On the 16th February, Hydro Wind Energy closed their crowdfunding equity round on Seedrs, having raised £696,260 from 1,231 investors on equity crowdfunding platform Seedrs. Their initial target was £200,000. During the campaign, CEO Lee King announced that the company had been approved for NASDAQ Dubai’s Private Market, and is aiming to raise at least £30 million in equity over the next twelve months.
Hydro Wind Energy, as its name suggests, is a tech startup that is designing and developing technologies that it hopes will provide solutions to some of the biggest challenges of this century: access to potable water and low cost energy, and grid-scale energy storage for renewables.
The UK/Dubai company’s vision, global in its ambitions, is three-fold:
QuenchSea is a small, portable device that combines a hydraulic system, triple pre-filtration and a small reverse osmosis membrane to desalinate seawater into freshwater using manual human power. Primarily developed for the humanitarian sector, it also has marine applications and was successfully crowdfunded on Indiegogo (raising over £200,000).
OceanHydro Wind harnesses offshore, high altitude wind using kites, storing the energy in submerged pressure vessels to be released on-demand as electrical energy. The aim is to negate the variability of turbines and transform wind energy into an on-demand (dispatchable) electrical power source.
SubSea RO Wind combines both reverse osmosis – again in a sub-sea pressure vessel – and high altitude wind to efficiently desalinate seawater at scale. Such a design, Hydro Wind Energy hopes, will have the potential to systematically address the emergent water crisis around the world – “both at small and large scale over the next 7 years”, according to CEO Lee King.
QuenchSea is already in production, and the company plans to have both prototypes completed by the end of 2021. Full scale commercialisation is planned for 2023, with an annual revenues forecast of at least $300 million by 2025.
B Beyond asked Lee a series of questions about the startup, its unusual path to capital funding and its vision for the future.
BB: There are several running themes with your three projects (the ocean as renewable energy/potable water source, ‘natural’ mechanics). Was this area your intention from the start, or did one idea simply flow out of another? Did you start with QuenchSea or with one of your big infrastructure ideas?
Lee: The inception of our company started with an attempt to find solutions to the world’s water crisis at scale. While developing this technology we had to find a solution to powering the kites and kite control mechanism. We found a simple solution by adding a hydroelectric turbine and flooding the pressure vessel every 10 cycles.
We realised that we could not only power the kites but could develop an autonomous independent technology for power generation. A simple way of harnessing wind at altitude offshore, store the energy sub-sea and release it as electrical energy on-demand.
BB: Your two systems – desalination and energy production – are both going to be subjected to a lot of stresses, one would think [oceanic pressure and environmental hazards, high altitude winds, mechanical forces, marine weather hazards etc.]. Have there been any material, technological developments recently that would solve these challenges – or are these systems intended to have a relatively shorter lifespan?
We are building on an available knowledge base and current existing technologies. Operating in harsh sea environments is considered the biggest technical and operational challenge. The systems themselves are planned for 20 to 30 year operation and factor in O&M costs at 40% of total operating costs. In comparison offshore wind arrays have a 20% to max. 30% O&M costs.
BB: Last year, Alphabet Inc. closed down Makani [a High Altitude Wind company] after several years in the Google X program due to lack of ROI, which seems a serious blow to the commercialisation of High Altitude Wind energy.
Do you have any thoughts on that situation, in regards to Hydro Wind Energy? Has it affected your business strategy, or technical designs?
Lee: About 15 companies and as many academic teams have worked on various approaches to airborne wind over the years. Some will fail and others will succeed. Also likely that collaborations and M&A will play a role in accelerating commercialisation.
Our technology is ultimately about structural design, systems integration and automation rather than building the kite control mechanism or making quantum leaps in technology development. Both technologies we are developing are combining existing technologies in a novel way to solve a specific challenge. The focus of our innovation is integrating existing technologies. Many of the components of the energy or desalination system are readily available off-the-shelf technology such as the francis hydroelectric turbine, subsea pressure vessel and reverse osmosis membranes. The kite control mechanism currently exists and has been commercialised by Skysails. The Skysails systems are currently in operation and use a pulling mechanism (similar to what is required in our system) to enhance ship propulsion. These systems have been in commercial operations for over 15 years.
In essence, what we have developed is a much simpler way to harness offshore altitude wind, store the energy subsea through a simple ballast system and release it on demand as dispatchable electrical energy. Solving several challenges at the same time; low cost solution, access to offshore wind in deep seas where 80% of the world’s wind resource exists, turning wind energy into dispatchable electricity, grid scale energy storage, and providing auxiliary services to the grid. A major difference between our solution and the current state of the art is that we are not converting wind directly to electrical energy but rather using wind for mechanical lift (similar to sailing).
This technology harnesses altitude wind and opens up the ability to exploit offshore wind power at significantly reduced cost compared to conventional wind turbines, offshore floating wind or evolving marine and kite energy technologies. Wind turbines are unable to access deep sea offshore wind and are limited to shallow waters of no more than 60m depth and heights of 150m. In addition, wind turbines and other kite technologies convert the wind directly to electrical energy, giving a low conversion efficiency of only 30% with variable power and energy output.
Kite technologies have evolved into two distinct categories; one is generation at the base (KPS) or generation in the air (Makani Google x), again converting wind directly to electricity with volatile electrical and power output. In contrast, we use kites solely to provide mechanical power to lift, altering the buoyancy of a submerged pressure vessel fully absorbing the volatility of winds from 4m/s right up to 25 m/s at altitudes of 100m-400m where the wind is stronger and more consistent. Water flooding into an empty pressure vessel at sea depth is used to generate electricity through a hydroelectric turbine. This in comparison gives a hydro-electrical conversion efficiency of 90% with the added benefit of energy storage and on-demand dispatchable power. The two missing links to a future powered by renewables.
BB: The promises of High Altitude Wind energy [lower set-up costs, greatly increased efficiency, more reliable winds] seem to be tremendous, if and when it can be successfully commercialised. Do you foresee a future where these High Altitude systems (either yours or others) entirely supplant wind turbines?
Lee: Once commercialised, the significant reduction in cost of high altitude wind energy would inevitably make conventional wind turbines obsolete, especially offshore. It’s good to keep in mind that each type of renewable energy technology provides a range of services to the grid with different impacts on the environment, different attributes, capabilities, levels of reliability and ultimately cost per unit of electricity generated. Other services include firm capacity, load following, reserve, response, inertia, black start, voltage control etc. – all are called auxiliary or ancillary services to the grid and are at a premium to the LCOE or wholesale rate of electricity.
The technology that we are developing solves the majority of these problems and provides these services to increase the stability and flexibility that grids require to meet electrical energy needs on demand while simultaneously lowering the unit cost of energy.
BB: Your first major source of funding and endorsement was from TechStars, a UAE-based accelerator [editor’s note: TechStars is actually a US-based, international accelerator – as Lee explains, Hydro Wind Energy was based in the UAE]. Perhaps you could tell us a little more about how that? How does the UAE compare, say, to the UK, for innovation and start-up support?
Lee: We were funded with private equity on convertible notes from the start (prior to Techstars). Still a UK based company but we were based in the UAE during the Techstars accelerator programme before lockdown. We currently have partners in the UAE and are in the process of joining the Private Market on NASDAQ Dubai.
Techstars were our first backers as a VC and accelerator. They are now partners and co-founders. They believed, right at our infancy, in our vision, technology and team. They have been critical to get us to this point in terms of investment and support. Fewer than 1% of applications get accepted to Techstars and their stats are impressive. They have built a portfolio of over 2,300 companies with a total market cap of $32 billion. 90% of companies they have invested in still exist today.
BB: Apart from Techstars, a majority of your equity up to this point will be raised from crowdfunding – is there any particular reason you chose this option?
Lee: From inception we have only raised on convertible notes, three in total and the Seedrs campaign will be our fourth. We are currently in the pre-valuation phase. We opted for crowdfunding because we had a successful campaign on Indiegogo and built a substantial stakeholder base of customers and supporters (over 10,000). We also received significant media coverage that opened opportunities to partnerships and new customers. We are already exploring VC funding but more so with strategic investors in the water and energy sector.
We are currently at technology readiness level 4 moving into building and testing an integrated sub-scale system offshore to help validate the technology before moving into building a scale prototype. Once we build a sub-scale system we will be in a strong position to attract strategic investors for a valued equity funding round. As we move through our technology development cycle we continue to build and increase the value of the company. This will put us in a strong position for an equity raise of £30 million plus within 12 months.
BB: Hydro Wind Energy’s mission statement is a very positive one – yet the things you are developing seem to anticipate (or may even see a competitive advantage) in a world of rising sea levels, global water shortages, and other systematic crises of climate change. Some of these impacts are already here, but what is the feeling inside of your company about these things?
Lee: We have a grand and ambitious vision to play a major role in the global transition to renewables in the 21st century and help alleviate the world’s water crisis by 2027. The solution we are working on now can rapidly be commercialised in the short term (within 2 years). The question of scale is the ultimate test.
BB: This past year has been one of a lot of discussion and speculation around green energy, but particularly wind turbines and hydrogen. Have you seen any evidence of (or are you hoping for) something similar for High Altitude Wind energy?
Lee: Definitely positive development in the renewables sector. The potential for high altitude wind has been discussed extensively and could be a game changer in solving the world’s energy crisis. Factoring in that we still source over 87% of our energy from fossil fuels. The dimensions of the energy challenge are multifaceted. Please see Bill Gates’s notes.
Also on that note, Bill Gates, although coming from a software engineering background is someone who understands energy, once said during an interview that altitude wind could be the miracle solution for transitioning global power demand.
BB: Could you tell us a little about your background/area(s) of expertise? What was the impetus behind Hydro Wind Energy?
Lee: We have 5 co-founders and 20 team members with various experiences from systems integration, automation, robotics, technology development to aerodynamics
BB: QuenchSea has been successfully crowdfunded, and is already in production. If possible, could you tell us about its humanitarian potential – what has been the response from NGOs, are there any projects where QuenchSea could be deployed?
Lee: QuenchSea will be a game changer. It is the first time in history that a low cost solution is available to instantly turn seawater into drinkable freshwater. It was developed primarily for the humanitarian sector in mind with applications in the marine and sailing sector.
BB: One of B Beyond’s areas of interest is philanthropy, corporate and private. What has you/your team’s experience been, if any, in regards to clean water provision? Do you think there is enough support, monetary or otherwise, for things like QuenchSea?
Lee: Overall we have had an extremely positive response. We are just starting to tap into the entire support network and stakeholder involvement. We seem to have hit a chord with investors, supporters and humanitarian organisations. Over the next 12 months we will be rapidly scaling QuenchSea with global impact in mind. We have a vision to alleviate the world water crisis and a commitment to donate and distribute with partners over 100 million units by 2027.
Solutions To Desalination At Scale
Although not directly covered in our Q&A, the SubSea RO Wind desalination system is Hydro Wind Energy’s most ambitious project – and one which they hope will revolutise desalination at scale.
The company is currently embarking on a pilot project to build and test a subscale system off the coast of Fujairah in the UAE with several offshore engineering firms. Running for six months, the project will become the foundation for building a 10,000 cubic metre per day scale demonstrator in late 2021.
According to Lee, “The main challenge has been how to extract or lift and deliver the desalinated water to shore. Conventional wisdom suggested building pipelines and pumping the water to shore which requires an immense amount of energy and infrastructure, and subsequently the cost of extraction and delivery have made the concept economically unfeasible. We have simply solved this problem by using wind power at altitude to lift and deliver.”
Seawater desalination remains among the most expensive water-supply options available, with high capital requirements and ongoing expenses. The Taweelah Plant in Abu Dhabi, designed to produce around 900,000 cubic metres per day (roughly 20% of current daily consumption), will cost $1.2 billion to build.
It will also require extensive amounts of fossil fuels, electricity, and other resources to operate. The largest single cost in conventional reverse osmosis desalination is the energy required to pressurize seawater through a reverse osmosis membrane at 5500 kPa and above — accounting for over 50% of the total costs.
Combined, these factors make large-scale desalination plants an inaccessible option for countries or communities who lack the funding or infrastructure to build and operate them.
“Our solution”, says Lee, “replicates this pressure at sea depths of 600m (6100 kPa). We use the natural hydrostatic head of the ocean at 600m depth to drive a reverse osmosis process. The system is combined with wind power using kites to lift the freshwater to the surface. Sail and kite powered barges are used to deliver the water to shore.”
With SubSea RO Wind, about 30% of the seawater feed is desalinated and the reject brine is released back into the ocean at depths of 500m, without a temperature gradient. Operating at these depths is expected to lower maintenanace and extend membrane lifespan (the anaerobic conditions reduce fouling from microorganisms). It also avoids the problem for onshore desalination in disposing of reject brine safely and cost effectively.
A standard, commercial sized unit could produce an average of 10,000 cubic meters (10 million litres) of water per day at wind speeds of 9 m/s, supplying over 300,000 people with their daily water needs, and at a CAPEX below $200 per cubic metre installed. In comparison, the lowest CAPEX achieved so far with current desalination plants is $900 per cubic metre installed.
Hayk Vasilyan, CTO at Hydro Wind Energy, forsees the potential to upend the entire industry. “Our technology is not only disruptive in terms of technology application, but also disrupts the current capital and business model — making it easier to attract investment and supply this strategic resource at a fraction of current costs. We are looking to break the $0.20 per cubic metre in our first scale pilot project in 2021. In addition, our systems are built individually and require smaller quantities of volume capacities to be low cost and reach economies of scale.”
(The current cost of current desalination varies considerably from a low of $0.50 to over $5 per cubic metre and depends on several factors. While SubSea RO Wind’s estimated water cost includes post-treatment, it does not include onshore receiving, storage or distribution costs.)
Hydro Wind Energy also hopes to significantly reduce the CO2 emissions for desalination, says Lee. “Deploying our first demonstrator will reduce carbon emissions by 14,000 tonnes per year. Moving the technology over the next 2 years to full commercialisation with 100 systems would supply 1 million cubic metres per day and displace over 1.4 MtCO2 per year which would be equivalent to taking 300,000 cars off the road or of the carbon sequestered by 2.7 million hectares of forest.”
The obvious question for sceptics is whether such an idea is feasible away from the drawing board, but Hayk is obviously confident: “All the components of this technology already exist. This technology ultimately revolves around systems integration and automation rather than making quantum leaps in technology development; the solutions are all out there.”
Our thanks to Hydro Wind Energy for providing this technological background.