IWS in Scotland: A Billion Dollar Opportunity
Published by RockStone Research October 17, 2016
View Original: Here
Last Friday, International Wastewater Systems Inc. (“IWS”) has announced a strategic alliance with Scottish Water Horizons Ltd., the commercial subsidiary of Scottish Water, a public water utility owned 100% by the Scottish Government.
Also on Friday, Scotland’s national newspaper The Herald called IWS “a Canadian renewables giant”. From a strict market capitalization perspective (currently at $44 million CAD), IWS is not really a “giant” (yet), but let´s take a look at the market potential as Scottish Water Horizons has estimated that up to 750 SHARC systems are needed to be installed to enable Scotland to achieve its carbon savings targets by 2020.
One SHARC system has already been installed successfully at the Borders College in Scotland, at costs estimated at $1.7 million CAD. If 750 such systems are to be installed in Scotland within the next 4 years, the market potential for IWS translates into a massive $1.3 billion CAD opportunity. This figure excludes any potential revenue sharing and cash distributions between IWS and Scottish Water from the heat and energy sales agreements that can be generated from such projects, which typically run for >20 years. The Borders College project has a revenue sharing agreement in place whereby IWS earns its share of revenue from heat sales to Borders College over the life of the project.
The IWS press-release disclosed that Scottish Water Horizons and IWS have collaborated for over 2 years, resulting in an identified pipeline of projects valued at £20 million GBP ($32.4 million CAD). From this it’s clear that Scottish Water Horizons and IWS are already executing against their ambitious goal of 750 SHARC systems; this is not simply a ‘blue sky’ target.
IWS may be a growth stage company but it’s already executing a >$1 billion dollar mandate with a world-class, national water utility in Scottish Water. And Scotland is only one, relatively small market (population of 5.3 million) when considering the global potential for the IWS technology.
In August 2016, IWS announced a $80 million CAD joint venture with RENEW Energy Partners LLC, a US-based clean energy developer and funding company committed to finance capital expenditures for 1,000 PIRANHA systems from IWS to be installed in California. Therefore, a single PIRANHA system installation averages about $80,000 CAD.
PIRANHA is a small, self-contained water heating system with a capacity of up to 100 kW, designed to be an easy to install “plug and play” system for commercial and 50-200 unit residential applications.
SHARC is a large, custom-designed water heating and space conditioning system with a capacity of 440-880 kW (source), which can be scaled to serve large district heating networks by adding multiple SHARCs. SHARC installations are individually designed and engineered for industrial, commercial and >200 unit residential applications. Thus, the price for a single SHARC system is much higher than a PIRANHA (also due to customized engineering on site), whereas the PIRANHA module can be shipped in a container to be installed easily on site with less engineering.
Federal and state grants totalling $1.3 million USD (1.7 million CAD) were made available to install a single SHARC system at the Camden Municipal Wastewater Treatment Plant in New Jersey, USA (source):
Susan Rice, Chair of Scottish Water, gave the following statement in the company´s Annual Report and Accounts 2015/2016:
“In 2015/16, we also commenced a 6 year, £3.5 billion investment programme which will see further improvements to water and waste water infrastructure around Scotland, improving drinking water quality, enhancing the environment and supporting jobs in the Scottish economy.”
Rockstone is looking forward to the release of further information from IWS and its alliance with Scottish Water Horizons, as they continue to execute on a billion dollar opportunity in Scotland over the next few years, which indeed would make IWS “a renewables giant” in due course.
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