Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine,
Published – March 16, 2012
CEOCFO: Mr. Davis, what is the vision
and focus for PowerVerde?
Mr. Davis: PowerVerde is a renewable
energy company, making electricity in the thermal or heat space. PowerVerde
uses any low-grade heat, such as heat from the sun, geothermal or even waste
heat from industrial processes such as manufacturing or energy production.
Our BTU (heat) requirements are much lower than the industry norm needing
only 60 degrees Celsius to make electricity. If you give us adequate heat,
we convert the heat into electricity with no carbon footprint, no waste
stream byproducts, and no noxious fumes, only clean renewable electrical
CEOCFO: Is this something that is not
being done in general? Does PowerVerde have a particular technology that
allows you to do this?
Mr. Davis: There is a renewable industry
known as the thermal space, historically dominated by large companies such
as United Technology and Ormat Corporation. Their applications are very site
specific and require much more heat than is generally available in "real
world" applications. They work with much larger industrial sized Organic
Rankine Cycle applications, which describe their style of pressure cycle.
They cater from 200 kilowatts up to many megawatts, but again, these
locations are very site specific. By site specific, I mean they work in
places where maybe you have geothermal springs that are very hot creating
unlimited amounts of BTUs or unique industrial manufacturing processes
producing vast amounts of waste heat as a byproduct. In contrast, PowerVerde
can capture enough BTU's to satisfy their minimal requirements and make this
waste heat technology an everyday reality. Most current waste heat
temperatures are not hot enough to promote these historic type technologies,
and as compelling as they sound, that is why Organic Rankine Cycles and
waste heat applications are not a common "household" theme. Power Verde, on
the other hand, is catering to 200 kilowatts and below market. We are able
to operate on heat temperatures much lower than our competitors. In a highly
controlled test---not our commercial claims, or real world applications---we
have actually made electricity on as little as 40 degrees Celsius. This is
like bathwater! This is, we think, an example of where the future takes us.
We do not think anybody closely compares to these kinds of metrics and this
makes waste heat or solar possibilities really a giant economic reality.
Harnessing very low grade heat would save this country billions of dollars
CEOCFO: Would you please explain how the
Mr. Davis: The waste heat thermal
industry works mostly on a cycle called an Organic Rankine Cycle, and
generally, it works much like traditional steam powered turbines using
heated water as their "working fluid". They heat a working fluid, and in the
case of say a nuclear power plant, the fluid or water expands and turns to
vapor resulting in much greater volume than its previous liquid state. If
you restrict this vapor say to a turbine, then it is forced into creating
mechanical energy. It turns the expanders (blades) and makes electricity. If
the working fluid is contained (closed loop) and reused this is an example
of a "classic" organic rankine cycle, or "closed loop cycle". Again, names
like United Technology Corporation, or Ormat Corporation, build systems like
this. Generally, these systems are about a megawatt or larger. There are
some applications as small as 200 kilowatts, but they are very rare. In the
purest case of an organic rankine cycle, they are essentially flashing or
boiling a working fluid or refrigerant like Freon or something along those
lines. When it hits a certain temperature, maybe 200 or 300 degrees, it
converts from a liquid to a gas. This gas is forced thru a turbine, which
generates electricity. PowerVerde on the other hand has pioneered a unique
pressure cycle that is non- organic rankine cycle in nature, nor utilizes
expensive turbine technology. We are operating on pressure. We are operating
on a unique pressure cycle we call an Organic Pressure Driven Cycle (OPDC).
We heat our working fluid, we expand our working fluid and we have a unique
proprietary driver that takes the expanded pressure and delivers it to a
generator making electricity---mostly servicing the 200 kilowatt or below
waste heat market on unprecedented low temperatures. That is our big
differentiating factor----very low temperatures.
CEOCFO: Are people using the PowerVerde
Mr. Davis: Last year we sold a 50
kilowatt system to the Dutch in the Netherlands known as Newton Green Power.
They became our EU distributor and they purchased this machine we named "The
Liberator". The Liberator has been demonstrated in an engineering/
manufacturing firm in Leeuwarden Holland since April of 2011. Moreover, in
this particular application, it operates on about 82 degree Celsius
temperatures. We did not consider this machine to be commercial but more of
a beta test system for Europe's perusal. It is more of a show and tell,
proof of concept system and PowerVerde has since been developing the next
generation Liberator II. We have a laboratory in Scottsdale, Arizona, where
we have been testing this new system. It uses much lower heat than the
system we sold the Dutch last year. This second generation Liberator has
demonstrated electricity on heat as low as 60 degrees Celsius. This new
Organic Pressure-Driven Cycle system, we believe, may revolutionize the way
electricity is made from waste heat or any low-grade heat.
CEOCFO: How does PowerVerde get the
people that should pay attention to pay attention?
Mr. Davis: We very much believe that
green energy has been a hot popular space to invest, however for the most
part, green technologies are not continuous power but intermittent power.
They only work when the wind blows or the sun shines. These technologies are
the historic gold standard for how we generate renewable electricity. On the
other hand, PowerVerde has engineered a continuous electrical production
machine. The companies that have gotten visibility have applications that
are mostly subsidized by governments. They (governments) mandate or
subsidize you to buy this technology. We think that will never work in the
long term, as commercial adoption must make economic sense based on return
on investment criteria. Therefore, our price points make PowerVerde among
the lowest priced systems in all the renewable space, that is, in terms of
dollar price per watt or kilowatt. We believe that with these low price
points the return on investment could be significant. That is, it pays for
itself quickly. If you have waste heat, generally vented up through the roof
of your factory, we would capture that waste heat and make electricity that
could either be used in the plant itself or sold back to the grid. We
believe that for renewable energy to be successful long-term, it must be
able to operate without government assistance or subsidies and we believe
PowerVerde is pioneering that space.
CEOCFO: How does PowerVerde reach
potential customers that are bombarded on all sides with new ideas?
Mr. Davis: We are earmarking specific
industries. In the case of Europe and our Dutch partner Newton, we know that
they are more advanced compared to the United States in terms of renewable
energy and what they pay for it. There is a lot of government participation,
many subsidies. Countries such as Germany, Netherlands, or some other
western European countries, are trying to become less dependent on foreign
oil or oil in general. They fear Nuclear power since the Japanese incident
and have already shuttered many gigawatts of nuclear electricity. I believe
the Germans have mandated that by 2020 they would like 20% of their
electricity to be generated by photo voltaic. Therefore, we have earmarked
biogas or methane gas plants and geothermal opportunities in Europe. There
are 7000 biogas systems in the Netherlands, Germany, Austria, Belgium and
the Scandinavian countries. These essentially are "cow powered" electricity
plants compensating the farmer. The Europeans are very big in dairy and
wherever there is a dairy farm, you will find a methane plant. They are
using the waste byproducts of cows------manure, and they are putting this in
methane plants. These are domed cement cylinders where they add certain
microbes. These microbes and the cow waste create a byproduct known as
methane gas. These plants have elastic or domed latex covers and as the
microbes generate the methane gas, the domes expand from which they siphon
the methane gas into traditional generator sets, usually 500 kilowatts and
above. Then they sell this electricity back to the grid and get a check
every month from the government.
We have demonstrated that we can co-generate, meaning these generator sets
throw off an amazing amount of heat. Everyone is familiar with his or her
car, or any fossil fuel burning machine. Most of the energy used to propel a
car or make electricity is wasted in the form of waste heat. Only a small
fraction----maybe 20%-25% is literally is used for its intended purpose.
These engines are really inefficient. We are able to take or capture this
waste heat and co-generate additional electricity. Therefore, if a farmer is
generating half a megawatt or 500 kilowatts of electricity from a methane
plant, we could generate an additional 20% or an additional 100 kilowatts,
by simply converting their waste heat into usable electricity. It comes down
to return on investment. The owner of these facilities purchases the
PowerVerde system, at a price per watt, much less, than he originally paid
for his methane plant and adds considerable efficiencies to his system. We
have also been talking with geothermal drillers and large capitalization
energy companies about low temperature waste heat production.
CEOCFO: What is the financial picture
like for PowerVerde today?
Mr. Davis: PowerVerde is a small
publicly traded company. We probably have 500 or 600 shareholders. We trade
under PWVI symbol. We went public in 2008. We have raised approximately $7
million, which is a very small amount of money for public companies working
in our space. We are a careful judicious company and our principals own
machine shops and factories which we make use of. We do not borrow other
people's technology and put together, Rube Goldberg type contraptions and
try to force them to work. We build it from the ground up much like the
Boeing Corporation would do. We think we have demonstrated some
world-changing technology. The financial picture is that when we need money,
we sell stock. We are close to transitioning to a revenue and earnings model
style company. We do have revenues, as we sold our first system last year to
the Dutch but we would like to think that this year we would transition into
a company with continuing revenues, earnings, market acceptance, and a
growing product line.
CEOCFO: Will Europe be your primary
Mr. Davis: For now! We have interest
from many continents including Africa, the Middle East and South America,
but currently our only licensee right now is Newton, the Dutch company. This
year, as mentioned above, we believe we will be transitioning into a
commercial enterprise. We probably are going to focus on the European market
for now and not expand beyond that for the time being. They pay almost 3
times as much for electricity as in the U.S. Down the road we will enter
into additional licensee agreements for the balance of the world.
CEOCFO: As a CEO how do you deal with
the frustration of knowing that you have something that should be simple to
understand and is ground breaking, but it seems to take a while to get it to
Mr. Davis: These things take longer and
cost more than one envisions. When we founded PowerVerde and went public in
2008, we believed that we would have a commercial machine out in a couple of
years. It has obviously taken longer. If it were easy, other people would be
doing it; many well capitalized companies would certainly be in our space
and succeeding. It is frustrating that it takes longer and costs more, but
we are always buoyed by the idea that this is a game-changer. This is a
technology that really is helpful to the planet, to the end users, and
possibly helpful to governments. This is a win/win/win. Therefore, even
though it has taken longer and has been frustrating to painstakingly move
forward and continue to develop the technology, we think we are very close.
We think that we will be commercializing this technology this year.
CEOCFO: Final thoughts, why should
investors pay attention today to PowerVerde today?
Mr. Davis: If someone does their due
diligence, they are going to see that PowerVerde really is unique. We have
working machines, real videos of machines making electricity. We have
collaborations with some large companies and academia and we have some
significant business opportunities, particularly in Europe. We also have
access to capital. We are more than a business plan; we have working
technology. We have had many qualified visitors visit our facilities in
Arizona. Most or virtually all of them have said that they feel we are the
leaders in our space. We really believe that if one looks really hard they
are going to see real value in PowerVerde and are not going to find any
competitors in the ultra low grade heat space we hope to pioneer.
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