Every hour in the United States enough methane is flared to heat over 6 million homes for an entire month. This resource is being wasted because there is often no other cost effective application for the low quality “dirty” gas produced at landfills, waste water treatment facilities and many oil / gas wellheads.
Q2Power (“Q2P” or the “Company”) is a renewable power company that utilizes proprietary technology and proven business models to monetize waste energy resources such as methane. Q2P is poised to capture a significant portion of this untapped market due to three key factors:
• We believe that our proprietary, patented technology is ideally suited for use with this fuel source. Our power systems are small, scalable and modular, and can be installed at the site of methane flares at a similar cost per kW as large-scale power plants.
• Our business model employs Power Purchase Agreements (PPA), which eliminate financial risks for our customers and reduce sales cycles. Unlike solar installations which are effective at most 6.5 hours per day, Q2P’s systems can generate power 24 hours a day, thus creating a far more attractive return on investment.
• Federal and local environmental crackdowns on methane emissions are creating urgency to install systems that can cost-effectively convert this wasted fuel source to usable power.
With the methane that is wasted each year in the U.S., Q2P could generate over 9,100 Gigawatt hours of electrical power, representing a $900 Million annual total addressable market. At a 5% U.S. market penetration, Q2P could generate in excess of $45 Million per year, or $320 Million over a 7-year PPA term, with greater than a 40% unlevered, unsubsidized IRR. Further, we estimate that the international markets are potentially 10 to 20 times larger than in the U.S.
Core Waste-to-Power System
Q2P’s core technology is a compact external heat engine, which is capable of converting small quantities of waste heat into mechanical power. The primary use for this is converting waste fuels (after being destroyed in a proprietary and clean-burning combustor sub-system) into grid-tied electricity. The complete package system (which can be sold with a Q2P burner or integrated with a customer’s burner), is compact and modular, with initial units in the 30kW size range. Estimated costs are $2/watt or below. Q2P’s target market is under 200kW in total output.
Monetizing Small-Scale Waste-to-Power
Q2P uses its technology to convert waste fuel streams to electric power and sell that power back to the facility owner at a discount to the grid. These arrangements are provided in a 7 to 10 year Power Purchase Agreement whereby Q2P assumes the cost of equipment installation and maintenance and receives monthly revenue from its customers over the term of the PPA. On an unlevered, un-subsidized basis, Q2P can generate approximately a 40% IRR over this period. In areas like California, where the company’s solution qualifies for up to 60% immediate cash rebate, a project’s IRR can exceed 125% over 7 years.