Business Startups in Ppt Formate
Business Startups in Ppt Formate document sample
Shared by: ina15542
A Biological Revolution in Hydrogen Fuel Production Principal Investigator: IBCS Team: Dr. Pamela Silver Giacomo Centini Harvard Medical School Michael Ellis Dept. of Systems Biology Cedric Lucas Yang Mao John Wu Autumn Yuan December 13, 2007 Multiple Methods of Hydrogen Production Hydrocarbon Biomass Microbial Reformation Hydrolysis Gasification Metabolism • Cheap • More • Cost unclear • Potentially • Energy expensive • Energy lowest cost intensive • Energy intensive • Least energy • High CO2 intensive • Some CO2 intense output • No CO2 output output • Little to no • Non-renewable • Potentially • Renewable CO2 output renewable • Renewable Source: Interview with George Sverdrup, National Renewable Energy Laboratory; group research Using Yeast to Produce Hydrogen Biomass Harvest and Sugar Fermentation Hydrogen Treatment Bioengineered Yeast C6H12O6 → high energy intermediate → H2 Source: Conversation with research team of PI Dr. Pamela Silver’s laboratory Technology Current Status and IP Considerations Current Status IP Considerations • There are two different processes • Provisional Patent has been Filed under study to convert sugar to H2 : • No publication has been made, – Direct : Converting sugar to H2 but research abstract has been displayed at scientific conference – Indirect: Converting sugar to Formate, then Formate to H2 • Strong IP protection likely; no • The current yield is 0.05% - 0.1% existing patents related to use of yeast to convert sugar to H2 • Further development is needed in order to achieve a reasonable yield (15-40%) • Operating indirect process to convert formate to H2 may require licensing existing bacteria Source: Conversation with research team of PI Dr. Pamela Silver’s laboratory; United States Patent and Trademark Office (USPTO), http://www.uspto.gov/, accessed November 2007. Hydrogen Market Overview Key Insights Current Producers • Hydrogen: – Is difficult to transport – Is difficult to store Others – Requires major capital infrastructure for 24% traditional production 36% • Hydrogen industry highly concentrated • Plant location is key 16% • High barriers to entry 10% 14% • Customer base very loyal; more concerned about reliability than price Source: ENEA – Idrocomb - www.krill.net/idrogeno/iacobazzi-1.pdf - Accessed November 2007 Hydrogen Market Overview (cont’d) Current Market: $3B Potential Market 2020: up to $1.7T Methanol; Other; 4% Space; Current Uses 10% 1% 2% Refineries; Ammonia; 35% 50% Future Transportation 98% • Current production: 50MT, $3B • Potential market if the global • Market growth: 10-20% per year transportation will migrate from • Current uses primarily non-energy current gas ICE vehicles to hydrogen related: fueled vehicles is estimated at over $1.7T in 2020 – Ammonia – Refining – Food production • Fuel Cells and ICE H2 Vehicles are expected to be the main market for • Some energy-related use: hydrogen in the future – Methanol – Rocket fuel Source Current Market Data: ITS – www.ieagreen.org.uk/h2ch2.htm - Accessed on November 2007 Source Potential Market Data: Minnesota Department of Commerce - www.state.mn.us/mn/externalDocs/Commerce/Hydrogen_Potential_090803021706_HydrogenReport4.pdf - Accessed in November 2007 Business Model Options Options Pros Cons Large-Scale • Greatest value add/capture • Most capital intensive Facilities • Flexible outputs possible • High transportation costs Small-Scale • Reduces transportation • High service costs Bioreactors costs • Difficult to upgrade • Best serves niche markets distributed tech • Core competency • Lower value add/capture License • Serve growing niches • Provide varied outputs • Lowest capex • Potentially faster • Tough to raise capital Lab Spin-Off development • Less control • Less access to Harvard resources Timeline 2008 2009 2010-2012 Develop Technology Prove Concept Find Partners • The technology should • Begin lab-scale pilot • License to strategic be developed further in production partner(s) for: Harvard laboratories in – Further development • Aim to generate data order to: of operations enabling greater value – Reach yield, cost, capture from licensees – Taking product to and output (e.g. cost, reliability, market reliably and milestones scalability) with a strong brand – Understand • Potential targets: possible applications given – Entrenched purity and pressure producers of H2 – H2 transportation fuel startups Backup Slides Description of Innovation • Most hydrogen production efforts focused on well- understood reaction C6H12O6 (glucose) + H2O 6CO2 + 12H2 • Focusing on alternate pathway with more favorable economics: NAD(P)H + H+ NAD(P)+ + H2 • Two parallel development paths – Constructing artificial metabolic pathways to generate stronger biological reducing agents – Constructing artificial organelles (microenvironments within cells) in which the NAD(P)H/NAD(P)+ ratio can be made arbitrarily high to drive the reaction to the right • R&D will also enable more efficient modification of metabolic pathways for production of other useful end products, including small molecule fuels Source: Conversation with research team of PI Dr. Pamela Silver’s laboratory Technical Feasibility • Stage of development: Early development/proof of concept – Provisional patent filed covering biological compositions, systems and methods for producing hydrogen using engineered yeast systems, or a combination of an engineered yeast system and an engineered bacterial system. – Systems have yielded maximum hydrogen conversion yield of 0.1%; target is 40% • Technical roadmap – Research milestones Source: Conversation with research team of PI Dr. Pamela Silver’s laboratory Technical Feasibility (cont’d) – Recommended additional milestones • Purity of hydrogen • Production capacity: 1 kg/day; 100 kg/day; demonstration of scalability to 10,000 kg/day • Production cost $10/kg; $5/kg; $2/kg – Risks • Modification of cell pathways could cause unintended consequences that inhibit conversion efficiency yield or hydrogen purity • Labor intensity and process variability could make system non- competitive with traditional modes of hydrogen production • Upstream biomass conversion needed for process input could make process uneconomical or output too variable in quality • Hydrogen production through advanced materials/direct catalysis or other production methods could render this process uneconomical The Current IP Status and Freedom to Operate Related Prior Art Freedom to Operate • From Sugar to Formate: • From Sugar to Formate: existing patent covers process for formate will not infringe the existing patent production by bacteria (5879915) covering process for formate production by bacteria (5879915), since yeast is • From Formate to H2: going to be used instead of bacteria public knowledge exists, process for anaerobic production of hydrogen using a • From Formate to H2: delta-proteobacterium was patented (5834264) back in 1998 could infringe the existing patent covering process for anaerobic production of hydrogen (5834264) only • Other related prior art: if the specific delta-proteobacterium( existing patent covers process for ATCC 55738) is going to be used, but, hydrogen production using hydrogenase- regular ways of converting formate to containing oxygenic photosynthetic organisms (6989252, 4442211) H2 are less economical, as claimed in the mentioned patent Recommendation: Inventors should engineer new strains of bacteria to make the conversion of Formate to H2 more efficient and bypass the existing patent, or consider licensing the patent mentioned instead Source: United States Patent and Trademark Office (USPTO), http://www.uspto.gov/, accessed November 2007. Hydrogen Market Overview Electrolysis, Production Method 4% Coal, 18% • The current distribution in the production of Hydrogen is driven by mainly economic reasons over environmental considerations • Currently renewable electrolysis is not economically competitive with other form of hydrogen production • Other forms of hydrogen production from fermentation to photobiological water splitting are under investigation Natural Gas, 48% Oil, 30% Air Products, 24% Competitors Others, 36% • The hydrogen production is highly concentrated with the four biggest competitors supplying more than two thirds of the hydrogen worldwide • The main player must compete on a global scale, even if certain plant locations are necessary to serve key clients • Most of hydrogen producers are highly differentiated in their Paraxair, production 16% BOC, 10% Air Liquide, 14% Key Insight • Hydrogen is currently not a viable option for many possible future uses because: – It is difficult to transport : There is no infrastructure available that can be converted to transporting hydrogen as it need specific pressure and temperature requirements – It is very difficult to store : The very small size of the hydrogen molecule make impossible given the current technology to avoid its evaporation from the thank • Entering the hydrogen market is very difficult: – The industry is highly concentrated – There are high capital requirements – The customer base tends to be very loyal and more concerned about reliability than price, as hydrogen is a key input but is usually not a significant portion of the cost structure Source Current Market Data: ITS – www.ieagreen.org.uk/h2ch2.htm - Accessed on November 2007 Hydrogen Market Development Other Space • Current production of hydrogen in Methanol 2004 globally was over 50MTwith overall revenue of >$3B • The industry has been growing on average in the last years between 10% and 20% p.a. • Currently most of the hydrogen produced is used for non energetic uses or indirect energetic uses Refineries Ammonia Current Future • Ammonia: • Fuel Cells: Used in the agricultural sector as a fertilizer, The main use expected in the future for has seen a rapid growth in recent years due to hydrogen, is related to private transportation growing use of fertilizers with fuel cells vehicles • Refinery: • ICE Vehicles: Hydrogen is used to enhance performance of Hydrogen can also be used as propellant for petroleum products by removing organic sulfur regular ICE when mixed with natural gases from crude oil, helping refineries to meet Clean • Power Storage: Act requirements Another important use for hydrogen is related • Methanol: to the energy storage. This has been proven Used in industrial and chemical applications, very effective especially with wind turbines, methanol use has been growing recently due where supply peaks tend not to match demand to its use in the private transportation sector peaks • Food: Margarine and butter market have been growing very slowly in the last ten years • Space: Hydrogen is the main propellant for spacecrafts Source Current Market Data: ITS – www.ieagreen.org.uk/h2ch2.htm - Accessed on November 2007 Source Potential Market Data: Minnesota Department of Commerce - www.state.mn.us/mn/externalDocs/Commerce/Hydrogen_Potential_090803021706_HydrogenReport4.pdf - Accessed in November 2007 Cost Comparison Hydrogen Production Costs • To be cost-competitive with $/kg dominant production $8.00 methods, H2 production $7.00 through yeast must be at $6.00 $2/kg or less $5.00 • Current estimates of $4.00 hydrogen through other $3.00 biological processes project $2.00 costs of $7.50/kg $1.00 $0.00 Gas Nuclear Wind Concentrator PV Flat-Plate reformation electrolysis electrolysis PV Electrolysis While some of the difference electrolysis may be made up by carbon credits, significant progress must be made on demonstrating much lower costs through scalable, reliable technology Chart data source: “Generating Hydrogen through Water Electrolysis Using Concentrator Photovoltaics.” R. McConnell and J. Thompson. NREL Conference Paper. January 2005. Source for other biological process cost: “Updated Cost Analysis of Photobiological Hydrogen Production from Chlamydomonas reinhardtii Green Algae.” Wade Amos. NREL. January 2004. Average of costs presented on page 26 excluding highest and lowest outliers. Summary of Potential Business Models Business Model Option Reasons to choose this model Pros Cons Small scale • If system is most efficient and reliable at small scale • Eliminates feedstock • Service and on-site • If H2 demand grows among fragmented customer base, and hydrogen price risk maintenance costs distributed preferably with feedstock access • Serves growing niche could be high production • If process costs near or above traditionally produced hydrogen, markets unlikely to be • Potential to be but with other advantages valued by customers (e.g., carbon served by larger squeezed by system credits) distributors manufacturer and feedstock supplier Large scale • If process is most efficient and reliable at large scale • Highest potential to add • Incurs both upstream centralized • If process is cost competitive with traditionally produced and capture value (feedstock) and production: hydrogen • Could enable flexible downstream (hydrogen) Develop and • If mass market demand grows production of various price and market risk operate outputs • Longest development production timeline facilities Develop • If R&D is yielding multiple technologies that could be licensed • Closest to existing • Lower value add; lower technology to numerous bio-chemical/biofuel producers (i.e. beyond researcher core potential to capture and license to hydrogen) competencies value existing producers • If projected costs of facility construction outweigh projected • Shortest development profitability pipeline • Lightest asset and capital intensity Recommended option... but only after technology has been further developed in the lab Potential Business Models • Option 1: Small scale on-site distributed hydrogen production – Manufacture and distribute modules that could be installed onsite at point-of-demand to produce 100-5,000 kg H2/day Revenue: • Service and maintenance contracts • System (sale or) lease • Biomass input (optional) – Costs: • Capex – System R&D • Opex – System manufacture – Continuing system R&D – Service and maintenance staff – Biomass (optional) – Reasons to choose this model • If system is most efficient and highly reliable at small scale • If demand for hydrogen grows among fragmented customer base, preferably with access to feedstock • If process costs near or above traditionally produced hydrogen, but with other advantages valued by customers (e.g., carbon credits, access to reliable onsite hydrogen production, “greenness” of process) – Pros • Eliminates feedstock and hydrogen price risk • Serves growing niche markets unlikely to be served by larger distributors – Cons • Service and maintenance costs could be high, especially with geographically dispersed customers • Potential to be squeezed by system manufacturer (assuming outsourced) and feedstock supplier – Complementary assets/technologies • Manufacturer (assuming outsourcing of system construction). Not highly specialized; straightforward contracting. • Distributor of pretreated biomass or supplier of other technology for onsite biomass pretreatment. Specialized; likely requires partnership. Potential Business Models (cont’d) • Option 2: Large scale centralized hydrogen production: develop and operate production facilities – Revenue • Hydrogen sale to distributors or direct to customers – Costs • Capex • Process development • Facility construction • Opex • Facility operation • Feedstock • Biomass – Reasons to choose this model • If process is highly efficient at large scale • If process is cost competitive with traditionally produced hydrogen • If mass market demand grows – Pros • Highest value add; highest potential to capture value • Could enable flexible production of various outputs – Cons • Incurs both upstream (feedstock) and downstream (hydrogen) price risk • Longest development timeline – Complementary assets/technologies • Provider of biomass pretreatment technology. Specialized; likely requires partnership. • Facility constructor. Not highly specialized; straightforward contracting. • Hydrogen distributor. Somewhat specialized. Potential Business Models (cont’d) • Option 3: Large scale centralized hydrogen and other biofuel production: Develop technology and license to existing producers – Revenue • License fees from sale to hydrogen producers or biomass processors – Costs • Capex • Technology R&D • Opex • Ongoing R&D • Small overhead staff – Reasons to choose this model • If R&D is yielding multiple technologies that could be licensed to numerous bio- chemical/biofuel producers (potentially beyond hydrogen) • If projected costs of facility construction outweigh projected profitability – Pros • Closest to existing researcher core competencies • Shortest development pipeline • Lightest asset and capital intensity – Cons • Least value add; lowest potential to capture value – Complementary assets/technologies • Knowledge of developments in related technologies. Specialized; requires research partnerships. Interview Notes Dr. George Sverdrup Technology Manager — Hydrogen, Fuel Cells, and Infrastructure Technologies National Renewable Energy Laboratory • NREL has a couple of projects on bio-based hydrogen production • Further resources on development of hydrogen technology and infrastructure – See Posture Plan on DOE Hydrogen project page; describes different strategies for the national program. – See also multi-year RD&D plan – covers multiple pathways (search on “hydrogen multi-year plan”) – Could call Pin Ching Maness – leads bacterial projects at NREL – 303 384 6114 ... she might have opinion on how yeast stacks up to bacterial • Gasification of biomass for hydrogen – Thought to be applicable to centralized production (e.g., 50K kg/year of H2), but not small distributed production – With technical advances, could get H2 production below $2.50/kg – Most biomass gasification research has been directed towards syngas combustion for power... 2-3 projects country-wide on gasification for hydrogen production. – Seen as more near-term, but only when we it becomes necessary to produce hydrogen centrally and distribute (years off) • Bacterial fermentation – Feedstock cost very high; hard to meet $2-3/kg cost. Largely driven by feedstock costs. – If could get organisms that could process cellulose, that might get around this cost. – So, NREL looking at different cocktails of bacteria. – More directed at distributed rather than centralized production. – One big issue: fermentation processes create multiple byproducts; molar yield of hydrogen nowhere close to theoretical maximum Interview Notes Dr. George Sverdrup (CONT’D) Technology Manager — Hydrogen, Fuel Cells, and Infrastructure Technologies National Renewable Energy Laboratory • How concerned about storage and distribution issues? – Quite; DOE focusing an entire effort on delivery and storage. – Looking at pipeline, compressed storage, by road, liquification over the road. Cost of distributing may overwhelm production. – Seems likely that these will be overcome. Local, distributed generation would cut down transportation costs greatly... but still need storage and compression technologies. • How confident in evolution of market towards transportation? – Quite – Hydrogen has great promise to meet transportation needs – H2 will probably be used in other markets before transportation gets going: backup power generation for telecommunications; stationary uses (natural gas reformation for fuel cell use now) – Many companies are investing now in hydrogen products, but given cash burn rate, question of how many will last Interview Notes Mr. William Baade Market Expert — Hydrogen and Bioengineered Organism Air Products Key Points: • Before you will be able to get to the market you need to pass four steps: – Prove the process – Pilot Plant – Commercial Demo – Acquire the Market • The issue with natural processes to obtain H2 is the pressure. – Most of applications use H2 at a pressure of 800psi. – From gasification H2 comes out at 400psi, making it very easy to bring it to 800psi – If you have to start form atmosphere pressure the process is long and very expensive in term of energy needed, as it needs many steps due to the small dimension of the H2 molecule – Some uses for low pressure H2 are related to food and steel processing, but those are very small markets – To get in the Ammonia and Ethanol market you need to take the H2 at high pressures • The production costs with the standard process at 800psi are : – 3$ per 1000 cubic foots that is approximately 1.2$ per Kg – On that you have to add 1-3$ per 1000 cubic foots of capital expenses (depending on the size and efficiency of the plant) – Liquid H2 goes at 10-15$ per Kg – A world class plant produce 100 Millions Cubic Foots per day Interview Notes Mr. Jerald A. Cole Chief Technology Officer Hydrogen Ventures • Overall Market: – It is very difficult to estimate the overall size of H2 market, because the captive H2 market (e.g. refinery) is approximately 8-10 times larger. – It is very difficult to get into the market for a couple reasons: 1) dominant players are willing to sell H2 for loss, since most of their users purchase a package of gases; 2) H2 users are concerning about the quality of H2 and reluctant to switch to unfamiliar suppliers. • Fuel Cell market is emerging. – A couple of niche markets which fuel cell is getting into: 1) Jadoo Power Systems, based in Folsom, Calif., has developed hydrogen fuel cells for portable, professional video cameras that it claims are cheaper and last longer than conventional batteries. 2) H2 Fuel Cell is an attracting energy source for luxury vacation homes located in remote area (45,000 of them are built last year, rich people are looking for all different ways to power up these vacation homes, solar cells is another option for them). – Still people are waiting for a major breakthrough in Fuel Cell technique to reduce the cost. – H2 used for Fuel Cell needs to meet five 9 standard, thus very expensive. • Other growing H2 market: – H2 combustion engines (e.g. BMW is testing hydrogen combustion 7-series.). Interview Notes Mr. John Trbovich Principal OnPoint Technologies • Market Insight - “future” uses of H2 will probably not develop into a viable market for at least 10 to 15 years - fuel cell is at this point the most likely use of H2 in energy generation. - major technical hurdles in H2 transportation, storage, and fuel cell must be overcome before the full potential of H2 can be realized • Investment Insight – their venture fund has funded projects out of the university before, and they all share the following characteristics: – Technology/process is usually at its earliest stage – The team that developed the technology is a major factor in considering whether to fund it or not – With regard to this particular technology, the bottom line is whether we can make a case for the industrial use of hydrogen generated through this technology for the period of time before other “future” uses of H2 develops Interview Notes Dr. Andrew Murray Professor Department of Molecular and Cellular Biology, Harvard University • Technological Insight - there are significant technical hurdles yet to be overcome in the full development of the technology according to the plan outlined by the Silvers group. - metabolic engineering is an emerging field with many uncertainties; therefore, the developmental timeline given by the Silvers’ group should be taken with a grain of salt. - scalability of the process needs to be experimentally demonstrated - it would be worthwhile to consider how much scientific resources (i.e number of graduate students, amount of funding etc.) the Silvers group intend to devote to the further development of this technology. In light the of the significant technical hurdles that they must overcome, full time engagement of at least a few graduate students and/or post-docs are necessary. • Bottom Line – The technical feasibility of the process is in no way guaranteed and therefore monitoring of the progress of the development team is of crucial importance if money is to be invested. – Significant investment should not be made until more data is provided to demonstrate the feasibility of the technology as proposed. Interview Notes Wal van Lierop – 16 November 2007 President & CEO Chrysalix Energy Venture Capital, Vancouver, Canada Hydrogen market overview • Key take-away: hydrogen market for industrial uses is EXTREMELY TOUGH to enter. Market leaders such as Air Products and Praxair control the market, therefore even if a start-up company were to come up with a new process for cheaper hydrogen production, the major industrial clients (e.g. refineries) would still rely on leaders such as Air Products and Praxair. Indeed, not only is hydrogen a limited cost item for these industrial customers, BUT hydrogen is critical to their operations so they would prefer paying a little more but being able to rely on a stable, well-established company for their hydrogen supply and not on a brand new start-up. • Industrial use is typically good for on-site hydrogen production: steel used in automotive industry for instance, undergoes heat treatment in annealing furnaces that use hydrogen. BUT same problem as described above regarding the difficulty of penetrating the market. • Industrial customers care about low cost hydrogen solutions BUT reliability is also a number one concern • Critical aspect for hydrogen start-up is great management team for execution in the industrial space • Hydrogen fuel for vehicles will not happen within a 7-year timeframe so need to find alternative niches for hydrogen generation companies • Would not invest in hydrogen companies whose only competency is to produce hydrogen, needs another asset (e.g. ethanol play, service to oil & gas industry) to be an attractive investment opportunity at this point in time Interview Notes Wal van Lierop – 16 November 2007 (continued) President & CEO Chrysalix Energy Venture Capital, Vancouver, Canada Views on biological processes for hydrogen generation • Problems of dealing with biomass as feedstock: availability and variations in quality of feedstock, and variations in quality of hydrogen gas being produced • Could be niche markets for small-scale on-site hydrogen production using biomass: for instance, stand-by power generation systems using fuel cells with a biomass source nearby • Could partner with Wal-Mart that started experimenting with fuel cells for indoor forklifts – could couple that with hydrogen from biomass, HOWEVER Wal-Mart would probably not pay anything for it and would only consider it as a free experiment • Hydrogen production cost needs to be at or less than $2 per kg, otherwise there is no way to compete (e.g. electrolysis to generate hydrogen is too expensive) Interview Notes Mark Murphy Vice President Finance Praxair Asia, Inc. • H2 production - It calls itself supplemental provider to petroleum refinery, which is the major revenue source. - Method: Steaming reforming. - Transportation: large production unit with pipeline network on site. - Capacity of a plant: 100 million standard cubic feet per day, while the refinery consumes 2-500 million standard cubic feet per day. - The price is influenced by the cost of feedstock, which is natural gas. - Small electrolysis unit to produce hydrogen. - The hydrogen produced this way normally is packaged in high-pressure cylinder. - This segment is highly fragmented and has a lot of small providers. • H2 market – Grows considerably in general mainly because the US and Europe have tighter regulations on refinery, the US market especially due to its high sulfur crude. • Price – The market price will determine how to build production, storage place and distribution. Interview Notes Barry Stevens President National Hydrogen Fund • Cost - Capital investment and development cost. - Feedstock: biomass. What if any of these cost goes up by 2 to 3 fold. - Energy demand: heat? Electricity? - Emission: How to capture H2? Carbon waste? - How long will it take to put into mass production? 4 stages to go (proof of principle, proof of performance, true demonstration and mass production). - Acceptable cost is $1.5-2 dollar per equivalent gallon of gas energy. • Market - H2 as energy source is a very attractive market and will happen eventually if the government is more concerned about environment. - The H2 market for energy use is estimated to be 70 million billion BTU and the power need will increase by 66% in 2025. Right now only 6.2 million are produced by renewable energy. The markets he is looking at are infrastructure (grid-connected power source) and transportation (vehicles). There are enormous breakthroughs in technologies related to these markets, but the costs are still relatively high comparing to coal. However, H2 is able to substitute fossil energy source if there is a strong pressure from the top to adopt it. • Business/Operations – When he looks at a business opportunity, he also looks at the team (inventors if they are to commercialize the technology.) apart from the technology itself. – The price of a product is normally charged at 3 times its production cost. – It always at least takes 3 years for a technology from idea to mass production.