TECHNOLOGY MANAGEMENT

1
TECHNOLOGY MANAGEMENT

• ENTERPRISE PROPOSAL
• FOR
• MICROTURBINES
• Submitted by
• Shreya Dave
  (639202)
  

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Enterprise Proposal Micro Turbines, LLC12/12/05
The Most Efficient Micro turbines From The Most
Efficient People
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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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Micro turbine Power (MTP) is striving to become a
leading Micro turbine manufacturer and
development company for stationary energy
generation solutions to provide power for a wide
range of residential and commercial
applications. This will be accomplished by
marketing the Power Source One Micro turbine for
the following market segmentsRESIDENTIAL
The Power Source One will provide homeowners with
an on-site primary source of electrical power
while connected to the electrical grid. Unused
power by the home can be used by the electric
utility company to distribute power elsewhere.
The Power Source One can also provide power to
homes where electricity is unavailable (off
network). The compact, quiet design of the
product would allow for it to be located in the
yard or garage of a home. The CHP (combined heat
and power solutions) system micro turbines are
also useful to produce heating at homes.
COMMERCIAL Business buildings, industries, schoo
ls, hospitals or other small businesses and
services can be severely hampered during power
outages. The Power Source One would provide
critical assured power to ensure computer
equipment, telecommunications, electronics and
medical devices will continue to function. A
micro turbine plant operating in conjunction with
the electrical grid provides an assured power
source. Micro turbines also provide power to
remote applications where traditional
transmission and distribution lines are not an
option such as construction sites and offshore
facilities. It can be located on sites with space
limitations for the production of power.
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Executive Summary (Cont.)

• Micro turbines are devices that generate
  electricity efficiently and cleanly using power
  turbines, generators, compressors etc. Research
  has shown that micro turbine technology will
  experience tremendous growth by the year 2009.
  
• Through the use of patents, proprietary
  technology and trade secrets, MTP will become a
  market leader in Micro turbines. MTP will use
  contract awards from the Government to
  demonstrate the effectiveness of our Micro
  turbines. The knowledge and experience from the
  contract awards will be leveraged to produce
  25-300 KW micro turbines for the identified
  markets above.
• MTP will have a strategic partnership with
  the Southern Union Gas Company (SUGC) that will
  provide access to markets located in Texas,
  Missouri, Pennsylvania, Rhode Island,
  Massachusetts, and Mexico. We are also addressing
  markets for our products in the southern part of
  U.S. and Europe through other strategic
  partnerships. A distribution relationship is
  being evaluated with United technologies for the
  U.S. global markets.

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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Technology Basis of the Enterprise

• Micro turbines are a relatively new sort of
  distributed generation technology being used for
  stationary energy generation applications. They
  are a type of combustion turbine that produces
  both heat and electricity on a relatively small
  scale. Micro turbines offer several potential
  advantages compared to other technologies for
  small scale power generation.
• A micro or mini turbine is defined as a machine
  consisting of a compressor, combustor, power
  turbine, recuperator and generator. Micro
  turbines work like jet engines but produce
  electricity instead of thrust.
• Cogeneration is an option in many cases as a
  micro turbine is located at the point of power
  utilization. The combined thermal electrical
  efficiency of micro turbines in such cogeneration
  applications can reach as high as 85 depending
  on the heat process requirements.

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Creating Micro Turbines Will Involve Many Unique
Technologies

• Micro Turbines
• Has high power density()
• Low emission technology provides cleaner power
  ()
  
• Operates at no vibration, performs quite
  operation ()
  
• Can power residential sectors, buildings,
  industries ()
  
• High speeds (90,000 rpm) ()
• Output range is 50-300 kW ()
• Needs to keep them running continuously once
  started (-)
  
• Requires AC to AC conversion (-)
• Recuperator technology
• Inverter
• Fuel flexibility
• Highly skilled Technicians, Engineers,
  Electricians
  
• Research Scientists

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How Does a Micro turbine Work?

• Micro turbines are small combustion turbines
  approximately the size of a refrigerator with
  outputs of 25 kW to 500 kW.
  
• Most micro turbines are comprised of a
  compressor, combustor, turbine, alternator,
  recuperator ( a device that captures waste heat
  to improve the efficiency of the compressor
  stage) and generator as shown in above diagram.
• Fuel enters the combustion chamber. The turbine
  can run on natural gas, kerosene, gasoline-
  virtually anything that burns.
  

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• 4. The hot combustion gases spin a turbine,
  which is connected to the shaft of an electrical
  generator. The exhaust transfers heat to incoming
  air.
• 5. Air passes through a compressor and is
  warmed by the exhaust gases before entering the
  combustion chamber.
  
• 6. Air also passes through an air filter that
  can filtered the air from other undesirable
  contaminations which in turn can increase the
  life span of the compressor.
• 7. Cogeneration is an option in many cases as
  a micro turbine is located at the point-of-power
  utilization. The combined thermal electrical
  efficiency of micro turbines in such cogeneration
  applications can reach as high as 85 depending
  on the heat process requirements.
• 8. Advanced materials, such as ceramics and
  thermal barrier coatings, are some of the key
  enabling technologies to further improve micro
  turbines. Efficiency gains can be achieved with
  materials like ceramics, which allow a
  significant increase in engine operating
  temperature.

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• Micro turbine generators can also be divided into
  two general classes
  
• Unrecuperated (or simple cycle) micro turbinesIn
  a simple cycle, or unrecuperated, turbine,
  compressed air is mixed with fuel and burned
  under constant pressure conditions. The resulting
  hot gas is allowed to expand through a turbine to
  perform work. Simple cycle micro turbines have
  lower efficiencies at around 15, but also lower
  capital costs, higher reliability, and more heat
  available for cogeneration applications than
  recuperated units.

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• Recuperated micro turbinesRecuperated units use
  a sheet-metal heat exchanger that recovers some
  of the heat from an exhaust stream and transfers
  it to the incoming air stream, boosting the
  temperature of the air stream supplied to the
  combustor. Further exhaust heat recovery can be
  used in a cogeneration configuration. The figures
  below illustrate a recuperated micro turbine
  system. The fuel-energy-to-electrical-conversion
  efficiencies are in the range of 20 to 30. In
  addition, recuperated units can produce 30 to 40
  fuel savings from preheating.
• Micro turbine efficiency
• 1. Unrecupearated - 15
• 2. Recuperated - 20-30
• 3. With heat recovery Up to 85

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What Can Be Done With Micro turbines?

• Cogeneration
• Back-Up Power
• Primary Electricity
• Heat/Hot Water/AC
• Peak Shaving

Courtesy of www.wbdg.org/design/micro
turbines.php
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• Some of the primary applications for micro
  turbines include
  
• stand-alone, on-site applications remote from
  power grids
  
• Quality power and reliabilityreduced frequency
  variations, voltage transients, surges, dips, or
  other disruptions
  
• Stand-by powerused in the event of an outage, as
  a back-up to the electric grid
  
• Peak shavingthe use of micro turbines during
  times when electric use and demand charges are
  high
  
• Boost powerboost localized generation capacity
  and on more remote grids
  
• Low-cost energythe use of micro turbines as base
  load or primary power that is less expensive to
  produce locally than it is to purchase from the
  electric utility
• Combined heat and power (cogeneration)increases
  the efficiency of on-site power generation by
  using the waste heat for existing thermal
  process.

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What Does A Micro turbine Look Like?
courtesy of www.alentecinc.com
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• Economics of Micro turbines
• Micro turbine capital costs range from
  700-1,100/kW. These costs include all hardware,
  associated manuals, software, and initial
  training. Adding heat recovery increases the cost
  by 75-350/kW. Installation costs vary
  significantly by location but generally add
  30-50 to the total installed cost.
• Micro turbine manufacturers are targeting a
  future cost below 650/kW. This appears to be
  feasible if the market expands and sales volumes
  increase.
• With fewer moving parts, micro turbine vendors
  hope the units can provide higher reliability
  than conventional reciprocating generating
  technologies. Manufacturers expect that initial
  units will require more unexpected visits, but as
  the products mature, a once-a-year maintenance
  schedule should suffice. Most manufacturers are
  targeting maintenance intervals of 5,000-8,000
  hours.
• Maintenance costs for micro turbine units are
  still based on forecasts with minimal real-life
  situations. Estimates range from 0.005-0.016
  per kWh, which would be comparable to that for
  small reciprocating engine systems.

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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Beachhead Segments Were Evaluated

• Is the target customer well funded and are they
  readily accessible to our sales force?
  
• Yes
• Do they have a compelling reason to buy?
• Yes
• Can we, with the help of partners, deliver a
  whole product to fulfill that reason to buy?
  
• Yes
• Is there no entrenched competition that could
  prevent us from getting a fair shot at this
  business?
  
• Yes
• If we win this segment, can we leverage it to
  enter additional segments?
  
• Yes

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Hospital Demonstrations Will Be Used To
Cross The Chasm

• Contract Awards for (FY) 2004 2005 programs,
  micro turbines will
  be demonstrated at nine U.S. hospitals in the
  major cities of USA.
• Micro turbine operating hours will total a
  minimum of one year at rated or load capacity.
  
• A total of six contractors have been selected for
  the FY04 Micro turbine demonstration project
  representing at nine U.S. Hospitals.
  
• Pre-proposals for the FY05 program are currently
  being evaluated, and awards for the FY05 program
  are anticipated to be made between September and
  December of 2005.

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Hospital Demonstration Will Be Used ToCross The
Chasm (cont)

• Requirements for this demonstration project are
  as follows
  
• All micro turbines shall be produced in the U.S.
  
  
• Units to be installed at U.S. hospital
  facilities.
  
• Micro turbines contract awardees are responsible
  for all installation
  
• requirements.
• Micro turbines will provide 1 year of power with
  90 unit availability.
  
• All units will have comprehensive maintenance
  contract for 1 year.
  
• Data performance monitoring will be conducted for
  each unit.
  
• Contract includes an option for removal of unit
  and site restoration.
  
• Location of units will be in a specified U.S.
  geographic region.

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Hospital Demonstration Will Be Used ToCross The
Chasm (cont)

• Building applications will be residential ,
  commercial and remote buildings
  
• Fuel Type - natural gas, gasoline, kerosene,
  other
  
• Fuel Options - fuel switching, no fuel switching,
  fuel blending
  
• Electrical Interface - grid-connected,
  grid-independent, both (alternating)
  
• Thermal Interface - cogeneration, no cogeneration
  
  
• Unit Configurations - individual, multiple units
  
  

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MTP Bowling Pin Strategy
Hospital
Light Commercial
Schools
Residential
Air Conditioning
Primary Electricity
Space Heating
Hot Water
Hospital
Light Commercial
Residential
Space Heating
Hot Water
Primary Electricity
Light Commercial
Hospital
Primary Electricity
Hot Water
Hospital
Primary Electricity
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A Strategic Partnership Will Be Formed

• Southern Union Company
• 4th largest stand-alone natural gas distributor
  in the nation
  
• Southern Union Company serves 1.5 million
  customers via four divisions
  
• Southern Union Gas in Texas
• Missouri Gas Energy in Missouri
• PG Energy in Pennsylvania
• New England Gas Company in Rhode Island and
  Massachusetts
  
• Owns a propane distribution subsidiary SUPro
  Energy Company
  
• It has equity ownership in a natural gas
  distribution company serving
  
• Piedras Negras, Mexico.
• Other Territories
• Fertile markets also exist in southern part of
  U.S.

Courtesy of www.southernunionco.com/about.html
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The Calm Before The Storm

• More than 50 micro turbine systems have been
  installed all over the world providing primary
  power or backup.
  
• In large-scale building systems, micro turbines
  can reduce facility energy service costs by 20
  to 40 over conventional energy service.
  
• The future cost of power generation by micro
  turbine is predicted as 600/kW.
  
• CHP (Combine heating and power) system has worked
  efficiently to provide necessary heating to the
  facilities.
  

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When The Tornado Hits, The Market Will
Head For Shelter

• Shelter consists of
• Moving together as a herd
• Picking the same micro turbine vendor
• Completing the move to the new micro turbine
  technology quickly
  
• The Whole Product will be completed in the
  Bowling Alley
  
• As the whole product will be completed in Bowling
  Alley, MTP can make itself as the dominant market
  leader among other industrial players.
  
• At this point, MTP can just ship the product to
  customers
  
• Due to the strategic partnership, our units will
  become the standard
  
• units for the Southern Gas territories.
  Expectations are well above
  
• 40 of new purchases over a twelve month
  period. Market share is also
  
• expected to be greater than 40 in the
  residential/light commercial
  
• market. In order to maintain market share, the
  next lower price point
  
• will be reached.

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When tornado hits, We will make stable market for
MTP

• When the tornado hits, MTP will put its efforts
  to achieve a stable market for new customers
  rather than creating the next thing.
  
• MTP will plan all production lines in a such way
  that it can handle the demand of the main stream
  market in tornado.
  
• MTP will make all the moves in a way that gorilla
  will not feel threatened by the market growth.
  
• During Tornado, MTP will grab all the
  opportunities to develop its distributing
  channels so supplies can reach the demands.
  
• MTP will make its partnership skills very
  effective to compete in Tornado.
  
• MTP will focus on Operational Excellence to get
  success in tornado.
  

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When Main Street Is Reached, The Cow Will
Be Milked

• Market growth will decrease from new customers
• Every new customer acquired was for life during
  the tornado
  
• The whole product 1 will be marketed to existing
  customers
  
• A main street characteristic is low growth/high
  market share. In order to continue market growth,
  niche-specific product extensions will be
  offered. Product variations that are being
  evaluated
• Fault Diagnostic/Fault Isolation Communication
  Software
  
• Improved efficiency of components
• Various marketing promotions

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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MTP Industry Structure
New Entrants
MTP
Buyers
Suppliers
Substitutes
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The Roots of Competitiveness
Advanced materials
Micro Turbines
Materials
Components
Software
Component Design
Material technology
Marketing
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• Advanced materials are a key enabling
  technology for advanced micro turbines.
  
• Monolithic Ceramic hot section components,
  combustor liners.
  
• Ceramic composites combustor liners.
• High temperature metal foils recupeators
• High conductivity carbon foam power
  electronics.
  
• The continuing improvements in component
  design(turbine, compressor, recuperator etc.) are
  also required to improve overall efficiency and
  make the micro turbine generator a viable power
  source.

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Horizontal Competition
Ballard Generation Systems (BGS
MTP
Plug Power

Vertical Competition
- GE - DTE Energy
First Energy
SUC
Light Com
Commercial
Residential
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Advantages Will Involve Both Horizontal Vertic
al Competitions

• Short Term Comparative Advantage
• Low cost
• Maximum Performance
• Long Term Comparative Advantage
• Design Skills (Tight Appropriability for
  Component Fuel)
  
• Distribution Network
• Switching Cost

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MTP Will Focus on Product Enhancement

• Product performance
• Reducing costs
• Designing market-viable products
• Developing additional volume
• Manufacturing capabilities
• Building customer and supplier relationships
• Developing effective market strategies
• Researching for international market

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The MOAT Will Result From Two Sources

• Core competencies in exchange components
  material design
  
• will allow greater turbine efficiency.
• Exchange components will be designed to last
  longer
  
• Materials will be designed to achieve more
  efficient results
  
• The strategic partnership will result in a
  distribution and a
  
• switching cost advantage
• Southern Union will distribute product
  exclusively to residential/light commercial
  customers
  
• It will be difficult for customers to switch
  micro turbines due to high costs
  

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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Micro Turbine Industry Is Still In The Fluid Stage

• There are over 50 micro turbine developers
  worldwide
  
• Micro Turbine prices are currently 750/kW, with
  heating 800/kW
  
• In some applications, multiple units required to
  increase reliability
  
• Competitive in high electric/low gas market
• Break even is 2 years for owners
• Ultimate goal is 650/kW

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Micro turbines Have A Bright Future

• The current market for Micro turbine is about
  850 million and will rise to 2.4 billion by
  2006, reaching 8 billion by 2010, according to
  studies by the Business Communications Company.
  The studies estimate the 2005 markets for micro
  turbines to break down as follows
• 850 million - Electric power generation
• 200 million Residential sectors
• 200 million - Military/aerospace
• 400 million - Other

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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Barriers To New Entrants

• Economies of scale
• Will succeed by having efficient operations and
  organization
  
• Proprietary product differences
• None
• Brand identity
• Existing energy sources for market (electric
  company)
  
• Switching costs
• Initial cost of turbine for customers (will save
  over the years)
  
• Capital requirements
• Will need millions of dollars to start
• Access to distribution
• Distribution partnership is being evaluated with
  Southern Union and United technology
  
• Absolute cost differences
• Proprietary learning curve
• Access to necessary inputs
• Government policy
• Must meet government standards (will meet them
  through contract awards)
  
• Expected retaliation
• New entrants

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

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The Winning Team Will Be Drafted

• MTP will utilize a Heavy Weight team structure
• Tiger Teams will be used to solve complex issues
• Organizational Design
• Software Development- Direct Integration /Strong
  Administration Linkages
  
• Fault Detection/Isolation
• Platform Project
• Component Design Direct Integration /Strong
  Administration Linkages
  
• Increasing components usage length, optimization
• Derivative Project
• Marketing Direct Integration /Strong
  Administration Linkages
  
• Must Promote micro turbines to market segment
• Material Design Direct Integration/Strong
  Administration Linkages
  
• Must increase overall efficiency
• Derivative Project
• New Micro turbine Process New Venture Division
  /Loose Administration
  
• Linkages
• Will research new process for micro turbines via
  R D
  
• Breakthrough Project

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Organizational Design(cont)

• Winning team will also develop strategies
  to meet future market requirements for micro
  turbines
  
• Lower emissions
• Water or steam injections
• Dry low emissions combustion
• Fuel Flexibility
• New combustion and fuel system
• New coatings
• Improved Reliability and Availability
• Longer component lives
• Intelligent control system
• Condition monitoring
• Reduce cost
• More compact turbo machinery

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Organization Characteristics

• Heavy Weight Team Charter The resulting micro
  turbines will be selected and ramped by
  residential sectors within the next 5 years at a
  minimum ROI of 15
• Organization will not overload employees with too
  many projects, especially the ones not critical
  to the business
  
• MTP will properly allocate resources to the
  critical tasks of the business
  
• Engineering effort will cause component fuel
  technology to improve. Therefore, MTP will
  integrate those 2 complimentary assets.
  
• Complementary Assets
• Distribution Contract/Strong Appropriability
• Repair Integrate/Weak Appropriability
• Manufacturing Integrate/Weak Appropriability
• Strategic Intent The Most Efficient Micro
  turbines From The Most Efficient People
  

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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

47
MTP Innovation Development Map
Software Development Component Design Fuel Desig
n
New turbine Process
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Enterprise Proposal Topics

• Executive Summary
• Technology Basis of the Enterprise
• Market Segmentation Plan
• Short term and Long Term Comparative Advantage
• Forecast for Technology/Industry Evolution
• Barriers To Entry
• Organizational Design and Management Policies
• Sourcing Resources
• Ongoing Product Development Plans Policy

49
MTP Will Ride The Wave For Product Evolution

• MTP will use second wave planning techniques for
  micro turbine evolution.
  
• MTP will release basic unit with no derivatives
  to customers
  
• Development team will develop product derivatives
  
  
• The experience from the market will fuel the next
  platform
  
• MTP will also use RD resources to investigate
  incremental and architectural changes for the
  micro turbine process.
  
• MTP development team will carry innovative
  experiments to meet future market requirements
  for micro turbines. The necessary resources will
  be provided to make developments at different
  stages of the cycle.

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MTP will continue to work with the U.S. D.O.E.

• Summary from Micro turbines for CHP system
• The U.S. Department of Energy has issued
  National CHP Roadmap in March 2001 and our
  activities are guided by the action identified in
  the document.
• U.S. Department has announced that by 2010,
  there will be double amount of CHP system
  nationwide
  
• U.S. Department of Energy had conducted 4th
  Annual CHP Roadmap Workshop in Chicago, IL which
  had been attended by 200 people.
  
• This and other programs organized by the
  U.S.D.O.E emphasized on
  
• Micro turbine product improving over the next few
  years
  
• Focus efforts on Hospitals and industrial
  markets
  
• Low income Community Energy Efficiency Pilot
  Program
  
• Advanced Power System Technology Program
  
  

51
Our Companys Quote

• By 2020, micro turbines will be intimately
  integrated in buildings, part of a flexible
  portfolio of options for meeting energy needs
  and/or supporting the grid.
• Quote from meeting
• Before Freedom Cars will roll across our
  highways, Freedom POWER will light our
  buildings
  

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References

• http//www.eere.energy.gov/regions/southeast/pdfs/
  bronson.pdf
  
• http//www.wbdg.org/design/microturbines.php
• Micro turbine Generator by M J Moore
• Distributed power generation by H Lee Willis
• Crossing the Charm
• Inside the Tornado by Geoffrey Moor
• Marketing of High-Technology Products and
  Innovations by Jakki Mohr