purchases in renewable energy equipment. PACE bonds lessen two burdens to VAWT
market: high-up front costs, and long payback periods, making Kemah Power, LLC services
more attractive. PACE also does not burden applicants with paying back the cost of the VAWT
if the property on which it is mounted is sold to a new owner. The next owner assumes payment
of the turbine under PACE stipulations. It can be seen then, that current legislation favors
purchases of small wind turbines. Kemah Power, LLC marketing strategies will capture this in
their marketing operations towards consumers who may be unsure of how long they plan on
owning a certain property.
Additionally, renewable energy can be more attractive than traditional energy sources.
Kemah Power, LLC offers unique services that capture growing customer concern over rising
electricity costs across the states. Electricity prices across all sectors have risen by 6% since 2006
to an average of 9.44 cents/kWh. Thus high costs of traditional electricity offer a chance for
alternative energy sources to compete in the energy market. Renewable energy have other
benefits that cannot be measured on a cost and effect scale: lower carbon footprint in production.
Kemah Power, LLC will encourage suppliers to certify their products with eco-labels to ensure
consumers a high standard.
Net metering programs enable consumers to offset energy consumption at their on-site
renewable energy generation system by allowing their meters to run backwards when more
renewable energy is generated than energy is used to produce it. Wind turbine, including
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VAWTs is an important source of on-site renewable energy generation source. Federal Energy
Regulatory Commission (FERC), a recent federal ruling establishes rules that make it easier for
small wind turbine owners to reap profits of net metering programs. FERC relieves qualifying
facilities of certain regulatory burdens that a turbine owner would otherwise have to apply for, a
process sometimes involving high fees. Net metering programs increase the value of electricity
from renewable sources and enable customers to bank their electricity as credit. This allows
customers more flexibility and the ability to use credits whenever they want, increasing the value
of their renewable electricity production.
Distribution Patterns
Distribution patterns are defined by location. Kemah Power, LLC will be distributing its
services across the nation, focusing on areas that have track records in a combination of factors
that make wind energy a strong competitor in local energy markets. This combination of factors
include wind speed, cost of electricity, and buy back rate to grid. These factors will vary across
states. Kemah Power, LLC will utilize a number of advanced technologies to identify geographic
regions with the greatest average wind speed to find the best VAWT mounting sites.
Extrapolating from the traditional wind resource maps that typically evaluate wind conditions at
a height of 50 meters above ground, the company will be able to project data for VAWTs
mounted at 30 meters and above to show the cost-effectiveness of mounting VAWTs in these
areas.
In addition, the company realizes that net metering policies and the cost of electricity will
affect choices for office locations and geographically defined target markets. Desirable places
will have high wind speed, high cost in electricity, good net metering policies and proximity to
local VAWT supplier. Kemah LLC strives to reach a triple bottom line so that achievement of
earth, economics, and equity goals will be balanced out over the long run. Currently, Kemah sees
California, Illinois and Hawaii as potential target markets for having many of those desirable
qualities and plans to focus distribution of its services in those areas. 7
Operational Plan
Stage of Development
The stage of development indicates a phase by phase description of the organizational
process of Kemah Power, LLC. The initial stages of development include: Patent Application,
Grant Application, Research and Development, and Application in the Private and Public Sector.
Patent Application
The first stage of development is finalizing the patent application. The provisional patent
application was successfully filed on March 13, 2009 and has been assigned Serial No.
61/160,227. A second provisional patent has been filed on May 22, 2010 and has been assigned
7 As shown in “Why Are Electricity Prices Increasing”, fossil fuel depletion is driving prices of electricity up. Average
cost of electricity per kWh in nation was 10.4 cents per kWh in 2007.
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Serial No. 61/180,513. Finally, publication of the patent occurred on Sep. 16, 2010. The abstract
states:
“A method and system for mounting a vertical-axis wind turbine to an existing
structure, such as conventional transmission towers, monopole towers, billboards,
road signs, utility poles, buildings, stadiums and the like, is disclosed. The method
and system generally include identifying an existing structure, connecting a power
generator to the turbine, and permitting the wind turbine to operate. It is
understood that the mounting of the turbine to the existing structure is done so as
to avoid interference with normal operation of the existing structure and wind
turbine. Also, the generator is connected to the wind turbine in a manner which
produces electricity as a result of the turning of the wind turbine. In certain
embodiments the invention includes supporting the mounted turbine on the
existing structure using additional supports. The existing structure may include a
component which operates on electricity, such as a light, timer, or a motor, and
the generated electricity may be used to power the component of the existing
structure.”
The patent application phase has been completed.
Grant Application Process
The grant application process is an essential step in the formation of Kemah
Power, LLC. The purpose to apply for federal grants is to secure a significant amount of
capital to install a variety of VAWTs to existing public structures. Federal grants will be
used for three main reasons: 1) Provide a public good by providing municipalities, towns,
or cities with renewable energy for pilot projects. 2) Provide a research and development
(R&D) component for Kemah Power, LLC and VAWT suppliers. 3) Educate the young
company on specific models, operation, partnerships, and potential problems. The grant
application process is an instrumental component to the success of this company.
The first step in the grant application process is to hire a grant writer for the company.
One qualified individuals (Bachelor’s Degree or higher) will be required to achieve quality
assurance and focus to the company. The grant writer should be compensated $15/hour and work
roughly 20 hours/week. Also, a financial bonus incentive should be added when the grant reward
is granted. This should be budgeted in the grant proposal as well. Applying for more than one
federal grant would also be highly recommended. The federal grant applications should be
applied through the Department of Energy, the Department of Transportation, and the
Department of Agriculture. In response to the American Recovery Act, multiple opportunities
can be found at: http://www.grants.gov/.
The grant application process should be separated into three components to diversify
projects and have a better opportunity to gain funding. Each grant proposal of project will require
roughly $1,000,000 to cover the costs of both the public entity, suppliers, and Kemah Power,
LLC. The grant request should be for a five year period for each project. This will include one
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year for operational set-up, two years for testing, and two years to promote and sell the concept.
After the grant is awarded, it will be the grant writer’s responsibility to file post-reward reports.
The grant application should include and focus on the following components:
Public Benefit
Financial Feasibility
Energy Production
Opposition- Safety (Distraction), Aesthetics, Noise-Level, Bird Casualties
Research and Development
The reward of a grant will directly contribute to the research and development (R&D)
section of the business plan. The R&D development portion will take approximately five years to
complete with one year of set-up operation, two years of testing the effectiveness of VAWTs,
and two years to promotional selling opportunities. The main goal of research and development
will be to educate Kemah Power, LLC on the factors and complications of installation,
maintenance, and placement of the VAWTs. The main purpose of the R&D portion will be
testing various designs and products from different companies. The R&D stage will provide the
practical application in a real world setting. Moreover, the application of various VAWTs will
allow the company to create strong partnerships with manufacturers based on their performance.
The R&D implementation will directly be tested and used in the public sector. This will
include, but not be limited to the following agencies: municipalities, townships, cities, and states.
The grant specificity will be aimed at reducing the cost of electricity for tax payers and act as a
pilot project for the upstart of Kemah Power, LLC. Lastly, the grant will include payment for
new employment as well. In order to properly consult the future customer base, it is essential to
employ engineers to the team. Initially, the company should employ one engineer for the
following fields: structural, mechanical, environmental. The R&D portion should take
approximately two years to properly complete.
Private and Public Sector Application
After the R&D portion is completed, Kemah Power, LLC will have the necessary
experience, personnel, and knowledge to fully launch into the private and public sector. The
main target in the private sector will be companies with billboards such as Lamar Advertising
Company and Clear Channel Outdoor. We will also focus our attention on traditional buildings,
stadiums, and the like. The company’s main goal is to show how applying these VAWTs will
offset cost of electricity through using these methods. Likewise, the company will continue to
apply the same practices on public structures such as conventional transmission towers,
monopole towers, highway signs, and utility poles. The main contacts will be through the
Department of Energy (DOE), Department of Transportation (DOT), Department of Agriculture
(DOA), and localized government entities.
Production Process
Kemah Power, LLC is a multi-faceted business aimed to profit from three main ways.
First, it will serve as a consulting firm for customers that are interested in installing VAWTs to
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existing structures. The company will be able to offer valuable insight on placement of turbines
due to the understanding of wind speeds, height, cost of electricity, and grid payback rate. More
importantly, this company will be able to project benefits based on the customer’s interest.
Secondly, if the locale of installation is approved by Kemah Power, the second profit center will
be to license the patent for use. The company will charge a licensing fee based on a per turbine
basis. Finally, Kemah Power will act as a dealer/distributor of VAWTs. In this way, Kemah will
be able to purchase VAWTs at a wholesale price and package the entire process for the
customer. The company also intends to create a contract agreement with various
installation/maintenance technician companies. This will allow for proper installation and
maintenance for the life of the turbine. In addition, the goal of Kemah Power, LLC is to manage
the paperwork (including tax incentives, zoning regulations, etc.) for the customers ease.
Potential Suppliers
The top-rated supplies for VAWTs are as follows. Suppliers: Sauer (Wind Charger),
Tangarie Alternative Power (Gale T1-R15), Helix Wind, Urban Green Energy (Eddy), and We
Power (Seahawk). Full specifications can be found in the Appendix. Based on the retail price,
performance, weight, aesthetics, and other physical dimensional concerns, these VAWT
suppliers will be the best to mount on the following structures:
Model Tran.
Tower Monopole Billboard
Road
Signs
Utility
Poles Buildings Stadiums
Wind Charger X X X X X X X
Gale T1-R15 X X X X X X X
Helix Wind X X X X X X X
Eddy X X X X X X
Seahawk X X X X X X X
Business Space and Equipment
The ideal business space will be located in Barrington, IL because both partners, Gregory
C. Schmitt and Konrad L. Osterhues reside in this area. Ideally, this company would need
roughly 1,500 sq. ft. of business space to operate efficiently. At $15 per square foot/year, Kemah
Power will be paying roughly $22,500 for office space.
Initially, Kemah Power, LLC will need the following for day to day operation:
Computers and Software, Printing Services, Desks, Chairs, and General Office Supplies. This
initial portion will be included in the grant application process as well. However, after the grant
has been properly implemented, these expenses will need to be covered for the future by the
business. More detailed description these expenses are found in the Financial Plan section.
Feasibility
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According to the business plan, much of the start-up costs will be implemented with grant
funding. After the grant funding and R&D process is completed, Kemah Power, LLC will have
to sustain itself by generating sales for manufactures, charging licensing fees, and charging
consultant fees. Feasibility is an important component for the customer and Kemah Power, LLC.
The first example is of customer feasibility in purchasing these systems:
Helix Wind VAWT- Illinois Customer Example
(Average Example)
Total Initial Cost
Cost of Helix VAWT= $9,000 (Estimated Price after Dealer Fee)
Investment Tax Credit (ITC) of 30% of facility = $2,700
Installation and Maintenance (over 30 years) = $1,500
Patent Licensing Fee ($5/month x 30yrs) = $1,800
Consulting Fee (per turbine) = $1,000
$9,000 - $2,700 + $1,500 +$1,800 +1,000 = $10,600
Total Initial Cost= $10,600
Annual Energy Cost Savings
Cost of electricity= $0.12/kWh
Average Wind Speed at 30m= 9m/s, 9m/s=3,500 kWh (Based on Power Curve)
3,500kWh x $0.12/kWh= $420 annually
Also, tax incentive for $0.022 per kWh produced= $77 annually.
Total Energy Cost Savings= $497.
Annual Operating Cost
3,500kWh x $0.01 = $35
Total Initial Cost
(Annual Energy Cost Savings) – (Annual Operating Costs)
$10,600
($497) – ($35)
Payback Period= 22.9 years
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The feasibility of the company hinges on its ability to have on successful grant funding,
low overhead, strong customer base, partnerships between suppliers, and contract agreements
with installation/maintenance companies. As illustrated earlier, if conducted properly, Kemah
Power, LLC should be able to make money for each project assignment through the following
ways: Consulting Fee, Licensing Fee, and Dealer Fee. Additionally, a life cycle analysis (LCA)
should be taken into account by consultants on every project conducted by Kemah Power, LLC.
This will create both cost incentive to upcycle existing materials for production and close the
process of operation in a sustainable manner. With the rising price of electricity, renewable
energy systems will be a great opportunity to continue to grow and create a larger incentive for
investment.
Management and Organization
Ownership Structure
Kemah Power is a Limited Liability Company (LLC) owned by Greg Schmitt.
Management Team
Kemah Power, LLC is a small company with four specific roles that include
owner/partner, grant writer/consultant, engineering consultant, and receptionist.
Owner/Partner: Greg Schmitt and Konrad Osterhues will be acting as partners in the
operation of Kemah Power, LLC; however, the company is legally owned solely by Greg
Schmitt. Greg and Konrad’s responsibilities include: hiring/managing personnel, payroll, create
partnerships between supplier/customers, and contribute to the mission of Kemah Power, LLC.
Grant Writer/Consultant: The one grant writer’s responsibility is to apply for federal
grants. These grants will be primarily aimed at applying to the Departments of Energy,
Transportation, and Agriculture. However, additional grant funding sources will be highly
encouraged. The grant writer will be responsible for writing the necessary quarterly or annual
reports. After all of the grant work is completed, the writer will transition to a role of consultant
for the business.
Engineering Consultant: The engineering consultants will be hired based on the number
of grants rewarded to Kemah Power, LLC. Ideally, there will be three grants awarded to Kemah
Power, LLC for the following applications: Power Tree, Highway Signs, and Utility Poles. Each
engineer should have a different specialization which includes: Environmental, Mechanical, and
Structural. Each engineer will be responsible for one grant application, yet Kemah Power, LLC
would like these consultants to cooperate with one another and offer their assistance to each
project.
Receptionist: The main role of the receptionist is to conduct basic office administrational
duties. These duties include but are not limited to: accounting entry, website maintenance, data
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entry, mailing, copying/faxing, and phone operation. The receptionist will have a multi-faceted
role that will evolve into specific roles after the company is formed.
Financial Plan
This financial plan is an estimated vision of Kemah Power, LLC. Due to the vital
component of the grant application process, Kemah Power will first and foremost be contingent
on funding from outside sources. The grant reward is planned to operate for a five year period of
operation, which will consist primarily for research and development (R&D) purposes. However,
the financial plan will consist of the following reports in order to show the viability of Kemah
Power, LLC. The following reports are included below: start-up, operational, and VAWT
expense projections. Additionally, a projected balance sheet during grant operation is included as
well as a basis income statement which depicts post-grant funding.
Start-up Costs
Item(s) Quantity Cost per unit Estimated Expense
Business Registration 1 $210 $210
Patent 1 $5,000 $5,000
Computers and Software 7 $1,500 $10,500
Printer 1 $12,000 $12,000
Desks 7 $250 $1,750
Chairs 7 $130 $910
Office Table 3 $240 $720
Website 1 $1,000 $1,000
Office Supplies (Misc.) - - $750
Total - - $32,840
Operating Expenses
Item(s) Quantity Cost/Year Estimated Expense/Year
Rent 1 $22,500 $22,500
Telecommunications 1 $480 $480
Utilities 1 $600 $600
Transportation - ~$20,000 $20,000
Salary- Receptionist 1 $25,000 $25,000
Salary- Grant Writer 1 $14,400 $14,400
Salary- Engineer 3 $75,000 $225,000
Salary-Greg Schmidt 1 $50,000 $50,000
Salary- Konrad Osterhues 1 $75,000 $75,000
Total - - $432,980
VAWT Expenses
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The vertical axis wind turbine expense is based off one grant proposal. If awarded three
grants, the grant would allow for the purchase of more turbines. However, clearly shows the
hefty capital for purchasing these turbines for the R&D portion.
Item(s) Quantity Retail
Cost
Shipping Fee Estimated Expense
Wind Charger 10 $7,000 (+) $1,000 $71,000
Gale T1-R15 10 $8,450 (+) $1,000 $85,500
Helix Wind 10 $10,500 (+) $1,000 $106,000
Eddy 10 $8,650 (+) $1,000 $87,500
Seahawk 10 $9,000 (+) $1,000 $90,000
Total 50 - - $440,000
Balance Sheet
This balance sheet is a projected attempt to show what the company owns and what it
owes at after a single grant has been awarded to the business.
Assets
Patent $5,000
Business Registration $210
Office Equipment/Supplies $27,630
Federal Grant $1,000,000
Total $1,032,840
Liabilities
Rent $22,500
Salaries $389,400
Utilities $600
Total $412,500
Equity
Owner’s Equity $620,340
Income Statement
This simple income statement has been prepared to show that after grant funding, Kemah
Power, LLC will be able to sustain itself. After basic calculations, it is recommended that the
company sells 200 VAWTs in order to profit over its current operating expenses. Each turbine
installation will produce roughly $2,060 of sales for the company. The targeted goal to sell 220
turbines after the grant is highly recommended. These figures do not account for inflation;
however, the net income of over $20,220 will account for any miscalculation and price increases
in the future.
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Basic Income Statement
Gross Profit $453,200
Expenses
Total Operating Expense ($432,980)
Net Income $20,220
WindCharger -Sauer
http://sauerenergy.com/index.php?option=com_content&view=article&id=52
Appendix 1
General Page 1
Gale T1-R15 -Gale
http://www.tangarie.com/products/gale_wind_turbine_data_sheets.php
Appendix 2
General Page 2
Gale T2 -Gale
http://www.tangarie.com/products/gale_wind_turbine_data_sheets.php
Appendix 3
General Page 3
Eddy -Urban Green Energy
http://urbangreentechnology.com/sanya.html
Appendix 5
General Page 5