Wave Swell Energy
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Wave Swell Energy Converting ocean waves into electricity using world leading technology.
  • Environment and Clean Tech
  • A$70,560

    invested

  • 14.7% funded

  • 21 days & 1 hours

    time left

  • 1.8% - 5.5%

    min - max equity offered

  • A$480,000.00 - A$1,500,000.00

    min - max investment sought

  • A$480.00

    min investment parcel

INVEST IN THIS OFFER
Financial forecast for your company throughout the King Island project including all business expenses and not just for this project

Hi Tom,
I really like what you guys are doing and hope you are successful!
My question is about how long your company can sustain itself over the next few years through the grants you already have, the raising of funds (the $9 odd mil) and revenue from the King Island implementation. i.e. do you have a forecast of income vs expenditure over the next 3-4 years showing how your company can stay viable?
It appears you need ~$1.5mil pa just in suppliers and employees - I'm assuming this figure is outside of what you require for the King Island project? where are you funding your operational costs?

Regards
Gerry

Gerry Whitehouse posted on 16.11.2018
Moving forward

Hi Tom,

Firstly congrats on the tech, I think wave energy is the only renewable energy capable of providing base load power at this stage.
Moving forward do you have any other trials, interested partners or potential customers?
My other question is relating to finance and dilution. You admit there will need to be future funding and even with a successful trial the profits from this wouldn't be sufficient to fund your next project so I am curious as to how you plan on expanding the company and revenues without making the equity any participants hold from this offer worthless considering the entire raise will only equate to a maximum of 5.5%?
Not trying to be negative I like what your doing but want to know if it's worth investing at this stage.

Shane Watson posted on 04.11.2018

Hi Shane,

Thanks for the positive comments.

To answer your questions, we haven't progressed any follow on projects in detail just yet - we're focusing on ensuring a successful outcome at King Island - but we do have some strong possibilities for profitable projects post King Island. However, I'd rather get a little further down the track with these before revealing specifics.

As for future funding after the King island project, we don't expect this to be large. We are intrinsically a technology developer, not a project developer, so our capital requirements will be minimal going forward. And a successful King Island project will likely result in a higher valuation for any subsequent round of funding, thereby minimising the dilution to existing shareholders from this round. Better to be in early than late, although, by its very nature, an earlier investment at a lower valuation logically comes with more risk.

I hope this helps.

Regards,
Tom

Tom Denniss posted on 04.11.2018

Replied to Shane Watson

Unit Grid Integration

Hi Tom,

Exciting idea! I was wondering how you are planning on integrating it on the grid? Do you have on-board transformers and inverters, or is this being done on-shore?

If offshore, what voltage would you be able to export?

Thanks!

Matthijs

Matthijs Koreman posted on 02.11.2018

Hi Matthijs,

The energy will generally be transmitted from each device to shore at a voltage of 11 kV. If the local grid requires 33 kV or higher, it will be stepped up by an onshore transformer.

Regards,
Tom

Tom Denniss posted on 02.11.2018

Replied to Matthijs Koreman

ESIC tax incentive

Does this investment qualify as an ESIC?

Ian Haverly posted on 01.11.2018

Hi Ian,

We did receive a positive ESIC ruling from the tax office for the 2016/17 financial year and, subsequently, all our shareholders at that time benefited from this ruling. However, our annual spend has been greater than $1 million since then, which, unfortunately, precludes us from qualifying for the ESIC.

Regards,
Tom

Tom Denniss posted on 01.11.2018

Replied to Ian Haverly

Share registrar

Do you plan to engage a share registrar & issue share certificates?

Ian Haverly posted on 28.10.2018

Hi Ian,

Indeed we are planning on engaging a share registry post capital raise and they will manage the issuance of shares.

Tom

Tom Denniss posted on 30.10.2018

Replied to Ian Haverly

Question re Oceanlinx and exit

HI,

1.How does this company differ from Oceanlinx? and what lessons have been learnt there?
https://www.abc.net.au/news/2017-05-03/sydney-runner-uses-waves-to-bring-electricity-to-tasmania/8494516

2.How is the technology differ from that of Oceanlinx? it appear the technology and IP was sold to Hong Kong in 2014. How will this impact protection of the IP ?
https://en.wikipedia.org/wiki/Oceanlinx

3. What is the exit strategy for the business? and what are some examples of successful exits?

Thanks
Josh

Joshua Lau posted on 25.10.2018

Hi Josh, there is a fundamental difference from the Oceanlinx technology. Our technology utilises a unidirectional oscillating water column, while Oceanlinx used the more traditional bidirectional technique. Extensive testing has shown that the unidirectional method, with energy capture on the downstroke, results in 15% more energy extracted than the sum of the up and down strokes of a bidirectional system. A unidirectional system also allows for a simpler, more robust, and more efficient turbine.

This fundamental difference completely differentiates the IP from that of Oceanlinx and other bidirectional WOC technologies. It's actually more robust than the IP of a bidirectional system, as ours is the first case of a unidirectional OWC. BTW, you're correct that the Oceanlinx IP was sold to HK in 2014.

We expect an exit in as few as two to three years, either by way of a 'trade sale' to a large global energy or construction company, or via an IPO. Our business model entails partnering with a large global company to ensure the rapid uptake of the technology around the world. This partner would be a logical candidate for acquiring the company, should that be what shareholders want.

I hope this helps.

Regards,
Tom

Tom Denniss posted on 26.10.2018

Replied to Joshua Lau

Bit new to crowd funding what happens to my investment

Hi, is this a donation or does my investment end up being shares
Great concept and have been interested for many years in this type of generation
Cheers
Jody

Jody Fraser posted on 25.10.2018

Hi Jody, it's not a donation. You will receive shares in the company in return for any investment.
Thanks,
Tom

Tom Denniss posted on 26.10.2018

Replied to Jody Fraser

  • > Offer Type: Australian Retail (CSF) Offer This offer is open to Retail and Wholesale/Sophisticated investors in Australia. Whilst in New Zealand the offer is open to Wholesale investors.
  • > Company: Wave Swell Energy Limited Securities purchased are for direct equity in Wave Swell Energy Limited.
  • > Security Type: Ordinary Shares
  • > Fees Paid by Issuer: 6.00% of funds raised Upon successful completion of this funding round a total of 6.00% of capital raised will be paid by the Issuer to Equitise.
  • > Cooling-Off Rights: 5 working days - Retail investors in Australia are able to withdraw their applications for securities with accordance to the Australian Crowd Source Funding (CSF) regulations. For more information please click on the link supplied.
    More Info
  • > Related Parties: None

More detailed information about this offer is contained in this Offer Document

Offer Document
Offer overview

 

The Company is offering 100,000 to 312,500 ordinary shares under the following terms: 

 

*This share reconciliation is based on the CSF offer only. The company is raising a minimum of $9.5m from a combination of grant, debt and equity funding of which $7.85m has already been raised. Financial close of the CSF offer is expected to be reached by 7 December, 2018. If the balance of funds remaining ($1.65m) is not raised through a mixture of the CSF offer and other funding options by this date then the funds raised through the CSF offer will be returned to investors. For further information please review section 2.9 of the Offer Document.

The Offer opened privately through the Equitise platform on 25 October 2018 and publicly on 31 October 2018. The Offer is scheduled to close at 11:59 pm (AEST) on 7 December 2018.

Executive summary

 

OVERVIEW

 

 

The Wave Swell Energy technology generates electricity using a wave energy converter conceived by our CEO, Tom Denniss. The core product, called the UniWave™, is an elegant and low-cost solution to generating electricity from ocean waves. It’s highly efficient, has minimal effect on marine life, and does so via an incredibly simple design.

 

THE NEED FOR RENEWABLE ENERGY

 

For the past couple of centuries, more than 80% of our energy has been generated by burning fossil fuels. This is not only detrimental to the environment, but our supply of these fossil fuels is finite. Eventually, they will have to be replaced by sustainable sources, such as that found in ocean waves. The Kyoto Protocol and Paris Agreement are examples of how the world has come to a global consensus on this need to migrate to a renewable energy future.

 

 

This revolution is well under way, particularly with the uptake of solar and wind energy. However, renewable energy as a global solution works best when it’s derived from a diverse range of sources. When the wind isn’t blowing and the sun isn’t shining, electricity has to be produced from something else. Waves are a perfect complement to the variability of these other sources, improving reliability and strengthening the wider electricity grid.

 

In fact, wave energy has a specific advantage over both wind and solar energy. Natural phenomena like rapid wind speed variations due to gusts and clouds suddenly obscuring the sun lead to complications with electricity grids. Wave energy’s much greater predictability, which can be accurately estimated many days ahead, greatly improves the reliability of delivering electricity from renewable sources.

 

HOW UNIWAVE™ WORKS

 

The Wave Swell Energy technology is very simple. As waves pass the large blow hole type chamber, the water level inside rises, pushing out the air inside the chamber through special valves. As the waves then start to fall the water level inside the chamber also falls. The low pressure within the chamber causes air to be sucked into the chamber through a turbine that spins in a single direction. This turbine is connected to a generator that converts this energy into power which is transmitted back to shore.

 

 

The WSE wave energy converter is mechanically simple and has no moving parts below the waterline. This means that access to the equipment is simple, maintenance costs are low and, most importantly, the impact on the surrounding ecosystem is minimised. A single unit is typically rated at 1 MW, equal to the average power usage of 1000 homes.

 

The only part of each unit that is exposed to storms is the large concrete and steel substructure. This structure is impervious to effects of storms. The high-tech componentry is situated well above the water line and is naturally protected from storm damage.

 

THE KING ISLAND PROJECT

 

Funds raised in this offer will be used to demonstrate the cost effectiveness of the technology by building out WSE's first project on King Island. The operational results, independently validated by Hydro Tasmania, are expected to indicate the technology will produce electrical energy at commercially viable rates when extrapolated to multi-unit wave farms.

 

 

The project entails the construction, deployment, and operation of a 200 kW WSE wave energy unit adjacent to the harbour at the town of Grassy on the east coast of the island. The unit will be installed in six metres of water depth and will supply electricity to the residents and industry of King Island. Capital raised in this round of crowdfunding will be used to finance the construction of this project.

 

 

Hydro Tasmania, a world leader in the integration of renewable energy into remote island grids, is an important project partner (see letter of support in Appendix A of the Offer Document) and will be the off-taker of the electricity generated by the initial 200 kW unit via a Power Purchase Agreement (PPA). Any subsequent scale up of the technology on King Island and mainland Tasmania will also see Hydro Tasmania as the commercial recipient of the electricity. The project also has the strong support of the King Island Council (see Appendix A of the Offer Document).

Intellectual Property

 

WSE owns all the intellectual property (IP) associated with the UniWave™ energy conversion unit, and for the method of its operation to generate electricity. Using the IP attorneys Adams Pluck, WSE has filed patent applications which cover the apparatus itself, and the method of using that apparatus. The patent applications also protect the components of an overall system for capturing wave energy and its transformation into electrical energy. Infringement searches in Australia by Adams Pluck have not identified any significant barriers to entry at this stage. These searches to identify competitive threats from any prior-filed patent applications for OWC energy conversion technologies, as well as to locate potential acquisition opportunities, are ongoing.

 

WSE is proceeding with patent protection beyond Australia. Filing patent applications is done centrally in a single procedure under the Patent Cooperation Treaty (“PCT”) that exists between the member countries comprising the vast majority of nations. Ultimately, the expansion of the technology into the relevant markets will be underpinned by national patent rights derived from that PCT application (PCT/AU2017/051122) over the next 2-4 years. Wave Swell Energy's IP will be expanded to patents in individual jurisdictions at the appropriate time in the near future. Countries that will be focused upon at the individual patent stage include the US, Canada, Europe, China, Japan, Australia, New Zealand, and Chile.

Business model

 

 

The business model is predicated on standard electrical supply arrangements, whereby electricity generated by WSE units will be sold to a local utility company. This utility will then distribute it to its customers.

 

WSE is a technology development company, not a project developer. We provide the technology to project developers for a license fee, typically in the form of a carried equity stake in each project that utilises the technology. This allows the company to remain very lean, with high margins and minimal overheads and operating costs.

 

As project developers install more and more capacity of the technology around the world, the dividends to WSE from the sale of electricity accumulate at an accelerating rate, resulting in an ever-increasing annuity stream. As a result, costs remain relatively stable while revenues grow exponentially. This style of business model is typical of technology companies and is associated with a minimum requirement for capital and low commercial and development risk.

 

GROWTH OPPORTUNITIES

 

Applications for the Wave Swell Energy technology include:

  • Large scale grid connected electricity;

  • Generation of electricity in remote locations (including islands), displacing expensive diesel;

  • Coastal protection and breakwaters;

  • Desalination;

  • Hydrogen production.

 

 

The WSE technology is globally applicable. Wherever there are coastlines, it is likely the technology will be relevant. While Australia exhibits a particularly good wave climate and is a prime focus of WSE, the company will be quick to diversify geographically, specifically targeting markets where wave energy is abundant and the cost of electricity is high. Remote island locations relying on diesel oil for power generation are an obvious candidate for early stage projects using the WSE technology.

Strategy & Vision

 

Once the fund raising activities associated with the King Island project have concluded, Wave Swell Energy will embark upon a strategy, one that will see the global installed capacity of the technology increase at an accelerating rate. This will drive down the levelised cost of energy (LCOE) produced by Wave Swell Energy projects (see the Industry Overview section below for more information on LCOE). It is this expansion of projects utilising the company's technology that would result in both a financial benefit to Wave Swell Energy shareholders, and an environmental benefit on a global scale.

 

The strategic objective of Wave Swell Energy is to firstly demonstrate the commercial viability of its ocean wave energy generation technology via the King Island project. This will be followed by several commercial projects in remote locations where expensive diesel generation is displaced. The objective will be to gradually increase the capacity of these projects as the technology’s cost of generation decreases, opening up the technology to more and more commercially viable locations.

 

TECHNOLOGY STRATEGY

 

 

Firstly, the performance and conversion efficiency of WSE devices will continue to be improved through constant innovation and technology development in conjunction with the world class research staff at the Australian Maritime College in Launceston.

 

Additionally, the cost of construction, deployment, and operation will continue to be driven down as the WSE team explore improved manufacturing techniques incorporating state-of-the-art materials and structural design methods. The team has already commenced preliminary investigations into the incorporation of cheap hybrid materials, such as recycled plastics, some of which may eventually be sourced from clean-up of the Great Ocean Garbage Patch, into its structures.

 

It is this dual improvement, of increased output due to better conversion efficiency, coupled with lower construction costs, that will be vital to the technology eventually assuming its place as one of the cheapest forms of electrical energy in the world.

 

COMMERCIALISATION STRATEGY

 

Commercialising the Wave Swell energy technology will effectively occur over three phases. The initial phase involves the King Island project. This project will validate the commercial viability of the technology, demonstrating an ability to produce electricity from waves, at a scale of 50 - 100 MW, for an LCOE approaching $100/MWh.

 

 

The WSE medium term (1 - 4 years) commercialisation strategy is to reduce the LCOE through the expansion of the installed capacity of technology profitably. Ideal targets for expansion are locations with good wave climates where the current cost of electricity is relatively high. The logical sites satisfying these criteria are remote and island communities that currently rely on diesel. Such locations range from the very small capacity (e.g. Lord Howe Island) to the much larger capacity (e.g. Hawaii). Displacing the need for diesel fuel for the generation of electricity in these remote regions is a high political priority, but it also makes strong commercial sense.

 

The longer-term (>4 years) commercialisation strategy of the company is to expand into the standard grid connected markets as the technology’s LCOE reduces. The migration of the technology to the mainstream grid will be achieved via a phased approach, with the higher cost energy markets targeted first.

Industry Overview

 

LEVELISED COST OF ENERGY (LCOE)

 

The Levelised Cost of Energy is the standard means of comparing costs for different energy generation technologies, measured by cents per kilowatt-hour over the life of the plant.

 

The long-term goal of WSE is to generate electricity from ocean waves at a cost which is equal to or below that of other renewable and traditional fossil-fuel sources when compared on a like-for-like basis. The chart below, provided by the US Department of Energy in 2013, illustrates such a comparison between existing commercial sources of renewable and fossil-fuel energy within the US. Virtually all traditional forms of fossil fuel energy generation exhibited an LCOE above 10 cents per kWh at that time. These costs have increased and will inevitably rise further in the future.

 

Based on the energy output indicated by comprehensive tank testing at AMC, along with actual quotes for construction, WSE believes it will be possible to produce energy from waves, for projects of 100 MW or more, at a cost approaching 10 cents per kWh.

 

 

A forecast LCOE in the vicinity of 10 cents per kWh ($100/MWh) for projects of 100 MW represents a leap forward in the commercial readiness of wave energy as a sector and would secure Australia’s position as the world leader in marine energy generation.

 

COMPETITIVE LANDSCAPE

 

The Wave Swell Energy technology is considered “nearshore”. It is applicable in depths of 5 – 15 metres. These depths can usually be found within one kilometre of the coastline. In contrast, the technologies of most of WSEs competitors are only possible in much deeper waters of 30 metres or more. For this reason, WSE has no known nearshore competitors in Australia, and virtually none in the world.

 

However, outside the nearshore environment, the company will be competing on price with both deep water wave energy technologies and, more broadly, with other forms of renewables such as wind and solar. Deep water wave energy competitors include Carnegie, OE Buoy, and Wello, although Carnegie is the only one of these based in Australia.

 

 

However, the nearshore regime will afford the technology unique opportunities for energy generation not applicable to these other alternatives. For example, in Hawaii, where solar farms take up too much valuable real estate, wind farms have proved unacceptable in a tourist market, and the lack of a continental shelf does not lend itself to deep water wave energy technologies.

Use of funds

 

 

As described in Section 2.9, the project is contingent upon raising $9.5m which funds the project, corporate overhead expenditure and provides working capital.

 

For a full breakdown of the sources of funds please review Section 2.9 of the offer document. Outlined below is the full use of funds being $9.5m, of which the funds raised through the CSF offer will contribute towards the total.

 

Risks Facing the Business

 

Below is a description of the main risks facing the Company.

 

For a detailed breakdown of the key risks please see section 2.13 of the Offer Document.

 

Financial summary

 

The following financials are the consolidated accounts of Wave Swell Energy Limited.

 

For a full breakdown of the financials for Wave Swell Energy please see section 2.11 of the Offer Document.

 

1. Intangible assets consist of the intellectual property of Wave Swell Energy Limited. The value above has been approved by the board of directors.

2. Expenditure incurred but unpaid for professional services and other costs in the normal course of buisness.

John Brown

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Tom Wilson

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Scott Hunter

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Tom Denniss

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Wave Swell Energy Offer Document

This is the Wave Swell Energy Limited CSF Offer Document as at 25 October 2018.

Download

The investors below have committed capital to the business in this funding round.

David Ward

14-11-2018

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Moby Dick

12-11-2018

David Gould

12-11-2018

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Shehan D

10-11-2018

Roger Sharp

08-11-2018

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Kirill Reztsov

07-11-2018

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Douglas Spiegelhauer

07-11-2018

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Mark Brennand

06-11-2018

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Jonny Wilkinson

06-11-2018

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Waltraud Wightman

04-11-2018

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KG

04-11-2018

None

03-11-2018

PK

03-11-2018

Shane Davis

03-11-2018

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Reinaldo Gunawan

03-11-2018

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Hegs

02-11-2018

Ivan Cauchi

02-11-2018

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Christopher Beal

02-11-2018

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Mark McNamara

02-11-2018

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Simon Rodwell

02-11-2018

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Panayiota Ward

02-11-2018

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Mac

02-11-2018

Andras Bakonyi

02-11-2018

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Mark Thomas

01-11-2018

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Anon

01-11-2018

Jan

31-10-2018

Relly

31-10-2018

John Lynch

31-10-2018

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Kelly Staker

31-10-2018

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dprovan

31-10-2018

Bandit

31-10-2018

Lucas Thornton

30-10-2018

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Matt Shaw

26-10-2018

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Anon

26-10-2018

Henry Ng

25-10-2018

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Adam

25-10-2018

 


 


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