As recently as a year ago, Seattle renewable energy startup Hydrovolts planned to sell its turbines primarily to irrigation districts for use in canals. But the company now sees a more promising initial market for a “waterfall turbine” that can be bolted onto systems within wastewater treatment plants and other industrial facilities.
“We made that pivot,” explains Hydrovolts president and chief operating officer Mike Layton. “We realized after looking at the markets, that is the fastest one to revenue.”
Wastewater treatment plants and industrial facilities have mechanisms—usually an industrial waterfall—to release heat and chemicals from water before it is expelled from the system. “What we’re doing is capturing the energy out of that falling water,” Layton says.
Being inside of a contained industrial facility eliminates many of the environmental permitting concerns power generation projects must overcome in traditional settings that are exposed to the environment. Hydrovolts was co-founded in 2007 by Burt Hamner who studied the idea of developing tidal power in the Tacoma Narrows, but ultimately concluded that natural environments of that sort pose insurmountable permitting challenges. Based on that analysis, Hydrovolts focused on turbines that can be placed in industrial settings, and more controlled environments, like irrigation canals.
Layton says there are some 14,000 wastewater treatment plants in the U.S., and estimates an industrial market at least twice that size. The minimum setup for the device is a 6-foot vertical drop with an average minimum flow of 5 million gallons a day, though it needs twice that to reach full production capacity.
“So we think it’s about a $150 million market in the U.S. Worldwide, that market’s going to be five-fold,” Layton says in an interview at the McKinstry Innovation Center, which houses Hydrovolts’ offices. It manufactures its products in the South Park neighborhood along the Duwamish Waterway.
How will a small company approach this large market? Like other providers of small-scale cleantech products and services, Hydrovolts aims to form partnerships with major energy services companies that already do business in the target markets. At $75,000, the 15-kilowatt turbine is “a rounding error” on the multi-million dollar contracts these companies handle, which should help Hydrovolts gain early acceptance for its product, Layton says.
The company will focus first on California and the Northeast, where high energy costs offer the prospect of a payback in three to five years, without government incentives for customers, Layton says.
Hydrovolts designed its turbines to use modular, interchangeable parts, and to be easy to permit and install. It is also significantly smaller than competing products. Layton says a typical installation requires very little modification of existing infrastructure. That also helps ease concerns of customers whose top priority is the uninterrupted operation of their water systems.
“If something goes wrong, the machines can be pulled out in a half hour,” he says.
Municipal and industrial facilities looking at the Hydrovolts offering are motivated by renewable energy mandates, and long-term energy cost controls.
“Generating their own power, with or without incentives, is a way of doing that,” Layton says, adding that customers will either sell the energy—produced consistently whenever the plant is running—back to the grid through net metering, or consume the energy on site. “Several of them want to be grid neutral—meaning they want to generate as much power as they use—within the next five years.”
Hydrovolts uses Washington suppliers for all the components, except the generator, something Layton says he will be constantly evaluating as the company grows. “It’d be nice to get everything from home, but I need to look at the cost-benefit analysis for each one as we go to different markets,” he says.
Hydrovolts has nine employees, but may make as many as 10 hires—from assembly workers to sales people to engineers—this year if it hits its projections.
Having raised $2.8 million from investors including the Northwest Energy Angels, Hydrovolts is now raising $1 million in convertible debt, Layton says. Even though Hydrovolts is more established as a company now, this latest round of fundraising has been more difficult as many investors have retreated from the cleantech sector.
“We’re having to work harder than I think we did in the past to find investors,” Layton says, adding that some Seattle investors more accustomed to Internet business models have trouble getting comfortable with the longer payback times on sales of industrial equipment.
Hydrovolts plans to push into the irrigation canal market in about two years. Design work is complete on a turbine that will fit about 70 percent of canals. Layton says the international market is bigger and more receptive to innovative uses of existing water infrastructure than the U.S.
“In the U.S., we primarily look at irrigation canals as just ways to move water,” Layton says. “Because of the cost of power, in some areas, it hasn’t dawned on [canal operators] that there’s money in their canals in addition to moving water.”
In Europe and Japan, by contrast, operators see their canals as energy and transportation assets, as well. Attitudes are starting to change in the U.S., Layton says.
