Enerdynamic Hybrid Technologies Corp. (TSX: V.EHT, OTCQB: EDYYF, Forum) has a better solution for supplying the solar power needs of the global marketplace. Regular Stockhouse readers may already be familiar with this Company’s technology. In a full-length feature article from September 14, 2017; EHT was introduced to Stockhouse investors.
That article laid out the full array of Enerdynamic’s innovative technologies and product solutions, primarily tailored for the construction industry. But along with industry-leading building materials (and pre-fabricated structures), the Company has designed superior solar panels for the production of solar power.
On September 20, 2017; Hurricane Maria hit Puerto Rico. Its dilapidated electrical grid was virtually wiped out. This was (and is) a terrible disaster for the population of Puerto Rico. However, it provides a real-life case study to showcase the superior qualities of Enerdynamic’s solar panels.
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A Stockhouse news feature on June 26, 2017 alerted investors to this calamity – and opportunity. A “working group” created by the U.S. government to address the Puerto Rico catastrophe has recommended a $17.6 billion program to rebuild the island’s electrical grid. Strong emphasis was placed on renewable power (like solar), and “micro-grids”: decentralized production of electricity.
EHT’s durable, lightweight solar panels are an ideal technology platform around which to structure this massive rebuilding. Stockhouse has reached out to the Company’s CEO, John Gamble to supply more information here: more information on Enerdynamic’s solar panels, more information on the Puerto Rico opportunity, and more information how the Company plans to transform this opportunity into shareholder profits.
1) For readers who didn’t have the opportunity to read the earlier news feature, please elaborate on what Hurricane Maria did to Puerto Rico’s electrical grid.
Hurricane María left the Puerto Rican power grid devastated, nonoperational, without integrated generation, transmission and distribution systems. All generating plants, major transmission lines and the vast majority of the distribution lines suffered damage that has required months to “restore” to as-built condition prior to the two September 2017 Category 5 hurricanes. Even today June 26, 2018 - a full nine months after the storms, Puerto Rico has thousands of families, small businesses, schools, water works and sewage treatment plants and even hospitals still off-Grid depending upon diesel powered generators. It has been stated by both the grid owner, PREPA and FEMA that the off-shore islands of Vieques and Culebra (15,000 population) may be as much as five to seven years disconnected from the power Grid.
The persistent lack of new materials - poles, cables, connectors, transformers, etc. - to restore the transmission and distribution lines, led to the common practice during the “recovery” to recycle components from the fallen lines. This is a practice that does not assure reliability and durability for the forthcoming hurricane season which has already begun.
2) Why was Puerto Rico’s electrical system so acutely vulnerable to a natural disaster such as a hurricane?
PREPA is the largest public utility under the US flag. It’s creation, by buying and consolidating regional small private utilities and access to Federal Rural Electrification funds, fulfilled the promise of the 1940’s to connect 100% of Puerto Rican families to the grid. The economic development narrative of this US colony however, led to an off-shore oil refinery as a legacy of President Johnson from the 1960’s and “downstream” heavy chemical and plastics plants.
The location of power generating plants followed this model leaving Puerto Rico fifty years later with more electric power generation on the south coast and much more demand in the metropolitan areas of the north coast. The transmission lines became vital lifelines and increased operations costs. Neither key transmission lines nor distribution lines were placed underground, leaving them very vulnerable to plant and tree growth as well as the periodic hurricanes. The grid was also made interdependent to operate as one functional whole with a central command center in San Juan. There was no redundancy and regional independence designed.
PREPA has not been paying its creditors for the last three years. Its access to operating funds to buy 95% fossil fuels (all imported), replacement of dated power generation equipment, and maintenance has been severely limited. Its debilitated state set up the preamble for the perfect storm - which came in the form of Cat 5 María that affected all of the territory of Puerto Rico all at once.
3) Does it make any sense to simply rebuild Puerto Rico’s existing system?
There is a consensus on the part of university experts (Inesi - the National Institute for Energy and Insular Sustainability) and the Office of the President of the UPR, that rebuilding the grid to its former self is a wasted opportunity. Given the deteriorated state of the Grid, now is the time to upgrade to the 21st Century with a diversified and distributed generation and much more reliance upon renewable energy sources.
A government policy of interconnected regional grids, cascades of microgrids (closer to the demand) and the integration of solar and wind technologies would lead to a far different recovery than the agonizingly slow “rebuilding” of a grid that is largely obsolete.
These policies are being pursued by professional and community groups from all sectors of the Puerto Rican society.
4) So this is why the working group tasked with addressing this crisis has recommended micro-grids and a dramatic increase on renewable power sources – as part of an (estimated) $17+ billion rebuild. Explain what a “micro-grid” is for investors who are unfamiliar with this term.
A task force made up of representatives of some of the largest private utilities in the USA has made recommendations that microgrids be considered as part of the Puerto Rican energy solution. A “micro-grid” is a group of interconnected energy resources for distributed power that act as a single unit that you can control. A microgrid can be connected to the outside grid or operate in an “island” mode disconnected from the grid. These energy resources contain generation technologies (solar panels, wind generators or fuel powered generators for example), energy storage devices (batteries) as well as inverters and controllers.
5) Now let’s take a closer look at Enerdynamic’s unique solar panels. Please explain what makes these solar panels superior to competing products and ideal for incorporating into micro-grids.
The most visible difference is that Enerdynamic solar panels are 66% lighter than the typical traditional solar panel, but they are also durable. The panels are mounted onto concrete roofs or concrete in solar farms so they cannot blow off, and if a piece of storm debris hits our panels only the broken cells will stop working rather than the whole panel (in the case of a glass panel). All other solar panels in the world are made of glass.
(Traditional solar panels in Puerto Rico, post-Maria)
6) What is the Company’s strategy for bringing its solar power solution to Puerto Rico?
We have formed a JV company with Brieke Family Assets Ltd called “Cat5 Solar and Microgrids LLC” and have now obtained the licensing to promote and sell EHT solar products. The first container of products will arrive in July 2018. During the autumn of 2018 an assembly facility will be opened in Puerto Rico to assemble the laminate onto Enertec coated EPS foam of 2.5lbs so insulating the roofs of the buildings.
7) The previous news feature referred to your financial arrangement with Elevate Export Finance Corp. and the additional financing backing it brings to this scenario. Please elaborate.
Most bank loans require PG’s to install solar with a substantial down payment. EDC requires a deposit of a minimum 15%, no PG’s, and will add back the customer’s electric usage to their cash flow, to determine their ability to repay. The loans are up to 60 months, based on LIBOR plus points, so with the average payback of 6-7 years the customer is only paying slightly more than their existing electric bills during the 5 years and after that they get 20 years + of free electric.
8) How successful has the Company been to date in accessing this multi-billion dollar opportunity?
It has taken 4 months to obtain the necessary local permissions to import and license the products so Enerdynamic is now only just starting these activities. EHT already has several microgrids and PPA’s that it has been invited to tender on. Once the first shipment is in Puerto Rico, we intended to ramp up sales and the public and commercial awareness. Cat5 has already established itself in the professional communities of architects, engineers and was endorsed by Fernando Abruña Cat5’s architect, said to be the godfather of solar in Puerto Rico.
9) Do you anticipate that the pace of rebuilding will increase once this Puerto Rico working group issues its final recommendations?
There are several energy initiatives on the short-term horizon: the release of federal funds for redesign and reconstruction of the grid is the most important; the new local regulations governing microgrids has already been approved; and the enabling act to “privatize” and/or sell PREPA assets has been approved and the specific plan is expected to be presented to the PR Legislature within the next six months.
From design to execution appears to be a quick track arrangement between the public and private sectors.
10) Does Enerdynamic have a specific target with respect to the proportion of this $17+ billion rebuilding project that EHT can capture for itself (and shareholders)?
Of the $17bn, the original estimate for microgrids was $1bn. We believe that figure will more than double with CAT5 obtaining a large market share in addition to retail and commercial insulations.
11) What impact do you estimate that this new opportunity will have on the Company’s 2018 revenues? What about 2019?
50% of the profits of the JV will be returned to EHT. Cat5 estimate for July – Dec 2018 is a profit of over $2m for which EHT’s share is 50%. For 2019 assuming the JV expands the JV territories to the southern US states and the rest of the Caribbean, the estimate of profit is over 5 times that amount or $10m.
www.ehthybrid.com
FULL DISCLOSURE: Enerdynamic Hybrid Technologies Corp. is a paid client of Stockhouse Publishing.