Renewable Ocean Wave Energy BUSINESS PLAN 2017

TABLE OF CONTENTS

COMPANY ANALYSIS

INDUSTRY ANALYSIS

MARKET ANALYSIS

COMPETITIVE ANALYSIS

MARKETING PLAN

OPERATIONS PLAN

FINANCIAL PLAN

COMPANY ANALYSIS COMPANY OVERVIEW

Ocean Power Parks was founded by Nader Hassavari in 2010 with the objective to develop, market, and

distribute a clean ocean electricity product that offers and provides renewable and sustainable energy to the

world. Ocean Power Parks mission is to supply clean ocean electricity at competitive prices while contributing to

a reduction of the world’s carbon emissions. Ocean power parks present technology , a system that exploits the

potential and kinetic energy of Ocean waves, and wind with the goal of powering a generator that will produce

energy, which in turn can be sold commercially to utility companies.

Ocean Power Parks has invested significant capital into the development of its technology, and is in the process

of researching and testing the equipment’s feasibility for ongoing improvements before the Company begins

production and full market launch. To date, the Company has worked directly with (FEDEM Technology today

Part of SAP Germany) to perform hydrodynamic and structural analysis of its floating wave power generator

concept through a dynamic simulation model [1] in order to determine power production potential. Specifically,

a wave power production system has been investigated in terms of CFD simulations to capture pontoon

motions, dynamic structural analysis for estimating the overall power production and finite element capacity

checks of the construction.

SYSTEM OVERVIEW

The technology, which consists of concrete, steel, pontoons, and generators, is movable and can demount and

mount in different sea environments. At low production season, the system will be able to produce hydrogen,

which will be stored and then transported to land by tank boats. There is also a significant possibility for capacity

increase by pumping seawater into the pontoons at high wave season to increase the weight, resulting in power

production. Additionally, pontoons and the surface of the trusses are made by Teflon to avoid overgrown and

corrosion at sea.

The design of the structure solves many of the most important challenges of current wave technology. The

robust system is designed to withstand harsher punishment from the earthly elements compared to

conventional technologies.

The construction of the present system is based on the use of potential energy in the waves and conversion of

kinetic energy in the waves to potential energy by design of unique pontoon edges and unique pontoon shape.

Because of the shape, the float will cover an expanse area of ocean compared to existing alternatives. The shape

also converts the horizontal movement in the wave (kinetic energy) to the potential energy, which is created

when a pontoon is moved by wave action. This is transmitted in a vertical motion in relation to the plant via a

drive, to a power-producing generator.

The pontoons are mounted 360 degrees around the center column of the system. This design allows maximum

energy generation on the sea surface areas or “footprint,” which is covered by a pontoon. Each pontoon

operates independently and in the case of any unforeseen damages, this will not affect the energy generation of

the other pontoons.

In addition, a new wind subsystem is currently in production to be mounted on the top of the device to produce

energy concurrently as well. Mounting of a hydrogen generator on the top of the platform will provide hydrogen

during low power production season for any wave power plant, so useless power for the power line can be used

at hydrogen production.

SYSTEM SPECS

The wave generator is based on a floating structure moored to the seabed. The floating structure has several

floating pontoons, which generate power when they are set into motion by the waves, mainly by means of

buoyancy force.

The wave power system is illustrated in the left figure below. It consists of a total of 6 pontoons supported by a

truss system with a large buoyancy tank providing tension in the mooring line going between the bottom of the

truss and the seabed. The pontoons are free to move in the vertical direction on a chain connected to power

generators located at the top of each truss. It is believed that the pontoon motion mainly will be governed by

the buoyancy effect, but with additional contribution from wave impact on the angled side walls.

The structural stiffness of the system is realized by the use of truss structures with a squared cross section, built

up by L-profiles in steel as shown in the right figure above. At the top level of the system, all pontoon columns

are connected to the center column in radial direction. In addition, tubular stiffeners are connecting neighboring

pontoon columns at their top end of the structure.

Providing stability, the large circular tank located at the bottom of the truss system sees a diameter of 16.3 m

and a height of 4.0m. It is built by 20mm thick steel plates or concrete and contains a concrete foundation as

described in Appendix A for additional weight at bottom part for stability. The truss structure columns

supporting the pontoons are connected to the stabilizer tank. The center column is mounted through an

opening in the center of the stabilizer tank and its lower end is used as a connecting point to the mooring line.

In the analyses, the wave power system will be subjected to regular waves with maximum wave heights as

defined in Table 1-1. As this is the governing source of vertical excitation, neither sea current nor wind speed will

be considered at present.

There will be two security wires in addition which connect WEC to the seabed.

FEDEM ANALYSIS

OVERVIEW

Structural analyses on this project were performed with FEDEM Simulation Software (FEDEM). FEDEM is a code

for effective modeling, simulation and visualization of finite element assemblies and control systems. The code

is based on a non-linear finite element formulation. This formulation predicts the dynamic response of elastic

mechanisms experiencing non-linear effects such as large rigid-body rotations.

The structural model includes environmental loads, such as waves, and is analyzed in time-domain. Since FEDEM

lacks the capability of full fluid interaction calculations, which are represented in the CFD simulations, system

parameters in FEDEM must be tuned for a realistic behavior of the pontoons. The challenge lies in the simplified

load model of the Morison equation implemented in FEDEM, which is only valid for slender beams.

FEDEM was used in the analysis to be able to describe the overall system behavior, both under the situation of

power production as well as under storm conditions. The scope of work included:

WP1: Establish a design basis based on input from the client. The design basis to be approved by the Client before startup of next WP. WP2: Data collection and initial analyses (normal operation) WP2 addresses one single pontoon during normal operation and will include the following: _Start-up activities including data collection and some key parameter decisions before modeling work can begin.

_Generating and running a CFD model followed by tuning of structural model with correct dimensions, mass, buoyancy and drag properties.

_Determine the power effect of one single pontoon. WP3: System model (normal operation) Based on the information found in WP2, WP3 will see a complete structural model of the wave power system. This will be run against a series of sea states representing normal operation in order to document the overall power generating capacity of the system. WP4: Structural integrity (storm condition) WP4 includes a structural capacity check of the truss construction for sea states representing storm conditions. No optimization and re-analysis of cross-sections is included in the scope of work for WP4. WP5: Reporting Prepare a technical report to document the analysis model, load cases and results.

CONCLUSION

A wave power production system has been investigated in terms of CFD simulations to capture pontoon

motions, dynamic structural analysis for estimating the overall power production and finite element capacity

checks of the construction.

From the CFD analysis it is concluded that the pontoons follow the wave propagation closely, especially for wave

lengths greater than two times the pontoon diameter. However, as the wave height increases, the waves tend

to partly break on top of the pontoons, limiting the vertical displacement of the pontoons and hence power

production.

The total power production estimated from the pontoon weight and velocities have been presented and it is

seen that a theoretical peak production of 1200kW is achieved for Case 4 (instantaneous), while the average

power output was 951 kW. Moreover, the system model simulations also showed that a mooring line consisting

of at least three connections points was required due to instability issues. Evidently, the power production

efficiency will decrease as the wave power system leans over due to the hydrodynamic forces acting on it.

The capacity check showed that the truss construction meets the design requirements when subjected to the

global forces and moments occurring in storm condition (Case 5). Hence, it is assumed that sufficient capacity is

also achieved during normal operating conditions.

Case # Wave height

[m]

Wave period

[s]

Wave length

[m]

Average power output [kW]

Case 1 1 2.7 12 380

Case 2 2 3.0 16 690

Case 3 4 4.5 36 805

Case 4 6 5.4 52 951

Case 5 (storm) 15 8.7 119 NA

Note that no resistance from the power generators has been included in the present investigation, which will

dampen the pontoon motion and lower the potential power production below what is reported.

For future developments, FEDEM Technology recommends an investigation of the wave power system subjected

to irregular sea to be performed. This should be conducted together with applying realistic power generator

resistance as this will affect the pontoon response. It is also advised to revise the mooring arrangement as the

center of gravity and center of buoyancy are closely located, which will lead to instability.

Further work

For future developments, Fedem Technology recommends an investigation of the wave power system subjected

to irregular sea to be performed. This should be conducted together with applying realistic power generator

resistance as this will affect the pontoon response. It is also advised to revise the mooring arrangement as the

center of gravity and center of buoyancy are closely located, which will lead to instability.

Note that a detailed CFD analysis of the complete system may be performed in order to account for such effects

as shielding from the upstream pontoons etc.

TRUSS CHECK

Check of the local stresses in the truss structure, Euler buckling strength for the columns and trusses, global

forces and moments are taken from the analysis model and decomposed into forces in the truss, assume that

the Shear force are taken by the braces, and the moments and the axial loads are taken by the columns.

Check the column L-beam for buckling. Assume that the global moment and axial load contribute to the column

load. Assume that the natural axis for bending is diagonal across the plane for the slider. That way the moment

contribution will act into one column at each side. The moment arm is denoted as a1. The force couple will then

be My/2 * 1/a1, and the global axial load will be added and divided into 4.

VALUE PROPOSITION

Wave Energy Converter (WEC) is a unique and patented invention. The beam technology is robust and allows for

the strongest possible structure, as 10% of strength is used at maximum drift according to analysis. The product

contains no movable joints and was produced to sustain a low maintenance cost.

Additionally, this pontoon structure with a combination of convex and concave shapes makes it possible to build

very large pontoons without the need of any supporting elements. Aside from the pontoons, no parts require

special fabrication, and the product consists of parts that are standard and easy to provide. One of the most

important values of the system is that it is economically lucrative as it earns income even without subsidies.

The first Prototype of the Product which performs the main task of the system.

Links to the video files: Please hold the Ctrl button and click on to view the contents.

Model1-Case1 functionality simulation

Device small prototype in the ocean

Wave velocity on single pontoon - 1

Wave velocity on single pontoon - 2

Wave velocity on single pontoon - 3

Wave velocity on single pontoon - 4

Device simulation - 1

Device simulation - 2

Device simulation - 3

Device simulation - 4

BUSINESS MODEL

Nader Hassavari holds an exclusive patent on the wave powered electricity generator that has been produced

for MURTECH. The Company will utilize this technology in order to produce potential power, which will then be

sold to utility companies globally.

Indeed, the average output can dramatically be increased through building wider tank and adding

more pontoons as shown in the diagrams below:

Overview of wave power system under operation, simulation

Available Buoyancy 1,500 m3 floating at sea surface.

Installed at 9 meter deep and total a buoyancy of 1500 m3 x 9 m = 135,00 m3

each anchor 1200 m3 force.

INDUSTRY ANALYSIS WORLD ENERGY OVERVIEW

● Substantial amounts have been invested in energy R&D over the last 50 years. Much of this has been

directed at developing nuclear energy – which now supplies 12% of world electricity.

● Today, apart from Japan and France, there is about twice as much R&D investment in renewables than

nuclear, but with rather less to show for it and with less potential for electricity supply.

● Renewables have received heavy direct subsidies in the market by various means, but these are being scaled

back or abandoned in some places due to the high cost to consumers.

● Fossil fuels receive indirect subsidies in their waste disposal as well as some direct subsidies.

There are three main areas where, broadly speaking, subsidies or other support for energy may apply:

government R&D for particular technologies, subsidies for power generation per unit of production (or

conceivably per unit of capacity), including costs imposed on dis-incentivized alternatives, and the allowance of

external costs which are either paid by the community at large or picked up later by governments. Strictly

speaking, a subsidy is monetary assistance granted by a government in support of something regarded as being

in the public interest, so external costs are actually a socializing of costs which belong with particular energy

users. Selective taxes can complement subsidies as another means of supporting what is perceived to be in the

public interest.

ENERGY R&D

There has been a lot of government-financed energy research and development (R&D) in most developed

countries. This has been driven by concern about energy security, as well as by the need to address

environmental problems and social concerns. Reliable and affordable energy supplies are vital to any economy,

while energy shortages or the threat of such have political and economic consequences. Therefore, as concerns

have evolved from oil shocks to climate change, each country's energy provision and infrastructure needs

restructuring accordingly.

Government R&D expenditure on energy tends to be focused on long-term development of new technologies,

with the aim of bringing them to commercialization, while private R&D is mostly on the further development of

existing and operational technologies. While there are notable exceptions both ways, there is a strong

disincentive for industry working in a highly competitive market and needing to justify a return on capital to

shareholders to undertake long-term, high risk R&D. This is because after all their investment they will still be

selling kilowatt hours of electricity or another essentially undifferentiated product in a competitive and very

price-sensitive marketplace.

SUBSIDIES THE

IEA'S WORLD ENERGY OUTLOOK 2011 ESTIMATES THAT THE TOTAL COST OF SUBSIDIES FOR RENEWABLE ENERGY WILL RISE FROM

$66 BILLION IN 2010 TO $250 BILLION IN 2035. HOWEVER, SEVERAL COUNTRIES ARE CUTTING BACK SUPPORT FOR RENEWABLES

DUE BOTH TO THE HIGH COST IMPACTING ELECTRICITY PRICES AND ALSO THE COSTS AND DIFFICULTIES OF INTEGRATING THEM INTO

THE TRANSMISSION NETWORKS. GERMANY AND SPAIN ARE CUTTING ABOUT $2.5 BILLION AND $3.5 BILLION PER YEAR RESPECTIVELY

FROM SUBSIDIES FOR RENEWABLES.

A feed-in tariff (FIT) obliges energy retailers to buy any electricity produced from specified, e.g. renewable,

sources at a fixed price, usually over a fixed period of some years (e.g. 20 years in Germany), the price being

significantly greater than that paid for power from mainstream sources. The rates usually vary for different

sources, e.g. being greater for solar or offshore wind. In this case they may be called Advanced Renewable

Tariffs (ART), differentiating by technology and perhaps project size. There is usually no amount or proportion

specified, though a cap or quota on how much needs to be bought overall or from particular sources may be

applied. With renewables, any supply offered must be taken by the grid operator, regardless of merit order

considerations (normally applying, so that lowest marginal cost supplies are preferred). In Germany for instance,

the grid operators buy the renewable kWh at the specified FIT rate and then sell them on the open market. The

difference between the sales proceeds and the FIT they have paid to various suppliers is compensated by the

end consumer through an 'EEG-surcharge' being applied to bills. Electricity-intense industry has this surcharge

limited.

Feed-in tariffs (FIT) are now common in Europe, Canada, China and Israel and imminent in several Australian

states, total at least 41 countries or provinces. They generally mean that the consumer pays the subsidy for

power from the legislated sources, the cost being spread across all power purchases unless there is a special

deal to buy renewable power at a premium. In Germany the additional cost of the FIT above normal wholesale

market is recovered by a ‘renewable energy surcharge’ being added to retail electricity bills (with exemptions for

industry). However, in some countries FITs have become unaffordable, and are being replaced with other

mechanisms.

A variation on FIT is the contract for difference (CFD), which means that if the market price is lower that the

agreed strike price, the government pays that difference per kWh, if the market is above the strike price, the

generator pays the government. The key factor then is setting the strike price far enough ahead to enable

investment. Another variation – short of a full FIT – is a bonus payment on market price.

A problem showing up in several countries, especially regarding FITs, is that they become increasingly costly to

consumers as the take-up increases. In Germany, the cost of subsidies for solar power is expected to reach EUR

46 billion by 2030. In Spain the take-up was so high that the government had to renege on its subsidy

commitments after investments had been made. France cut back subsidies in 2010. The UK in 2011 wound back

the FIT levels for new plants. Slovakia in 2011-12 slashed FITs for solar from EUR 38 c/kWh to 11.9 c/kWh for

small solar (up to 100 kW) in order to keep electricity prices down.

When governments change the FIT levels to adjust the incentive, the changes generally apply only to new

sources.

UNITED STATES

The US government spent $24 billion on energy subsidies in 2011, $16 billion of this for renewables including $6

billion for ethanol tax credits, according to the Congressional Budget Office. The production tax credit for wind

cost $1.6 billion. Fossil fuels got $2.5 billion in tax breaks.

In the USA a direct subsidy or Production Tax Credit (PTC, finally about 2.3 c/kWh net for wind) has been

available to generators of renewable power over the first ten years of a project's operation so they can sell it

that much below actual cost. The subsidy is granted as credit on taxes, though following the American Recovery

& Reinvestment Act (ARRA) in mid-2009, an investment tax credit of 30% could be claimed instead for wind

plant placed in service before 2013 if construction began before the end of 2013. A total of $16.8 billion had

been provided in direct grants for energy efficiency and renewable energy projects under ARRA. This credit can

be converted to a grant from the government. In the USA a Renewable Portfolio Standard is proposed,

mandating a specified amount of renewable power from suppliers, and applying already in California and other

states. The PTC is indexed to inflation, and was extended each year to the end of 2013. With a wholesale

electricity price of around 2.8 c/kWh, the PTC meant that intermittent wind generators could dump power on

the market to the extent of depressing the wholesale price so that other generators were operating at a loss.

This market distortion has created major problems for the viability of dispatchable generation sources upon

which the market depends.

Several US states and municipalities are looking at FITs. Vermont enacted one in 2009 and Gainesville, Florida

has one in 26-32 c/kWh range.

Figure 2: United States Figures for Electricity Production ($Millions)

Beneficiary Direct Exp

Tax Exp

R&D Federal Elect

Support

Loan G'tee

Total Share of total subsidies &

support

Share of electricity generation in 2010

Coal 37 486 575 91 0 1,189 10.0% 44.9%

Natural Gas and petroleum liquids

1 583 15 56 0 654 5.5% 25%

Nuclear 0 908 1,169

157 265 2,499 21.0% 19.6%

Renewables 4,178 1,347 632 133 269 6,560 55.3% 10.3%

Biomass 6 54 55 0 0 114 1.0% 1.4%

Geothermal 115 1 72 0 12 200 1.7% 0.4%

Hydropower 17 17 51 130 0 215 1.8% 6.2%

Solar 409 99 287 0 173 968 8.2% 0%

Wind 3,556 1,178 166 1 85 4,986 42.0% 2.3%

Unallocated Renewables

75 0 0 0 0 75 0.6% 0

Transmission & distribution

461 58 222 211 20 971 8.2% NA

Total 4,677 3,382 2,613

648 555 11,873

100% 100%

EUROPE

In the EU, feed-in tariffs are widespread (in 18 of 25 EU countries as of 2007). European Environment Agency

figures in 2004 gave indicative estimates of total energy subsidies in the EU-15 for 2001: solid fuel (coal) EUR

13.0, oil & gas EUR 8.7, nuclear EUR 2.2, renewables EUR 5.3 billion.

EAST ASIA

In Japan, since 2009 a feed-in tariff required utilities to buy surplus solar power produced domestically at up to

JPY 48/kWh. This was extended to hydro, wind and geothermal power at JPY 17-20/kWh, compared with JPY 5-7

for base-load power. In mid-2012 the general FIT was increased to JPY 42 /kWh for solar-generated electricity,

double the tariff offered in Germany and more than three times that paid in China. The level was reduced in

April 2014 to JPY 37/kWh residential and JPY 32/kWh for systems over 10 kW. Wind power FIT was JPY 22/kWh

for onshore units above 20 kW, JPY 36 for offshore wind, and JPY 55 for smaller units.

In China, the Global Wind Energy Council acknowledges "the fact that wind is heavily subsidized". This is under a

variety of complex measures focused on capacity rather than output, and correlates with a low average capacity

factor of 16% over 2006-07, partly due to grid constraints. China's 2006 Renewable Energy Law sets out a

subsidized electricity tariff structure (though no feed-in tariff), a compulsory grid connection mandate for

renewable energy projects, and a rule that requires utilities to purchase all the renewable electricity produced in

their service area. In addition, carbon credits awarded under the UN Clean Development Mechanism (CDM)

enable foreign investors in Chinese wind projects to sell carbon credits outside the country, this being essential

to project viability.

Solar power has enjoyed substantial incentives in China since 2009, and in 2011 the national feed-in tariff was

RMB 1.15 per kWh (18 cents), but in 2012 this was reduced to RMB 0.55 (8.7 cents). Late in 2012 subsidies for

solar power were boosted by CNY 7 billion ($1.1 billion) to a total of CNY 13 billion. The subsidies are to allow

support of 5.2 GWE of domestic solar energy production.

INDUSTRY OVERVIEW1

MURTECH AS competes within the Hydroelectric Power industry. Companies in this industry operate facilities

and machinery that use water to generate hydroelectric and renewable electricity. Industry players also use

renewable energy sources, including wood, municipal waste, landfill gas, biomass and geothermal energy to

generate electricity. Moving forward, the Company may also pursue a wind to energy strategy as well. This

industry research can be found within the Appendix of this business plan.

1 IBISWorld

Figure 3: Industry Snapshot

INDUSTRY PERFORMANCE

Severe droughts over the past five years have led to a decrease of water inflow for the Hydroelectric Power

industry, limiting its ability to generate electricity. Industry operators focused their attention on mitigating the

effects of droughts by scaling back hydroelectricity operations. In turn, investment in hydroelectric

infrastructure slowed and plans for upgrades to increase efficiency and output were delayed, as the need to

combat droughts took center stage. Although other renewable power sources, such as biomass generation,

experienced steady expansion during the past five years, adverse economic and natural conditions made it

difficult for the industry to sustain growth. However, IBISWorld expects industry revenue to either increase or

maintain stability through 2015.

Although hydroelectricity is a renewable energy source perceived as environmentally friendly, state

governments have considerably scrutinized it due to the potential damages hydroelectric dams can cause to

river resources. Establishing new hydroelectric facilities has been difficult for industry players, due to stringent

state and federal regulations and a lack of suitable locations with enough water on inclines steep enough to

produce electricity. Furthermore, the recession caused financing for large, capital-intensive projects to dry up,

which made it difficult for industry operators to find money to break ground on new projects early in the five-

year period.

Sustained economic growth during the next five years will contribute to more robust demand for electricity

generation and transmission, while investments will be used to increase the efficiency of existing facilities and

properly outfit the country’s no powered dams. Converting existing dams into hydroelectric generating facilities

allows industry operators to use existing infrastructure, lowering the initial cost of constructing a hydroelectric

facility. In the coming years, hydroelectricity and other renewable energy sources included in this industry will

benefit from favorable government regulations. As a result of these positive trends, industry revenue is forecast

to increase at an annualized rate of 6.5% to $5.0 billion during the five years to 2020.

Total Revenue (2015)

$3.6bn Average Profit Margin

$556.9mn

Number of Firms

578 Annual Growth '15-'20

6.5%

Figure: Product and Service Segmentation

Figure 4: Industry Performance: Historical & Future Estimate

PRODUCTS AND SERVICES SEGMENTATION

The overall breakdown of revenue in the Industry through a variety of renewable energy services offerings can

be seen in Figure 1 and in more detail below. However, MURTECH will focus solely on sustainable water based

energy services.

Hydroelectricity

Hydroelectricity, a well-established form of

renewable energy, accounts for the majority of

industry revenue. Hydroelectric power generators

are either regulated utility companies or

independent power producers (IPPs). Utility

companies face price regulation from regional public

utility commissions, which results in stable revenue.

In contrast, IPPs have the option to sell electricity on

unregulated wholesale markets, where electricity

prices can fluctuate considerably according to supply

and demand. Over the past five years,

hydroelectricity’s share of industry revenue has

decreased, mostly due to the continued growth of

alternative forms of renewable energy and low

rainfall. The high capital costs of hydroelectric dams

also limited major capacity expansions during the

past five years. In 2015, hydroelectricity is expected

to contribute to 47.8% of industry revenue, down

from just under 50.0% in 2010. Biomass electricity

Wood biomass power is estimated to account for 29.0% of industry revenue in 2015, up from 26.5% in 2010.

Wood-fired electricity has grown slightly over the period as growth in this segment has outpaced growth in

other segments. Wood biomass includes paper pellets, railroad ties, utility poles, bark and wood-based liquids.

Waste biomass power sources have contracted slightly as a share of revenue over the period, declining from

13.4% of revenue in 2010 to 12.8% in 2015. Non-wood biomass power includes electricity generated from

agricultural byproducts, landfill gas and biogenic municipal waste.

Geothermal electricity

Geothermal electricity is power generated from thermal energy stored underground. Thermal energy is used to

power traditional steam turbines, which is then used to generate electricity. Over the past five years, this

product segment’s share of industry revenue has increased, mostly due to a recovery in geothermal

infrastructure investments. In 2015, geothermal electricity is estimated to total 10.4% of industry revenue.

KEY EXTERNAL DRIVERS

Average annual precipitation

Hydroelectric power generation relies on water flow, so rainfall levels substantially impact industry

performance. In particular, drought conditions brought about by low rainfall can reduce industry output, which,

in turn, lowers revenue. Average annual rainfall is expected to decrease slightly during 2015.

Electric power consumption

Growth in demand for electricity, including hydroelectricity and electricity from renewable sources, is closely

linked to overall economic growth. Increases in electricity transmission and distribution lead to increases in

hydroelectric demand. Electric power consumption is expected to decrease during 2015, representing a

potential threat for the industry.

Price of electric power

Regional public utility commissions regulate retail electricity prices. Hydroelectric power plants controlled by

regulated utility companies are subject to regulated retail prices. Industry operators that successfully petition for

rate hikes benefit from increased revenue and profitability, while companies that are unable to obtain favorable

rulings will have difficulty operating in the industry. In 2015, the price of electric power is expected to slowly

increase, representing a potential opportunity for the industry.

Price of natural gas

Natural gas is a major source of fuel for power plants in the United States. Gas power plants are typically

inexpensive to construct compared with hydroelectricity dams. When gas prices decrease, natural gas-generated

electricity becomes more cost effective than hydroelectric power, causing utilities to turn to natural gas power

instead of hydroelectric power. In 2015, the price of natural gas is expected to decrease.

Value of utilities construction

The value of utilities construction measures the annual amount spent on constructing power plants. An increase

in utilities construction results in higher revenue, as more electricity is transmitted after construction. The value

of utilities construction is expected to decrease during 2015.

Figure : Hydroelectric Power Industry Market Breakdown

MARKET ANALYSIS MARKET OVERVIEW

Users of electric power either cannot or do not differentiate on the basis of the fuel used to generate that

electric power; however, about one-half of all US retail electricity customers have the option of purchasing

power generated from renewable energy sources. The extent to which this option is exercised is very limited. In

general, the same factors drive electricity demand, regardless of the fuel that is used to generate electric power.

Households, industry and the commercial sector are the major users of electricity, and altogether account for

virtually all demand.

Households form the largest single group of users. The factors that play a role in household electricity

consumption include shifts in household disposable incomes; changes in the price of electricity and competing

fuels; and the availability of a wider range of fuels. Fuel availability has increased through the extension of gas

pipelines and improvements in technology that have made solar power more accessible, which, in turn, has

limited demand for hydroelectric power. In recent years, improvements in appliance energy efficiency have

limited consumer demand for electric power.

Levels of economic activity determine demand for electricity by the commercial sector. When businesses are

staying open longer, more electricity is needed to provide lighting and air conditioning. The growth in demand

for power by the industrial sector, which largely depends on growth in the output of electricity-intensive

products, including most metals, particularly aluminum. Where firms are able to switch between fuel types (e.g.

between electricity and gas), movements in fuel prices also impact demand. Business demand for electric power

has picked up as the economy recovered.

Demand for hydroelectric power is also dependent on the future advances in turbine technology. A main issue

harming the progress of the industry is the harmful effects of hydroelectric plants on the environment. These

effects include increases in marine life mortality rates, obstruction of fish migration and change in natural life

water temperature. If the aforementioned issues could be resolved, environmental protection organizations

would be more receptive to this form of alternative energy, given its convenience and efficiency.

MARKET SEGMENTATION

The industry’s major markets represent all of the

downstream customers of electricity, which are

dominated by households, commercial users and

industrial users. Industry players generate energy

that is passed along to these customer segments.

Residential households

Households are estimated to account for 44.9% of

industry revenue in 2 015. Households pay retail

prices for electricity, which is considerably higher

than wholesale prices charged to large

manufacturers and industrial firms. As a result, households’ make up the largest downstream market in terms of

revenue.

Households use electricity for lighting, refrigeration and to power appliances. There are seasonal fluctuations

associated with household usage, such as increased usage during very cold winters and unusually hot summers.

Households generally use more energy when incomes rise because they are able to absorb extra costs.

Household electricity consumption only experienced moderate growth over the past five years due to steep

declines in consumer income during the recession. The growing popularity of energy efficient appliances, such as

Energy Start-certified appliances, has also moderated household electricity consumption. As such, this market’s

contribution to revenue has fallen. As the economy gains steam, households will have more money and, in turn,

will increase energy use.

Commercial

Commercial customers use energy to power business operations, which includes paying the power bill for any

items necessary to conduct business, such as an office space and computers. Manufacturing-heavy businesses

(those that are classified as commercial because they do not produce at the scale that industrial firms do) use

more electricity than office-based businesses because of the large amount of power needed for production.

Many firms limited their electricity usage as profit declined. Electricity consumption also fell as businesses closed

following the recession. However, as economic growth picked up, this market segment has recovered steadily. In

2015, the commercial sector is estimated to contribute to 36.5% of industry revenue.

Industrial

Industrial firms use the most energy per firm of all the major market segments. Heavy manufacturing accounts

for the bulk of electricity the industrial sector uses (88.0%). The remainder is used in mining and construction.

Within the manufacturing sector, the main electricity users are chemical manufacturing (17.5%), primary metal

production (14.5%), food manufacturing (9.0%), paper manufacturing (8.0%) and plastic and rubber

manufacturing (7.0%).

Industrial operations use a significant amount of energy, and these firms buy bulk electricity from industry firms

to conduct operations. Industrial users enjoy lower prices than households and commercial users of electricity

due in part to the large-scale purchase of power by industrial users. As a result, the industrial sector is only

expected to contribute to 17. 8% of industry revenue, despite having very high levels of consumption. The share

of electricity production consumed by industrial users fell during the recession, when lower manufacturing

output and construction activity led to reduced electricity demand from that sector. Since then, industrial

demand for electricity has steadily recovered as economic growth picked up.

Market Area and Average retail price/kWh:

Market Area Average Retail Price/kWh

United States $0.12

Canada $0.10

France $0.19

Spain $0.30

Denmark $0.41

UK $0.20

Germany $0.35

Russia $0.11

China $0.08

Japan $0.26

Australia $0.29

COMPETITIVE ANALYSIS COMPETITIVE OVERVIEW

The Hydroelectric Power industry is characterized by a low level of concentration, because most private electric

utilities and independent power generators operate in regional markets. According to the Energy Department’s

Office of Energy Efficiency and Renewable Energy (EERE), the bulk of privately owned hydroelectric power plants

are small facilities with less than 30 megawatts of generating capacity. By comparison, the federal Bureau of

Reclamation’s (BoR) Grand Coulee Dam has total generation capacity of about 7,000 megawatts. The BoR is not

included in this industry because it is entirely owned and funded by the federal government. Due to

transmission and maintenance costs, most industry operators do not construct facilities across the country,

thereby limiting each firm’s market share. For example, major player Pacific Gas and Electric Corporation derives

nearly all of its revenue from California. Over the past five years, market share concentration has remained

relatively stable. Hydroelectric power infrastructure construction activity has been low, especially after North

American natural gas prices plunged following the recession. Gas generation became cheaper, which provided

competition for industry operators.

In addition to the Hydroelectric Power Industry, the Wind Power industry has a medium level of concentration.

The four largest industry participants hold a combined market share of over 40.0%. This level of concentration

reflects the industry’s rapid growth and rising consolidation. Market share concentration has increased over the

past five years as industry players expanded their footprints by constructing wind farms at accelerating rates,

taking advantage of tax breaks and looking to meet state demands for alternative energy. Concentration should

continue to rise over the next five years, as government incentives continue to be favorable for the industry.

Operators will look to boost revenue by acquiring additional assets and building new wind farms to meet

increasing demand.

DIRECT COMPETITION

MURTECH will compete directly with hydroelectric and wind powered companies in the United States. Two

example competitors to the Company are:

Figure 7: Top Competitor Overview

Name Clipper Wind power First Solar

Address 4601 Bowling Street S.W.

Cedar Rapids, IA 52404 2832 East Foothill Boulevard, Pasadena, CA 91107

Company Overview Clipper strives to support customers and existing Liberty 2.5MW wind turbine fleets by providing OEM knowledgeable gearbox and component

part refurbishment services, as well as, maintaining a full line of wind turbine service

parts.

First Solar has developed, financed, engineered, constructed, and currently

operates many of the world’s largest grid-connected PV power plants in existence.

Service Offerings

Precision manufacturing, spare parts, service repair.

Modules, power plants, power blocks, energy services

COMPETITIVE ADVANTAGES

MURTECH will draw on its strengths, such as first-hand market and product knowledge, a sustainable and

lucrative product, and its unique invention to build a construction unlike any other in renewable energy. The

Company will focus on the following strengths of its unique technology to ensure that it maintains a competitive

advantage against alternative sources:

● Fully Patented Technology

● Robust Beam technology that allows for the strongest possible structure. 10% of strength is used at

maximum drift according to analyses

● No movable joints

● Low maintenance cost

● Unique pontoons structure a combination of convex and concave shape, which makes it possible to build

very large pontoons without supporting elements

● The construction is movable and can demount and mount in different sea areas

● At low production season is able to produce Hydrogen which will be stored then transported to the land by

tank boats

● Possibility for capacity increase significantly by pumping seawater in pontoons at high wave season to

increase the weight of pontoons and power production as the result

● The most important is economically lucrativeness. It earning incomes even without subsidies

● Pontoons and surface of trusses are made by Teflon to avoid overgrown and corrosion at sea

MARKETING PLAN POSITIONING

The Wave Renewable Project will work with a marketing firm to implement an integrated strategy, utilizing

marketing and advertising to reach its target market and position the Company as the premier provider of

renewable wave energy machinery.

The goal of the Company’s marketing plan is to create a product and project for long-term success and brand

awareness. It will achieve this through the following measures:

➢ Establish the brand identity in the marketplace;

➢ Create an educational process to assist key customers in learning about The Wave Renewable Project’s

service offerings;

➢ Develop demand for the Company’s service offerings.

The Wave Renewable Project will employ an integrated market strategy to reach its target market, as seen in the

figure below.

Figure 8: Marketing Channels under Consideration

WEBSITE/DIRECT E-MAIL

MURTECH will have a developed website to highlight its various product and service offerings. Potential partners

and customers may input their email contact information in order to receive updates on the Company.

SEARCH ENGINE OPTIMIZATION (SEO/SEM)

Internet searches are by far the most common activity on the Internet, and therefore it is crucial to appear

among the top results when a user searches for keywords related to a business’ industry. MURTECH will

implement an aggressive search engine optimization strategy, whereby the Company will optimize content using

keywords related to its business. By optimizing the website’s content, MURTECH will organically aggregate

higher on Google, Bing, and Yahoo search engines.

Marketing

Direct Business

Development Team

Word of Mouth / Strategic Partners

SEO / SEM

Advertising

Print Advertising

Online Channels

PPC

Public Relations

Press Releases

Special Events

Media & Publication

Coverage

REFERRAL/WORD OF MOUTH MARKETING

The Company will rely heavily on referrals and word of mouth marketing to get the business name into the

industry. Thus, MURTECH will actively seek and encourage referrals from utility companies and industry

participants, providing incentives for those able to bring in new business.

ONLINE ADVERTISING

The Company will identify the best websites to purchase banner and display ad space. The ad will be visually

engaging and include a direct link to MURTECH thus providing the traffic and brand awareness needed for

increasing market presence. MURTECH will work with its marketing partners to increase online presence

through their websites, blogs, forums, and social media channels further driving traffic and brand recognition.

INDUSTRY SPECIFIC TRADE SHOWS & EVENTS

The Company will engage potential clients at industry related events, trade shows, and expositions.

Participation at these events will allow MURTECH to educate while also learning about clients’ needs, wants, and

expectations. Events can include local and regional associations geared at the franchise and small business

market.

PUBLIC RELATIONS

MURTECH will focus on securing the Company editorial coverage with various media outlets based on its unique

products and the launch of the project within each competing market. The team will reach out to local

publication editors, high-traffic websites, and blogs in order to create a “buzz” about MURTECH’s product,

features, and services.

SOCIAL MEDIA

Social media will play a significant role in establishing The Wave Renewable Project as a premier provider of

sustainable and renewable energy. A solid online presence represents an inexpensive promotional and

informational strategy. The Company will operate various social media platforms and have a presence on

Facebook, Twitter, Yelp, and Instagram. Real-time updates on these sites will also keep customers in the loop

regarding new content, services, or products.

OPERATIONS PLAN OPERATIONAL STRUCTURE

Ownership Nader Hassavari

Business Entity Limited Liability Company

Founded 2015

General Email Address nader@murtech.no

Website URL TBD

ORGANIZATIONAL STRUCTURE

The patented technology and all IPR is owned by Nader Hassavari as a sole proprietorship. The company is

seeking investors/partners to both finance the growth initiatives of the company and provide further access to

the energy market and sales. It is the intention to start a new company and transfer all assets and ownership to

this as the project expands. The breakdown of the Company’s organizational structure can be found in the

figure below.

Figure 9: Organizational Structure

MURTECH AS

Nader Hassavari -

Sole Proprietor

Manager

Project Leader

Marketing Director

Technical Designer

Business

Development Team

MANAGEMENT TEAM

NADER HASSAVARI

Nader Hassavari started his career as a construction engineer and has started different types of businesses,

including restaurants and building development companies. He has also worked many years developing wave

power plant.

KEY HIRING NEEDS

To operate and grow the business, the Company will need to hire the following employees to ensure efficient

and effective operations as the Company begins to expand and ramp-up. The following figure shows the

detailed key hiring needs schedule based on level of priority and time to hiring.

Level of Priority Time to Hiring

0-2 Months 3-4 Months 5-6 Months

High Manager Marketing Director Business Development Team

Moderate Technical Designer Secretary

Low Project Leader

KEY OPERATIONAL MILESTONES TIMELINE

The Company has identified the immediate milestones and goals that the Company would like to accomplish

prior to the full launch of the business.

Time to Implementation

PHASE ONE PHASE TWO PHASE THREE PHASE FOUR

High Development of

Business Plan Raise Capital

Fabrication of Prototype

Full Market Launch

Moderate Circulate Business Plan to Investors

Design & Fabrication of Plans

Acquisition of Experts and Knowledgebase

Low Start Ongoing

Research & Development Process

Create Computer Programs for

Automation and Remote Control

Surveillance

APPENDIX

INDUSTRY ANALYSIS

INDUSTRY OVERVIEW2

The Company may also compete directly within the Wind Power Industry as well. Companies in this industry

operate wind farms, which consist of wind-operated turbines that are used to generate electricity.

Figure 10: Industry Snapshot

INDUSTRY PERFORMANCE

The Wind Power industry generates revenue from owning and operating wind farms and selling the produced

energy to downstream customers. Over the past five years, favorable government assistance has made this

energy source cost competitive with other electricity-generation sources, lifting wind power’s share of the total

electricity generated in the United States from 1.9% in 2009 to nearly 4.3% in 2014. As a result, industry revenue

grew at an average annual rate of 18.1% to $8.0 billion in the five years to 2014. Industry operators have

particularly benefited from the federal production tax credit (PTC), a government-funded incentive that pays

producers per unit of energy sold.

The PTC, which expired at the end of 2013, offered renewable power generation operators a tax credit of 2.2

cents per kilowatt-hour of energy produced. The incentive was set to expire in 2012, which provided an

incentive for downstream operators to construct wind farms to take advantage of the tax credit. As a result, in

2013, over 13,000 megawatts of wind power were added and industry revenue increased over 20.0%. In 2014,

revenue growth slowed because the expiration of the PTC made it costlier to expand wind power facilities;

industry revenue increased just 4.8% in 2014, much slower than in previous years. Still, industry operators have

fared well over the five-year period, enjoying high and rising profit margins due to falling wind turbine costs.

Over the next five years, stronger economic activity and a focus on energy independence and reducing

greenhouse gas emissions will contribute to growth in wind power production. A push for the creation of

offshore wind farms is also expected to support the Wind Power industry. The first such farm in the United

States received federal clearance in 2012. However, no direct federal incentives have been finalized for the

industry, which will likely hinder wind farm expansion. As a result, despite positive downstream demand,

IBISWorld forecasts that revenue will only increase an average of 5.6% per year to $10.5 billion in the five years

to 2019.

2 IBISWorld

Total Revenue (2014)

$8.0bn Average Profit Margin

$1.0bn

Number of Firms

140 Annual Growth '15-'20

5.6%

Figure : Product and Service Segmentation

Figure 11: Industry Performance: Historical & Future Estimate

PRODUCTS AND SERVICES SEGMENTATION

The overall breakdown of revenue in the Industry is through a variety of wind powered energy service offerings,

which can be seen in Figure 1 and detailed below. Again, MURTECH will focus solely on sustainable water based

energy services.

The Wind Power industry produces a single product, electricity, from a single energy source, wind. Industry

companies build out wind farms with varying electric capacities depending on the size of the land available and

the strength of wind flows in the area. About 85.0% of wind electricity is generated by independent power

producers, while the remaining 15.0% is produced by electric utility companies.

Utility scale wind

Utility scale wind, estimated to account for 69.7%

of industry revenue, is defined as wind farms that

have greater than one megawatt (MW) of energy

capacity. One MW of energy equates to enough

power to provide electricity to 200 US households.

Large independent power producers and utility

companies typically build these wind farms, and

they require significant investment to undertake.

Companies involved in this service generally do

not have distribution operations. The volume of

electricity created by this segment has grown

quickly over the past five years as utilities build

out large farms to meet renewable portfolio

standards set out by various states. These

mandates require utilities to have a certain

percentage of their energy portfolio be generated

from renewable by a certain date.

Distributed generation

Distributed generation, estimated to account for 30.3% of industry revenue, is defined as wind farms that have a

generating capacity of less than one MW. Landowners build these farms in an effort to create and use their own

energy or to sell small amounts of energy to the grid. Selling energy to the grid is dependent on state laws

regarding the sale of unused energy. This share has fallen over the past five years as utilities have built out large

wind farms more quickly than other small wind developers.

KEY EXTERNAL DRIVERS

Regulation for the Wind Power industry

Generally, regulation positively affects industry performance, with the Wind Power industry historically

receiving a great deal of assistance, particularly following the American Recovery and Reinvestment Act. One of

the largest incentives for the industry had been the production tax credit (PTC), which provided 2.3 cents per

kilowatt-hour of energy produced; however, the tax credit expired at the end of 2013, and no new incentives are

planned to replace the PTC in 2015, presenting a threat to the industry.

Electric power consumption

Electric power consumption measures electricity consumption in the United States. Rising levels of electricity

consumption leads to greater demand for renewable energy. As a result, heightened consumption bolsters

revenue growth for industry operators. In 2015, electric power consumption is anticipated to remain high,

presenting an opportunity to the industry.

Price of electric power

The price of electric power indicates electricity demand from customers because when demand for electricity

rises, the price of electricity typically grows in tandem. Higher prices increase industry revenue since customers

pay more for the energy that companies produce. In addition, higher prices for traditional power sources make

wind power more competitive and attractive to consumers. The price of electric power is anticipated to increase

in 2015.

World price of iron ore

Falling prices of iron ore, and thus steel, benefit wind power producers. Wind power producers purchase wind

turbines from turbine manufacturers, which use steel as an input in production. Lower steel prices result in

decreased turbine prices, which allow producers to generate energy at a lower cost. To the good fortune of

industry operators, the world price of iron ore is expected to decrease over 2015.

MARKET ANALYSIS

MARKET OVERVIEW

Demand for wind power is based on a variety of factors, including government legislation and assistance,

interest in green technology and the price of wind power. All of these determinants tend to interact with one

another. For example, favorable government legislation might lower the price of wind power by providing a tax

break to wind power generation companies. Likewise, a broader interest in alternative energy technology may

lead the government to provide additional tax incentives.

Favorable renewable energy government legislation can increase the demand for wind power. For example, in

the past it has been mandated at the state level that the states’ utilities provide power from renewable sources

as a certain percentage of their total energy portfolio, which is referred to as a state’s renewable portfolio

standards (RPS). In addition, tax breaks for industry operators would provide incentive to produce additional

wind power. In recent years, there was a producer tax credit (PTC) that credits 2.3 cents per kilowatt-hour

created by industry operators. This credit expired at the end of 2012, but was extended until December 31,

2013. Since then, the expiration of the tax credit has increased the cost of wind farm construction, putting some

pressure on industry operators.

Interest in green technology as a whole can increase demand for wind power. The movement toward a

sustainable economy has both consumers and businesses demanding different types of technologies that will

help them reach their own green goals. As the population continues to grow, and energy demand grows with it,

individuals and companies are looking to reduce their carbon footprint. This shift, in turn, can translate into

increased demand for wind power. Several states have programs where consumers can buy green energy from a

utility at a premium price. The extent to which electricity customers exercise this option is very limited. Indeed,

according to the Energy Information Administration, less than 7.0% of total electricity generated comes from

renewable sources (excluding hydroelectric power). This is set to grow over the next five years.

The price of wind power affects demand for the product. Typically, lower prices of wind-generated electricity

leads to a higher demand. However, if the price of wind power is above prices of traditional forms of energy,

lower prices might not translate into immediate demand increases. Government legislation that lowers the cost,

like the PTC, can help to alleviate this burden. Furthermore, technological progress in the industry has resulted

in a decrease in the price of wind turbines, which leads to cheaper energy generation costs. Further

technological advances will increase the appeal of wind.

MARKET SEGMENTATION

Companies in the industry provide downstream customers with access to electricity generated through wind

power. Often times this service is implemented through a power purchase agreement (PPA). A PPA generally

defines the terms for the sale of electricity between the two parties, including when the project will begin

operation, schedule for delivery, penalties for under delivery, payment terms and termination. It is the principal

agreement that defines the revenue and credit quality of an agreement, making it a key instrument to project

financing.

Utilities

Figure : Wind Power Industry Market Breakdown Some of the largest wind projects sell their

generated power to utilities, estimated to account

for 56.0% of industry revenue. A majority of states

have renewable portfolio standards (RPS), which

require utilities within that state to sell renewable

energy as a part of their electricity offering. As a

result, independent wind farms in this industry

increasingly rely on utilities and other power

producers as key customers. Utilities tend to buy

large amounts of energy, given high demand from

consumers and businesses with regard to energy in

general and the renewable energy mandates. This

market segment has been increasing over the past

five years as utilities seek to meet the RPS goals. In addition, it is often more cost effective to sell wind power to

utilities because of the large size of most projects. The larger the size, the lower the marginal cost of energy

generated by the wind farm. In sum, the cost of energy for the firm selling wind power to the utilities lessens.

Commercial sector

Many commercial entities have been interested in supplying their facilities with wind energy. As a result, the

commercial market is estimated to account for 24.0% of industry revenue. For example, Walmart has made it a

priority to power their stores with wind energy. Companies that sell energy to commercial users often sign a PPA

to ensure continued business. PPAs are usually between five and 20 years long, locking commercial buyers into a

long-term agreement and providing service providers protection against lower cost alternatives. This segment

has increased over the past five years as more businesses push to become greener in their efforts to market to

consumers that are increasingly interested in sustainability.

Industrial users

Both industrial and, to a lesser extent, commercial users of electricity enjoy lower prices than households. This

segment is estimated to make up 20.0% of industry-wide revenue. In part, this reflects large-scale purchase of

power by industrial users. The industrial market typically uses other types of generation in addition to wind to

power their operations. High wind generation costs compared to other types of electricity generating

technologies, particularly natural gas, have made it hard for industrial users to continue using wind and, in turn,

have deterred many users over the past five years.