WHOLE TREE ENERGY

BACKGROUND
Most demand of electric power has been conventional sources of fuel like
Coal Oil Natural gas

Other sources which could be used for generation of electricity

Solar energy Wind energy Geothermal energy Nuclear energy Biomass fuels energy resources in living things and their waste products. Clean and cost efficient source.

BIOMASS v/s FOSSIL FUEL

Biomass Fuels
Renewable Fewer emissions Low CO2 emissions Very low levels of SO2 emitted Hardly any NOx released

Fossil Fuels
Depleted by extraction Higher emissions High CO2 emissions Power plants need expensive equipment to control SO2 emissions Higher levels of NOx released

OBSTACLES IN VIABILITY OF BIOMASS FUEL

Power plants constrained to small scale operations Thermal efficiencies are poor Fuel delivery system not developed yet Overall economic viability not yet demonstrated Public not educated about both the advantages and limitations

WHOLE TREE ENERGY

Inspired by the choking smoke released from the neighborhood, David Ostlie built a high energy, smokeless, woodburner The device generated higher temperatures, wood burnt completely and gave a sootless exaust Key elements of the WTE concept
Use fast growing hybrid hardwoods

Trees cut and transported to the plant site

Stacked and dried by the waste heat of the plant for over 30 days removing 65% moisture Further cut and put into the furnace Oversized boiler promoted high heat release and complete combustion

QUESTIONS AT HAND

How much demonstration effort is required to prove the viability of the concept? At what stage of the purchase process and what constituency should the limited marketing effort be directed to?

Financial analysis
The factor cost for manufacture of electricity comes out to be cheaper than for normal modes Reduced need for expensive pollution-control techniques Lower fuel costs in most potential plant locations Decreased capital costs due to the elimination of expensive systems required to process and handle coal Less expensive ash handling and storage systems because of the lower ash content of wood less than 10 percent the ash of coal As a renewable, closed-loop biomass technology, Whole Tree Energy also qualifies for special federal and state tax and energy credits that further offset the capital and operating costs of a plant. Saving on wood chipping costs

Factor contributing to costs Marketing costs Capital for equipment Construction costs Fuel costs Operations and Maintenance Financing costs Harvesting and transportation costs

Factors affecting costs Tree yield Capacity factor Power plant efficiency Interest rates Labor costs

Cost of electricity
The average cost of producing electricity in the US is around 10 cents per kWH The same cost for a whole tree energy plant are as follows:
Net Power Plant Size in MW 25 50 100 150 Cost of electricity In $/kWH $0.046 $0.049 $0.042 $0.036

Strategic problems
New technology Inability to handle peak loads Pressure from the community Requires large acquisition of land Large setup time for the plant Advent of newer types of power plants Patented technology limitations Limited financial resources

Planning
Base load and peak load requirements to be analyzed to find out ideal capacity Land required to be calculated keeping the tree yield of the area in mind Research to handle the transportation and distribution in the most effective manner Analysis of alternative sources of energy required to meet the peak load requirements

Integrated Marketing Campaign

Considerations
Demonstrations Communication Why communicate? Looking for investors (B2B) Taking the community / government along (B2C) Lengthy decision process Who is the target audience for the communication? What are the communication objectives? What channels can be used?

Understanding Decision Process

Forecast energy demand for the market Evaluate the options Specifying resources for each alternative site Calculate equivalent cost Optimization programs and Sensitivity analysis

Executive Committee
Reviews the recommendations Apply financial criteria and market service standards Consider environmental and political dimension

Seek to obtain EPA and state licensing agency approval Acquire the needed property Interface with local governments and community groups

Capacity Planners

Licensing and Environmental Affairs Staff

The Target Audience

Capacity Planners: For the major set of information Executive Committee: Relationship building and communication of advantages Licensing and Environmental Affairs Staff: Partners in acquisition of licenses and approvals Community Groups: Proactive awareness building before any revolts or hurdles

Capacity Planners
Will be on a proactive lookout for alternatives and innovations: Personal selling and direct advertising will help Will want to weigh out the problem against alternatives: Likely to attend trade fairs and conferences Will need to stay abreast of the latest in their field: Likely to read the relevant magazines and newsletters Will want the market information: PR can play an active role

Capacity Planners
Objectives Building awareness and getting noticed Information regarding the technology and its advantages

Channels Personal Selling Direct Mailers and Brochures / Newsletters (informative and comparative) PR (Interviews on Biomass and energy conservation, articles published reiterating the need) Trade Shows and Conferences / Workshops (explain the process of energy utilization)

Executive Committee
Will not be as proactive in seeking information as capacity planners: Relationship building is important and personal selling does not make sense Financial criteria is important: Communication of the cost savings via this innovation Environmental and Political: Awareness regarding environment-friendliness of the innovation and mass popularity can help

Executive Committee
Objectives: Facilitating go-aheads in the company by Relationship building and maintenance Communication of advantages Stressing on low cost and sustainability Channels Brochures / Newsletters PR (Interviews on Biomass and energy conservation, articles published reiterating the need) Conferences / Workshops (explain the innovation)

Community Groups & Local Government

More of B2C here than B2B: The B2C channels can be used as objectives will majorly be awareness and shedding of psychological barriers Done for a focused locality: No sense having geographywide campaigns as localized ones would help Government hesitation: Involving local community groups or government offices in green conferences can help get over the hesitation

Community Groups & Local Governments

Objectives: Awareness of the new technology Avoidance of potential revolts Aiding the licenses and approvals Partnering with Licensing and Environmental Affairs staff Channels: Road shows Internet & Website Viral Marketing & Social Media Conferences and Workshops PR (activities like biomass week)

Biomass week
Road shows
Make a list of community groups in a city, mail them Visit important cities of the country with the marketing and sales team Meet community groups and educate them

Logo design/symbolism
An important means of recognition A logo that is simple and symbolic of energy utilization can be designed and made popular Cotton entered the minds of many with their symbolic black and while logo of a cotton tree

Advertising
Advertising in relevant media such as trade magazines where community groups may view the ads Picking the right medium for advertising is also extremely important

Internet
Internet
To be proactive on the internet. The website should be made interesting and educational E-brochures and videos can be made available for download videos of the spokesperson commenting on various energy issues can be made available for download

Viral Marketing
In the form of a very short documentary could be passed on via YouTube and also facebook and other online mediums (the website) Would not just educate probable investors but also consumers

Social media
getting in touch with the right audience launch videos and posts on Biomass Quizzes on energy conservation

Propositions for B2B & B2C

Power Utility Companies
Lower cost of electricity production Renewable source by using wood from forests Provide results of demonstrations by EPS & EPRI Provide testimonials about favorable combustion tests & environmentally friendly process Act as partners to educate the end customer to make the technology acceptable to consumers

End Users
Educate them about the depleting fossil fuel resource Creating awareness about the fast growing tree crop as a source for power Focus on renewable & planting more trees To convince stakeholders & city groups that cutting of trees would be replaced by new forestation

Strategy Identification & Selection

Whole Tree Energy has limited resources at disposal Needs to channel its marketing efforts towards:
Power Utility Companies The end consumers

The phase of marketing efforts to both targets has to be decided

B2C & B2B simultaneously
Phase of marketing effort

Start with B2B initially Focus on B2C after engagement with client

Review of strategy alternatives

Both B2B & B2C simultaneously Initially B2B & B2C at a later stage

Product Market Investment Strategies

No power utility company has bought this new technology Hence the exact geography & market not known Creating awareness at country level without the support of power provider & state there might be negative publicity as well

With limited resources at disposal, it is economical to focus market development on power utility companies initially Once the power distribution company is decided the geographical area gets defined concentrated efforts Proposal to act as partners in educating the end customer - support from power companies as well

Review of strategy alternatives

Both B2B & B2C simultaneously Initially B2B & B2C at a later stage With technological expertise it would be more feasible to pitch to the power utility companies that general public WTE has expertise in all functional process to bring up a new power plant hence can pitch better to act as partner

Functional Area Strategies

Essentially a technological company Personnel to handle the vital process to bring a new power plant Low confidence in people handling meetings with public

Proposed Strategy
Assets & skill set of employees at WTE more suitable for pitching to & partnering with Power Utility companies WTE would have to engage with the end customers sooner or later But it is more prudent to direct marketing effort at B2B in beginning and then working together to convince the end consumer