Estimating the Cost of an E-Cat Plant

I thought this was an interesting post by ECW reader Bruno who has attempted an estimate of the cost of a 1MW E-Cat QX industrial plant based on Andrea Rossi’s comment that the return on investment (ROI) would be less than two years.

With current US natural gas prices, the fuel cost is approximately $20/MW-hr for thermal energy (steam etc…). Dr. Rossi is talking about a 2 year ROI.

Let’s assume perfect 24/365 each year for two years, and no labor costs. If he plans to sell HEAT, but not the E-Cats themselves, to hit $20/MW-hr his capital cost would need to be $350,000 (fully installed). In reality, he’d need to offer a lower price than $20/MW-hr (let’s say $17), he’d probably need to take the E-Cats down a few days/year for maintetance (let’s assume 350 productive days/year), plus he might have part time labor costs associated with servicing the installation (let’s say $25,000/yr).

This means that the total installed cost for him would need to be on the order of $235,000 just to break even. I think that he needs to get LEONARDO’s capital cost somewhere below $150,000 (installed) to sell 1 MW of thermal energy profitably. So his cost per 1 MW E-Cat (uninstalled) will probably need to be on the order of $100,000. Of course, the capital cost could be higher if the payback period is stretched beyond 3 years.

Bruno

  • gdaigle

    Prices for A-Type LED lightbulbs dropped 90% over their first 9 years of availability while sales went from 0 to 80 million. I think that putting QX technology into as many products as possible will be key to achieving the fastest drop in price of producing the units. Think not only industrial scale steam generators but also dryers for grain crops, pool heaters, even down to consumer hair dryers.

    • cashmemorz

      That is the key to getting going into market. Slow uptake by word of mouth would be impracticable. First it would take so long others would only need to make minimal modification to Rossi’s device and then patent their version. Any potential competitors are watching for any clues as to how Rossi approaches the market. Preparing the market in every place possible by others is what will decide Rossi to do the same, if he wants to stay in the game. As a comparison, there were similar devices using tubes before transistors. Those already making such devices were a ready market. The ready market for Lenr is there also. As was mentioned by others, the first to need the cheaper power source, such as LENR, will be those having the most to lose if they do not change over to LENR immediately. Those who will potentialy lose the most are those with the most investors to be appeased. Find those kinds first, show the need to change over asap. Those first customers will be a mix of intermediate to larger users. Start with transport truck power plants. Then find the next users who need a little larger assemby of QX’s. This approach will allow for scaling up Rossi’s device where and when needed. These markets must be prepared by Rossi NOW.

      • LarryJ

        It is not really possible or practical to prepare markets of any kind NOW for a product as radically paradigm shifting as the QX until it is being mass produced, on the shelf and ready for sale. Nobody in the mainstream is going to take it seriously. Even when Rossi was looking for solutions for his own problems he would quickly pass over any device that was not out of R&D and being currently manufactured with product on the shelf.

        • cashmemorz

          So what size and how many for what kind of purpose? Or lot of any kind that can be made at first and let the buyers decide? The first airplanes were very basic, just like the first mass produced model T cars. As long as it works. Then, as soon as a few months continuous, reasonably dependable operation have indicated the reality, then customers will tell Rossi what kinds of changes are needed. Then Rossi just has to pick through the various wants and make them in the order that his people are able to make first.

          • Pekka Janhunen

            Aeroplanes were a bit different because they could fly, whereas the E-cat is just another kind of energy production device, albeit a revolutionary one. The first aeroplanes were not ready to compete against human ground transportation, but they were still a commercial success because they provided unique entertainment, postal service and military value.

            Without government subsidies and regulations explicitly promoting it,
            it’s not self-evident that the ultimate green nature and awe-inspiration of the E-cat has
            much additional value in the energy market.

            Rossi knows it and tries to bring into market a product that competes against other means of energy production from day one. It’s a tall order, but given the characteristics of the QX, it may be possible.

          • cashmemorz

            The military, has long shown an interest in LENR. Will they be the first to get some off the store shelves or will they wait for someone else to try it first? Then ask those others to show results in regard to national security. That will be a defining point of how fast the uptake will be after those first off the shelf units have shown their potential.

          • Omega Z

            Highly probable the Military(DOD,DOE etc,,) are watching closely and have already worked out possible scenarios of implementing such technology. It is in fact part of their job not to be caught off guard by unexpected technology. It’s happened in the past and heads rolled.

          • LarryJ

            It was rumoured that the only reactor Rossi ever sold was the 1MW reactor back in 2011/2012 to the US military. As I recall he was also working at a military site when he made his breakthrough on the hot cat presumably while helping to work out the kinks in the ecat he may have sold to them back then. It would not surprise me at all to hear the US military are already testing his reactor to power small ships. Rossi is known to have links with the military.

  • sam

    Frank Acland
    February 18, 2018 at 6:36 AM
    Dear Andrea,

    Will Leonardo Corp be selling plants, selling heat (i.e. Leonardo retains ownership of the plants), or both?

    Best regards,

    Frank Acland

    Translate
    Andrea Rossi
    February 18, 2018 at 7:18 AM
    Frank Acland:
    Both.
    Warm Regards,
    A.R.

  • Dr. Mike

    Was Rossi’s ROI estimate really based on $20/MW-hr natural gas?

    • Buck

      A competitive pricing analysis means you assess the cost of the significant material competitors such as bulk pricing of grid electricity, wind, solar, nuclear, and any other source of energy generally available even hydroelectric. Your question suggests that Rossi & Partner are not very competent.

      • Dr. Mike

        My guess is that Rossi based his answer on the more expensive cost of electricity. (Looks like Vinney agrees with me-see above.) I think we will have to wait until Rossi finally releases a price for a 1MW unit to know on what he was basing his ROI estimate. If he can deliver a 1MW unit for $100K, then we will know his ROI answer was based on considering all comparative options.

        • Omega Z

          U.S. energy costs are cheap compared to most of the world. Of course some of those high costs are taxes that pay for many social programs.

    • Vinney

      Doubtful, natural gas pricing is a rollercoaster.
      Its bulk electricity pricing in Miami.
      Remember to that no one in their right mind invests in natural gas reticulation in the third world, as its so easy to pilfer.
      They universally use cylinder gas for cooking, and courtesy of their wayward tendencies they probably use cylinder gas for their bathing also.
      Because of advances in electrical smart metering this is going to change.
      Natural gas from a high pressure mains (also available to all large industrial users) will fulfil the last phase of the Carnot cycle to supply everyone clean and multipurpose electricity (especially good for the internet and education).
      Smart meter monitoring will pinpoint in realtime people that are trying to pilfer power and GPS accuracy.
      Investment in this grid is rock solid, there is no taking back these people to the stone (gas) age.

      • Vinney

        And baking will ‘universally’ be done in an electric oven (set and wait, few surprises).

        • Omega Z

          “set and wait, Fall Asleep and Big ‘unpleasant’ surprises” 🙁

      • Dr. Mike

        I agree that Rossi’s ROI estimate is probably based on bulk electricity pricing in Miami. I think it will be quite some time before the QX units are able to demonstrate sufficient reliability that they will be able to become a viable source for supplying the heat for electricity generation. Another assumption that Rossi makes in his ROI estimate is that he will be able to re-fuel the QX devices at a low cost while maintaining high reliability in the re-fueled devices. It is not possible to determine the reliability of re-fueled QX devices until millions of them are refueled and tested.

  • causal observer
  • LilyLover

    “Eventually energy will be almost free” doesn’t mean it is free – now!
    The ROI is based on continued scenario replaced by E-Cat.
    When fuel becomes say quarter-price, your ROI numbers for the company might be in decades.
    BUT overall ROI to the society in driving down the fuel costs, shall we say, will be realized within a month of crashed oil prices?
    Or, for that matter, did the ROI of negative four years allow the world a downward pricing pressure on oil since the publication of Lugano? In my opinion, this is the only known meaningful endeavor that has borne the fruits of success even before birth of the product.
    Quite impressive, so quit obfuscating.

  • Omega Z

    Some time ago, Rossi said his goal was to produce E-cats at around $50 per Kilowatt capacity. A 1MW system(1000KW) would cost “$50K”.

    1KW capacity at $50 times 8760 hours(1KWh per 24/7/365) would produce electricity at about 0.0057… cents per kilowatt hour.

    You don’t sell product at cost($50K) Should Rossi sell these for $100K doubles the KWh cost.
    ————————————————————————————
    However, That would be the 1st year. Rossi has also said the refills will be substantially cheaper. This changes the cost again (makes it cheaper).

    As to additional hardware cost. That will fall under amortization and heavily dependent on life cycle and how the tax laws apply. So any speculation on cost should be done only on the fuel costs of which we don’t have enough information.

    • Ophelia Rump

      $50K appears to be a little low when you consider the two year amortization and the current cost of fuel. I think a likely range for the price to fall into would be between 250K and 500K.

  • LilyLover

    Frank,
    What am I doing wrong, in the following?
    Please sanitize at your will. Thanks.

    In my estimation, Dr. Rossi will stick with $50/kW module-pricing. Home encasement, certification, and refill will probably take 10 kW E-Cat to $1000 for home usage, but commercial supply of heat will be at half cent per kWh. He can still charge the 1 cent per kWh and maintain 200% margin of profit including 150% corporate overhead. I did the similar calculations and Z for got $ vs Cents conversion. Although he can get away with 2.5 cents/kWh against Cheap-New-Solar, I think he will rather startle, stun, and outshine the competition and still maintain a vast lead at 0.5 cent/kWh. I’m sure that after a few years of refinement he will make it 0.1c/kWh, for no other reason than to simply show that it can be done!

    Perhaps he already has that confidence level, but with requirements of high initial costs.

    Attempts of ‘selling slightly below market price’ by others will be squashed. Rossi’s business model may not be maximum profit, but rather maximum development of humanity.

    What’s money to the guy who can redefine it? What’s gold to the king Midas?

  • Omega Z

    When comparing to solar, the hyped cost and promoted numbers are deceptive.

    This varies according to geographical location, but the average daily productive sunshine is calculated at 6 hours. If you require 5KWh 24/7, you require at least 20KW capacity plus batteries. Should you have a week of overcast skies, Solar still comes up short.

    With that in mind, Rossi could easily charge 3 cents a KWh and blow away any current energy prices. And initially, why not. There is a lot of investment that needs covered. Note: First adopters always pay higher prices that pay the upstart costs.

    Also, the above is why I am not concerned when people say Rossi will have competition. Competition is good. It will keep Rossi honest on his intent of providing cheap energy. Even if this is not a problem for Rossi, It’s only a matter of time until someone else will be in charge. Will they have the same intent on providing cheap energy. Competition. It’s a good thing…