Evergreen Technologies – Ashok Bhatla

Company Overview• Evergreen Technologies is a startup company which has

been in operation for 9 months. The company is organized for profit – U.S. business in the designing of electrical equipment.

• Evergreen Technologies is 90% U.S owned company, and independently operated business located here in the U.S.

• The company has an outstanding track record for competence in manufacturing breakthrough electrical equipments.

Professional ManagementABC: Chairman, Board of Directors, NEMA, Ph.D. – Berkeley University

XYZ: MS-IIT Bangalore, Board Member of IEEE

RTY: CPA, MBA - Secretary of OIC

POI: Chief Technology Manager, MIT Lincoln Laboratory, Lexington,, MS – PSU

MNO Secretary, Institute of Energy Supply

Company Project Goals• To minimize electric consumptions [both at normal and peak

hours] using Smart Meter Technology.

• To successfully complete the project and provide economic and societal benefits through creation of new jobs by next fiscal year. [Target – 500 employees]

• To build partnerships and enhance networks with High Performance Companies in the business of electric equipment manufacturing in future.

• Align with universities to strengthen and support R&D resources.

Executive Summary• Mission: To be the leader in smart electrical meters

technology nationwide.

• Vision:

• To capture a market share of 25 % (out of a total market share of $ 12 billion) in the next 5 years.

• To generate an operating profit of 30% after in the first year of operations.

• To reduce carbon footprint and conserve electricity by 20% for the nation by using Smart meter technology.

• Electricity demand is on the increase. As population increases, comes more demand for electricity supply/consumption. Demand per capita is increasing due to large no. of gadgets in use. Demand from developing countries is also on the rise.

• “How can we manage customer consumption of electricity in response to supply condition, for example having electricity customers reduce their consumption at critical times or in response to market prices

Problem Statement

• It’s important to save the energy and minimize the wastage. In order to do this, we have to first accurately measure the consumption and then control it using SMART METERS concepts.

• Our product can help consumers in saving approx 20% of utility bills by better monitoring & control.

• A smart electric meter is an advanced electrical meter that identifies consumption in more detail than a conventional meter; and optionally, but generally, communicates that information via some network back to the local utility for monitoring and billing purposes.

Proposed Solution

The initial investment is 1,350,000 Time Line

Our money $500,000 -

SBIR grant ( Phase I) $100,000 6 months

SBIR grant ( Phase II) $750,000 2 years

Required Funding

SMART Meter technology• Shown in the picture is the

ELSTER A3 ALPHA type A30 single-phase kWh smart meter.

• It collects data from neighboring REX smart meters using a 900MHz Frequency Hopping Spread Spectrum (FHSS) [1] mesh network and 128-bit AES encryption branded as “Energy Axis”.

http://www.portlandgeneral.com/about_pge/current_issues/pdf/smart_meter_brochure.pdf

• Smart Electrical Meter will measure, regulate and control the consumption of electricity.

• It provides details about KWh used per appliance.

Users can switch off electrical devices which are not in use at peak hours

• Utility companies can remotely monitor using WIFI / Telecom Networks

• It is Compatible with existing infrastructure. It is environmental friendly, and easily installed.

Product Features

Proposed Developed Project Scope

Phase I [Funding amount: $100, 000. Time line: 6 months] Feasibility Study of innovative concept – Smart Electric Meter

Phase II [Funding amount: $750, 000. Time line: 2 years]

• principal research or R&D

• Design Concepts, Patent Application & Trademark, Product Prototype, UL Certification

• Licensing from Public Utility Commission

• Testing and Validation with Utility Company

• Product Positioning and Pricing

Phase III [Commercialization - SBA Loan $500,000 – Time Line 6 months]

• Identify Investors

• Venture Capitalists

• Sub Contractors / Consulting

• Source: SBIR Funding and DOE - http://sbir.er.doe.gov/sbir/; http://www.osti.gov/gencoun/partnership.jsp

• Mission of DoE - Promoting America’s energy security through reliable, clean, and affordable energy and  Strengthening U.S. scientific discovery, economic competitiveness, and improving quality of life through innovations in science and technology

• DoE needs to improve the efficiency of the power generation and distribution. Our product fits well under the Smart Grid Investment Program of American Recovery and Reinvestment Act 2009.

Funding Agency – Dept. of Energy

AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 : http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_public_laws&docid=f:publ005.pdf

ENERGY POLICY ACT OF 2005: http://www.epa.gov/oust/fedlaws/publ_109-058.pdf

Based on the objectives of the Funding Agency, our product will provide the following benefits to customers and companies:

• Saves the Environment – Fewer meter-reading vehicles that will cut miles of driving annually, saving large gallons of gas and reducing CO2 emissions by millions pounds.

• Saves Money – Reduce operational cost each year when the system is fully operational with no blackouts.

• Increased Reliability – Consumers will anticipate constant flow of electricity because of low stress been put on systems.

• Greater Energy Security – Reliance on oil from rogue nations will reduce and increase nation’s sense of security

• Enables smart grid technology - Smart metering is the foundation of smart grid technology. Next generation of smart grid will be dictated by the available of smart meters.

• Compatibility – smart meter technology is designed to be compatible with existing technologies

Benefits of Smart Meters

Milestone / Scheduling Chart

Milestone / SchedulingGOAL A1: 3 to 6 months- Identify Customer (s):- Vendors:- Market survey:- Technical evaluation of product:

GOAL A2: 1-2 years- Design Concept (Electrical Design, Mechanical Design, and Software design for monitoring and control)- Patent application and Trademark- Product Prototype- Certification from UL- License approval from Oregon Public Utility Commission- Testing and Validation with Utility Company (PGE)- Product positioning, and pricing

GOAL A3: 6 MonthsSpin offs and Follow Ups

• Electrical Design will be done in house. We have expertise in this  area.  We  will  also  use  the  Testing  facilities  of  PSU Electrical Engineering Department

• Mechanical  Design  will  be  done  at  NCMS.  Company  is already  a  member  of  NCMS  and  we  will  be  using  their facilities for the housing design.

R&D Strategy

• Competitors: Our main competitors are GE, Siemens and IBM

• Market Size: Gartner expects more than 150 million smart meters to be installed worldwide in the next five years, with approximately 50% installed in North America. We expect Oregon Market to be approx. 1 million

• Niche Market: Portland Metro Area

• Our Market Share: Evergreen Technology will capture 10% of the total market share of Smart Meter technology within 5 years of operations.

• Distribution Channels – Evergreen Technology, Inc. has secured contracts with PGE Electric Company to distribute smart meters.

• Rebates: We can also ask Public Utilities Commission to give a rebate of 25 % for the cost of the meter.

Authors: Mareca Hatler, Darryl Gurganious, Charlie Chi PhD “WSN for AMI & Demand Response, A Market Dynamics Report” Published: Nov. 2007. http://onworld.com/smartmeter/?gclid=CLDGhZqs6JoCFRBbagodCjVHBA#TOC

Market Strategy

- Product Strategy: We will accelerate the development of the meter by parallel development in electrical, mechanical and software components.

- Product Differentiation: Our Product offers monitoring software to remotely monitor the power consumption over wireless networks.

- IP protection:

- Company has applied for a Patent and Trademark with the USPTO.

- As we are not doing collaborative research, we will hold exclusive rights to the patent.

- We will get license from Utility Commission to operate and install smart meters.

Product Strategy

Manufacturing strategy:

We will use Spherion Contract Manufacturing based in Hillsboro for the production. This will keep the capital costs low in the beginning. As the product reaches a critical mass, we will setup our own production facilities.

Vendors:

GE – Electrical Spare Parts

Precision Cast parts – Mechanical parts

Processors and chips – Intel, Samsung

Operations:

• Operate on ‘ZERO TIME’ strategy to satisfy 21st century customers.

Operating Strategy

Budget Worksheet Expense Category Expense Details Amount Total Cost (in $)

Personnel Cost Consultant Cost for SW Development 8470

Salaries 29950

Equipment AutoCAD Station 7500

Testing Meters Leased for 6 months 500/month 3000

Oscilloscope - Qty 1 2950

Laptops for 5 employees 800/laptop 4000

Travel 1 Trip to Underwriter Laboratories 800

2 Trips to Washington DC to meet DOE Officials 1300/trip 2600

2 Trips to NCMS 750/trip 1500

Patent and Certification Costs Licensing Application with Public Utility Commission 2500

Application for Patent 1250

Application for Trademark 1400

Certification Costs – UL 3900

Other Direct Costs Office Rent 6000

Testing Services with NCMS 4200

Testing Services with PSU Electrical Engineering 4000

Subcontractor fees for Mechanical Assembly 1500

Office Supplies 1500

Computer Services 5250

Incidental Expenses 3000

TOTAL 95270

• Design of the meter will comply with the IEEE standards for the electrical equipment.

• Evergreen Technologies will get the product certified by the Underwriter Laboratories.

• Installation will comply with the Regulations setup by local and federal Utility Commission.

Govt. Regulations and Controls

• Internal: - No in-house manufacturing capabilities, lacking

workers with special manufacturing skills.- Delays in Production due to problems at Contract Manufacturing Partners.- Flooding or producing more than Demand.

• External: - Change in government mandate, external competitors, - Product quality to outsourced partners

Risk Assessment

• In addition to Spherion Contract Manufacturing, we have also identified MERIX Electronics as a backup production facility.

• Seek for information “ statistic” about demand, use Just In Time (JIT) approach.

• We will contract with different suppliers in different places. ( to have alternative supply)

• Search about the distribution companies before making contract, and we have to make term to eliminate the contract based on the companies performances

Risk Mitigation Plans

Income StatementIncome Statement 2009 2010 2011 2012 2013

Total Sales $0 $4,310,200 $4,924,660 $5,626,765 $6,429,052

Number of Units Sold 0.00 21,551 26,195 31,840 38,702

Average Selling Price $0.00 $200.00 $188.00 $176.72 $166.12

Average Cost of Goods (Material and Labor)

$100 $100 $100 $100 $100

Gross Margin (%) 0.00% 50.00% 46.81% 43.41% 39.80%

Total Variable Costs 0.00 $862,040 $984,932 $1,125,353 $1,285,810

General & Administrative Expenses

$105,000 $240,000 $480,000 $540,000 $540,000

R&D Expenses $700,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000

Marketing & Promotional Expenses

$200,000 $500,000 $800,000 $1,000,000 $1,200,000

Sales $200,000 $500,000 $500,000 $1,000,000 $1,000,000

Total Fixed Cost $1,205,000 $2,440,000 $2,980,000 $3,740,000 $3,940,000

EBIT ($1,205,000) $1,008,160 $959,728 $761,412 $1,203,242

Profit Margin

2009 2010 2011 2012 2013

Total Sales (Revenue) $0 $4,310,200 $4,924,660 $5,626,765 $6,429,052

Total Variable Costs 0.00 $862,040 $984,932 $1,125,353 $1,285,810

Total Fixed Cost $1,205,000 $2,440,000 $2,980,000 $3,740,000 $3,940,000

Net Profit (EBIT ) ($1,205,000) $1,008,160 $959,728 $761,412 $1,203,242

Profit Margin (%) 0.00% 23.39% 19.49% 13.53% 18.72%

5-Years Average

Total Sales $21,290,677

Total Investment $1,350,000

Total Profit $2,727,542

5-year Average ROI (percent) = Total Profit /

Total Investment 202.04%

The Break Even 2010(Q1)

Lessons learned from prior awardees1. Don’t judge an agency’s interests by its name.2. Consider all agencies.3. Select topic carefully to make sure it’s a good fit for

your company.4. Understand agency’s mission & needs.5. Get to know your agency Program Manager — call,

email, and/or visit them if possible.6. Read solicitation and follow instructions.7. Don’t depend solely on SBIR funding.8. Don’t go it alone - use support systems.9. Have an outcome. Be Persistent.