Technical & Economic Feasibility of Hydrogen
Project in USA
Executive Summary
This is a typical example of a project to give a detailed
idea about our style of designing a project. Every Project has its own special
requirements. Your project may be quite different and hence you should contact us
and fill in the contact form for us to take up your project. There are no fees for
preparing a project.
The Opportunity of a Life time: Present Pollution Reduction to zero, Revolution
taking place now all over the world is an opportunity once in a generation’s Life
Time. It is like the Industrial Revolution multiplied many times over. The Industrial
Revolution took very long time to complete. Present revolution is much faster and
much bigger in terms of economy. Let us not be left out just sitting on a fence
unable to jump on the band wagon.
Overview of the Project:
The Entrepreneurs:
The entrepreneurs are a team of engineers having years of experience in
manufacturing electrical products and developing custom made electrical products
and software for practical needs of Business and Industrial applications. We have
experience also in Wholesale Marketing and have been self-employed business
men for many years.
Project Location:
The Project will be established in USA
Site Size, Location, Approach and Permitting:
Environmental resources were reviewed to ensure site would avoid natural
resource impacts and potential permitting delays; and Site suitability as regards to
adequate land size, highway access, terrain and water supply availability.
Federal, State and Local Incentives:
The above aspects for Incentives were Investigated before deciding the site
location.
Renewable Energy Technology Selection:
1. Solar, with no operational fuel costs and little maintenance, provides a stable
cost of power and acts as a hedge against volatile electrical power rates.
2. On-site power generation infrastructure investments will preserve power
reliability and
operational capacity of the project even in times when grid failure occurs avoiding
delays
and business costs associated with power outages.
3. The importance of renewable energy is expected to increase in the future.
4. Investments in environmental projects will facilitate growth of a sustainable
ecosystem and help in national goal of controlling the Green House gas damage
to environment.
5. It would be more financially rewarding if some of the renewable energy is generated by wind turbines.
Rated Microgrid Solar System Capacity: 5.4 MW (only working during day time hours.)
Our plan is to produce Green Hydrogen which qualifies for maximum incentives from the government. The Green Hydrogen Economic
Rated Microgrid Solar System Capacity: 5.4 MW (only working during day time
hours.)
Our plan is to produce Green Hydrogen which qualifies for maximum incentives
from the government. The Green Hydrogen Economic Revolution is just begining and it is fully supported by majority of the countries of the world. The Revolution has been launched and there is no going back. So opportunities are abundant and early starters will have an economic edge. To produce Green Hydrogen the electricity used should be produced by Renewable Energy Sources like Solar, Wind, Hydro etc.
Hydrogen has many traditional uses and is being produced by use of Fossil Fuels. This is not classified as Green Hydrogen and is not considered as competitive product for Green Hydrogen. The demand for Green Hydrogen is rising exponentially because of the laws enacted by many countries of the world and advantage of not producing any environmental pollution.
The skeptics will watch the rise of the Green Revolution and it will be too late for them when they will be forced by economic reasons and laws of the land to jump on to the band wagon.
To avoid Bureaucracy of Electric Utility Companies and wait time required for approval of the connection to the power grid, which may not be approved for anyreasons we have designed Microgrid System. Utility Companies have a wasted interest in delaying and denying any and every project for connection to grid for Green Energy. According to the latest news, utility companies do not give approval for connection for 1 to 2 years based on an excuse to technically analyze the safety of their grid network before approving new connection to their grid. It is better to produce our own power without any connection to the Utility Grid for the simple reason to start on an early stage of development of the Green Revolution. However the cost of using our own Microgrid will be higher than that using utility grid.
We will produce our own power on our own purchased land by installing Solar Panel System along with Storage Battery Banks so that the production can be carried on during day time hours. The decision to run plant during day light period or using battery bank to run 24 hours a day will be decided at the time of launching project based on actually prevailing prices of battery bank. The present economic projections are based on running the production during day light with some battery capacity for firming the power supply to the electrolyzers.
Producing our own electrical power will give us government incentives.
Section I
Investment Profile:
This is based on purchasing all equipment from USA wholesalers who have
established Supply Chain Management System, so that they can provide the goods
in reasonable time. We have alternative to Import directly from the Manufacturers
of the equipment and save good amount of money. We will decide about the
option whether to import directly from the manufacturers or buy locally before
launching the project.
(a) Capital Cost: For fully installed and commissioned system: $21,280,000
Solar System Capacity: 5.4 Mw DC
(b) Hydrogen Production Plant:
Rated Capacity: 4 Nos of Electrolyzers 1 MW capacity each
(Working only during day time hours)
Actual Yearly Hydrogen Production: 4,469,360 Kg
{c) Total Investment: $21,280,000
(d) Useful Life: 25 Years
Life of Solar Panels Cables and Structure: 30 Years
Life of Inverters: 12 to 15 years
Manufacturers Warranty: Solar Panels: 25 years, Inverters: 10 to 15 years
(e) Construction Period: 8 t0 12 months from the date of available capital
Section II
(a) Business Model:
Hydrogen Gas will be produced using electricity produced by our Solar Panel
System and Electrolyzer using water and chemicals. Hydrogen will be compressed
using compressing equipment to 700 bar pressure and will be ready to be
dispensed to Fuel Cell type Hydrogen cars and Semi Trucks Class 8 having total
gross weight capacity of 80000 lbs. The trucks will be owned by our project
company and operated by Our Company Employed Drives or by third party who
will be transport operators. Transport Operator will sign a contract to work with our company until the leasing contract is in effect. They will lease the trucks from
our company. It will be mandatary for them to buy hydrogen gas from us. They will
be charged Retail Price of $15 per kg (which is market price now) for compressed
Hydron Gas at 700 bar. Selling Retail direct to the user gives us retailers margin
and saves us the cost of delivery. For leasing and buying hydrogen from us on
signed contract we will help them to signup customers for freight shipments.
We plan to use five channels of selling our hydrogen (a) We will use our contacts
with Custom Clearing and Forwarding Agents Companies who always have to
handle the shipment of cargo of their customers to be dispatched to customer’s
warehouse. we will negotiate handling of their shipment on annul contract basis
and secure our Hydrogen Selling business. (b) There is a vast open market for
Freight Shipment which is being sold on online sites on commission basis.
According to our sources, if we have trucking company, we can book our freight at
market price within an hour or two. In this system we don’t have to depend on any
particular company for our sales of our transport services. (c) There are many
manufactures of all kinds of products who want to ship their manufactured goods
to their own network of warehouses or their customer’s warehouse. We will
negotiate yearly contracts for shipping their goods at fixed contracted price.
(d) We will negotiate contract for supplying hydrogen to Transport Fleet Owning
Companies who will buy hydrogen on bulk basis regularly. We will offer them Turn
Key Hydrogen storage at their site specially for them without them having to
invest any capital.
(e) we will buy Hydrogen car Toyota Maria and lease them on daily basis to drivers
to work with Uber or Lyft taxi service.
This Business Model will be repeated at two more locations after we establish our
first project.
Section III
Project Return on Investment:
Profit Margin: Considering Sales Price will be USD 15.00 PER Kg and adding
Government Incentive of USD 3.00 ( for Hydrogen Production ) our effective Sales
Price will be USD 18 per kg of Hydrogen.
The Average Inflation Rate in USA, considering last 20 years data has been
documented as 2.5%
After paying a 3% per annum fixed simple interest rate for a loan having 20 years
term and monthly payment of interest and amortized principle amount the
following will be Discount Rates (Internal Rate of Return) realized. This considers
25 years production.
These numbers are for a Life Cycle of 25 Years.
Investment Required in USD: : $21,280,000
Real Internal Rate of Return (IRR) after adjusting for Inflation
Discount Rate =7.90%
Nominal Internal Rate of Return (IRR) Discount rate=10.60%
Yearly average sales Including Incentive=$3,217,900
Life Cycle Hydrogen Production: 4,469,560 Kg
All numbers below are Without applying Inflation except O&M Cost
Life Cycle Sales Price without Price escalation: 15.00
Life Cycle Revenue Including Incentives=$76,872,000
Life Cycle Government Incentives= $11,609,000
Life Cycle Cost O&M with Inflation adjusted (excluding Interest and Depreciation):
$11,979,000
Life Cycle EBITDA: $63,273,000
Life Cycle Net Profit: $41,324,000
Payback Period: 9 years.
Conclusion: All above numbers and internal calculation are based on good faith
efforts and depend upon market conditions, competition, supply chain situation,
government policies and regulations etc. When we get letter of intent
about any specific the project all above numbers can be reworked to more precise
by getting the latest quotations from the vendor and other relevant
latest information.